Page 23 - RusRPTJul20

Allegations that Russians offered bounties for the killing of American soldiers in Afghanistan have caused a fresh scandal. Fears of falling oil prices following the bounce back after the new​ ​OPEC++ production cut deal that will reduce production of oil by 9.7mbpd on April 13​ have also undermined the strength of the ruble, that rebounded 10% in the second quarter.
Several bills are in the US House and Senate that contain a mix of new sanctions on Russia. The Nord Stream 2 pipeline is the main target and the Senate bill is threatening to apply sanctions retroactively on companies working on the pipeline, although the House bill misses this point. There are also new sanctions against Russian bonds.
The majority of Russia watchers are dubious about the veracity of the New York Times piece, which only cites unnamed “intelligence sources.” All the other reports to date have simply cited the NYT piece and new evidence has emerged. The main objection to the idea is: “Why would Afghanis need to be paid to kill US soldiers? They are killing them anyway.” Moreover, a spokesman for the Taliban went on record denying the story was true and said the Taliban were not the paid lackey’s of US intelligence. The Kremlin, needless to say, also denied the story as western propaganda.
However, the new sanction bills are being heard in this enflamed environment and observers say surprises could be in store. Despite heated rhetoric over the Kremlin’s interference in US presidential elections in 2016, Washington only passed mild new measures last year, including against new issuance of dollar-denominated Russian Eurobonds and the Nord Stream 2 gas pipeline.
The ruble was by far the biggest decliner among emerging- market peers on June 30, losing 1.8% to 71.2474 per dollar as of 3:42 p.m. in Moscow and headed for its weakest level in a month.
The Russian currency’s record gain this quarter comes after a more than 20% collapse in the first three months. The coronavirus pandemic sparked an exodus from riskier assets, while an oil price war between Russia and Saudi Arabia added to pressure on the ruble.
2.17 ​ ​Watcom shopping index picking up in June
The latest Watcom shopping index results, which measures foot traffic in Russia’s biggest malls in real time using 3D camera technology, shows that foot traffic in Moscow has picked up dramatically in the last week.
Moscow Mayor Sergey Sobyanin imposed some of the toughest stay-at-home restrictions in Europe on March 30 after finally admitting the infections from the virus were running unchecked in the capital – the epicentre of Russia’s epidemic.
Residents were confined to their apartments and only allowed out to buy food (from a store within 100m of their residences), walk the dog or take out the rubbish. A system of QR codes was introduced to police the measures and transgressors faced heavy fines.
However, the infection rate in Moscow has passed peak and Sobyanin relaxed the regime at the start of last week. Foot traffic in the malls immediately picked up.
While foot traffic in malls plummeted after March 30, down some 70%-80% in the first week of the lockdown, it improved about four weeks ago after new rules were introduced to allow people to go for walks on a timed rotation depending on region. That increased the foot traffic to a c.60% fall year on year in Moscow (top chart).
23​ RUSSIA Country Report​ July 2020 ​ ​www.intellinews.com