#2
Russia Beyond the Headlines
www.rbth.ru
March 23, 2015
HIV is not grounds for deportation, says Russia's Constitutional Court
According to a ruling by the Constitutional Court of Russia, being HIV-positive does not represent an unconditional basis for deportation from the country for foreign nationals. Speaking to RBTH, human rights advocates called the decision an important achievement in protecting of the rights of people in Russia living with HIV.
Darya Lyubinskaya, special to RBTH
 
The Constitutional Court of Russia has ruled as unconstitutional the practice of the application of certain laws on the legal status of foreigners in Russia that have been used to deport HIV-positive foreign citizens or stateless persons whose family members permanently reside in Russia.

Under law, foreigners who are residing legally in Russia become undesirable if they "pose a real threat to public health." Temporary residence permits are issued to foreigners working in the country only after presenting a certificate proving the absence of HIV to the Federal Migration Service (FMS). If diagnosed with the HIV infection, they are deported.

The ruling by the Constitutional Court, made on March 16, came about following complaints lodged by two citizens of Ukraine and a Moldovan citizen, who were prohibited from staying in Russia only because they are HIV-positive.

According to Judge Nikolai Melnikov, the foreigners who filed complaints with the Constitutional Court did not violate Russian legislation and are married to Russians.

"With the provisions of these conditions, it is unacceptable to deport a foreign national, to deny him entry or not to issue him a temporary residence permit," he said. According to the decision, the cases of the citizens of Ukraine and Moldova who filed complaints with the court should be reviewed.
 
Human rights advocates react

Representatives of human rights groups and patient support welcomed the ruling, with Maria Onufriyeva, director of the NGO Community of People Living with HIV, telling RBTH that the decision of the Constitutional Court was "a major achievement in the field of protection of the rights of HIV-positive people."
"The family is of unconditional value and its interests should be significantly higher than [those of] migration policy," said Onufriyeva.

"A person with HIV-positive status should not be a priori considered dangerous to society. If a person started a family, is a respectable member of society, receives treatment and is observed by a doctor, the refusal of entry or deportation based solely on the presence of HIV is certainly a violation of rights," said Onufriyeva.

Onufriyeva said that legislation in the field of HIV infection should be subject to regular revision to reflect changes in the real world.
 
Lack of public awareness still a problem

Alexander Saversky, chairman of the League of Protection of Patients, noted that HIV-infected people also experience discrimination within the country.
"Employers tend to seek information about the health of their employees, effectively demanding the disclosure of information protected by physician-patient privilege," he explained.

Saversky added that the public's fears of people living with HIV are often unfounded and are accompanied by inappropriate behavior. "The state and public organizations must conduct explanatory work - how to behave," he concluded.

The director of the Moscow Bureau for Human Rights and a member of the Presidential Council for Civil Society Institutions and Human Rights, Alexander Brod, noted that Federation Council Speaker Valentina Matviyenko had expressed in February the need to develop a standards act for deportation of immigrants with AIDS and tuberculosis.

"The state cannot take responsibility for these patients in an economically difficult period. It's another case if a person was working in Russia when they acquired the disease. In this case, we need to do everything possible to help them here," said Brod.

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 #3
Kremlin.ru
March 25, 2015
Ceremony awarding prizes for young cultural professionals and for works for children

On Cultural Workers' Day, Vladimir Putin awarded in a ceremony at the Kremlin the 2014 Presidential Prize for Young Cultural Professionals and the 2014 Presidential Prize for arts and literature for children and young people.

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon friends.

First of all, let me congratulate you sincerely on Cultural Workers' Day and on receiving these prizes. They are being awarded today to people who have dedicated their creative work to children and young people, and to people, who, though still young themselves, have already made their mark on the arts. I think it is symbolic that these prizes are being awarded at a single ceremony. Our young creative talent was raised in part on the achievements of their older colleagues, and many of you grew up on their works.    

Let me say a few words first of all about Yevgeny Krylatov's wonderful songs and music. Many generations know and love his melodies.

Many generations have discovered too the literary heroes created by the best children's writers through Yevgeny Medvedev's marvellous illustrations.

Another of the laureates today is Mikhail Khokhlov, director of the Gnessin State Musical College. He has nurtured many talented young people, most of whom have gone on to make music their life and vocation.

The creative and educational efforts of our country's masters and talents make an invaluable contribution to developing artistic taste and shaping our entire society and people's outlook on life, making them involved, responsible and creative individuals.

I want to make particular mention of the Mikhail Ulyanov State Northern Dramatic Theatre. Its representatives are receiving the prize today. In 2002, these graduates of the Omsk Regional College of Culture and Arts went together to the small town of Tara and established a theatre there. It turned out to be very popular with the residents. The regional authorities helped to build a modern building for it and it is now quite literally the main cultural centre for the entire northern Irtysh region. I think this is an excellent example of how, with the authorities' active support, we can and should carry out public initiatives of social importance.

Another group of laureates certainly has a socially important project. I am referring to the young creators of the documentary about the Sochi Paralympics, Spirit in Motion. Their talented presentation of these courageous athletes' stories pays respect to and shows admiration for their skill and optimism. This film instils hope in all who have found themselves in difficult circumstances and shows what summits can be scaled through strength of will and belief in oneself.

Those who are preserving and developing our classical artistic heritage and bringing it to the broadest possible audience in Russia are also performing a mission of great importance for our country and society.

In this respect, the soloists of the Eifman Ballet Theatre of St Petersburg have achieved great success and are being awarded the prize for young cultural professionals today.

Laureates, what distinguishes all of you, the experienced masters and the young talents, is not just a special creative gift but also a deep awareness of your work's importance for our country, people and society. Talent, responsibility as citizens, and selfless dedication to your work, people and country form the foundation of your success and make it especially precious. This is valuable in any profession, of course.  

Our country has many outstanding and successful people who are dedicated to their work. The winners of the prize for young scientists were invited to be special guests at today's ceremony. They are open to innovation, bold and competent, and have made a big contribution to developing our country's science, thereby making Russia richer and stronger.

Unfortunately, changes in my schedule meant that I was unable to present your awards to you in person in February. I am pleased to have the chance to greet you here today. We will meet separately to talk and discuss what you are doing, how your work is going, and look at the prospects for the future.

Of course, I want to wish all of you new creative achievements and success.

Thank you.
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Friends, let me congratulate you once again from all my heart.

Speaking of the Paralympic movement, one of the laureates said that now she must continue scaling new heights. I can tell you that we all need to keep scaling new heights. We should only move forward. With such talented young people as yourselves, we have every opportunity for putting this into practice with the best of results.

I wish you success. Thank you very much.

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#4
Kremlin.ru
March 25, 2015
Meeting with young scientists

Vladimir Putin met with the laureates of the 2014 Presidential Prize in Science and Innovation for Young Scientists: Irina Didenkulova, Alexandra Kalashnikova, Nikita Kuznetsov, Alexei Shatikhin, Vitaly Danilenko and Georgy Vasilyev.

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Good afternoon, friends.

You were present just now at the ceremony awarding the prize for young cultural professionals. You won the same award really, only in the field of science.

We will talk about your achievements of course, but at the start of our discussion, I want to say that the number of young researchers has increased considerably in Russia over these last years. We see this not only from the results achieved, though the results are the main thing of course, but also by the number of people competing for this prize. What's more, the research presented covers an ever-wider range of fields and themes.

I know that you have done interesting work with very useful practical applications, and I would like to discuss this with you today.

Which of you was it who worked on large waves and tsunamis? This is certainly a fascinating field and, most importantly, it has practical dimensions. The same goes for the research on DNA. This kind of work that is related to people's health will, as I understand it, enable us to make new breakthroughs in medicines for fighting malignant tumours and tumours in general, and this is very practical work, very important. The same goes for the work that was done in a field that will strengthen our defence capability. In short, I want to congratulate you all.

Unfortunately, when the award ceremony was already scheduled to take place back in February, my own schedule changed and, as you know, I was unable to attend the ceremony. I mentioned this before at the meeting with the young cultural professionals. You probably remember that we were giving a lot of attention to the work taking place in Minsk at that time. But I am happy to have this chance to meet with you today, and in this informal setting, to discuss what you are working on now and what we can and should do, in addition to awarding you prizes, to help you continue to achieve success. This is a good chance to discuss how to develop our country's science in general.    
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 #5
Kremlin.ru
March 24, 2015
Meeting with President of WorldSkills International Simon Bartley

Vladimir Putin met in the Kremlin with President of WorldSkills International (WSI) Simon Bartley. The meeting took place during an inspection tour by the WSI international movement's commission to assess Russia's preparedness for holding the WorldSkills Competition in 2019.

On Mr Putin's instruction, Russia submitted its bid to host the international competition in professional skills in January 2015. If Russia's bid wins, the competition will take place in Kazan.

Worldskills is an international non-commercial movement established in 1950 to promote trades' prestige and develop vocational education. The movement currently brings together 72 countries. Russia joined in May 2012 and has held two national championships since then, the trade-related Worldskills Hi-Tech championship for young specialists at big Russian companies and students at corporate and state educational establishments, and 46 regional competitions. The tradespeople who took first place in the Russian competition went on to take part in the international competitions in Leipzig (Germany) in 2013, and Lille (France) in 2014.

Beginning of meeting with President of WorldSkills International Simon Bartley

PRESIDENT OF RUSSIA VLADIMIR PUTIN: Mr Bartley, friends,

I am happy to welcome such a prestigious and influential organisation to our nation.

Your organisation, WorldSkills, is one of the most important instruments for raising the prestige of vocational professions; we regard it with a great deal of respect and attention.

In 2012, Russia joined the WorldSkills movement, and since November 2012, we have held a whole series of events: two national competitions and 46 regional competitions, with 5,000 participants and 300,000 spectators.

We are now conducting a great deal of work with professional communities and entrepreneurial organisations to create a national system of qualifications and therefore want to establish permanent working contacts with your organisation.

As you know, we have submitted an initial bid to hold the 2019 WorldSkills Championship in Kazan. We know that Kazan has some respectable competitors, such as the Belgian city of Charleroi and Paris.

I must say that Kazan is better than Charleroi and Paris. I will tell you why. First of all, Kazan is not overburdened with various events. And second, we have built truly world-class infrastructure there.

Just now, very recently, we held the summer's World Student Games there and in 2018, we will host the FIFA World Cup games there. In other words, the city is entirely ready in terms of infrastructure. But there are other advantages, culturally, because Kazan is at the crossroads of Asia and Europe.

This can be seen in all areas of life. And in addition to everything else, Kazan is a major commercial centre with a very rapidly and energetically developing economy.

We understand that you have a difficult choice. We are prepared for whatever decision you make. And indeed, Kazan's initial bid - at least as far as we're concerned - is also an element of support for WorldSkills International. We look forward to working jointly with you in the long-term.

Thank you very much.

PRESIDENT OF WORLDSKILLS INTERNATIONAL SIMON BARTLEY: Mr President, it is a delight to be here in Moscow, and a real privilege for Stefan [Vice President of WorldSkills International Stefan Praschl] and myself to be meeting with you and representatives of Russia.

We are becoming friends with your Deputy Prime Minister [Olga Golodets]. This is the third time I have met her on a visit here to Moscow. And also, I have visited Kazan twice before, and also met the President of Tatarstan as well.

The purpose of Stefan's and my visit here is really to check the facilities exist and the support of the country exists for the possibility of hosting the competition in Kazan.

As well as looking at the physical facilities in Kazan, which we will do tomorrow, we look to see the engagement of the government at every level.

And I have to say that, already, since we have been here in Moscow, arriving yesterday, we have seen the enthusiasm and the real attitude of the government, the government of the Russian Federation, for wishing to host the competition. And for that, I thank you for your interest and your comments about wishing to compete with Charleroi and Paris.

VLADIMIR PUTIN: I also commented that Kazan is better than Charleroi and Paris.

SIMON BARTLEY: Interesting, the Prime Minister of Belgium and the Labour Minister of France said that their cities were the best as well.

VLADIMIR PUTIN: It's surprising. (Laughter.)

SIMON BARTLEY: The other thing we experienced here in Moscow on this visit was the interest of your media.

This morning, we met with the press at TASS. And I gather there has been quite a lot of coverage since that occurred. So two of the twelve things that we have to report back to our board about I think have been satisfactorily achieved so far. And before we leave on Thursday from Kazan, I'm sure that we will have all the information we require in order to explain to our board of directors that Kazan should be allowed to put a formal bid to our general assembly in Sao Paulo in August.

And then, the member countries of WorldSkills will have a vote after they have seen the documentation from Kazan, from Charleroi and from Paris and heard the presentations made to them live about the benefits of each city.

You will recognise the process as one you have been through in relation to winning the Olympics in Sochi. And I think all of us are admiring of the way that you managed to make Sochi a venue, with all of the buildings, with all of the infrastructure, all ready for the Winter Olympics.

We are, I think, confident that because of that example, what is being developed in Tatarstan, in Kazan, will also go smoothly.

And of course, if you were to visit the competition in Kazan in 2019, I am absolutely certain that it will be finished in time for your visit. And I think it would be a very nice thing in the bid if there were some indication that you might be prepared to come to the opening or closing ceremony together with members of your Cabinet and your Government.

When we hosted the competition in London in 2011, we had visits from the Prime Minister, members of the royal family, the Mayor of London, and this makes the people who visit really understand the importance of what we are trying to do.

So thank you very much for your interest. Thank you very much for your support of WorldSkills Russia. I was delighted - Stefan and I were delighted to be in Jeju when Russia was admitted to WorldSkills. You help us make a real family.

VLADIMIR PUTIN: Thank you very much.

The event we are discussing will take place in 2019; the presidential elections will be held in Russia in 2018. But I am confident that whoever becomes the Russian head of state will be happy to participate in these events, because increasing the prestige of vocational professions is directly tied to the development of the economy, which is one of our highest-priority objectives. We will treat preparations for these events very seriously - if, of course, Kazan is selected to host the events.
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#6
www.rt.com
March 26, 2015
To change the situation for the better we must make Russia stronger - Putin to FSB

President Putin has told senior officers of Russia's domestic security service that despite the constantly increasing foreign pressure, the situation in the country will improve - once it stops giving in to its foes and starts becoming more powerful.

"No one has ever succeeded in intimidating or pressuring our country and no one ever will - we have always had and always will have an adequate answer for all internal and external threats to national security," Vladimir Putin said in an address to the FSB collegium on Thursday.

"The situation cannot always remain as it is, it is going to change and I hope it will change for the better, including the situation around our country," the Russian leader said. "But the changes for the better will not happen if we constantly yield, give in or use baby talk, it will only improve if we become stronger," he emphasized.

"NATO is developing its rapid response forces and is boosting its infrastructure near our borders, we are registering attempts to violate nuclear parity and the creation of the European and Asia-Pacific segments of the missile defense systems is being sped up," Putin said.

