RA’s Daily Russia News Blast – May 26, 2020

Today in Russia: Victory Day on June 24; US accuses Russia of sending fighter jets to Libya; Poll: Confidence in government virus management down; Russian gas flows to Europe plunge along with prices; Physical crude prices recovering; Kremlin says OPEC+ taking wait-and-see approach on continued cuts; Russia overtakes Saudi Arabia as largest oil supplier to China; Kadyrov reappears post-COVID infection – maybe?; Russians told not to holiday overseas; Roscosmos and NASA; Small businesses “left out in the cold”; Suspiciously enormous grain exports to Belarus; Lavrov piles onto Open Skies debate

Russian President Vladimir Putin announced that the May 9 Victory Day parade which was postponed due to the coronavirus outbreak will be held on June 24. Russia has remained under 10,000 new daily cases for the past few days, today adding 8,915 new COVID-19 cases bringing the total to 362,342.

The US military said Russia deployed fighter aircraft to Libya to support mercenaries supporting strongman Khalifa Haftar, who is fighting against the Government of National Accord (GNA). U.S. Africa Command Army General Stephen Townsend said, “For too long, Russia has denied the full extent of its involvement in the ongoing Libyan conflict…Well, there is no denying it now.”

Russians’ confidence in the government’s handling of the coronavirus has plummeted while Russians turning to “self-reliance” during the crisis is up, RBC reported [in Russian]. The Moscow Times wrote,

Some 61% of Russians surveyed by the Moscow-based Online Market Intelligence (OMI) researcher and the Platforma social forecasting center said they felt less confident that the government would come to their aid during the pandemic, RBC reported. Only 10% said they had more confidence that it would help them.

The survey’s respondents also reported lower levels of confidence in state media (54%), Russian healthcare (43%), the stability of their employers (42%) and people in general (24%). Public organizations were the only institutions to see an increase in trust from the public (22%).

Meanwhile, 28% of Russians said they felt stronger confidence in themselves, RBC said, a sign of increasing self-reliance. 

Spot gas prices could turn negative in Europe. Retuters reported that “A month after U.S. crude oil prices collapsed into negative territory, European gas markets are facing the prospect of also slipping into the red after a slump in demand and surging inventories pushed prices into low single digits.” As of May 22, gas storage facilities were already 70 percent full, RBC wrote [in Russian], noting that should storage facilities fill up, the “basic law of economics” is price will turn negative. Bloomberg noted that Russian gas exports to Europe have fallen, writing “Flows from Russia via the Yamal-Europe pipeline that runs across Belarus and Poland to Mallnow, Germany, slumped to zero Tuesday after a sharp decline since Sunday. Shipments into Baumgarten in Austria, a major European hub for Russian gas, fell by 25% from its 10-day average.

Physical crude prices are starting to show signs of recovery. It rose above $34 in New York and benchmark Brent crude has surged 40 percent this month. Bloomberg wrote, “Around the world, producers have slashed global production by 14 million to 15 million barrels a day so far, Russian Energy Minister Alexander Novak said on Monday. The nation sees the current global surplus at 7 million to 12 million barrels a day, RIA Novosti reported Monday.”

Kremlin spokesman Dmitry Peskov indicated that the Kremlin expects OPEC+ to take a wait-and-see approach on future production cuts, while adding that Russia will be a responsible participant in whatever is agreed by OPEC+.

Russia overtook Saudi Arabia as China’s largest supplier of oil. Chinese imports from Russia rose by 17.7 percent year-on-year to 1.76 million barrels per day in April, while imports from Saudi Arabia fell 18 percent to 1.26 million bpd last month.

Chechen leader Ramzan Kadyrov, who was reportedly flown to Moscow last week to undergo treatment for COVID-19, has apparently re-emerged [in Russian] at a meeting. Kadyrov posted on his Telegram account that he had attended a meeting in Grozny, alongside a photograph of the meeting in which a figure resembling Kadyrov appeared to be in attendance, but the image quality was too low and the alleged Kadyrov sighting could not be confirmed as the real thing.

