US nixes Russian demands not to expand NATO and Biden eyes sanctioning Putin

Top stories from the Russian press on Thursday, January 27th

The US and NATO provided Russia with a written response to its demands for security guarantees. The United States and its European allies do not intend to discuss the “open door policy” of NATO and the military presence in Eastern Europe with Russia, Kommersant writes. At the same time, they are interested in dialogue on arms control, transparency, and risk reduction. Now, the Russian Foreign Ministry and other departments will prepare proposals for further steps for Vladimir Putin. Two proposals have already been made in the State Duma: United Russia called for weapons to be supplied to the self-proclaimed republics of Donetsk and Lugansk, and the Communists pressing to recognize their independence.

According to US Secretary of State Antony Blinken, the answer consists of multiple components. First, a list of the US and its partners’ concerns about Russia’s actions “undermining security and stability.” Second, the assertion that every state has the right to choose which alliances to join, is a reaction to the demand to halt NATO expansion. Third, a list of areas where the US believes it is possible to reach an agreement with Russia on reciprocity grounds.

Blinken said he still expected to meet with his Russian counterpart Sergey Lavrov in the coming days. According to Kommersant’s sources, the meeting may take place next week in Geneva.

According to Fyodor Lukyanov, editor-in-chief of Russia in Global Affairs magazine, “The response of the US and NATO is unsatisfactory, which requires Russia’s promised ‘military-technical measures’. But it still requires communication, despite the mentioned measures,” he told Kommersant. “The following actions are predictable – this is a demonstration, but not the use of force. A general increase in military activity – exercises, flights, possibly the deployment of new weapons systems in sensitive areas,” he added.

According to the expert’s forecast, “every action will be followed by a reaction, and this will most likely happen numerous times”. “In theory, at some point, there is a saturation with confrontation and a desire to move to reduce the tension,” Lukyanov continued. But he clarified, “At the moment, we are far from this, the political and psychological exaltation and the game of nerves have just started”.

Nezavisimaya Gazeta: Biden’s sanctions gamble against Putin may become test for US-China confrontation

US President Joe Biden announced the possibility of personal sanctions against Russian President Vladimir Putin in case Russia introduces troops into Ukraine. From the standpoint of direct influence, this measure would have no ramifications because Putin has no assets overseas that are directly registered in his name. Specific penalties against Putin would make little sense in the context of broad sanctions against Russia. However, placing Putin on the same level as the leaders of North Korea, Iran, and Belarus could have consequences, Nezavisimaya Gazeta writes.

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In the event of personal sanctions against Putin, things are not so simple, the newspaper writes. For example, the Russian president has good relations with a number of Italians and on Wednesday spoke with representatives of large Italian businesses, despite the current tense situation. At the same time, Europe does not want to lose Russia as a reliable gas supplier.

“Personal sanctions can be effective against businessmen with assets abroad. This will not work with Putin: his assets abroad have been searched since 2014 and never found. The sanctions can also be diplomatic in nature. For example, there will be no invitations to various events. However, there is a way out in the form of neutral states,” Dean of the Faculty of World Politics at Moscow State University Andrey Sidorov told the newspaper.

Deputy Director for research and head of the Center for German Studies at the Institute of Europe of the Russian Academy of Sciences Vladislav Belov believes that personal sanctions will completely lose their practical meaning amid wider restrictions. Another thing is that such restrictions may become a precedent. “These restrictive measures could be aimed at the main figures in China. The main enemy of Washington is still Beijing. Biden’s key task now is to test the waters after the defeat in Afghanistan,” the expert said.

Izvestia: EU hopes for diplomatic solution to crisis in Ukraine

The EU is hoping for a diplomatic solution to the Ukrainian conflict, but any aggression against Kiev will have serious consequences, the European Commission told Izvestia, emphasizing that they do not support exporting their weapons to Ukraine. Meanwhile, the United States is considering the possibility of deploying troops, aircraft, and navy to the Baltic countries and Eastern Europe. NATO has already announced plans to beef up its military presence in the region. Sources in Bundestag told the newspaper despite the refusal to supply weapons, Germany will fulfill its obligations to the Alliance. However, Berlin considers returning to dialogue and building cooperation to be more reasonable.

