0726GMT//Trump threatens Russia's trade partners; carrot prices soar; Russian 'spy dens' to set up in UAE and Saudi Arabia
TRUMPS THREATENS RUSSIA'S PARTNERS: Donald Trump said on Monday that he would impose secondary sanctions on Russia and its trading partners if Putin does not negotiate a deal to end the war in Ukraine within 50 days. (COMMENT: This is a major threat. Slapping sanctions on countries such as China and India that trade with Russia would certainly hit the Kremlin's coffers but it could also undermine the global trade system. Is it realistic? Will it actually force Russia to the negotiating table?)
The Moscow Stock Market rose by 2.3% immediately after Trump's secondary sanctions threat against Russia. (COMMENT: Russian traders clearly feel the threats could force Putin to make a deal.)
The Kremlin has not yet commented on the US secondary sanctions threat.
TRADE DROPS WITH CHINA: China-Russia trade dropped by 9.1% in the first half of 2025 compared to the same period in 2024, China's customs office said on Monday. Chinese exports to Russia were down by 8.4% in value to $47.2b. Russian exports to China were down by 9.6% to $59.32b. (COMMENT: Trade with China is vital to the Kremlin. This slowdown is another major economic headache.)
VEG PRICES SOAR: Vegetable prices have risen by around 60% in Russia this year, statistics agency Rostat said. Russian media quoted farmers as saying that they have to pass on their increased costs to consumers. (COMMENT: This is another reminder of the inflation baked into the Russian economy currently. Food price inflation is vital to monitor as it forms a large proportion of the average Russian's budget.)
REGIONAL MANUFACTURING BOOST: The Kremlin will hand 1.4b roubles ($18m) to each of six regional development bodies to then hand out as preferential loans to manufacturing companies. (COMMENT: This is all part of the Kremlin's drive to boost manufacturing after data showed a drop in demand and output. Putin has ordered manufacturing levels to remain at 2024 levels.)
DRONES, NOT COVID, BRINGS BACK WFH: VTB, one of Russia's largest banks, ordered staff at its Moscow City HQ to work from home because of the increased threat of attack from Ukrainian drones. The Bell, an online Russian news website, said that the VTB staff had been ordered to work from home for the next fortnight. (COMMENT: It has been two years since Ukrainian drones flew into skyscrapers in Moscow City, the financial district. Since then Moscow has boosted its air defence systems but Ukraine has also increased and accelerated its drone attacks.)
RUSSIA HOUSE EXPANSION: The Kremlin will open two new branches of its Russia House cultural centres in the UAE and Saudi Arabia, the pro-Kremlin Izvestia newspaper reported. (COMMENT: Russia House is considered a cornerstone policy for the Kremlin's soft power projection and also for its hard power. Russia House branches have been accused of acting as spy dens for the Kremlin.)
SPARE PARTS SHORTAGE FOR PLANES: Russia is nowhere near achieving self-sufficiency in the commercial aviation sector, a Russian airline executive said on Monday. Anatoly Gaydansky, CEO of aircraft parts manufacturer Aerocomposite, said that despite Kremlin pledges to prioritise self-sufficiency in its domestic aviation market, component shortages still dog the sector. (COMMENT: This is a blow to the Kremlin's prestige. It knows that aviation is vital in Russia. Unable to reduce its reliance on the West to service its fleets – even "Russian-made" planes – means that the Kremlin is exposed.)
HOLIYDAYING IN NORTH KOREA: Russian tour agents are already selling holidays to North Korea, less than a week after North Korean dictator Kim Jung-un opened a new seaside report at Wonsan-Kalma. A seven-day holiday costs around $1,400 per person. (COMMENT: Russia is playing a bizarre 'through the looking glass' role for North Korea in return for workers and soldiers. By encouraging Russian tourists to holiday in North Korea, the Kremlin legitimises the dictatorship there. Youth exchanges and ski holidays to North Korea have already been arranged.)
RUSSIAN HOTELS EXPAND INTO CENTRAL ASIA: Azimut Hotels, a Russian brand, agreed to a deal on Monday to take over the five-star International Hotel in central Tashkent. It will be renamed the Azimut Grand Hotel Tashkent. (COMMENT: Aziumt is moving with the times and, like other Russian companies, is now expanding into Central Asia. Last year Azimut opened the Moderno Tashkent hotel too.)
NEW MATRIX:
It's crowded in the top right quadrant of today's News Matrix with three important and surprising stories. The most surprising was Trump's threat to impose sanctions on Russia's trading partners; then the Kremlin's announcement that it planned to open branches of Russia House in the UAE and Saudi Arabia; and then data that showed a large drop in Russia-China trade.
Not surprisingly, but still important, is a move by the Kremlin to hand cash to regional authorities which will then hand it out to local manufacturing plants.