Moscow seeks rapprochement with the West after the Paris attacks

The now-infamous Paris attacks are believed to be pushing Russia and the West closer as first signs of rapprochement appeared during the G20 summit in Turkey on 15-16 November. Unlike last year’s summit when Vladimir Putin left early due to the frosty atmosphere, this year the Russian president huddled for private chats with American and British leaders. Putin spoke publicly of the need to join forces in the wake of new threats and challenges and Russian plans to intensify bombing campaigns in Syria against ISIS. Russian commentators even drew parallels with anti-Hitler alliance uniting Stalin, Churchill and Roosevelt despite their ideological differences. Furthermore, the Russian president offered a conciliatory gesture over restructuring Ukraine’s $3 billion debt to Russia and thus ended a long Russian stand-off over the debt issue.

Meanwhile, Russia and France both staged air strikes on targets belonging to the Islamic State in Raqqa, the terrorist organization’s de facto capital. Russia hit the targets the second day after French Prime Minister Francois Hollande appealed to Washington and Moscow to join forces against the Islamist group. Even though the EU members accepted the French request, the manner of this forthcoming assistance is still unclear as Britain and Germany are reticent about joining in military actions. The Kremlin announced that Putin and his counterpart agreed on coordinating military attacks on Syrian territory held by the Islamic State. Russian air strikes preceded by the Kremlin acknowledgement that a bomb caused the crash of a Russian charter jet in Sinai two weeks ago.

President Barack Obama announced his openness to cooperate with Russia in the campaign against the Islamic State if Russia targeted the militant group and shift the focus from boosting the role of Syrian president Bashar Al-Assad. He called the recent Russian air strikes a fitting response with the focus of principal threat unlike their operations over the last weeks targeting the government opposition. Obama called Russia “a constructive partner” during the diplomatic talks but voiced American officials skepticism about the Russian shift toward the terrorist group. More talks are expected in Moscow.

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News Briefs:

  • In the wake of the Paris attacks, China has appealed to the world for help against Islamist militants in its western region of Xinjiang. Beijing blames the East Turkestan Islamic Movement (ETIM) for the deaths of hundreds of people during the past three years in the region. The group claims to have ties with Al Qaeda and aims to establish an independent state called East Turkestan. As China recently reported, some of it comprises Muslim Uighurs which joined the Islamic State in Syria and other states. Western countries have been reluctant to share intelligence with China, doubting ETIM’s existence as a coherent group as Beijing has not provided detailed evidence on their existence or operations.
  • Ukraine’s President Petro Poroshenko stated that a free trade zone with the European Union is set to launch in January. The deal failed to take effect this past January due to  Russian objections. The EU denies all trade with Crimea in the framework of the upcoming EU-Ukraine Deep and Comprehensive Free Trade Area (DCFTA), which requires thorough reforms and Ukrainian compliance with EU standards in many economic policy areas. If Kiev sticks to its promises, the EU will gradually remove tariffs and other barriers. Currently, the EU is Ukraine’s largest trade partner.
  • Turkmenistan has completed a section of the Turkmenistan-Afghanistan-Tajikistan (TAP) railway. The Atamyrat-Imamnazar-Akina section, which falls within Turkmen borders up to the border with Afghanistan is 88 kilometers long. Two railway bridges along the railway line are also under construction. The railway network is envisaged as an initial stage in the TAPI project and as an important transportation link between the Asian countries. Central Asian countries are particularly interested in Afghanistan as a railway corridor in order to end their geographical isolation, whereas Afghanistan envisages the project as an aid to resolve its social and economic issues.
  • The European Commission has issued a few conclusions on Baltic budgets for 2016. Latvia is expected to record the fastest economic growth in the Baltic countries reaching 3% in 2016, however the external environment, particularly an unstable geopolitical location is presumed to negatively affect the country’s macroeconomic indices. Estonia is one of the five countries in the EU that complies with the requirements of Stability and Growth Pact (SGP) and is expected to exceed its medium-term budgetary objective. On the other hand, the EC considered Lithuania’s first draft budget as too optimistic, in the risk of non-compliance with the SGP which will less likely meet the commitment for its structural deficit not to exceed 1% GDP.
  • Iran plans to boost its oil export with additional 500 000 barrels a day to reclaim its market share after sanctions are lifted. Iran hopes to double its current level of 1.1. million barrels of crude oil per day which has drastically fallen from 2.7 million in the beginning of 2012. Oil Minister Bijan Zanganeh says Iran does not fear decline in oil prices that dropped down to just over $40 a barrel, half of the last year’s price. Iran is further planning to start negotiations over buying oil refineries in Europe, Latin America and Asia with priority over Asian markets. Iran’s deputy oil minister talked about the policy to invest in plants to refine Iran’s crude oil and stated to be in talks with India’s Essar Oil. However, Essar Oil only confirmed negotiations with Russian Rosneft over sale 49% of Essar Oil shares. India remains Iran’s second-largest customer after China.
  • Russia has proposed an offer to Ukraine to accept annual debt repayment of $1 billion over three years if the West provides guarantees and insurance on payments. The plan announced by the president Vladimir Putin at the G20 summit is seen as Putin’s attempt to mend relations with the West, seeking to create a joint front against Islamic State. Before the announcement, Russia was refusing to restructure the $3 billion bond on Ukraine’s terms and threatened to take Ukraine to an international court if it failed to repay the bond’s principal in full next month. But Ukraine’s private creditors are expected to pressure Kiev to decline the Russian proposal. The creditors have only agreed to the restructuring called by the International Monetary Fund, which implies a 20% “haircut” and a four-year extension to cut Ukraine’s debt burden, leaving the private creditors with less than the full value of the promised yield.
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