Apart from the military standoff with NATO, Russia had to oppose the attempts to undermine its political system, the Russian leader noted. "They are using a whole range of means for the so-called containment of Russia - from attempts at political isolation and economic pressure to a full-scale information war and tools used by special services."

The Russian president demanded that the FSB apply maximum effort to prevent the destabilization of the country.

"Western special services do not give up their attempts to use non-government groups and politicized unions to discredit Russian authorities and destabilize the internal situation in Russia. They are already planning actions for the period of the forthcoming elections in 2016 and 2018," Putin said. In 2016 Russia will hold the federal parliamentary election, and the next presidential poll is scheduled for 2018.

The president stated that the authorities intended to maintain their dialogue with the opposition and Russian civil society in general, as well-founded criticism and partnership have proved to be useful for any nation, including Russia.

"But it makes no sense to argue with those who work on orders from outside, who serve the interests of not their nation but an alien nation or nations," he said.

Putin pledged to continue the recently introduced practice of disclosing the foreign funding of political groups and NGOs, to check if the declared objectives of such groups match their real activities and to cut short any attempts at violations.

The president's statements are in line with the conclusions of Russia's top consultative body on national security, the Security Council, that said Wednesday that the 2015 US National Security Strategy was openly anti-Russian and could have multiple negative consequences on relations between Moscow and Washington. The document, published in early February, was based on the principles of American Exceptionalism and the alleged right of unilateral enforcement of US interests in various parts of the world, the Russian security experts claimed in their conclusion.

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#7
Russia & India Report
http://in.rbth.com
March 24, 2015
Moscow State University may become another Russian "Silicon Valley"
Moscow State University is launching a new scientific research center.
Viktor Kuzmin, specially for RIR

The Lomonosov Moscow State University (MSU), one of the oldest institutions of higher education in Russia, is yet another aspirant hoping to become the Russian analogue to America's Silicon Valley. MSU is planning to build a 430,000 square-meter cluster to be used for scientific research near the university's main campus.

The purpose of this project is to encourage collaboration between the university and hi-tech corporations, says MSU Rector Viktor Sadovnichy. In his opinion, this would enable university laboratories to carry out major scientific research in various areas. Sadovichny says that the partnership would especially focus on the "oil and gas sector and in social, information, medical and biological technologies."

Is there enough room for two scientific clusters?

This is not the first time that someone has tried to set up an analogue to Silicon Valley in Russia. In 2010 the country witnessed the emergence of the Skolkovo Innovation Center located at Moscow's western edge. According to experts, the establishment of yet another research complex is a sign that the demand for scientific developments is growing, even if it is happening at a slower than hoped for pace.

"In Russia a promising market for the domestic commercialization of innovative goods is the state sector: state orders, tenders by infrastructure monopolists and companies with state ownership," Sergei Fakhretdinov, a member of the general council of Delovaya Rossiya, a non-profit business association, told RIR. "It amounts to about a quarter of the country's GDP, around 14 trillion rubles."  

Here Fakhretdinov has highlighted the fact that the system of state orders is oriented to the needs of big business, while small and medium high-tech enterprises have little representation in this area. Only recently has the Russian government begun to tackle this problem. In December 2014 the government pledged to reassign 18 percent of all annual orders held by large infrastructure firms and state companies to small and medium concerns.

However, Fakhretdinov suggests that the system is slow to change. "There are about 60 big enterprises that the government has forced to step aside to make more room for small and medium concerns," Fakhretdinov says. "Yet, no more than 10 of them have actually started their work."  
 
Who are the drivers of innovation?

According to experts, despite the recent growth in demand for new technologies, the structure of Russia's raw material exporting economy doesn't stimulate the development of innovations.

"Traditionally in Russia the main driver of innovations is the military-industrial complex," Anton Tabakh, a senior economist at the Rus-Rating agency, told RIR. "But the growth of expenses in this sector has started only recently."

"There have been significant expenses devoted to research and development in the domain of defense, but on the whole this sector has very limited influence on the development of Russia's economy," says Moisey Furshik, a manager at the FOC consulting firm. According to him, the MSU project is promising, but it doesn't seem to offer as much in the way of facilities and a new administrative approach as compared to Skolkovo.
   
In Tabakh's opinion, the Skolkovo and MSU projects are aiming for different things, so he thinks there should to be enough space for both on the market. Tabakh believes that even today in Russia there are many actors competing for state and private support. These actors include Novosibirsk's Akademgorodok research cluster, the many scientific settlements located near Moscow, as well as Russia's numerous federal research universities.

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 #8
Business New Europe
www.bne.eu
March 26, 2015
MOSCOW BLOG: New team on the way?
Ben Aris in Moscow

A rumour was doing the rounds in Moscow on March 25: Russian President Vladimir Putin is due to hold a big press conference on March 26 and will sack the entire cabinet - presumably including Russian Prime Minister Dmitry Medvedev - and appoint a new team.

The speculation is probably another #putindead story; the halls of the Kremlin are still echoing with the ridiculous rumours surrounding Putin's 11-day disappearance earlier this month. But still, the speculation about the cabinet sacking is intriguing, as this is exactly what needs to happen.

The need for a new "big plan" is screamingly obvious. And yet there has been a deafening silence from the Kremlin on anything other than (for the most part entirely sensible) short-term fixes to Russia's current economic woes.

There have been two opportunities over the past few months for Putin to announce a new "Gref plan" - the reform plan that he personally backed and saw through after taking office in 2000, named after the then-economy minister German Gref, now chairman of Sberbank. First there was Putin's state of the nation speech and second there was the Gaidar Institute conference, an annual get together of Russia's liberal and financial elite to have a pragmatic and realistic discussion of the issues the country faces. Both events produced not a single concrete idea on what to do to fix the ailing Russian Inc. You have to ask why.

If not now, when?

To any long-term Russia observer the need for radical and deep reform is now more obvious than ever before. Russia's economy had already slid into stagnation before the collapse of the oil price in December as fixed investment fell to next to nothing. It was already clear that Russia is suffering from a crisis of confidence amongst its own leading businessmen, let alone the pall of despair that has fallen over the international investors. And this was happening with oil above the $100 a barrel mark. Clearly something needs to be done and just improving Russia's place on the World Bank's "Doing Business" ranking is not enough.

One of the more obvious explanations for why Putin is ignoring the problem - and remember he gets the need for reforms as demonstrated by the Gref plan, which was his personal initiative at a time when no one else wanted to change the oligarchic system - is because it will not be the current team that implements any Gref Plan II. What is the point of starting the debate when an entirely new team will make a clean break with the past and go back to the drawing board?

Why hasn't Putin acted earlier? Again the answer to this question is obvious. He has decided to sacrifice the economy while he concentrates on spending every spare penny Russia has on military reform, as he needs to improve his hand in what has turned into a major geopolitical standoff with the West over the future of how the world is run. The Ukrainian crisis has precipitated this clash and made it obvious, but Putin had already committed Russia to a massive rearmament programme in 2013, which caused the then finance minister and one of the most well-respected liberal reformers inside the system, Alexei Kudrin, to quit his job.

The dream scenario would be that Kudrin comes back as premier - a job he is known to covet - but with the full powers of a prime minister as described in the constitution to appoint his own team to make the deep changes needed to ensure Russia flourishes again. This will also necessarily mean sidelining the Siloviki fraction centred on Rosneft CEO Igor Sechin.

If this theory is right, then this change of guard can only come when Putin feels that he has won his geopolitical standoff. That time could be now, as Russia's economy seems to be doing a bit better than was expected following December's meltdown and certainly the rally on the equity market - Russian stocks are amongst the best performing year-to-date - and the very strong rally on the bond market on March 25, both suggest international investors, at least, believe the way is up from here. The Kremlin's annual economic summit in St Petersburg in June would be another obvious date for making the change. Certainly, the need to make a start on the reforms is pressing.

However, this whole argument could simply be wishful thinking. The alternative is that Putin has spent so long in power (15 years and counting) that he has fallen into the doddery old dictator trap, where he has surrounded himself by yes-men and is out of touch with reality, preferring the status quo over radical change. In this case there will be no announcement either today or in the summer, and Russia will slide slowly into irrelevance, propped up only by oil, and we will have to wait until 2024 when he leaves and there comes the next opportunity to make a big change.

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 #9
Moscow Times
March 26, 2015
Uproar in Murmansk as Teachers' Salaries Withheld Amid Economic Crisis
By Gabrielle Tétrault-Farber

Teachers' salaries have been withheld en masse in Murmansk as Russia's economic crisis bears down on the regional budget, news site FlashNord reported Wednesday.

The Murmansk branch of Russia's national teachers' union filed a complaint with regional governor Marina Kovtun, claiming that a large number of employees of Murmansk's educational institutions had not been paid for their work in the first half of March, FlashNord reported. Collective bargaining agreements list March 19 and March 22 as the deadlines by which teachers must be paid, the report said.

"The sharp rise in inflation, the decrease in educators' real income - many of whom earn minimum-wage salaries - insufficient savings and the current situation linked to payment delays have caused anxiety for many and fomented high social tensions in communities," the union's complaint said, according to FlashNord.

City officials said that the delay in teachers' payment stemmed from a lack of funding from regional authorities, FlashNord reported.

Earlier this month, the Murmansk region discontinued its distribution of some social benefits such as child allowances and housing subsidies, citing delayed funding from the federal government as the reason behind the cuts.

Issues with the timely payment of teachers is not exclusive to Murmansk. Some 60 teachers of Siberia's Zabaikalsky region declared a strike earlier this month after not having been paid for more than three months.

The Zabaikalsky affair had been the first large-scale teachers strike in Russia in more than a decade, according to the Kommersant newspaper.

Last month, female teachers from the Urals city of Yekaterinburg concerned about salary cuts were bluntly told by a regional official that finding a rich husband would put an end to their financial troubles. The Sverdlovsk region, of which Yekaterinburg is the administrative center, slashed the teachers' salary fund by 75 million rubles ($1.3 million) in September, media reported at the time.

Teachers and their pupils were kept in the dark in the far eastern Primorye region this month after electricity was cut in 17 kindergartens because of the municipality of Spassk-Dalny's inability to pay its power bill, news agency Interfax reported in early March.

A survey published earlier this month by the Moscow-based Levada Center, an independent pollster, found the salaries of 9 percent of Russians were currently being withheld. The poll, conducted among a representative sample of 1,600 people in 46 regions with a margin of error not exceeding 3.4 percent, revealed that 15 percent of the population expects delays in getting paid in the coming months if the economic situation continues on its current course.

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 #10
Moscow Times
March 24, 2015
Health Care Workers to Hunger-Strike in Protest of Labor Conditions
By Anna Dolgov

Health care workers in central Russia threatened to stage a hunger strike starting Monday to protest what they described as "repercussions" against co-workers who demanded better working conditions and higher salaries at previous protests, media reports said.

The hunger strike, planned in Ufa, the capital of Russia's republic of Bashkortostan, would be the third by medical workers in the city since the start of a labor dispute with local health care officials last April, Ekho Moskvy reported.

About 20 health care workers are expected to go on a hunger strike on Monday, joining the protest started last week by a local ambulance service manager, Svetlana Yusupova, the report said.

Protesters, many of them ambulance workers, accuse local authorities of imposing penalties and putting "pressure" on their colleagues who took part in previous protests, Noviye Izvestia reported, citing anesthesiologist Irina Tishina, who planned to join the strike.

Supporters also accuse health administrators of having denied water for six hours to Yusupova, while holding her for an "interview" after she went on hunger strike last week, the head of a medical workers' trade union, Andrei Konoval, said on his LiveJournal social network page.

Local health workers were awarded salary increases after their two hunger strikes last year, but say many of their demands remain unmet, according to media reports.

In Moscow the RBC news agency uncovered an apparent plan to fire 14,000 doctors in the city by the year 2018.

According to an agreement signed by Deputy Health Minister Airat Farrakhov and Deputy Mayor Leonid Pechatnikov, the number of doctors at state clinics and hospitals in Moscow will be 40.9 per 10,000 residents by 2018, RBC reported Monday.

There are currently 64,900 such doctors, and with an estimated 12.4 million people expected to reside in Moscow in 2018, the number of doctors will have to be lowered to 50,800, the report said, citing data by federal statistics service Rosstat and City Hall's labor department.

RBC reported that money that had been used to pay salaries of the fired doctors will be used instead to pay their colleagues in order to fulfill President Vladimir Putin's promise in 2012 to raise the salaries of doctors to 200 percent of the regional average salary by 2018.

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 #11
Russian health reform: strategy is right but tactic sometimes fails
By Lyudmila Alexandrova

MOSCOW, March 24. /TASS/. Russia's health reform, in the first place, the way it is being implemented in Moscow, is tough-going and has drawn criticism from some medics and the population. Its officially declared purpose is to upgrade health service establishments and provide better services to the patients, but at the same time it envisages the closure of some hospitals, merger of others and a major cut in medical personnel. According to official statistics, 8,300 medical workers had been dismissed in Moscow by last February. The remaining personnel were told to service more patients, and the average time a doctor spends on one visitor has been cut to 9-10 minutes.

The strategy that has been chosen is a correct one and the reform will eventually yield positive results, but the methods the local authorities sometimes choose leave much to be desired, experts say.

Medics at Moscow's six outpatient clinics on Tuesday warned they might launch a work-to-rule action to protest the way Moscow's health service is being reformed. But, as the Moscow authorities have said, the attempt failed. It is a hard fact, though, that the campaign to optimize Moscow's health service, started in the middle of last year, has drawn mass discontent. Last year Moscow's medics staged several protest actions.

Moscow's deputy mayor for social development, Leonid Pechatnikov, has confirmed that massive cuts are inevitable, but he promised that all specialists will be able to undergo retraining at the government expense and granted new jobs. And Moscow's Mayor Sergey Sobyanin promised lump sum bonuses to the medics whose jobs have been axed - from 200,000 roubles (3,300 US dollars) to 500,000 roubles (8,300 dollars).

Some federal officials, too, have criticized the Moscow authorities for the way the reform has been proceeding. The head of the State Duma's health protection committee, Sergey Kalashnikov, has said that "reforms in Moscow are appalling" and that "the availability of medical assistance has shrunk drastically."

"I believe that our colleagues have failed to give proper thought to it and to foresee every detail," President Vladimir Putin said last November. "While being guided by right considerations and fine intentions by and large they could have arranged for this quite differently. We have already discussed this theme with the Moscow authorities."

"In all regions the health service reform situation is different," the deputy director of the Social Analysis and Forecasting Institute at the presidential academy RANEPA, Vladimir Nazarov, has told TASS. "Moscow has paid no attention to reforming its health service for too long. The city has excessive health service capacities, but it has to be remembered that it services not just Moscow alone, but the whole country."

The presidential decrees of May 2012 required a rise in the medical workers' salaries, but there was no way of meeting the target while leaving the number of medical personnel unchanged, Nazarov said. Therefore the Moscow government launched an optimization campaign, but the way it has chosen has proved too radical: literal axing of medical workers' jobs and health service establishments without any attempts to try to meet the interests of the patients."

