Top stories in the Russian press on Wednesday, October 2, prepared by TASS

Kommersant: Normandy Quartet gears up for Paris summit

The first major shift has occurred in the Ukrainian peace process since the signing of the Minsk accord in 2015. On October 1, the Trilateral Contact Group for Donbass agreed on a single version of the "Steinmeier formula" and agreed on separating forces between the conflicting parties. Now nothing is preventing the Normandy Four (Germany, Russia, Ukraine, France) from holding a summit in Paris and discussing further steps to resolve the conflict in eastern Ukraine, Kommersant wrote.

The parties will not only have to withdraw their military and equipment, but also dismantle fortifications, and conduct demining. Minefields are one of the main problems, since anti-personnel mines were often planted randomly, without any indication. Another key objective concerns the preliminary approval of the final document of the future summit. This, a Kommersant source close to the negotiations said, was done by advisers to the Normandy Four leaders.

A Kommersant source in Moscow pointed to the agreements reached on the "Steinmeier formula" and the withdrawal of forces, these solutions improve the climate for further negotiations. At the same time, according to the source, the most difficult phase lies ahead.

The newspaper’s sources in Russian state structures said that it was quite possible to have the summit this month.

However, the newspaper noted, that the Paris conference would be held soon if Ukrainian President Vladimir Zelensky does not change his mind under pressure. On the one hand, Zelensky brought the coveted summit closer, and on the other, he faces resistance. The news about the agreement on the Steinmeier formula has stirred up the opposition in Ukraine and Ukrainian nationalists have accused Zelensky of betrayal, demanding incessant protests against "the surrender."

Izvestia: EAEU expands cooperation at Yerevan summit

Eurasian Economic Union (EAEU) members are working hard to bring down trade barriers, and plan to focus on enhancing cooperation on the energy front and in the digital economy. One of the central events of the meeting of the Supreme Eurasian Economic Council was an agreement on a free trade zone with Singapore. The State Duma is confident that the association has good prospects for further cooperation with third countries. In particular, business circles in Italy and Germany have already advocated rapprochement with the EAEU, Izvestia wrote.

Moscow expects that in the near future, a deal on forming a single electric energy market within the EAEU will come into force, and it is also necessary to complete the process of streamlining legislation on gas supply and transportation. Cooperation in the digital economy also needs to be strengthened. Member states have already approved the concept of forming a common financial market.

One of the summit’s major events was the signing of the EAEU Free Trade Area Agreement with Singapore. That being said, other EAEU free trade zone deals have been struck with Vietnam (it entered into force in 2016), and Iran.

President of Confindustria Russia, Italian Industrialists Association Ernesto Ferlenghi told Izvestia that the EAEU is a promising market with a population of 186 mln people, and a combined GDP of $1.8 trillion. The opportunities that appear in various sectors of the members’ economies should not be ignored, since European companies will benefit from the harmonization of rules and standards within the EAEU, he noted.

The association’s key benefit is that members do not try to drag political issues into the dialogue and focus on purely economic issues, which should simplify trade relations between countries and improve the living standards of the region, Deputy Chairman of the State Duma Committee on CIS Affairs, Eurasian Integration and Relations with Compatriots Viktor Vodolatsky told Izvestia.

The next meeting of the Supreme Eurasian Economic Council will be held in St. Petersburg in December 2019.

Izvestia: Russia’s S-500 successfully tested in Syria

The S-500 air defense system has successfully passed a series of tests in Syria. During its assessment, certain problems were identified, and then fixed. The tests have already been completed and recognized as successful, sources in the Ministry of Defense and the military-industrial complex told Izvestia.

During the trials that precede the deliveries of weapons, special attention is always paid to the uninterrupted operation of all their components, former Lieutenant General Aitech Bizhev, deputy commander-in-chief of the Russian Air Force on issues of the integrated air defense system of the CIS told the newspaper.

According to him, all equipment "is tested under harsh technical and climatic conditions and literally works to the max. This is the only way deficiencies can be pinpointed. After that, all breakdowns and problems are summarized and fixed. Syria is well suited for such trials - it is always hot there, and there is a lot of dust".

The S-500 system will also include a combat control point with an automatic control system, Dmitry Kornev, editor-in-chief of the Military Russia portal told Izvestia. The combat control point is the system’s brain. He added that the tense situation in Syria provides a great opportunity to check the system and radar detectors.

The oil facilities in Saudi Arabia that were recently attacked by drones did not have such a defense system, Kornev emphasized, noting that otherwise, the drone strike could have been repelled.

Kommersant: Rostec lays out three plans for UAC’s development

Russia’s state corporation Rostec drew up and sent three options to the Russian government for the development of the United Aircraft Corporation (UAC). According to Kommersant, all three scenarios need 350 bln rubles ($5.36 bln) from the budget as a priority measure to cover the aircraft manufacturer’s debts.

According to the newspaper, the first scenario for UAC involves cleaning the balance sheets of enterprises from non-core assets, optimizing land and unused production areas. The second one involves reducing the number of enterprises involved in final assembly, and aggregate plants. Also, a proposal was put forward to significantly cut the number of personnel, which accounts for about 60% of UAC’s expenses. The third strategy focuses not only on optimizing, but on also strengthening government support of demand for Russian aircraft.

Rostec has suggested using the "trade-in" system in the military sector. The Russian Ministry of Defense hands over old aircraft and receive new ones in return. The old aircraft will be modernized for sale on foreign markets at a bargain prices. Rostec believes this idea would provide an opportunity to once again make this sector profitable.

Rostec and the UAC are currently in the process of integration. In October 2018, Russian President Vladimir Putin signed a decree transferring 92.31% of UAC’s shares to Rostec. The transfer is being conducted in stages and should be fully completed within a year and a half.

Vedomosti: Russian manufacturers’ business activity hits 10-year low

In September, Russia’s PMI manufacturing (calculated by IHS Markit based on a survey of purchasing managers) plunged to a record low not seen since May 2009, dropping to 46.3 points from 49.1 points in August, this is significantly below the 50-point mark, which separates business growth from a recession. According to Vedomosti, the main reason is a decline in production and new orders. These indicators have not fallen so quickly since April 2009.

"Weak PMI is a very bad signal," Economic Development Minister Maxim Oreshkin told Vedomosti. "The report shows that the main culprit is weak final demand," he added. If this trend remains, it can lead not only to a sharp drop in inflation, but also worsen the situation on the labor market. Most likely, in September, a decrease in manufacturing output can be expected, Chief Economist at Alfa Bank Natalia Orlova told the newspaper.

According to Orlova, the decline of external demand due to the current trade wars also played part in the situation. On Tuesday, the World Trade Organization more than halved its forecast for global trade growth this year, from 2.6% to 1.2%, which is shaping up to be the worst result since 2009.

Given the drop in the public’s real incomes, the economy can accelerate only by restoring to exports and boosting investment, Valery Mironov from the Development Center of the Higher School of Economics told Vedomosti. On the other hand, companies have the opportunity to increase investment. Profits have been growing much faster than investments, he noted, but this requires not only money, but also an improvement in the investment climate.