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German Industry Group Says Damage from Russia Sanctions Stands at $115bn

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The chairman of the German Committee on Eastern European Economic Relations said on Friday that the damage caused by European and U.S. Russia sanctions was in the order of 100 billion euros ($115.25 billion), Reuters reported.

Wolfgang Buechele also said that Washington’s potential sanctioning of Russian gas projects would represent “an attack on the sovereignty of Germany and Europe.”

The U.S. has threatened, but not levied sanctions on companies involved in building the Nord Stream 2 gas pipeline. Sanctions on the consumption of Russian gas have not been threatened.

The chairman of the umbrella group for German industrial companies doing business in the vast region to its east, recommended German companies continue doing business with Russia, saying that U.S. sanctions against Moscow were vague.

“Sanctions against the use of Russian gas would be a violation of the sovereignty of Germany and Europe,” Wolfgang Buechele said, adding that if it came to this he would hope to see a political reaction from Berlin.

Also on Thursday, German Foreign Minister Heiko Maas said U.S. sanctions against the Moscow-backed Nord Stream 2 natural-gas pipeline project would be the wrong way to solve a dispute over energy supply.

“Questions of European energy policy must be decided in Europe, not in the U.S.,” Maas said in a speech in Berlin.

The minister added that imposing unilateral sanctions against Nord Stream 2 was “certainly not the way to go.”

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Russians’ Trust in Putin Falls to All-time Low Amid Struggling Economy

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Public trust in the policies of Russian President Vladimir Putin fell to a 13-year low in the first poll of 2019 by the state-owned pollster, the state-owned All-Russian Center for the Study of Public Opinion (VTsIOM), according to The Times.

The survey showed trust in Putin slipped from 36.5% on December 29 to 33.4% on January 13. This was Putin’s lowest popularity level since January 2006.

The data is not to be confused with the president’s approval rating, which remains high, but also fell slightly as the New Year started. Putin’s approval rating fell to 62.1% on January 13 against 64.6% on December 29. The previous low in Putin’s rating was in August 2013, of 59%.

The VTsIOM results largely agree with the results of independent pollster Levada Center, which put Putin’s approval rating at 66% in December and his disapproval rating at 33%. Levada also found that Putin’s popularity fell over 2018 having started the year at a sky-high 80%.

In another survey of Russian citizens conducted by the Public Opinion Foundation (FOM), 54 percent of respondents indicated that the Russian government’s actions in the past month left them feeling dissatisfied or resentful. The survey was conducted on January 12 and 13 and included 1500 respondents from 104 municipalities and 53 Russian regions.

40 percent of those surveyed said they did not experience these feelings. That number has decreased by 5 percent over the past month, while the number of dissatisfied respondents has increased by 6 percent.

70 percent of respondents said they had heard people around them criticize Russian authorities within the past month. According to FOM, this is the highest that number has been since 2013.

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Russia Looks to Accelerate Oil Output Cuts, Energy Minister Says

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Russian energy minister Alexander Novak has said Moscow is seeking to accelerate the pace of its oil production cuts under the OPEC+ agreement but reiterated it faces operational challenges.

Early last week, Novak’s Saudi counterpart, Khalid Al-Falih, had complained Russia’s production cuts started slower than he’d like and was pushing for faster reductions.

“Of course we will try to make the cuts faster,” Novak told reporters in Serbia. “We have our limitations of a technological nature, yet we will aim to reach the levels we agreed on.”

“We have special conditions and cannot ensure sharp declines in principle,” he added, referring to winter freezing conditions in Siberia – the country’s key oil province.

The minister’s statement comes after the Paris-based International Energy Agency on Friday cast doubt on whether Russia would meet its agreement with OPEC.

Under the OPEC+ cooperation deal, Russia has pledged to cut its production by 228,000-300,000 barrels per day (Bpd), but has said the cuts would be made “gradually.” Novak said last December “full compliance” would be achieved over a few months given Russia’s climate-related and technical challenges.

“Data show that Russia increased crude oil production in December to a new record near 11.5 million barrels per day and it is unclear when it will cut and by how much,” the report said.

The output cut deal became effective Jan. 1, and is set to last six months. It’s not clear yet how much Russia has taken out of the market in the first weeks of January.

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Russia Green-Lights First Section of Moscow-Kazan High-Speed Railway

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The first section of the Moscow-Kazan High-Speed Railway (up to Nizhny Novgorod) has been approved for construction by the Russian government, Kommersant reports.

According to the business newspaper, the project’s expediency was discussed at a meeting with Deputy Prime Minister Maxim Akimov. With the decision, around $3.10 billion will be drawn from the budget for the project, the report said,

Experts believe that the railway section up to Nizhny Novgorod is not self-sufficient and requires extending the line, while any planned cancellation of several current high-speed trains would lead to a loss of some passengers.

Akimov’s office confirmed the meeting, without specifying the details. A source close to the talks told Kommersant it was stated that the project would break even for both the infrastructure owner and Russian Railways from the third year of operation, even with conservative estimates of passenger traffic.

Materials for the meeting reveal the project’s financial model does not imply subsidies at the operational stage. Russian Railways told the newspaper that the passenger traffic forecast indicated that about 40% of all riders between Moscow and Nizhny Novgorod are expected to use the high-speed railway.

However, according to Mikhail Burmistrov, the head of Infoline-Analytics, the Moscow-Nizhny Novgorod section of the High-Speed Railway is not independent, so completion of the entire project is required.

“Moreover, the current phase creates problems with equipment. In order to achieve the required commercial indicators, Russian Railways will have to stimulate passenger traffic to the detriment of road and air transport.

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