Nazarov welcomes some of the Moscow authorities' projects, but on the whole "very crude, administrative methods" have gained the upper hand there where financial incentives should have been established to let the system reorganize itself.

"The idea was right, but the selected methods were not the very best ones," he said.

The reform envisages three directions - restructuring of medical assistance, standards of providing it and the related revision of approach to personnel placement and, lastly, improvement of the remuneration system," says the chief of the economics and social sphere management chair at the RANEPA academy, Larisa Gabuyeva. "These three vectors should have been employed successively, but many regions have fallen behind and the new approach to remuneration was introduced before the first two stages were over. Both medical personnel and patients were strongly hit. It has turned out that the reform has brought about negative effects. There would have been nothing of the sort, if the regional authorities were acting on time."

"There is one more problem. The administrative bodies of the health service have lost the financial support functions. All finance issues were handed over to the medical insurance system. As it has turned out, some set the rules, while others are to provide the money," Gabuyeva said. At the same time she has no doubts "the reform proceeds in the right direction."

"At this moment every effort should be focused on minimizing or avoiding negative effects," she said.

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 #12
http://readrussia.com
March 24, 2015
Pensions Under Threat as Government Looks for Funds
by CHRIS MILLER

As Russia's government tightens its belt in the aftermath of the oil price collapse, the country's pension system has become the site of a heated political battle. So long as oil prices stay low and sanctions continue to bite, money will be tight. Billions of rubles that the government formally earmarked for pension savings are a rich prize-and vultures are circling, hoping they can seize control over these billions. For the past two years, the government has filled its budget deficit in part by raiding the pension pot. Now, some in the government want to make this transfer permanent, using pension contributions to fund indefinitely the government's current spending. This decision will shape the future of Russia's public finances and the stability of its pensions.

Russia's payments to retirees are financed in two ways. Companies pay the national pension fund a fee equal to 22% of each worker's salary. Of this, 16% goes to pay current pensioners, while 6%-called the 'funded' portion, because it is funded in advance-is put into savings, intended to pay for current workers' pensions when they retire.

Like many countries, Russia faces a funding crunch as its population ages, and the 'funded' portion of the pension was intended to keep the system solvent in future decades. Already, the country has far fewer workers per retiree than a decade ago, but the mismatch is only going to get worse. In 2014, Russia had 85.2 million workers and 33.9 pensioners, a ratio of about 2.5 workers per pensioner. Within the next three years, according to RBС, the number of pensioners will increase by nearly 3 million, and the labor force will decline by about the same amount, so there will be fewer than 2.25 workers per pensioner. If Russia is to keep paying the same pensions, the burden on current workers will increase by over 10% in just the next three years. Even sharper increases will follow.

The 22% pension contribution is already insufficient to fund today's retirees. Over half of last year's pension payments were paid for via transfers from the government budget rather than from the pension fund, according to a recent study by Sberbank. If pension payouts stay the same, by 2030 Russia will have to spend at least 3% of GDP more than it currently does on pensions. That means pensions will put an increasing strain on the government's budget. Alternatively, the government could reduce pensions, but the cuts would be painful. Unless the government allocates additional funding for pensions, payouts could fall by a third by 2025, say Sberbank researchers. Such a move would push many pensioners into poverty, and no government could push through such cuts without serious political backlash.

The problem is not that Russia's pensions are overly generous. By international levels, Russia's current pension payments are reasonable. The standard Russian pension replaces 63% of median salaries for men and 56% of median salaries for women-near Europe's average. Most Russians begin receiving pensions at 55 for women and 60 for men. That is younger than most European countries, but life expectancy is lower too.

In theory, the 'funded' portion of Russia's pension system-the 6% of wages that are saved for future payments rather than spent today-should help fill the country's pension gap. These funds are invested via government and private retirement funds. They should earn a decent return, though high levels of inflation in recent years have made that difficult. Some officials and financiers have called for investing these pension savings in infrastructure projects. This makes some sense-Russia needs more infrastructure investment, and pension funds have the decades-long time horizon that infrastructure requires-but so far little has come of such ideas. Most of the pension savings remain in low-risk assets such as bank deposits and government bonds. This guarantees that savings are secure, but such investments will not generate returns large enough to close the country's pension hole.

The government is in a political bind, too. On the one hand, much of Putin's popular support comes from the fact that pension payouts increased sharply compared to the chaotic 1990s. Cutting pensions today is politically unthinkable. But like politicians in other countries, Russia's leaders are less wary about cuts or tax increases that take place in the future. That is why spending the 'funded' portion of pension savings appeals to many government officials. They reap the rewards of spending today, and when the bill comes due, they may well have already left office.

Some of the country's most influential financial officials have spoken out against the plan to eliminate the 'funded' pension savings, arguing that this will exacerbate the country's future problems while reducing the investment funds Russia needs to spark economic growth today. Former finance minister Alexey Kudrin, meanwhile, has argued that the government should use the current debate as an opportunity to put the pension system on a more stable financial footing by raising the retirement age. But that is little different than a benefit cut-something Putin is unlikely to endorse.

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#13
Russian rouble gains on oil and weaker dollar

MOSCOW, March 26 (Reuters) - Russia's rouble gained on Thursday, helped by a surge in oil prices and a weaker dollar.

At 1105 GMT, the rouble was around 1.7 percent stronger against the dollar at 56.73 and gained 0.8 percent to trade at 62.49 versus the euro.

Brent crude oil rose over 3 percent on Thursday after Saudi Arabia and its Gulf Arab allies launched air strikes against Yemen. The operation could stoke concerns about the security of Middle East oil shipments.

Oil is key driver for all Russian assets since it is the country's chief export.

The dollar, meanwhile, was soft in the wake of disappointing U.S. data that suggested its recent rally was on hold for now.

Dmitry Polevoy at ING Bank in Moscow said a sharp rouble rally early in the session on Thursday could have forced traders to close long positions in foreign currency, driving further rouble gains.

Analysts said, however, that pressure on the rouble could build in the coming days as the end of month tax period draws to a close, removing an important pillar of support for the Russian currency.

The bulk of the large monthly taxes fell due on March 25, with profit tax remaining on March 30. The tax period typically helps the rouble as Russian companies with foreign-currency earnings must convert a portion of those earnings into roubles to pay the taxes
 

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 #14
Effect of ruble strengthening nearly neutral for Russian budget - Nesterenko

MOSCOW. March 25 (Interfax) - Ruble strengthening in excess of that assumed in the 2015 budget would lead to both lower revenue and lower spending, meaning that the net impact on the budget will be neutral, First Deputy Finance Minister Tatyana Nesterenko said.

"The ruble exchange rate and the price of oil [assumed in the budget] are forecasts calculated as the annual average. Right now we are very close to those average annual figures. To speak of the possibility of a shift in the trends assumed in the forecast, then it is important to say that the ruble exchange rate affects revenue and spending," Nesterenko told journalists on Wednesday when asked about the apparent stabilization of the ruble at a stronger level than that assumed in the budget (61.5 rubles/$1).

Very much budget spending depends on the ruble exchange rate, including external debt servicing and international obligations, she said.

"This could be a balanced effect for revenue and spending. We have fairly large foreign currency liabilities. Accordingly, they will also be recalculated," Nesterenko said.

"If the trends change, if forecast estimates change, the first thing that will be done is to go to parliament and introduce amendments," she said.

The dollar fell to its lowest level on the Moscow Exchange (MOEX: MOEX) on Wednesday, dropping below 57 rubles/$1, as the Russian currency gained from bullish sentiment on capital markets and higher demand for ruble liquidity. The previous minimum for the dollar in 2015 was 57.52 rubles/$1 on January 5.

The dollar has declined in each of the last eight trading sessions (beginning March 13), shedding over 5 rubles or more than 8% in that time. Analysts credit the ruble strengthening to the halt in the growth of the dollar's value on the global market and the halt in oil price declines, as well as gains in Russian equities. One other factor is heightened demand for rubles heading into the tax payment period.

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 #15
Moscow Times
March 26, 2015
Ruble Panic Recedes as Russians Start Selling Dollars

Russians sold more foreign currency than they bought in January for the first time in two years, the Central Bank said Wednesday, in a sign that last year's panic over the ruble has subsided.

The Russian currency went into meltdown in December as a months-long devaluation prompted by Western sanctions and oil price falls turned into a rout. Massive demand for dollars and euros among Russians exacerbated the ruble's plunge, which peaked on Dec. 17, when the ruble fell 20 percent against the U.S. dollar within a few hours of trading.

But the rout appears to have run its course for now, with demand for foreign cash falling sharply in January, according to data published by the Central Bank.

Individuals sold $6.7 billion in dollars and euros at banks and licensed exchange points in January, $300 million more than they bought over the same period, the data shows.

Both numbers fell steeply from December, when Russians bought the equivalent of $21 billion in dollars and euros and sold $12.5 billion. January was the first month that Russians' sales of hard currency had exceeded purchases since February 2013.

Total foreign exchange transactions both by individuals and between banks declined by more than 60 percent in January, spurring banks to sharply reduce imports of foreign cash, the Central Bank said.

Despite the cooling of demand for hard currency, the ruble fell almost 20 percent in January against the dollar after falling 40 percent in 2014. The Russian currency has since regained its January losses as oil prices stabilized and fears of new Western sanctions over Ukraine eased.

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 #16
No signs Russia might leave WTO, director general says
By Katya Golubkova and Aija Krutaine

RIGA, March 24 (Reuters) - Russia shows no signs of wanting to leave the World Trade Organization, WTO chief Roberto Azevedo said on Tuesday, despite tensions with the West over the Ukraine crisis and disputes with other member states.

Some Russian parliamentarians have called for their country to pull out of the WTO less than three years after it acceded because, they say, membership is damaging Russia's economy.

But Azevedo said during a visit to Latvia that he had never heard of any moves by Russia to leave.

"Never, neither officially nor unofficially or any other way," he told a news briefing. "Russia has been a party to disputes in the WTO and I think every single member of the WTO including Russia knew that would be the case."

"Russia is a big economy, it is going to be a very well monitored economy because of its size, because of its importance, because of its relevance," he added. "And it is inevitable that big players will be at one point in time challenged in the WTO dispute settlement mechanism."

The European Union and the United States have imposed economic sanctions on Russia over its role in the Ukraine crisis although Moscow denies sending weapons and troops to support separatists fighting government forces in eastern Ukraine.

In response, Moscow has banned food imports from Europe.

The EU said last month it was escalating a dispute with Russia at the WTO over what it said were excessive import duties on paper products, refrigerators and palm oil.

The challenge was the latest in a series of WTO disputes with Moscow, the EU's third-biggest trading partner, since Russia joined the body in 2012.

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 #17
Amnesty on capital is good news, but yield may prove lower than expected
By Lyudmila Alexandrova

MOSCOW, March 26. /TASS/. Amnesty on Russian capital that may begin to be returned to Russia is a step in the right direction, but one should not expect very high yields, Russian analysts warn. The scale of capital repatriation, they believe, will depend first and foremost on the general economic situation, as well as on how strictly the law enforcers will observe the established rules of the game.

A bill on the voluntary declaration of properties and bank accounts was on the Cabinet's agenda on Thursday. Now it will go to the State Duma for consideration and may be adopted by the summer.

"The bill declares immunity from criminal, administrative and tax punishment within the framework established by the law and in relation to transactions performed before January 1, 2014, if the wrongdoings committed involved the formation of the declared property items and transactions connected with the acquisition of these assets," Finance Minister Anton Siluanov said at the Cabinet's meeting.

All those eager to have their possessions and incomes amnestied are invited to submit declarations to the tax authorities by December 31, 2015.

On Wednesday, at a meeting with government members President Putin supported the more liberal amnesty version of the two proposed, the daily Vedomosti has said. According to the bill it will be possible to declare only some assets. Each declarant will be free to choose whether to disclose the entire structure of one's property or only part of the assets (in that case the amnesty will apply only to the disclosed asset). The amnestied will not have to present any documents to confirm the declared assets. Nor will there be a special declaration fee (originally the Ministry of Finance had hoped for charging an equivalent to 1% of the assets declared).

The amnesty deadlines will be pegged tightly to measures to deoffshorize businesses' foreign assets. The deadlines for filing declarations under the anti-offshore law on controlled foreign companies will be moved from April 1 to a later date.

The amnesty on capital will possibly be unable to completely compensate for capital flight, but it may prove a factor for easing the outflow of cash, says the Bank of Russia's first deputy governor, Ksenia Yudayeva. According to preliminary information, the net outflow of capital from Russia in 2014 grew by 2.5 times to 151.5 billion dollars.

The deputy chairman of the Federation Council's committee for constitutional legislation, Konstantin Dobrynin, believes the amnesty may promote the return of 10% of the withdrawn cash at the most.

True, the amnesty of capital is a step in the right direction, and it is good that the deadline for filing declarations has been extended till the end of the year, the first deputy president of the organization uniting small and medium-sized businesses OPORA, Pavel Sigal, has told TASS.

"I am not expecting a great influx of capital in the current economic situation. Investors are in the process of evaluating risks. The uncertainty over the exchange rate of the rouble plays a major role, because, once the capital is back to Russia, it will have to be converted to rouble cash before it can be invested."

According to the expert, a great deal will depend on how strictly the law enforcement agencies will agree to stick to the established rules.

"There must be the certainty no questions will arise to those who may agree to bring their money back. Strict observance of the rules is very important," he added.

Senior economist Anton Tabakh, of the Institute of Energy and Finance, has warned against excessive expectations. "The entire experience of previous capital amnesties, including those announced in the post-Soviet space, indicates that the expected result should be divided by five, if not by ten," he told TASS. "Kazakhstan's experience shows that the result of the amnesty was not very impressive. In particular, that concerned large possessions."

He believes that even the forecast repatriation of up to 10% percent of capital is too optimistic. As for the assets belonging to major companies, including state-owned ones, the yield may be greater.

The expert welcomed the choice of the more liberal version of the proposed legislation.

"The harsher the law, the harder it will be to enforce," he said.

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 #18
Bloomberg
March 26, 2015
Russia Sets Terms for Capital Amnesty to 'Correct Past Mistakes'
by Andrey Biryukov and Anna Andrianova

(Bloomberg) -- Russia laid out the terms of a draft law to offer amnesty on repatriating capital, promising new incentives and legal protections to aid an economy starved of investment by sanctions over Ukraine.

The bill won't require the return of assets to Russian territory, demanding only their registration in a "transparent" jurisdiction that isn't blacklisted by the Financial Action Task Force, Prime Minister Dmitry Medvedev said at a government meeting in Moscow on Thursday. Under the proposed legislation, the declared assets won't be subject to a one-time tax and won't be used for criminal investigations, Finance Minister Anton Siluanov said at the meeting.

"We need to give people an opportunity to declare their capital freely and peacefully," Medvedev said. "This will help us to correct past mistakes."

