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Russia Could Turn to National Wealth Fund for Local Investment

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As the Kremlin struggles to attract foreign investors for its ambitious spending plans, the government may turn to Russia’s National Wealth Fund for local projects next year, Bloomberg writes.

The Finance Ministry has moved to ease the budget rule and it will review any investments that make use of the fund with the central bank in order to assess any possible monetary impact, First Deputy Prime Minister Anton Siluanov told reporters Saturday at the St. Petersburg International Economic Forum (SPIEF).

“Foreign investment is falling, we need internal investors,” Siluanov said. “We could deploy the funds on the understanding that they would be returned and in projects that attract investment from private businesses.”

Previously, the Finance Ministry was against spending the fund’s money in the home market, fearing it could accelerate inflation. But now, according to Bloomberg, it is searching for money to implement President Vladimir Putin’s National Projects initiative, which he hopes will help to double the growth rate by the end of his current term in 2024. Russia has the lowest direct foreign investment as a percentage of economic output of any developing country.

The plan may meet resistance at the Bank of Russia, which has helped bring inflation down to historic lows. Governor Elvira Nabiullina said at SPIEF last week that Russia needed structural reform to raise growth rates rather than to throw money at development.

“There’s the desire for an immediate impact here and now, and suddenly the question of state investment, spending from the National Wellbeing Fund that we’ve saved up, and softening monetary policy,” Nabiullina said. “Softening monetary policy when the real restraints are elsewhere will not provide growth but rather create new inflationary risks.”

Russia established the National Wealth Fund to divert revenue from oil and gas sales in order to reduce the state budget’s exposure to price fluctuations. Its coffers swell when the price of oil, Russia’s most valuable export, rises above $40 a barrel.

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Court in Gibraltar Extends Iranian Tanker’s Detention for 30 Days

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A court in Gibraltar has extended the detention of an Iranian oil tanker for 30 days, AFP reported, citing Gibraltar’s attorney general. According to the agency, the order authorising the detention of the tanker can be extended for up to 90 days.

“We look forward to continuing to work constructively and positively with officials of the Islamic Republic of Iran to facilitate the release of the Grace 1 pursuant to the satisfaction of all legal requirements,” Gibraltar’s Chief Minister Fabian Picardo told the territory’s parliament, as quoted by AFP.

On 4 July, the supertanker Grace 1 was detained off the coast of the British Mediterranean territory of Gibraltar on suspicions of it carrying oil to Syria for refinement.

Iran’s Foreign Minister Mohammad Javad Zarif and UK Foreign Secretary Jeremy Hunt discussed the issue earlier this week, with Mr Zarif urging London to release the tanker. He also stressed that Tehran would continue its oil exports under any circumstances. Mr Hunt, for his part, said that the Grace 1 would be released once Iran gives guarantees about its destination.

The tanker’s four crew members were freed on bail earlier this month after being questioned.

The situation in the Gulf has remained tense since the US tightened the sanctions it reimposed on the Iranian oil sector after quitting the 2015 nuclear deal.

A series of incidents, including attacks on oil tankers, took place in the Gulf of Oman in May and June. Washington has blamed the attacks on Tehran, but the latter has denied all the accusations.

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Russia in Confidential Consultations with the Netherlands on MH17 Crash

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Russia is having confidential consultations with the Netherlands on MH17 flight that was downed over Donbass in July 2014, Russian Deputy Foreign Minister Alexander Grushko said on Friday.

“Such consultations are underway, but we agreed that the process will have a confidential character,” the diplomat said.

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Links Between Russia and EU’s Right-Wing Parties Cause for Concern, Says Merkel

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Relations between Moscow and EU’s right-wing political parties are a cause for concern, German Chancellor Angela Merkel said on Friday during a press conference in Berlin.

“Some questions arise here,” she stated. “We have constantly monitored the very strong support that right-leaning parties have received from Russia in one way or the other.” “This is a cause for concern,” Merkel stressed.

The German chancellor also mentioned the scandal regarding the alleged financing of Italy’s Lega party by Russia, noting that the Italian side must investigate the allegations in detail.

Milan’s prosecution launched a case based on the publications on the US BuzzFeed website and in the Italian L’Espresso weekly news magazine shedding light on the alleged financing Lega was receiving from Russia, qualifying the case as international corruption.

The main suspect in the case is one of the associates of Italy’s Deputy PM Matteo Salvini, head of th-e Lombardy-Russia Association Gianluca Savoini. According to the prosecution, his voice can be heard on the BuzzFeed published audio recording of an alleged conversation with Russian entrepreneurs with ties to the Kremlin, during which a possible oil supply contract was discussed. The party could have received the deal dividends amounting to $65 mln.

Both Salvini and Savoini have denied the allegations.

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