The European Commission told Izvestia that the EU is discussing and is already providing all kinds of assistance to Ukraine, including the recently announced 1.2 bln euro financial aid package, but Brussels is not engaged in the export and supply of weapons. These are the decisions of individual member states, Peter Stano, lead spokesperson for the external affairs of the EU told Izvestia. However, if dialogue and diplomacy fail, any aggression against Ukraine will have serious consequences, Stano added.

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On January 21, Chancellor of Germany Olaf Scholz once again stressed that the German government had no plans to supply lethal weapons to Ukraine.

Spokesperson on Foreign Affairs for the Parliamentary Group of the German Social Democrats Nils Schmid told Izvestia that arms deliveries usually do not contribute to the de-escalation of the situation, so all efforts are aimed at finding a diplomatic solution to the current crisis. According to him, issues of security and stability in Europe should be resolved through negotiations.

Nevertheless, his party colleagues told Izvestia that if NATO and the United States plan to increase their military presence in Europe, then Germany, as a member of the alliance, must comply with its obligations to the US-led bloc.

Vedomosti: Russia intends to ramp up coal supplies to China

Moscow is negotiating an increase in coal supplies to China, Russian Deputy Energy Minister Pyotr Bobylev said during a meeting of the State Duma Committee on Energy. He did not specify the volume of the possible increase in supplies but recalled that in 2021, Russia signed a memorandum on boosting coal supplies to India for the next 10 years from 6 mln to 40 mln tonnes per year. The Ministry of Energy did not specify to Vedomosti the volume of supplies to China that had been discussed.

Based on the data from the Federal Customs Service, China is already the largest buyer of Russian coal. It accounted for almost 18% of export deliveries in 2020, or 37.7 mln tonnes. According to the latest data from the Russian Ministry of Energy, in the first half of 2021, Russian coal exports to China rose 49% to 24.15 mln tonnes.

China is primarily interested in importing high-quality coking coal since it faces a shortage, namely due to trade disputes with Australia, Head of Equity Research at Alfa Bank Boris Krasnozhenov told Vedomosti.

According to Krasnozhenov, around 15% of deliveries are currently made via railway border crossings with China. The rest was delivered by sea via Far Eastern ports. The expert claimed that problems with the flow of goods across border crossings with China in 2021 were caused by lockdown measures implemented by the Chinese customs authorities. According to Sergey Grishunin, Managing Director of the NRA rating agency, the overall growth potential of Russia’s coal supply to China is more than 50 mln tonnes per year if market conditions are favorable.

Izvestia: Market opposes ban on cryptocurrencies in Russia

The Russian government received an outline from the Ministry of Finance on the regulation of cryptocurrencies. They are already studying the document, the government press service told Izvestia. According to analysts interviewed by the newspaper, other countries are also following the path of regulation, rather than prohibiting digital money. Meanwhile, crypto market players are calling for the legalization of digital asset mining in Russia. This would enable the budgets of the regions to get more money via additional taxes. Russia is already one of the three largest mining centers and leaders in terms of the number of cryptocurrency holders.

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The proposed ban on cryptocurrencies will allow mass investors to avoid investments in them, which may pose financial stability problems and necessitate state assistance, Director of the Financial Stability Department at the Bank of Russia Elizaveta Danilova said. According to her, emerging countries, including Russia, have a high risk of losing sovereignty over their national currency, which might lead to higher inflation and financial sector troubles.

Russia’s nearest neighbors, such as Uzbekistan and the Baltic nations, have also opted to regulate cryptocurrencies, Director of Binance in Eastern Europe Gleb Kostarev told the newspaper. According to him, the majority of countries are working on legislation in this area to prevent the outflow of capital and innovation from the state, and the risks that threaten financial stability are speculative. The company is already working on market regulatory suggestions for the Bank of Russia. According to them, even unqualified investors should have full access to cryptocurrencies.

Mining should be permitted as well because Russia has cheap electricity and the country may become popular with miners who will pay taxes to regional budgets, leading strategist at Exante investment company Janis Kivkulis told Izvestia. Russia is one of the three largest mining centers, as well as one of the top three in terms of cryptocurrency ownership. According to the expert, any restrictions on this segment will result in a loss of specialists and capital.

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