The government is crafting the law almost four months after President Vladimir Putin called for "a full amnesty" on money returning to Russia as a currency crisis, a tailspin in oil prices and sanctions imposed over the Ukrainian conflict sparked record capital outflows. Russia is looking to harness the billions stashed away in low-tax offshore jurisdictions in the years following the Soviet breakup in 1991 as its economy enters a recession and some companies and banks remain walled off from foreign funding.

Illicit capital outflows related to Russia's shadow economy may have been as much as $211.5 billion between 1994 and 2011, according to Global Financial Integrity, a Washington-based group researching cross-border money transfers.

'Public Forgiveness'

"It's an opportunity that makes it possible to clean up, get what's called public forgiveness and live with this property without any fear for your future," First Deputy Prime Minister Igor Shuvalov told reporters after the meeting.

Capital outflows, which more than doubled in 2014 to $151.5 billion, may reach about $110 billion in 2015, according to the central bank. Fixed-capital investment will fall 13.7 percent in 2015 after contracting 2.5 percent last year, the government forecasts.

Outflows may ease as a result of the amnesty, central bank First Deputy Governor Ksenia Yudaeva said March 23.

The government approved the draft bill Thursday and will submit it to the lower house of parliament to be adopted by June 1. Declarations will be accepted until Dec. 31, Medvedev said.

Russia is prepared to start talks next week with the FATF, a Paris-based intergovernmental money laundering watchdog, to discuss the proposed bill, according to Siluanov.

"I doubt it will have a major impact," Piotr Matys, a London-based foreign-exchange strategist at Rabobank International, said by e-mail. "After all, those who keep their funds abroad simply don't trust the government and offering them amnesty is unlikely to change that."

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 #19
Business New Europe
www.bne.eu
March 26, 2015
Russia's economy in 2015 - more resilient than expected
Mark Adomanis in Philadelphia

How is Russia's economy doing right now? Pretty clearly, the answer is "not very well." 2014 was the first year since Putin came to power in which, due to a combination of spiking inflation, plummeting oil prices and flat-lining growth, the average real disposable income actually shrank. The economy still managed to eke out 0.6% overall growth, but no one, not even the Kremlin, could dispute the blackening outlook and the general sense of malaise. There is a universal consensus that 2015 will be worse. But exactly how much worse? Here the answer is not at all clear.

Anders Aslund was a particularly high profile member of what can be called the "disaster caucus", the people who think that Russia's economy is headed for implosion. He predicted that 2015 would see a recession that would lop off somewhere between 8% and 10% of total output, substantially worse than the crisis year of 2009.

Needless to say, Aslund's forecasts seems unduly pessimistic. Yes the current mood is grim, but it's nothing like the blind panic which was gripping the world financial system in the aftermath of the collapse of Lehman Brothers. In contrast, Russia's current crisis has been a slow-motion one. Things haven't happened all at once, it's been a slow drop of bad news over the course of a year. Market participants are all too aware of what is likely to happen. That will likely make resolution of the crisis more difficult (it seems a virtual certainty that the current recession will be more protracted than 2009's) but it also means that panicked uncertainty, which was a hallmark of 2009, is absent.

Outside of the Russian finance ministry, which predicts a modest recession in 2015 and a return to 2-2.5% growth as soon as 2016, other estimates broadly expect a contraction of somewhere between 4% and 6%. The latter figure is the position of market economists and credit ratings firms, while the slightly more optimistic figure is the product of the Central Bank of Russia (which estimates that the economy will shrink by 0.7% over the first quarter of this year).

Bad or worse?

But while a contraction of 4% is bad, it's a lot better than 6%. So which seems more likely? Well Rosstat's initial first-quarter GDP estimate has, obviously, not yet been released, since we're still in the midst of the first quarter. Rosstat did, however, release industrial production figures for the January-February period. These are the most broad-based and accurate data that we currently possess about the actual state of the Russian economy. And what do they suggest? Well, the result certainly wasn't overly sunny; total production decreased by 0.4% in comparison with the analogous period in 2014, but neither was it disastrous.

On a sector-by-sector basis the extractive industries were the best performers. Despite the recent swoon in commodity prices their output in the first two months of 2015 actually increased by 0.7% on year. On the other hand manufacturing fared the worst, with output down by 1.5% in comparison to 2014. Of particular note was the disastrous performance of the automobile sector, where production was down a full 17% from the year before.

The month-by-month breakdown was a bit strange in that January actually saw a small (0.9%) year-over-year increase while February saw a deeper (1.6%) decline. The acceleration of the decline in February is worrisome, and it means that the March data will be very important in more clearly ascertaining the economy's real trajectory. If March's figures are worse than February's, it would suggest that Russia will experience a recession closer to the expectations of credit analysts and market economists (eg. a contraction of between 5% and 6%). However, if March's figures are either stable or marginally improved, it would suggest that Russia is likely to end up on the more optimistic side of the forecasts with a total contraction of somewhere between 3% and 4%.

Moving forward, the most important variable is going to be the price of Brent crude, which has been fluctuating wildly as the US Federal Reserve debates when it will raise interest rates. If oil resumes the modest rally it experienced from late January through mid-February, before retreating against in early March, Russia will probably end up on the optimistic side of the forecasts. If oil resumes its downward march, though, Russia's economic performance will inevitably deteriorate.

That's the important takeaway, though, the conditional nature of all of these forecasts. No one knows exactly what Russia's economy is going to do, it's all a matter of probability. Given what has happened so far in 2015, particularly the relatively modest overall decline in industrial production and a modest rally in the value of the ruble, it seems as if the looming recession will be on the modest end of the spectrum. That could change, of course, but the data seem to indicate a bit more dynamism and resilience than expected.

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 #20
http://russeurope.hypotheses.org
March 26, 2015
Russia coming out of the crisis
By Jacques Sapir
Jacques Sapir is a noted French economist and Russia expert, who teaches at Ecole des Hautes Etudes en Sciences Sociales (EHESS) in Paris and at Moscow School of Economics. He heads the CEMI Institute (Centre d'Etude des Modes d'Industrialisation).
Note kindly translated by Anne-Marie de Grazia
[Charts here http://russeurope.hypotheses.org/3670]

We have been told day after day that the economic situation in Russia was frightening. But the economic situation in Russia is far from catastrophic. As has been discovered, with great bitterness and no little astonishment, by Western analysts. Indeed, until these past days, such was not the discourse in the Western media, particularly in France and in the United States. Yet, truth is finally filtering through. A chronicler at Bloomberg just coughed up the morsel[1]. Make no mistake, Matthew Winkler's paper concentrates on investment opportunities in Russia. But his tone is in sharp contrast with what one could read and hear over these past months concerning Russia. The country is now becoming a "land of opportunities." There is no longer any question of a "default," or of any other kind of catastrophe. We can now measure the amplitude of the disinformation to which we are subjected concerning the economic situation in Russia. But, after a while, the absurdity of the situation is coming to light.

Russia, a promised land of investment ?

Matthew Winkler's article emphasizes two important elements. On the one hand, the yield of loans underwritten by Russian companies is presently high. It is getting close to 7.3%, whereas the yield of « corporate » loans, such as measured by the MSCI Index of emerging markets amounts only to 1.7%. On the other hand, the depreciation of the rouble, which has been considerable, leads to equities in Russian companies (stocks and bonds) being cheap. So that, with the rouble tending to appreciate, and the results of Russian companies remaining good, an investor can hope to win on both fronts, on the currency exchange (where he can expect an appreciation of at least 10% of the rouble) and on the value of equities. Winkler also notes that 78% of companies listed on the MICEX (the Moscow Stock Market index) have increased their market shares considerably more than the average of the companies of emerging countries.

These various elements are largely the indirect effects of the depreciation of the rouble, which has whipped up the productiveness of Russian companies. Moreover, the data of the past ten years show that the gains in productiveness of the Russian industry are very sizeable, and largely superior to those of other industrialized countries, with the exception of China.

All this confirms the presence of a strong industrial potential. In such a framework, one can understand Russia being presented as a "land of opportunities" for foreign investors. Of course, the question must be considered of a possible extension of the sanctions, particularly in the financial domain. This will compel investors to forego the currencies, which risk being the vectors of such sanctions, such as the US Dollar and the Euro, and to operate in other currencies, such as the Chinese Yuan. This is now possible thanks to the development of a market for the Yuan in Moscow, open to non-residents. This market has by the way just undergone a new extension, with the opening of a compartment for futures quotations for operations in Yuan. We had a good exemple in the latest loan asked by the French company TOTAL for developing its activities in Russia, amounting to billion 15 USD, and made in Yuan. This should dispose of the necessity to use either the dollar or the Euro for the forward covering of investment operations.

This assessment of investment opportunities existing today in Russia compels one to re-examine the surprising resistance of the economy to the speculative shock, which it underwent in December 2014. As a matter of fact, this resistance sheds light on the dynamics of a gain in depth and a diversification of the economy of which we have been aware since the beginning of the years 2000 and which has remained widely ignored by a number of commentators. This explains why the Russian economy is presently far more robust than it was in 1998, or even in 2008.

The December crisis and stabilization.

We remember the speculative crisis of December 2014. It translated into large and erratic movements in the exchange rate of the rouble between December 12 and 26. These movements were countered by a decisive action on the part of the Central Bank of Russia of which we gave an account on this blog. The "counter-speculation" launched by the CBR with the support of the Central Bank of China allowed it to inflict very severe losses on the speculators. But these movements have much rattled the confidence, which the Russians had, not in their currency, but in their banks. As a matter of fact, when at the worst of the crisis the rouble was negotiated at 77 roubles for 1 dollar on the « spots » markets, and at 67 roubles for one dollar at the level of sellings by the Central Bank, some banks did not hesitate to post exchange rates for private individuals amounting to 140 to 150 roubles for one dollar. This is what led to the effervescence around consumer goods in mid-December.

This speculation also imposed on the Central Bank of Russia to take restrictive measures and, for lack of having put in place a system of capitals controls, it attempted to circumvent speculation by hitching up spectacularly its interest rate. One can regret that capitals controls were not utilized. They are a far more efficient weapon when faced with purely speculative movements than the « market measures » which were resorted to in Russia. It is clear that the CBR was taken by surprise by the sheer amplitude of the speculation and that for a moment, its directorate gave in to panic, as can be seen from the movements of interest rates. The latter went up, from 11% to 17%. But, in reality, even a rate of 17% presents only a puny cost in the case of an operation lasting only a few days and where the anticipated speculative gain can reach 10% to 20% of the sums engaged (and borrowed). This situation forced the CBR to intervene directly on the market, by massively selling dollars in order to trigger a « counter-speculation », as we have said. This policy has been effective. By December 26, the exchange rate was back where it had started.

But due to the loss of confidence of the Russians in their banks, downwards pressures have continued to work on the rouble (chart 1).

The latter depreciated, but in a slower way than at the beginning of February. Then, it started to slowly appreciate. Presently, it seems to have returned durably to a rate of 60 roubles for 1 dollar and the upwards pressures will continue to push it probably up to 52-55 roubles. And this at a time when the Central Bank has begun to reduce its interest rate, which went from 17% to 15% then to 14%. This is proof that trust is slowly coming back. The deposits in banks have begun to increase again, (+3%) during the month of February. Moreover, the decrease in the payments due to foreigners by Russian companies and banks during 2015, in comparison to what they had had to pay back during the 2nd half of 2014, is another factor in the appreciation of the rouble.

As we have already signalled on this blog, we must therefore expect the rouble to appreciate. The movement will be weak as long as the prices of oil will remain depressed. But these prices are in the process of provoking a true economic catastrophe in the sector of shale gas and oil. This can be seen when comparing the variations in the number of rotating drill-bits in North America since the summer of 2014.

We can therefore expect a fall in production in North America beginning in June-July 2015. The price of the barrel should climb back up (in the case of the BRENT) to around 70 dollars a barrel. This should correspond to an exchange rate for the rouble at 42 to 45 roubles for 1 dollar. But we must take into account both the loss of confidence of the Russians in their banks (which could justify an exit of capitals out of the rouble) and, to the opposite, the upwards pressures which will come from the attractiveness of investment possibilities in Russia as soon as the foreign operators will have understood how to circumvent the sanctions mechanisms. This makes for the potential range of stabilization of the rouble being in fact rather broad, going from 50 roubles for 1 dollar (at the lowest) to 35 roubles for 1 dollar (at the highest).

This uncertainty about the range of stabilization of the rouble will certainly favour yet more erratic movements in the exchange rate. This is why we insist on the necessity to implement measures of capitals controls, in order to avoid movements, be they upwards or downwards, the destabilizing power of which upon the economy remains considerable. We are reminding here that even the IMF recognizes the necessity of capitals controls in emerging countries, in the presence of sizeable uncertainties.

The real economy is swallowing the exchange rate shock.

But the most interesting point remains the reactions of the real sector. 2015 was announced to be a disaster year. One may conjecture that some analysts in the United States were indeed wishing for a disaster year, in the hope that massive economic difficulties would fuel a potential hostility against the power of Vladimir Putin. Even the minister of Finance, M. Siluanov, forecast in January a decrease in GDP of around 4%.

However, we are beginning to realize since the beginning of March that the real sector is digesting the exchange rate shock far better than some had thought. The fall in GDP should not exceed 3% during the 1st quarter 2015, and hover around -1.5%/-2.0% for the year 2015. One cannot even exclude, should oil prices rebound faster than expected, that the year 2015 could finish with growth in the 4th quarter. Forecasts have also been readjusted for 2016, when a growth rate of 1.5% minimum is expected. As one can see, the Russian economy is digesting much better the exchange rate shock it went through.

The cause of this resistance is double. On the one hand, households are keeping up their levels of consumption, despite the price hikes related to imported products, and on the other hand, employment is remaining relatively stable. Unemployment has progressed only little, from 5.2% to 5.8%. Over the whole year it should hover at worst around 6.5%. It is important to remember that in 2009, at the time of the financial crisis, it had reached 9.9%.

The reasons for this resistance to the shock of the exchange rate are multiple. First of all, the Russian industry has greatly improved it competitiveness thanks to the depreciation of the rouble. It is maintaining a good level of activity.
 
Then, the so-called « anti-crisis » measures taken by the government are beginning to bear fruit. Granted, the process is slow, and uneven according to the sectors considered. A worrisome straggling slow-down seems to be affecting agribusiness (food-processing) and agriculture. But, all over, the measures are having a positive effect. Finally, the decision of the CBR to lower interest rates rapidly, and without waiting for a significant drop in inflation (which should reach a ceiling in March around 16.5% relatively to March 2014 before decreasing sharply beginning in May) is a strong signal that the authorities are quite decided to use all means possible to maintain production at a high level.

Adapting process in the economy.

