Will the Russia-NATO Council Meet and When Will Europe’s Energy Crisis End

Top stories from the Russian press on Tuesday, December 28th

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The NATO-Russia Council meeting’s effectiveness hinges on whether all the alliance members and Moscow speak on equal terms, Deputy Speaker of the Federation Council Konstantin Kosachev told Izvestia. Earlier, NATO Secretary General Jens Stoltenberg said that a council meeting would be held on January 12. According to the alliance's press service, they are in contact with Russia about the meeting. In turn, the Russian Foreign Ministry stated that it was considering NATO's proposal and was ready for direct dialogue on security guarantees. However, politicians and experts interviewed by Izvestia noted that the West is not ready to accept Moscow’s conditions in full, so there is no need to expect a breakthrough from this meeting. Furthermore, Russia's principal round of security guarantees negotiations will be held directly with the US.

Kosachev believes that the success of the talks with the alliance will depend on the agenda. "At the previous stage, the Russia-NATO Council had lost its meaning because NATO foisted an agenda on the Russian Federation. Russia’s proposals were systematically ignored. If the alliance’s representatives realize that they can only talk to Russia on equal terms, we will see this reflected quite quickly in the agenda," he said.

Program Director of the Valdai International Discussion Club Timofey Bordachev said that no breakthroughs or long-term decisions should be expected from the Russia-NATO Council format since the main decisions will be made during Moscow's negotiations with Washington.

Director General of the Russian International Affairs Council (RIAC) Andrey Kortunov did not exclude that the NATO-Russia Council is unlikely to consider security guarantees this time. "Most likely, the Western side would try and shift the discourse towards tactical and situational decisions that will help decrease tensions. That is, they will attempt to discuss confidence-building measures and de-escalation along the contact line. At the same time, they will demand that Russian forces withdraw from the Ukrainian border. It is difficult to say if this position of ‘small matters’ is sufficient for Moscow. Meanwhile, we are sticking to our guns that our proposal to halt NATO's eastward expansion should not be ignored. As a result, either Moscow will demonstrate flexibility and agree to start with a discussion of easy issues, or it will declare that it is unwilling to negotiate on such terms," the expert told Izvestia.

Regarding the global climate agenda, 2021 turned out to be a watershed year. The world split into two camps: one supporting an accelerated energy transition at any cost and the other backing an evolutionary shift. However, both sides fully felt the complications of this process, which resulted in a global energy crisis, Vedomosti writes. According to experts interviewed by the newspaper, the energy crisis may last until the end of 2022.

The prelude to Europe’s energy crisis in 2021 was the empty underground storage facilities (UGS), from where over 65 billion cubic meters ended up being extracted over the winter of 2020-2021. It was not possible to make up for the summer losses: in the spring, a dramatic spike in spot gas prices emerged in Asia. In early September, the price of 1 MWh surged to 97.25 euro in Germany and soared past 100 euro in France. Power shortages popped up in China. In Europe, power generation began to shift away from expensive gas and toward less expensive coal and fuel oil.

Senior Director of the Natural Resources Group at Fitch Ratings Dmitry Marinchenko believes that there are still too many uncertainties. "It is not clear when Nord Stream 2 will start working, or whether Gazprom will be able to increase supplies to Europe to the record levels of 2018-2019," he noted. Instability on the European gas market, according to Marinchenko, will continue to affect coal and electricity prices.

Vasily Tanurkov, Director of corporate ratings group at ACRA, believes there are so far no reasons to look forward to any drop in gas prices in Europe. "Gas prices will depend on Gazprom's decisions on additional supplies, the pace of Nord Stream 2’s certification, as well as the arrival of LNG from Asia," he added. "A return to long-term equilibrium levels of gas prices will not happen before 2023, when they will drop to $200-300 per 1,000 cubic meters," the expert believes.

Belarusian officials have hammered out a draft of the country's new constitution available for "public debate." It is assumed that before the referendum in February, amendments proposed by citizens may be made to the text. The major goals of the reform, according to experts interviewed by Kommersant, were to shift some of the president's powers to the All-Belarusian People's Assembly and to build a system of checks and balances for the future head of state.

The country’s presidential powers have been considerably rolled back. Numerous items in the draft are simply marked as "excluded." Furthermore, it is noted that the president's decrees and orders "must not contradict the laws," whereas the current constitution states that "the president issues decrees that have the force of laws."