Russians were instructed not to holiday overseas and to travel domestically or stay home instead this summer. The Bell wrote [in Russian] that “it will be almost impossible to disobey.

Axios wrote about the long mutually beneficial relationship between Russian space agency Roscosmos and its US counterpart, NASA. For the past nine years, “Russian rockets have been the only ride to orbit for U.S. astronauts,” and a ticket doesn’t come cheap: A seat on a Soyuz rocket – which has not been significantly improved since the 1960s – costs NASA some $80 million on average. From 2017-2019, NASA spent some $1 billion on Russian rocket flights. But SpaceX, the Elon Musk-owned venture could end this relationship and put a financial strain on Roscosmos, which has relied on NASA spending as its budget has collapsed over recent years. Axios added, “If SpaceX — and Boeing, which has its own crewed spacecraft program and contract with NASA — can deliver astronauts to space, the U.S. plans to stop purchasing flights from Russia.” NASA Administrator Jim Bridenstine says he hopes Russia and the USA will trade seats on each others’ rockets instead of selling seats.

Small businesses in Russia have been “left out in the cold” during the coronavirus crisis and subsequent economic fallout. The Financial Times wrote,

The pandemic has frozen large chunks of Russia’s $1.7tn economy and compelled the Kremlin to demand two seemingly opposing outcomes: maintain restrictions to smother the world’s second-largest number of Covid-19 infections and lift a lockdown that could lead to gross domestic product shrinking by 6 per cent this year, according to forecasts by the country’s central bank.

Small and medium-sized businesses such as Denis’s are trapped in the space between. For the whole of April they were forced by president Vladimir Putin to pay salaries to employees while also suspending their operations. Now they are subject to almost daily changes to local rules governing how they can operate, while waiting for state financial grants that pale in comparison with those offered in western countries.

Since Russia suspended grain exports to all countries outside of the Eurasian Economic Union (EEU), exports to Belarus – an EEU member – have gone through the roof. The Bell wrote [in Russian], “Customs data [in Russian] on the export of Russian grains and oilseeds showed an inexplicable anomaly: in March, 5.2 million tons of soybeans, 400 thousand tons of wheat and 300 thousand tons of sunflower were sent from the Smolensk region to Belarus.” This was an “inexplicable” rise. This could be due to fraud, an accounting error, or perhaps that these grain exports are being forwarded from Belarus onwards to another country in a work-around solution to Russia’s export ban. This would be reminiscent of Belarus’ surprise rise as a gourmet cheese “producer” in 2014 after Russia banned the import of certain food products from Europe.

Russian Foreign Minister Sergei Lavrov claimed that the US justifications for pulling out of Open Skies were wrong. The US has said that it was prevented from flying over Kaliningrad and along the borders of Abkhazia and South Ossetia – the latter two internationally unrecognized Russian-backed republics in the Caucasus. Lavrov claims that Russia was within its rights to restrict both, claiming that the Open Skies treaty contains a provision for Kaliningrad and Alaska. He said, “Our stance is that both in Alaska and in the Kaliningrad Region there is one Open Skies airdrome each for making observation flights over territories. Like in Alaska, where an upper limit for flight distance has been set under the addendum to the Open Skies Treaty, we have set such a limit for flights over the Kaliningrad Region.” Lavrov then continued by claiming that since Russia recognizes Abkhazia and South Ossetia as independent states which are not signatories to Open Skies, it is within Russia’s rights to restrict flights, even though these territories are unrecognized by the US, the UN, or the vast majority of the international community. “The fact that our Western colleagues do not recognize Abkhazia and South Ossetia as independent states changes nothing. This is our position and it relies on international law,” Lavrov asserted. 

PHOTO: Mystery Man: Ramzan Kadyrov allegedly chairs a meeting in Grozny on May 26 after enjoying an unusually quick recovery from the coronavirus. He was flown to Moscow for treatment last week and has apparently already returned to regular business back in Chechnya, but some have pointed out that Kadyrov cannot be clearly identified in the photo, which he posted to his Telegram account (Chechnya Today/Чечня Сегодня).