It is important to note that the Russian economy is in reality adapting to the sanctions and to a relatively hostile international environment. Companies have changed suppliers, preferring the countries of the Far-East (Taiwan, China, Japan) to the Western countries. We notice a similar phenomenon concerning financial fluxes and the Chinese Yuan is now occupying an ever greater space in investments. From this point of view, there is a coherence between the economic and the ideological evolutions which are concentrating on the question of « Eurasism, » a theme which has become fashionable since the beginning of the 1990s [2]. One may wonder up to what point this accelerated economic transformation has not also occurred in response to what Russian leaders have perceived as a « threat of war » coming from the United States[3].

This is the framework within which one must consider this double movement, both of an integration at the « Eurasian » level, as witnessed by the cooperation program for infrastructures of transportation, signed between Belarus, Russia, Kazakhstan and China, and of an interpenetration of the BRICS, which is materializing in the creation of a new development bank, the Asian Bank for Investments in Infrastructures (ABII). This creation was decided at the BRICS summit in the summer of 2014. After a first deposit made by the Chinese of 50 billion dollars, the capital of this bank is expected to double with the contributions of the other participants, which should allow it to reach a total of 100 billion. This sum amounts already to 2/3 of the capital of the Asian Development Bank, which is an emanation of the World Bank. [4] This new independent banking institution will have its headquarters in Shanghai, the presidency will be rotating, and India should be taking on the presidency first. Similarly, one must take note of the Contingent Reserve Agreement (RCA) also emanating from the latest BRICS summit. It should potentially constitute the future IMF for the BRICS. The aim is to constitute a security net in case of financial shock and a crisis in the balance of payments, for instance if the currency of one of the countries came under speculative attack. This double integration, going hand in hand with Russia's ambitious projects of modernizing its economy, results in providing the latter with an economic depth which largely shelters it from outside short-term perturbations, such as those resulting from the crisis in Ukraine.

The Russian economy is therefore taking a 180° turn which will bring it to develop ever closer links with the countries of Asia and the emerging countries. The only effect of the sanctions will have been to speed up a movement, which was foreseeable over the next ten years. But the impact of this movement on some European economies is already revealing itself to be considerable. The market losses for the German, French and Italian industries will be very difficult to reverse. In fact, at present Russia can even indulge in considering lifting some of the counter-sanctions which had been taken in retaliation and which have hit hard the economies of countries such as Hungary and Greece.

It appears therefore that if some were hoping that the sanctions would bring about an ample social crisis in Russia, which could have destabilized Vladimir Putin, their calculations did in no way take into account the considerable resilience of economic structures in Russia. The failure of these calculations, confirmed by the opinion polls about the popularity of Vladimir Putin[5], are leading the United States and the European Union to the following dilemma : must one maintain, or even reinforce the sanctions, of which one can well see that they have had only little effect, or must one come to admit that the policies of sanctions have been a deep mistake? This dilemma should become ever sharper in the months to come.

Notes
[1] Winkler M.A., « Russia rebounds, despite sanctions », 20 March 2015, Bloomberg, http://www.bloombergview.com/articles/2015-03-20/russia-rebounds-despite-sanctions
[2] The origin of this curent is older, in fact. Voir : N. Riasanovsky (1967), The emergence of eurasianism, in California Slavic Studies, Berkeley, volume IV
[3] Glaziev S., « The Threat of War and the Russian Response » in, Russia in Global Affairs, 23 septembre 2014, http://eng.globalaffairs.ru/number/The-Threat-of-War-and-the-Russian-Response-16988
[4] David Pilling, «The Brics bank is a glimpse of the future » on the Russian television site, 30 July, 2014
http://french.ruvr.ru/2014_10_24/La-Chine-etablit-une-banque-regionale-en-Asie-avant-le-sommet-de-l-APEC-2362/
[5] Le point-AFP «Russie : la popularité de Poutine atteint un nouveau record», Le Point, 07/08/2014
http://www.lepoint.fr/monde/russie-la-popularite-de-poutine-atteint-un-nouveau-record-07-08-2014-1852064_24.php

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 #21
www.foreignpolicy.com
March 25, 2015
Should Putin Let the Ruble Bottom Out?
The Russian president is just the latest in a long line of national leaders with a sentimental, ill-fated attachment to propping up their countries' currencies.
BY DEBORA L. SPAR
Debora L. Spar is a columnist for Foreign Policy, the president of Barnard College, and the author of Wonder Women: Sex, Power, and the Quest for Perfection.

One can almost excuse Vladimir Putin for trying so hard. This is a man, after all, who famously built his public image in part on feats of derring-do: riding shirtless across Siberia, hang-gliding with migrating birds, and releasing a caged leopard into a natural reserve. So perhaps it isn't surprising that the Russian president would leap with similar brashness into his country's economic crisis, precipitated by tumbling global oil prices and Western sanctions. Why not use sheer financial force to wrestle the depreciating ruble back to safety?

At 1 a.m. Moscow time on Dec. 16, Russia's central bank announced a massive hike in the country's interest rate, from 10.5 to 17 percent. Early indicators of the government's move were mildly positive, with the ruble opening the next morning up 10 percent against the dollar. Within hours, though, the weight of the foreign exchange market reasserted itself, hammering the ruble to less than half its starting value in 2014 and raising the dual specters of inflation and recession. Over the following weeks, Putin and his lieutenants proved almost wholly incapable of controlling the two economic forces that mattered most to them: As of mid-January, spot prices for Brent European crude oil hovered near the historically low level of $46 a barrel, and the ruble was stubbornly slumped at 65 to the dollar.

It's clear why falling oil prices and a declining ruble would strike fear into even the leopard-friendly Putin. The Russian economy remains overwhelmingly dependent on oil and natural gas, which in 2013 accounted for 68 percent of the country's export revenues and 50 percent of its federal budget. Diminishing global energy prices could lead to a 4.5 percent GDP contraction in 2015, according to the country's central bank. A declining ruble would similarly wallop the country's holders of hard-currency debt, $130 billion of which come due this year.

What's not clear is how Putin and his colleagues could realistically have expected to achieve anything by hiking the interest rate. Unless the increase was intended to attract foreign capital - a very unlikely event - it could only have led to higher inflation and greater downward pressure on the ruble. The country's international debt was destined to become harder to service; the prices of imported goods were likely to rise; and Russian holders of foreign debt were going to face difficulties in accessing foreign currencies.

Yet Putin is hardly the first national leader to chase a stronger currency at the risk of a weaker economy.Putin is hardly the first national leader to chase a stronger currency at the risk of a weaker economy. In the 1920s, Winston Churchill drew down his country's reserve holdings to bolster the British pound, long after the nexus of global financial power had shifted from Britain to the United States. The result was a marked decline in British industrial competitiveness and a sagging economy that contributed to the unfurling of the Great Depression. Half a century later, U.S. President Richard Nixon struggled to maintain the dollar's position as the world's reserve currency despite the growing financial cost to the United States of doing so. And Mexican President José López Portillo pledged to "defend the peso like a dog" shortly before being forced by his country's collapsing economy to let the currency float, and plunge. In all these cases and many others like them (Russia in 1998, Indonesia in 1997, the United Kingdom in 1992), intervention led solely and inevitably to malaise: higher inflation rates, slower growth, rising unemployment, and capital flight.

Why such a long line of clearly ill-fated policies? Probably because, like many of their citizens, national leaders often seem to feel a physical, sentimental attachment to their currencies. It's an odd vestige, arguably, in a world marked by increasing cross-border flows of foreign exchange, but a powerful one nonetheless. In theory, the value of any currency is an impersonal, apolitical fact - the result of supply and demand in the open marketplace. In practice, though, leaders often associate strong currencies with national strength more generally and thus view declining currencies (and particularly rapidly declining ones) as insults to their prowess.

As a result, in the optics of intervention, a national leader is seeking to convey a certain element of power-broking - to display muscle and an implicit promise that the state is not being abandoned to ruinous outside forces. Think again of Churchill, who in 1925 risked Britain's gold to prop up the beloved pound. The economic wisdom was clear: Intervention would not work. That same year, economist John Maynard Keynes had warned that returning Britain to the gold standard at an artificially inflated rate would lead inevitably to unemployment, class conflict, and prolonged strikes. Yet Churchill proceeded, unwilling to let the pound fall below what he considered its rightful level.

For Putin, too, sitting by as the ruble declined was probably never an option - and still isn't. He likely will keep indulging in efforts to pump up the ruble and draw down Russia's hard-currency reserves accordingly. (In a surprise move, the central bank cut interest rates in late January - but only by 2 percentage points.) Because neither of these measures will do anything to redress the country's underlying economic woes, however, Russia will probably be consigned to muddling through until global oil prices eventually rise again.

What Russia should do is diversify its economy away from anything that involves extracting resources out of the ground and selling them at volatile, internationally set prices. The country should follow the Norwegian example of isolating energy revenues in a sovereign wealth fund, investing the proceeds for the long term, and insulating its broader economy from dependence on commodity markets. It should consider strategies like those employed in Chile, where copper revenues are carefully invested in a broader range of industries and where export earnings during booms are reliably saved for less felicitous days.

Until that happens, Russia and its chest-thumping leader will be caught in a cage of their own making, acting symbolically but without any real effect. And the country will remain on the long list of states making policies based on nostalgia rather than sense.

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 #22
Bloomberg
March 25, 2015
The Central Banker Who Saved the Russian Economy From the Abyss
by Evgenia Pismennaya and Ilya Arkhipov

It was Dec. 16 -- the day Russian traders would later christen Black Tuesday -- and the ruble was in a freefall.

"Intervene! Intervene!" a central bank official shouted.

Governor Elvira Nabiullina watched the currency on her tablet screen react to her emergency rate increase. No, she said, not this time: Russia would no longer fight the market. Speculators needed a cold shower, she said.

That daring decision, related by two people with knowledge of the meeting, has begun to pay off for Nabiullina, 51, and her patron, President Vladimir Putin. Despite sanctions meant to punish Russia for its foray into Ukraine a year ago, the ruble has stabilized. Since Black Tuesday, when it plunged to a record low, the ruble has rebounded 19 percent against the dollar, the most among 24 emerging-market currencies.

Russia still confronts a painful recession brought on by the collapse in oil, and many of its banks are hurting. But for now, at least, the economy has stepped back from the abyss. Finance Minister Anton Siluanov last week declared the worst was over.

Inside the central bank, near Red Square, the lull passes for victory. Nabiullina no longer has to squander foreign-exchange reserves in vain attempts to prop up the ruble. Now she faces the equally daunting task of binding up the wounded economy.

Direct Line

While her central bank is nominally independent, analysts agree Putin is ultimately in charge. Yet Nabiullina has emerged as a power in her own right, with a direct line to the president.

Nabiullina isn't afraid to speak up. When aides urged Putin to impose capital controls last year, she fought against the move and pushed for a freely floating ruble, according to people with knowledge of the matter. Putin heeded her advice -- and then let Nabiullina sort out the details.

"It was a historic moment because she convinced Putin to accept a market solution to a problem that threatened the whole banking system," UBS AG Russia Chairman Rair Simonyan said. Russia might well have veered into economic isolation, he said.

What Nabiullina came up with turned out to be one of the biggest financial gambles of Putin's 15-year rule. First she raised interest rates to punishingly high levels, lifting the benchmark rate to 17 percent from 10.5 percent in one stroke. Then she stepped back from intervening on the currency market.

Talk Strategy

Putin regularly uses a hotline to the central bank to talk strategy with Nabiullina, a former economy minister and presidential adviser who became governor in 2013. When the dedicated phone on her desk rings, everyone else leaves the room, the people said.

"He can't interfere in the day-to-day business of the central bank," said Dmitry Peskov, Putin's spokesman. "He doesn't have that right."

With oil prices holding steady since January and the threat of further sanctions on hold, Nabiullina can now attend to the first recession in six years. Emboldened by Putin's support, she surprised analysts by reducing the benchmark rate to 15 percent in late January, followed with a cut to 14 percent this month.

"The negative peak is behind us," Siluanov said March 19.

'Great Difficulty'

On that point, Nabiullina's former boss at the Economy Ministry, Herman Gref, disagrees. Gref, now head of state-run OAO Sberbank, said lenders have set aside "huge" provisions, forecasting a rise in bad loans.

"All banks are in great difficulty, including us," Gref told reporters in Moscow on March 20. Nor is the economic picture bright: Russia is on track for the biggest drop in consumer spending in six years and inflation is running at 16.7 percent, the fastest since 2002. All of this has the central bank predicting the economy may shrink as much as 4 percent this year.

Nabiullina, for her part, has learned the art of bureaucratic survival from Putin. After the president publicly scolded the central bank for moving too slowly last year, she replaced her head of monetary policy, Ksenia Yudaeva, bringing back Dmitry Tulin, a seasoned regulator, to the central bank. The move was applauded by many economists and let Nabiullina retain Yudaeva, a trusted ally, as head of forecasting and strategy.

'Market Panic'

Not everyone gives the central bank high marks. Pavel Trunin, who runs the monetary-policy department at the Gaidar Institute in Moscow, said Nabiullina spent most of 2014 reacting to the markets rather than getting ahead of them. While letting the ruble float freely will cushion the impact of oil-price swings on the economy, the move came too late to avert a "market panic," he said.

Perceptions of Nabiullina's handling of the crisis are improving, according to a Bloomberg survey of 29 economists. Thirty-one percent said they have a better opinion of the monetary authority now than six months ago, while 21 percent said their view has worsened. In the same poll, 19 respondents gave the regulator a positive rating when asked to assess its role in the Russian economy, with eight neutral marks and two negative assessments.

Russia is getting better news on other fronts. The central bank said Thursday that its international reserves had their biggest weekly increase since last July, jumping by $1.2 billion to $352.9 billion in the seven days through March 20.

Social Media

Still, few in banking had to deal with geopolitics like Nabiullina, the first woman to lead a Group of Eight central bank. As Putin moved to annex Crimea, for instance, she began monitoring social media to gauge investor expectations about the ruble.

Neither Nabiullina nor Putin was prepared for the collapse in oil that upended the economy. Through it all, however, the president has stood behind her.

"One can pick on Nabiullina, but one shouldn't forget that in general her policies are adequate," Putin said after the December rate increase. "The central bank isn't the only one responsible for the economic situation in the country."

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 #23
Russia in Global Affairs
http://eng.globalaffairs.ru
March 19, 2015
The Russian Economy: Resilience But for How Long?
Sanctions and Oil Prices Are Not the Be-All
By Martin Gilman
Martin Gilman is a Professor at the Higher School of Economics-National Research University, Moscow.

Resume: Even in the absence of attempts to isolate Russia politically and economically resulting from the events in Ukraine, the flight of investors from emerging markets as a class and a re-evaluation of risks in emerging markets generally have provoked a move to safe havens.

In recent weeks, an increasing number of analysts and commentators have been referring to an actual or looming economic crisis in Russia. Many compare recent developments, and especially the likelihood of a further deterioration this year, with the Russia economic crisis of August 1998. This comparison is exaggerated at best. It also distracts from the real issue that threatens the country's future economic prospects.