Meanwhile, the All-Belarusian People's Assembly will meet at least once a year and will have the authority to approve the main objectives of domestic and international policy, military doctrine, propose constitutional amendments, and declare a state of emergency "in the event of the president's inaction." The Assembly now has the power to select and dismiss the chairmen and judges of the Constitutional and Supreme Courts, which was formerly held by the president.

According to Belarusian political analyst Artyom Shraibman, "The All-Belarusian People's Assembly has the right to overturn any decision by the president for reasons of national security. But everything pales in comparison with the fact that the president retains control of the security agencies and the executive branch". At the same time, the expert believes that Alexander Lukashenko sees himself in the Assembly’s Presidium and intends to continue influencing the government even after leaving the post of head of state.

That said, Belarusian political scientist Pyotr Petrovsky was dissatisfied with the fact that the new draft constitution turned out to be a huge "compromise". "For example, a presidential term limit has been added, the effectiveness of which is unclear," the expert told Kommersant.

As 2021 comes to a close, geopolitical tensions have intensified not only around Ukraine but also around Transnistria, the pro-Russian breakaway region of Moldova, which Chisinau lost control over three decades ago. Vadim Krasnoselsky, who serves as president of the unrecognized republic, published a letter addressed to Moldovan President Maia Sandu on his website, offering to immediately start direct negotiations on the settlement of the conflict. According to Kommersant, if there is no response, Tiraspol can pin the blame on Moldova for not wanting the country to be reunited.

It is unclear whether Tiraspol is seriously considering negotiations to reintegrate with Moldova. Only once in the history of the standoff has Transnistria indicated its willingness to negotiate any sort of reunification with Chisinau, and that was back in 2003.

"We still don’t see Chisinau’s interest in substantively dealing with the Transnistrian settlement," Russian Deputy Foreign Minister Andrey Rudenko told Kommersant. "Moldova has canceled the ‘5 + 2’ meeting, there is still no representative at the talks, and the activities of the working groups have been stalled. We will urge international partners to encourage Chisinau to take an active part in the negotiations," he added.

Former Foreign Minister of Transnistria Valery Litskai believes that a diplomatic game has kicked off around the region. "Krasnoselsky visited Moscow, and they agreed on some action. He wrote the letter, and the Russian Foreign Ministry came out in strong support of it. The simplest diplomatic game. So now, the initiative lies with Moscow and Tiraspol," he told Kommersant. "It will be difficult for Sandu to fight back. The absence of negotiations is hardly acceptable even for the West," the expert pointed out.

If there is no response from Chisinau, Transnistria will be able to accuse Moldova of not wanting to peacefully resolve the conflict. Then reunification with Russia approved at a referendum could be possible, Kommersant writes.

Inflation in Russia at the end of 2021 will be 8.3-8.4%. This is the average figure that 14 economists presented when interviewed by Vedomosti. Food inflation, according to the consensus forecast, will amount to 10.7-10.8% by the end of the year. Non-food inflation will be in the range of 8.5-8.7%, while services will climb by 5.1-5.4%.

The most pessimistic forecast was from Moscow State University: Head of Mathematical Methods of Economic Analysis department of the Faculty of Economics Filipp Kartaev expects prices to rise within the range of 10%. Most of the respondents estimate inflation at 8% or slightly higher. The Bank of Russia expects that inflation in the country by the end of 2021 will meet the forecast of 7.9%. Meanwhile, the Ministry of Economic Development does not rule out that the figure will exceed 8%.

"The reasons for inflation in Russia are roughly the same as in other countries, stretching from Austria to Japan," Chief Economist at Expert RA Anton Tabakh told the newspaper. Prices have jumped due to the coronavirus pandemic and anti-crisis measures, he said. One of the main reasons is the surge in commodity prices on global markets, including food, metals, and energy, which translates into higher prices on countries’ domestic markets, Head of SberCIB Investment Research Yaroslav Lissovolik. "The energy crisis that hits those countries that import raw materials is returning to us with imported inflation," said stock market expert at BCS World of Investments Mikhail Zeltser. The rise in prices was also triggered by the disruption in supply chains in global trade, along with gaps in supplies, and local deficits, analysts said.

Analysts named active consumer lending, problems with supplies from abroad (lack of chips, electronics, cars), shortage of foreign labor, transition to escrow financing in housing construction, and cheap mortgages among other factors fueling inflation in Russia.

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