0724GMT//Russian steel demand falls; Russia proposes next round of talks with the US
STEEL DEMAND: Demand for steel in Russia has dropped by around 10% this year to its lowest level since 2016, manufacturers told the Vedomosti newspaper. They blamed the drop on a collapse in the construction sector because of Russia's high interest rates and a collapse in exports because of sanctions. (COMMENT: Steel manufacturers are just the latest segment of the Russian economy to issue a poor economic outlook. The war economy may be motoring along but the civilian economy is floundering. Russia's massive Soviet-era steel plants are a critical cornerstone of its economy.)
FOOD PRICE INFLATION: Ordinary Russians are now spending a higher proportion of their salaries on food, a survey in the Moskovskaya Komsomolts newspaper reported. (COMMENT: This shows that food price inflation is outstripping overall inflation and salary rises. The survey said the average Russian spends 34.6% of their salary on food, a rise of 6 percentage points from a year earlier.)
BUDGET DEFICIT: Russia's budget deficit surged in May because of the strong value of the rouble and low income from oil and gas sales, the finance ministry said on Tuesday. (COMMENT: The data was worse than most Russian economists had expected and highlighted the impact of the rouble strength and low oil and gas prices. According to the finance ministry, Russia's budget deficit is now running at 3.4 trillion roubles ($44.2 billion) which is around 1.5% of GDP. This is five times larger than this time last year.)
TALKS WITH THE US: Russia and the US will meet "very soon" for a third round of bilateral talks, Russia's deputy foreign minister Sergei Ryabkov said on Tuesday. Russia's ambassador in Washington even suggested that they may take place in Moscow. (COMMENT: It would be remarkable to see US Sec. of State Marco Rubio fly to Moscow for talks with Russian foreign minister Sergei Lavrov. These talks are vital for driving forward a potential peace deal for the war in Ukraine. The Kremlin views them as more important than direct talks with Ukraine and is pushing to normalise more ties with the US – including re-establishing direct flights. US and Russian officials have met in Istanbul and Riyadh this year.)
LIBERAL LEADER ARRESTED: Police in Russia arrested Lev Shlosberg, a leader in the Yabloko opposition party, for "discrediting" the Russian army during an online debate in January in which he called for a ceasefire in Ukraine. (COMMENT: Yabloko is a throwback to the 1990s and early 2000s when it was considered a pro-Western liberal party. Now it is a rump protest party that has been tolerated by the Kremlin to add a veneer of 'choice' to its totalitarian system. Shlosberg's arrest chips away at this veneer. Shlosberg, who had been an MP in the Pskov regional assembly for 10 years from 2011, faces up to five years in prison if he is found guilty.)
PRISONER SWAP: Russia and Ukraine have this week carried out the first two phases of a large prisoner swap agreed in peace talks earlier this month. (COMMENT: Details of the prisoner exchange are thin but this is still an important process. It was, really, the only major deal broached at the most reent round of peace talks. One of the Ukrainian prisoners was returned with "Glory to Russia" carved into his stomach.)
PROPAGANDA: Vladimir Putin spent most of a session of his Security Council extolling the importance of indoctrinating the next generation of Russians with "moral values". (COMMENT: By this, he means pumping them full of Kremlin propaganda on the "greatness" and "uniqueness" of Russia compared to the "immoral" West. Putin is as obsessed with his culture war with the West as he is with trying to conquer Ukraine. He views it as a holistic mission.)
NEWS MATRIX:
The two most important stories in the News Matrix are Russia's push for more talks with the US and a 10% collapse in demand for steel. The arrest of a Yabloko leader for "discrediting" the Russian army has been judged 'surprising' because the authorities didn't have to make this move. They had appeared to be tolerating Yabloko as a pressure release valve. Putin's call for propaganda targeted at Russian youths to be intensified may be sad but it is not surprising or important – because the poor Russian youths are already being so heavily targeted in a state brain-washing campaign.