THE 1998 EXPERIENCE WAS UNIQUE

Harking back to the summer of 1998, the Russian economy confronted a set of contradictory challenges. Policymakers were adamant to maintain a managed peg of the ruble at about 6 per U.S. dollar as a point of pride demonstrated by the introduction of the redenomination of the ruble on January 1, 1998, at a rate of 1 new ruble = 1,000 old rubles. In a situation in which foreign exchange reserves barely covered 3 months of imports at the beginning of the year and contagion was engendered in all emerging market economies as a consequence of the Asia financial crisis in late 1997, it was understandable that financial markets were prone to test the resolve of the authorities. Moreover, Russia's post-Soviet public policy was work in progress and economic management was weak.

We all know what happened. On August 17, 1998, unable to roll-over its domestic treasury bonds falling due or repay them (it was even having difficulty finding the cash to pay the army), the Government defaulted on its ruble-denominated debt (totaling the equivalent of almost $40 billion). Major Russian banks, having speculated wildly using borrowed dollars, were suddenly insolvent. Futile attempts by the Central Bank, under significant political pressure from the oligarch owners of the banks, to provide liquidity then completely undermined their new objective to stabilize the ruble at about 10 per dollar. In early September 1998, the ruble was floated and depreciated gradually to about 21 per dollar by the end of that year.

IT IS DIFFERENT THIS TIME

Objectively speaking, in early 2015, the situation is not analogous and there should be few causes for serious concern at least regarding the macroeconomic balances that undermined confidence in 1998. Of course, deep-seated institutional and structural policies to raise productivity and make the economy more flexible remain woefully inadequate, but the popular view that Russia is now in crisis stems from immediate concerns about the macro side. So how to explain the histrionics by both Russian as well as foreign experts lamenting the country's seeming descent into chaos?

The precipitous slide in oil prices is the leitmotif in both stories, as well as being too facile an explanation. Between early January 1997 and late June 1998, Brent prices fell by 56 percent. From late June 2014 to mid-January 2015, Brent oil sank by 60 percent. However, the analogies end there.

In fact, the August 1998 debt crisis was a wake-up call and some important lessons were learned by Russian policymakers. Aside from major fiscal reforms such as the flat personal income tax, centralized Treasury control of all government spending, conservative budget assumptions, and the eventual creation of two sovereign funds as a buffer from rising oil prices, the most significant change was to allow the ruble to float. This has been especially important since the acceleration in the drop of oil prices on international markets starting in late 2014. The Central Bank of Russia (CBR) introduced its move to a free-float in mid-November 2014, that is, a few weeks in advance of the scheduled change, in order to preserve its foreign exchange reserves. Such a wise decision not only recognizes that, as a price-taker in the international oil market, the ruble exchange rate would be inevitably linked to the oil price, it also broadly protected the budget since almost all government spending is denominated in rubles.

As a result of this latter move, the breakeven oil price for the budget has been reduced from about $110 per barrel to about $75 per barrel, and the budget deficit in 2015 should not exceed 3 percent of GDP even if oil remains around $50 per barrel on average.

Prudent macroeconomic policies in recent years, especially since the last oil price plunge in the latter half of 2008 (when prices fell from $141 per barrel in early July to $35 per barrel in late December), make the Russian economy much less vulnerable to external financial disruption. Most notably, unlike in 2008, the Russian corporate sector is now a net external creditor and public sector external debt is minimal.

Normally risks concerning sovereign debt are assessed by the main Western credit rating agencies on the basis of their capacity and willingness to repay their debt. From a macroeconomic perspective at least, their actions in recent weeks to downgrade Russian sovereign debt, even threatening to reclassify it as below investment grade or "junk," look overdone. Since the sharp drop in the ruble exchange rate has shielded the government's oil revenues in local currency, the oil shock is therefore unlikely to have a large impact on the fiscal position. And, although the foreign exchange sell-off has increased the stock of foreign exchange-denominated debt in ruble terms, the aggregate balance sheet of the corporate sector should actually improve as the stock of foreign exchange-denominated external assets is even larger. Since sanctions have made it all but impossible for Russian corporates to borrow in the West, net repayments have caused Russia's external debt to shrink to about $600 billion from $729 billion at the beginning of 2014. In principle, Russia's total foreign debt of $363 billion remains completely covered by CBR reserves of $386 billion in CBR reserves, once the debt is adjusted for debt in rubles (about $106 billion) and inter-company debt (about $131 billion).

Another strong point in Russia's advantage in coping with the current oil price decline is the continuity of senior policymakers in both the Ministries of Finance and the CBR. These are people who have already lived through and managed possibly even more serious economic challenges in 1998 and again in 2008. They provide some reassurance that at least earlier mistakes in policy will not be repeated.

One of the major challenges to economic policy under current circumstances of weakening oil prices and a lack of confidence in the ruble as inflation accelerates as a result of the pass-through of the earlier, rapid ruble depreciation is how the CBR will manage the difficult trade-off between the Scylla of financial stability and the Charybdis of a tight monetary policy to stabilize the exchange rate and bring down the rate of price inflation. The weak growth prospects and a flight to quality within a banking sector with too many small banks create enormous pressure on the CBR to provide liquidity support. Yet in doing so, the monetary authorities must know that this ruble liquidity will flow into the foreign exchange market, undermining their very efforts to stabilize the exchange rate. And even though policymakers recognize that there is an urgent need to rationalize the banking sector, they are understandably reluctant to apply such a hard-nosed policy which risks a serious run on the banks. Nevertheless they need to be more ruthless in bank restructuring.

RUSSIA IS NOT ALONE

It should be stressed that, while Russian economic performance in recent months has seriously deteriorated, this should not be seen in isolation. There has been a tectonic shift in the global economy in which Russia has been adversely affected along with many other emerging market economies, especially among the energy and commodity producers. The U.S. economy, for the moment, is one of the few bright spots whereas most of the rest of the world, including China, is slowing down and, in the case of the Eurozone countries, actually deflating. Desperate monetary measures to stoke domestic demand have been employed in most advanced economies and the attempt to export unemployment via currency war, most blatant in the case of Japan, are stoking rising volatility in international financial variables.

The fear of secular stagnation, as Larry Summers, one of America's leading economists, calls it, evokes experimentation by policymakers around the world, many with uncertain and no doubt unintended consequences. With the global context so fraught, the Russian economy is buffeted by more than the crash in oil prices as in 2008. Even in the absence of attempts to isolate Russia politically and economically resulting from the events in Ukraine, the flight of investors from emerging markets as a class and a re-evaluation of risks in emerging markets generally have provoked a move to safe havens. The U.S. dollar and American financial markets have been the principal destination for this redistribution of assets. Effectively this portfolio reallocation has impacted on the decisions of Russian investors as well as foreign investors holding Russian assets. Plunging oil prices and the ruble exchange rate have exacerbated these pressures, resulting in substantial capital outflow from Russia.

AND THE SANCTIONS?

The economic and financial sanctions imposed on Russia progressively during 2014 by a large group of Western countries, led by the U.S., have also played a role. In part, the direct impact of the sanctions has raised the cost of capital and created uncertainties about debt roll-over as well as new financing. Even worse would seem to be the chilling effect on Western business and banks across the board in view of the uncertainty about the future path and timing of sanctions. Many accounts in recent weeks have blamed the sanctions, in conjunction with falling oil prices, on the seeming sudden deterioration in the Russian economy. It is a compelling narrative for both those imposing the sanctions to be able to claim that they are working as intended (post hoc ergo propter hoc) as well as those in Russia who would like a convenient scape-goat for the deteriorating economic situation.

Various numbers have been mentioned in Russia and abroad about the quantitative impact of the sanctions. More important, in my view, is the change in perceptions. Focusing on the Russian side of the equation, it seems that, after the initial shock effect, the economy is absorbing the impact, leading to a diversification to other markets and sources of financing. A suddenly much more competitive ruble may not do much to mitigate some of the adverse effects from the sanctions but over time it may help promote a healthy reorientation of the economy that policymakers had been reluctant to pursue. Another silver lining in this dark cloud is that not only have Russian corporates significantly reduced their foreign debt, but the sanctions have no doubt prevented them from a serious borrowing spree in low-cost dollars last year that would by now have become a huge repayment burden. And let's be clear: if oil prices had not plunged in world markets, there would be little cause for concern in the short-term about the Russian economy. Even so, I am still not convinced that Russia will suffer more than a minor recession in 2015.

Even if some of the more dire predictions for Russia's GDP in 2015 are realized, it should be understood that Russia would still be a major economic player in the world. It is surely wishful thinking by some in the West who act as if Russia can be safely ignored as if it were a Cuba, North Korea, or an Iran. First, the reality is that Russia is a traditional European power of more than 140 million well-educated and aspiring middle-class consumers. Furthermore, Russia is a highly globalized economy with its international trade (exports + imports) accounting for a larger share of GDP than in Brazil or the United States, and about on par with China and the United Kingdom according to World Bank data. Second, the longer Russia is ostracized by Western-dominated institutions and business, the more it will shift its economic and financial focus to Asia and other regions of the world. Over a longer period of time, much of this shift may not be reversed.

THE WORST IS YET TO COME

In any case, Russia will have to navigate a much more difficult international environment, not just because of sanctions. There is an unusual degree of fragility in the entire international monetary system nurtured by six years of exceptional policies and experimentation by central banks in most of the advanced economies.

This is not the worst challenge facing Russia. To varying degrees, almost all observers of the Russian economy blame the deteriorating situation on some combination of oil prices and sanctions. However, even a cursory view of the data is more disturbing and defies simple explanations. Perhaps the really bad news is that Russia's poor economic performance began well before oil prices started to drop and sanctions were imposed. Real GDP decelerated to 1.3% in 2013, from 3.4% in 2012, and was slowing down in 2014 well before sanctions and especially the oil price drop. Clearly something else, more disturbing, is going on, and is being conveniently masked by oil prices and sanctions.

It is an old mantra that, unfortunately, bears repeating. Russia must diversify away from energy and raw materials to economy modeled on the use of human capital and a dynamic, productive private sector. This has been official policy at least since the Gref Plan for structural reforms was formulated back in 2000. The President, Prime Minister and other senior officials have reiterated this approach ever since and yet there is little to show for it.

The pity is that Russian policymakers limited themselves only to the necessary macroeconomic policies as a result of the 2008 oil price debacle when Brent fell by 75 percent in the second half of the year. The sufficient policies to lessen Russia's oil dependence never happened as oil prices then bounced back up to about $70 per barrel by mid-2009, and grew gradually to the $100 per barrel range by early 2011 until mid-2014. As German Gref and Alexei Kudrin, among others, have remarked, the country avoided the tough decisions that might have lessened its dependence on oil and other commodities. Instead, its dependence grew all the greater. Some commentators have even drawn the facile comparison with the late Soviet regime, implying that the current tendency is irreversible without a change in the power structure.

What is clear is that the growth model underlying the economy in the previous decade, of using existing capacity better and expanding the services sector, has reached its limits. A dearth of productive private investment impedes progress to a new growth oriented economy. The policies needed to move in that direction are well known. These comprise, inter alia, the strict application of the rule of law and contract enforcement, an impartial and efficient judiciary, transparency in government at all levels, privatization and deregulation, and vigorous anti-corruption measures.

The concern must be that there is a manifest lack of political will to pursue the opportunity offered by recent events. Perhaps later is better than never. Maybe when the Brent price falls to $25 per barrel and stays there for a while, the attitude towards serious institutional reform will change. If not, the future prospects are indeed somber whatever the oil price or Russia's foreign relations. On this will depend, more than anything else, Russia's position as a world power in the 21st century.

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#24
Forbes.com
March 25, 2015
How Much Energy Does Russia Have Anyways?
By Jude Clemente
Principal at JTC Energy Research Associates, LLC
[Charts here http://www.forbes.com/sites/judeclemente/2015/03/25/how-much-energy-does-russia-have-anyways/]

The ongoing conflict in Ukraine has once again thrusted energy into the spotlight. Russia, after all, is the world's 2nd largest producer of fossil fuels, sources that account for over 80% of the world's energy supply. Last year, Russia produced a whopping 10.7 million b/d of oil, 23 Tcf of natural gas, and 365 Mt of coal. Russia knows that hydrocarbons will remain a vital strategic asset: even in the IEA's best case policy projection (450 Scenario) for renewables, fossil fuels retain a grip on 60% of global energy supply in 2040. President Putin is KGB hardened and his 1997 PhD dissertation, Strategic Planning Of The Reproduction Of The Resource Base, was over 200 pages on how to exploit Russia's vast natural resources for political gain. In the U.S., "national champions" are the Ohio State football team; in Russia (and China), they're huge, powerful organizations leveraged through governmental policy to not only seek profits but to also advance the national interest. Oil and gas exports are 70% of Russia's $550 billion annual exports. Russia just set a post-Soviet oil record and has an Energy Strategy to 2035 where "the primary task is to speed up entry into Asia-Pacific markets," responsible for 60% of the world's incremental demand growth. This grand plan has capital expenditures in the energy sector gradually rising to $800 billion from 2031-2035, against $460 billion for 2011-2015. Constant globalization confirms the global energy system as a "growing string of interdependencies," and competition for Russian resources will remain high. A rare negative population growth rate gives Russia a just as unique expanding capacity to export energy. Yes, we're going to need to know a lot more about this energy giant than we apparently do:

-Is the 3rd largest oil producer, 2nd largest exporter, and fastest growing supplier to all-important China
-Is the 2nd largest natural gas producer, largest exporter, and leads in proven reserves
-Has a 455-year supply of coal and surging exports to Europe
-As a % of total production, exports 70% of its oil, 35% of its coal, 30% of its gas
-Supplies the EU with 33% of the bloc's natural gas and 35% of its crude oil
-Signed a $400 billion, 30-year gas pipeline deal with China that could hurt U.S. and Canada LNG export opportunities for the critical, higher-priced Asian markets
-Enjoys a regional pipeline dominance in the region that limits development in the other energy-rich former Soviet states
-Has managed to actually extend its share of total European gas imports from 48% in 2010 to 64% in 2014, despite price disputes that stopped European-bound Russian gas via Ukraine in 2006 and 2009
-Has liberalized exports to become a major player in the very fast-growing LNG business, having as many as six big new projects that could expand production 6-fold to 60 mtpa by 2020, 25% of the current market
-Indexes the price of its gas to the price of oil, which, although down now, will eventually regain its upward trend
-Has usable hard currency reserves of over $400 billion and a $75 billion National Wealth Fund to help weather crises

Russia's Critical Role in The Global Fossil Fuel Market

Proven reserves, however, are just snapshots in time illustrating what's available today given prevailing prices and technologies. These conditions are always changing and in time more of the "resource" gets elevated into the "reserve" category. Consider the USA, with a proven 34 billion barrels of crude oil, versus 21 billion at the end of WWII, despite the extraction of over 180 billion barrels over that period. Remember: this crucial difference between resource (what's available to become available) and reserve (what's available today) is another misconception the "get off oil now" crowd likes to capitalize upon. At 6.7 million square miles, Russia is easily the largest country in the world, covering one-eighth of Earth's land surface. Russia thus still has loads of unexplored areas, and is now even laying claim to broad swaths of ocean floor in the Arctic, a frontier oil and gas jackpot that could retain 15% of the world's undiscovered oil reserves and 30% of the gas. PwC credits Russia with 43 of the 61 large oil and natural gas fields discovered so far within the Arctic Circle. State-owned Rosneft, the world's largest publicly-traded oil company and yielding nearly 5 million b/d, wants to pump $400 billion in Arctic hydrocarbon production by 2030 Modern seismic techniques are helping companies detect potential resources in Russia's gigantic unexplored areas.

Russia's Conventional Hydrocarbon Resources

Russian national champions have sat and watched with envy the U.S. oil and gas revolution and now want "fracking" technologies for themselves. The unconventional opportunities are staggering. The Bazhenov shale in Western Siberia could contain as much as 100 billion barrels of recoverable tight oil, which is five times larger than the Bakken shale in North Dakota that sparked America's oil renaissance. In fact, the Bazhenov is believed larger than the next 15 biggest shale opportunities in the world combined. The EIA estimates "a risked shale gas in-place of 1,920 Tcf, with 285 Tcf as the risked, technically recoverable shale gas resource." As such, Russia actually still remains a sleeping energy giant (remember when Russia oil production was "about to peak?"). Shale oil and gas in Russia is a ways off, and not necessarily needed at this point, but it surely won't be hindered by the environmental policies that block Europe and are likely to drag the USA. Putin's goal of 450,000 b/d tight oil by 2020 seems unlikely for now since the state-of-art technologies required remain out of reach. Western sanctions, augmented by the collapse in crude prices, have reduced capital spending and delayed key energy projects in Russia. The largest state-connected banks no longer have access to Western financing (see Russia's energy financing problems here). Less myopically, the ability to separate business from politics often goes underrated: IOCs realize Russia's massive resource base, and Russia knows it will need more money and expertise. The liberalization of the LNG export business in 2013 that ends Gazprom's monopoly is itself a sign that Russia's energy sector is becoming more globalized.

From 2014-2035, the IEA estimates that the global energy supply system requires over $40 trillion in new investments, with oil ($13.7 trillion) and gas ($8.8 trillion) constituting over half of that. Russia alone needs close to $2 trillion for oil and gas. For petroleum, the world's primary fuel, Chevron concludes that over 200 billion barrels of base business projects and new field production will be needed by 2030 alone. And now, low crude prices are putting $1 trillion in investments in future projects at risk. Ultimately, the energy might of Russia can only grow: over 80% of the world's population resides in undeveloped nations, and hydrocarbons will remain the key energy sources for decades to come. They're cheaper, more reliable, and fully entrenched in a global energy system that devours 38 million tonnes of oil equivalent every day, where Russia is the 2nd most important supplier.

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 #25
Dances With Bears
http://johnhelmer.net
March 26, 2015
THE YELTSIN TAX RETURNS TO RUSSIAN POLITICS - WAGE ARREARS RISE, PUTIN SUPPORT DECLINES
By John Helmer, Moscow
[Charts, photos, and footnotes here http://johnhelmer.net/?p=13014]

The late Yegor Gaidar, when acting prime minister of Russia, thought up the idea of the Yeltsin Tax. The late Boris Nemtsov didn't think it was such a bad one when he was first deputy prime minister. The one still surviving officeholder responsible for the idea is Anatoly Chubais, chief executive of the state technology corporation Rusnano; he is unelectable to anything and fortunate to be alive. Their idea was the 100-percent withholding tax which Russians name after President Boris Yeltsin and his reforms.

In practice, it was the outcome of deliberate delay in paying wages by state and public institutions, for lack of budget funds from the federal Finance Ministry; and refusal to pay wages by commercial organizations, shareholding corporations, and private companies.
According to the Helmer theory of Russian political economy, first propounded [1] in 2002, people who haven't been paid spend their time blaming the Kremlin for their pain. When arrears rise, the president's approval rating falls.

The first time this happened over a sustained period after Vladimir Putin commenced his first term as president was between May and August of 2000. For every 1% increase in the arrears, month to month, Putin's rating fell by 0.5%.The sharp fall in the public approval rating for the president in mid-2000 followed by one month an 8% increase in Finance Ministry-ordered wage arrears. The Kursk submarine disaster compounded the fall in Putin's rating at the time because it reinforced the public perception that he was powerless to stop catastrophe or remedy ills.

The trend up and down in arrears and in political rating continues to hold, even though the magnitude of the Yeltsin arrears has been much greater than the Putin arrears.

In 1996, immediately after Yeltsin's narrow reelection, the countrywide wage arrears total peaked over 103 billion rubles. It fell during 1997, then started up again in 1998, peaking in October of that year, just weeks after the financial crisis, at 88 billion rubles. In Putin's first term, the arrears number peaked in the spring of 2001 at a figure of 34 billion rubles. As the numbers went up earlier that year, the official statistics showed it was commercial or private enterprises rather than public or government bodies that were to blame. By imposing more budget discipline, Putin pulled both the arrears and his rating out of their common dive. For more, read this [2].

This year, since January the official statistics show that as the rate of inflation has risen to almost 17%, real Gross Domestic Product (GDP) has been contracting - at a rate of 2.1% in January, 3.6% in February. The first sign that the government and private employers are passing on the cost of the contraction to wage-earners was in January. Before then it was reported that budget payments had been running on time almost everywhere in the country. In December the trend for corporate arrears was rising in 27 regions, but declining in 42. Total measured arrears that month came to less than Rb2.1 billion. The figure had declined in November and December.

The new monthly statistics [3] show that the trend is now reversing, and arrears are growing. By March 1, Rosstat, the state statistical agency, reports the arrears aggregate has jumped 14.7% over the February report and is now Rb2.9 billion. More than half this number, Rb1.98 billion, comes from the state-funded sector, and the failure of these budget organizations to pay on time has almost tripled, compared to January. More regions are now reporting private business arrears than are reporting stable payment schedules. The worst region is Krasnoyarsk, in central Siberia, where the largest private employers are Rusal, the state aluminium monopoly run by Oleg Deripaska, and Norilsk Nickel, controlled by Deripaska and Vladimir Potanin. St. Petersburg is also prominent among the wage-payment laggers. The Crimea leads for payments on time.

A breakdown of arrears by industry sector reveals that at the moment manufacturing industries account for most of the problem, followed by construction, transport, agriculture and forestry.

The negative trend is a warning of political impact to come, though compared to the Yeltsin tax the magnitude of the current arrears is very much smaller than in the 1990s. For the last report on Putin's approval rating, as it has climbed in response to the events in Ukraine, European sanctions, and the US war for regime change, read this [5].

Since then, the Levada Centre measurement of Putin's approval rating has been more or less stable just below the year-long peak of 88%. The trend line is running like this:

Alexei Grazhdankin, an analyst at Levada, confirms there is a correlation between wage arrears and disapproval of Putin's performance. Levada is monitoring the parallel trend as closely as the Kremlin is watching.

In January, a Levada Centre survey found there was a 7-percentage point gap for those whose pay has not arrived on time. According to the survey, 18% of respondents reported a delay in wage payments for themselves, their families or friends over the preceding six months; among this group approval for Putin was at 78%. This compared with an overall rating that month of 85%.

In the last week of February Levada measured again. Putin's rating was up a point to 86%; those reporting wage arrears dropped to 9%, and again the magic 7 percentage points - 79% Putin approval rating among those suffering a wage-payment delay.

The problem is getting measurably worse, however. According to Grazhdankin of Levada, asked if they are expecting wage payment delays in the coming weeks, 5% said yes. In that group, Putin's approval rating has dropped to 63%.

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 #26
Russia licenses CNN broadcaster

MOSCOW. March 24 (Interfax) - Russia has issued a universal broadcast license to CNN, press secretary of the Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor) Vadim Ampelonsky told Interfax.

"An order to issue a universal broadcast license to CNN has been signed," he noted.

The newspaper Izvestia said earlier that CNN International had received a universal broadcast license from Roskomnadzor.

A CNN representative confirmed to the newspaper that a ten-year license was issued on March 23.

In turn, Roskomnadzor chief Alexander Zharov told Izvestia that CNN had been actually issued a license.

"I welcome CNN's strict compliance with the agreements reached at the negotiations and believe that their content policy will be equally precise and impeccable," Zharov said.

CNN applied for a universal broadcast license to Roskomnadzor on February 17. Back then Ampelonsky told Interfax that the service had 30 days to process the application but "most probably, a decision would not take so long."

The European office of Time Warner Concern notified Russian cable operators in November 2014 about the intention to stop CNN broadcast in Russia in 2015. The news channel was founded by Ten Turner in 1980. It was one of the first in the world to begin operation 24/7.

The CNN office in Russia opened in 1983, and the channel started airing its programs in the country in the early 1990s. As of late, its broadcast was limited to cable and satellite channels lately.

CNN did not receive a broadcast license in Russia earlier but the national authorities had no objections to the airing of its programs. Roskomnadzor said it had nothing to do with the CNN decision to halt the broadcast in Russia.

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 #27
Moscow Times
March 26, 2015
Wagner Opera Scandal Reflects Deep Divide in Russian Society
By Ivan Nechepurenko

An avant-garde production of a Wagner opera in a Siberian city that has seen conservative Russian Orthodox activists declare war on the liberal intelligentsia is a sign of things to come, some in Russia fear.

The production of "Tannhauser" at the Novosibirsk Opera and Ballet Theater is accused of the crime of insulting the feelings of religious people, and has exposed the sharp divisions within Russian society: What some perceive as a sophisticated work of art was interpreted as offensive blasphemy by others.

The high-profile scandal, which has seen the country's Culture Ministry weigh in on the side of the Orthodox activists, is a "pure political action whose goal is to crush the independence of modern art and create new instruments for the censorship of creative work," Irina Prokhorova, one of Russia's leading culturologists, told The Moscow Times this week.

"The problem is that the hysteria of many 'believers' is determined by the fact that such behavior works as a social lift for the worst part of our society. Today, just as in Soviet times, it is possible to swiftly make a career without many professional competencies and skills simply by emphasizing personal patriotism and spirituality," Prokhorova, who together with her billionaire brother founded the Mikhail Prokhorov Foundation that supports many regional cultural initiatives, said in e-mailed comments.

At the other end of the spectrum, the Church sees the conflict as redressing an imbalance in society.

The "Tannhauser" scandal reflects the desire of the liberal intelligentsia to preserve "its monopoly of state funds that they earned in the 1990s, when it was decided that innovation is always good, and traditions are bad," said Vsevolod Chaplin, spokesman for the Russian Orthodox Church.

"The reason why this scandal has reached such heights is because many people want to preserve their place under the sun," he told The Moscow Times in a phone interview.

The fierce debate is not limited to public figures. Multiple advocacy groups and letters of petition have been established on social networks during recent weeks, with some people calling for the director to be prosecuted and others calling for his works to be performed on the stages of the country's top theaters.

The Charges

In 30-year-old Timofei Kulyabin's staging of Wagner's story about a contrary medieval composer who takes part in a song contest, the action is transposed to the modern day and the protagonist enters a film competition with his work on the unknown years of Jesus Christ that were not described in the New Testament.

The film, whose action is also portrayed on stage, suggests that between the ages of 12 and 30, Jesus lived in "Venus's grotto" - which also serves as the film's name - where he is tested by the temptations of love and pleasure. At the end of the film, Jesus destroys the grotto and leaves the world of fantasy for the real world of suffering and death.

At the film competition, the character of Tannhauser presents a poster for his film, which depicts a crucifix between a naked woman's open legs. It was the poster that elicited the most criticism from Orthodox activists.

Ironically, in the opera itself, which premiered in December, the poster also sparks heated indignation from other contestants and the public, who banish Tannhauser from the town of Wartburg where the contest takes place.

On March 10, a local court in Novosibirsk threw out an administrative case brought by prosecutors against Kulyuabin and the theater's director, Boris Mezdrich, of offending the feelings of religious believers. The proceedings were initiated by the regional leader of the Russian Orthodox Church, Metropolitan Tikhon.

Public actions that offend religious believers' feelings were made a crime in 2013 following an anti-Putin performance by female protest group Pussy Riot in Russia's main Orthodox cathedral the year before. The crime carries up to three years in prison.

The Orthodox camp did not give up following the court's decision, and has called for Kulyabin to face criminal prosecution, a proposal taken up with gusto by Yaroslav Nilov, head of the State Duma's committee on public associations and religious organizations.

"I believe it is better to bring criminal proceedings against one person than let others publish such materials and incite others to revenge and acts of terror that can result in innocent victims, including you and myself," Nikov told Russian News Service radio earlier this month.  

A Time to Compromise

In an open latter about the scandal, Kulyabin wrote that "the artistic decisions that emerged during work on the production were determined by Wagner's opera, which I have tried to deliver to spectators.

"There was no provocation or any desire to scandalize the public," he wrote.

The director declined repeated requests to comment on the situation to The Moscow Times.

Amid the scandal, Kulyabin agreed to replace the controversial poster with a blank piece of paper for the opera's second two performances in March. Orthodox activists, however, continue to demand that the production should be struck off the theater's playbill altogether.

Some have claimed that they are defending the rights of Wagner, whose legacy, they say, has been compromised by Kulyabin's production.

"The church is often accused of fighting art. The church does not fight art, but wants to defend it. Today we are in a situation when we need to defend great authors, including Wagner," Vladimir Legoida, a spokesman for the Church's Moscow Patriarchy, told RIA Novosti this month.

No Backing Down

Both sides have signaled their readiness to defend their beliefs with open letters and rallies in central Novosibirsk, but while the intelligentsia has called for a dialogue, many Orthodox activists have demanded a public apology and an inspection of the theater's finances.

The Novosibirsk Orthodox Diocese has called on the Federal Security Service, Prosecutor General and Investigative Committee to conduct an objective investigation into the activities of anyone connected with the "Tannhauser" production.

"This opera has insulted religious believers' feelings, has instigated instability in society and is capable of destroying the good soul of our nation," the diocese said in a statement Saturday.

Orthodox activists now plan to stage a rally in central Novosibirsk this Sunday, with the participation of a boxer-turned-Duma Deputy Nikolai Valuyev.

Not to be outdone, the Novosibirsk intelligentsia is planning its own rally in the city center to defend freedom of creativity.

Silver Lining

While the storm around Kulyabin's "Tannhauser" - the first Wagner opera that the prestigious Novosibirsk theater, often dubbed Novosibirsk's coliseum for its size, has produced in the past 50 years - has left some cultural figures despondent, it has also demonstrated that they are a force to be reckoned with. Numerous theater directors, actors, musicians, composers have issued statements in support of Kulyabin and his work.

The director of Moscow's legendary Bolshoi Theater has invited him to work at the theater, the TASS news agency reported.

And for Kulyabin himself, for whom "Tannhauser" was his first full-scale opera production, the fallout may not ultimately turn out to be a bad thing.

Mark Zakharov, the eminent director of Moscow's Lenkom theater, who has also invited Kulyabin to work at his theater, offered Kulyabin some advice in a humorous comment in the Moskovsky Komsomolets newspaper on Sunday. Zakharov advised Kulyabin to order a Mass in honor of the Novosibirsk bishop who organized him "a brilliant PR campaign with a loud scandal" and thus launched his career on a national scale.

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#28
www.opendemocracy.net
March 25, 2015
Interview with a murderer
There are currently 59,000 women in Russian penal establishments. For many of them prison is not so much a punishment, more a way of life.
By Ekaterina Loushnikova
Ekaterina Loushnikova is a radio and print journalist based in the city of Kirov.

According to the International Centre for Prison Studies, there are currently 671,700 Russians serving sentences in penal establishments, of whom 59,000 are women. Only the USA and China have more female prisoners (over 200,000 and 100,000 respectively). According to human rights organisations, conditions in Russian prisons and prison camps are among the harshest in the world. The harsh climate is one obvious factor, but inadequate nutrition, physically demanding and low paid work, isolation in a punishment cell for the slightest misdemeanour, bullying, beatings, and other violence from prison staff are all also the norm.

Russia's female prisoners

Women prisoners are usually too frightened to complain to the legal authorities or human rights groups, as this might trigger immediate and severe punishment. And it is not just the camp administration that exercises power over its population; there are also the 'overseers' - prisoners who take charge of the others in the same barracks. Some of these overseers work with the administration, but others refuse, preferring to observe their own 'criminal code.'

'Overseers' collect 'tribute' from their fellow prisoners and are responsible for 'order'. But this 'order' has nothing in common with either the law of the land or the normal rules of human interaction. These are the rules of the criminal world, according to which it is shameful to work and honourable to thieve.

Female criminals usually live in 'families'. Lesbian relationships are common, and young and attractive 'new girls' often become objects of sexual harassment from more hardened women prisoners. Most Russian prison camps are also breeding grounds for potentially fatal illnesses, with HIV/AIDS now added to the traditional TB. The prisoners most likely to contract HIV/AIDS are young women serving long sentences for drug-related crimes.

Unlike male prisoners, who often receive visits from their wives and children or even manage to initiate relationships through lonely-hearts columns, women prisoners are often abandoned by everybody from their previous lives. Their husbands divorce them. Their lovers don't want to wait for them. Their children are ashamed of them, and their friends forget them. These 'outcasts' are only ever visited by their mothers; and they find it very difficult to regain their previous job status after their release. Often they are unable to find any work at all.

All too often, the easiest road for these 'criminals' is straight back to prison. At least there everything is familiar, there is food to eat and somewhere to have a bath and sleep. A woman sent to a 'penal colony' for even a petty crime such as shoplifting or vandalism will most likely be unable to get back on the 'straight and narrow', and will become a hardened criminal - a 'repeat offender' as the courts call it. These women serve sentences of not just a year or two or even ten. They are prisoners for life.

The women's zone

Even veteran guards prefer not to work in the women's 'zone' - a term Russians often use for a penal colony.

'There's no animal worse than a female!' a member of the prison riot squad told me. 'Today she'll be making eyes at you and tomorrow she'll stick a shank into you. You never know what to expect from these bitches!'  

I met one of these 'bitches' in a prison camp near the small town of Omutninsk in the Kirov Region, about 1000km east of Moscow. Her name was Valentina, Valya for short, and she had spent 36 out of her 53 years in similar places.

'I was a headstrong kid right from the start', she happily told me after asking for a smoke. But she didn't care for my menthol cigarettes, and after cheerfully cursing me she lit up one of her favourite rough, filterless 'Belomor.' Valya was a chain smoker, stopping only now and then to clear her throat, and was known throughout the camp as 'Valya Fag-end' - a good nickname for her as she was tiny (no taller than a child), skinny and fidgety. But she was also bent over like an old woman and appeared to be of indeterminate age and gender. A kind of human fag-end, chucked out of normal society but not yet burnt out. Her voice was hoarse and throaty, like a man's. She was a thief of long-standing, and feared nothing.

A life in and out of crime

'I started off in juvenile', she told me. 'I was 16. We lived in a village with a shop on the edge of it, and the lads and I robbed it - as a test, a dare. We found about 500 roubles in the till - old, Soviet roubles, and also made off with beer, vodka, tinned stuff, sweets, and a blouse with lace on it.

'It was the blouse that got me caught by the cops - one of the lads grassed on me. Bastard! But I know who it was and I'll get the prick! Just give me time, Katyusha!' (Valya had taken an instant liking to me, started calling me by a pet name, 'Katyusha', a diminutive of Ekaterina. I had no objection).

'Have you ever been in a prison wagon, Katyusha?' she went on. I shook my head in fright, shocked by the very idea. 'You haven't, have you? I remember travelling in one with a girlfriend who had 48 bodies on her conscience. She was an interesting woman, a real passionate type. She would sleep with a man and then bump him off in the morning - either strangle him or knife him right in the heart. But I wasn't into that then.'

'Did you ever love anybody, Valya?' I asked cautiously.

'I was married once. His name was Alikhan - he was a Chechen. There was an army base at the village, and he was doing his military service there. We met at a dance and I took a fancy to him - he was smitten, he fought for me. He would see me home and we would kiss and cuddle and then one evening I brought him in to meet my parents. My dad asked him if he wasn't scared, and he said, "Vala and I (he called me Vala) are in love! I'll take her back home to Grozny!" Dad chuckled: "If she doesn't take you to Bystritsa first!" Bystritsa was where the local cemetery was ...'

'So we got married and started living together, but as soon as we got in to bed together I felt like I was allergic to him ... I didn't need all that sex! And my Mum said, "At least have a kid with him, Valechka, then at least we'll have a grandchild!" Then I realised my periods had stopped, my breasts were getting bigger, I felt sick and couldn't even look at food. Mum said, "That's it, you're pregnant!"

'So I threw Alikhan out the same night. "What are you doing?" he asked, "I'm your husband! We're going to have a baby!" But I got his stuff together and threw it out of the house. "Get lost, I don't need you anymore! It's my baby!" So he went back to Grozny and I never saw him again.

'When I went into labour, they got me to the hospital and there I was, yelling and swearing! The doctor came running and said, 'The baby's too big; she'll never push it out!' So they took me off into surgery and I had a caesarean.  When I woke up in the morning I immediately said, "Show me what I gave birth to!" They brought me my baby girl, who weighed 5kg and was 54 centimetres long, with her head covered in black curls! I turned her over - she had arms, legs, a wee-wee - everything was where it was supposed to be.

'For four months I didn't leave her once, and fed her every three hours. I had loads of milk, and she was really plump and red-cheeked. But then I just switched off - it was like the devil whispered to me! I left the house, left my daughter with her grandparents, and took off! I started hanging about, partying, thieving! I stole 70 roubles and got four years for it ... Ah, it's a pity we can't have a drink together, Katyusha, but Mr Prison Governor doesn't allow it! We could always sing, though!'

And Valya Fag-end began to sing a sad prison song. She sang in a throaty, cigarette-stoked voice, but with perfect pitch.

'Let me tell you all a tale
Saw it with my own two eyes
A little girl was being tried
Though she only was a child ...
She asked the court if she could speak
The judge said yes, go on my dear!
As soon as she began her tale
The room began to fill with tears.
"I knew him since I was a child
I'd go with him to rob and thieve
And in my seventeen short years
He was the only one for me!"'

At the last line Valentina burst into tears herself, obviously remembering her own sad life, although it wasn't a husband or boyfriend that she loved, but the free life of crime.

From robbery to violence

'Have you ever killed anyone, Valentina?' I asked.

'I did, Katyusha. I told you I was headstrong. One day I came home, and my dad was sitting crying and his eye was all bloody. My dad didn't smoke or drink. He worked all his life and brought up six children; and I was the only jailbird, the black sheep of the family. "What happened, Dad?" I asked. And he said, "My brother got drunk and came to ask me for some money to buy vodka. But I wouldn't give it to him, so he hit me." I just flipped! How could someone hit my dad - the person who gave me life, showed me the world? So I went to sort it out with my uncle.'

'When I got to his house my auntie was pounding potatoes for the pigs with a wooden mallet, and my uncle was sitting washing a snack down with vodka. I said, "Hair of the dog, eh? I'll give you a real hangover!" And I grabbed the mallet from the table and brought it down on his head - once, twice! His wife was screaming, "You've killed him, you've killed him!" Then I went home. The next morning the cops turned up: "Did you kill your uncle?" And I was, "Yes! 'Cause nobody hurts my dad!"'

'I got six years for my uncle - he survived. Turns out I hadn't killed him after all. I did the full six years, every day of them. When I got out my daughter was growing up, she was shy of me, didn't recognise me, and my mum had turned into an old woman. And I didn't get to see my dad again - he had died when I was in jail. I gave him a proper burial and got myself a job as a caretaker. And I worked, made enough to keep us, lived quietly; didn't bother anybody.'

'But I could see that my mum had become very down; she was always wiping away tears when she thought I wasn't looking. I asked her about it and she told me: "The cops have been hassling us, Valya! As soon as you got back they were round here - pay up, old girl, for your jailbird daughter! At first it was 1,000 roubles, then 3,000, and now they're asking for 5,000! Where am I going to get that sort of money? I asked. I've only got my pension". And they were like, "Pay up, or we'll send her down again! We can always find a reason!" And they used such language as well! They said they'd be back and if the money wasn't there they'd send you back to jail". I said, "Don't cry, Mum, I'll sort it out!"'

'So I went into town and found some old friends of mine, and we sorted them. I finished one of them myself - a shank right in the heart! Why should my mother be living in fear? This time I got the full whack - 15 years. Why so long? 'Cause I killed a cop, and 'cause I was a repeat offender, in other words a hardened criminal!'

Valya laughed, revealing her half-toothless mouth; then her laugh turned into a cough. She cleared her throat and started singing another sad prison song ...

'The sparks in the hearth burn up like rubies,
And disappear in wisps of blue.
Once I was a handsome lad,
Now I'm sick and lonely too.
What can I do, I've lost my youth,
What can I do, where can I roam?
I'll follow an untrodden path,
Away from you and far from home ...'

'That song was written by one of the friends that killed the cops with me, Katyusha. He's dead now. He had TB. Well, what else can I tell you? I got released early - I have TB as well, and asthma too. I went home. My mother had died. My daughter was married; she lives a respectable life - her husband's a cop. The last thing she needs is an old lag for a mother. And I wouldn't have wanted to go there anyway - why should I ruin the girl's life? I got another job as a caretaker in a warehouse. My rich little brother fixed me up with it; he didn't forget his sister. So this is how I lived: I didn't get paid much but then I don't need a lot - just enough for bread, tea and smokes.

'But I'm not used to being beholden to anyone! I'm used to being my own woman! My brother's a good egg, but his wife's a right bitch! One day she said to me, "You should pay us something - we cook for you! You live in our house!" And I was like, "I live in my own house; my dad left it to me! And you don't have to cook for me; I'll eat in a cafe! I never asked you to cook for me!"' But she wouldn't leave off - she was always on at me about something! She would shout and scream and tell my brother tales about me! I had it up to here with her! So I decided to get rid of her.'

'I hit her over the head, but it didn't finish her off, just left her brain damaged. She lost her wits, turned into an idiot. So I got done for attempted murder with aggravating circumstances, plus GBH, plus I was a repeat offender - 10 years altogether! There you go, Katyusha! But I'll get her some day!'

The end of the road

Valentina gave me a crafty look, obviously pleased with herself at having reduced this journalist to silence. As I was leaving she took my phone number and promised to get in touch when she got out. Many years later, I got an unexpected call.

We met at a centre for homeless and unemployed people on the outskirts of Kirov. Valya had just been released and had nowhere to go. Her parents were dead and her family wanted nothing to do with her. Her brother had refused to give her any more help after what she did to his wife, and her daughter was ashamed of her jailbird mother. When she left she was given a certificate of release and 700 roubles, which she had already spent on a train ticket to Kirov. She was delighted when I gave her a pack of her beloved Belomor and a packet of tea. We sat in a corner at the centre, made ourselves tea in grubby mugs and recalled old acquaintances.

 'How are you going to live now, Valya', I asked. 'As God wills,' she answered, 'if there is a God, that is! The priest always said there was, but I have my doubts.'

Two weeks later Valya was dead. She had been suffering through the final stages of TB, and died in the homeless people's ward of a hospital on the outskirts of Kirov. She was of no use to anyone, like a cigarette end dropped on the ground. Someone will step on it, someone walk past; the wind will carry it who knows where, turning it to ash.

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#29
www.rt.com
March 25, 2015
'EU has very poor capability in terms of understanding Russia's concerns'

A report on EU-Russia relations by a UK House of Lords committee admits that the EU totally miscalculated Moscow's reaction to the developments in Ukraine because of a lack of Russian experts, says Lord Peter Truscott.

Britain's House of Lords has been debating a report suggesting relations between the EU and Russia have reached a critical level. The text looks at tensions caused by events in Ukraine, and concludes Moscow has been gradually turning away from Europe.

RT: What was the main message to come out of this debate about the EU's relations with Russia?

Peter Truscott: The first thing that was said was the EU totally miscalculated Russia's reaction to the Association Agreement which was proposed with Ukraine and also Ukraine joining NATO. The EU was totally unprepared for the hostile reaction that both those proposals had. The report from the EU Committee of the House of Lords also said that Britain and other EU member states have got a very poor capability in terms of understanding Russia's concerns, and there is a real lack of Russian experts both in Britain and across the EU.

RT: Have relations reached a point of no return, or is there still hope of a turnaround?

PT: I think there is still a hope of a turnaround because one of the things that the EU Select Committee report in the House of Lords said was that it's very important to maintain a dialogue and engagement with Russia. One of things that could be done is that the EU could reconvene summits with Russia and there should be further discussions on the Minsk agreements that have been put forward. And even the Foreign Office minister today said that Britain has been taking a very hard line as far as the crisis in Ukraine is concerned, talked about the importance to maintain trade links with Russia, cultural links, and also maintaining diplomacy and engagement with Moscow. So there is a desire to maintain relations with Russia. But everyone accepts at the moment that relations are at a pretty low point. There is a lot of work that needs to be done.

Passers-by outside City Hospital No.3 in Shevchenko Boulevard in Donetsk's Kalininsky District after the building was hit with an artillery shell during the city's shelling by the Ukrainian army (RIA Novosti / Mikhail Parhomenko)Passers-by outside City Hospital No.3 in Shevchenko Boulevard in Donetsk's Kalininsky District after the building was hit with an artillery shell during the city's shelling by the Ukrainian army (RIA Novosti / Mikhail Parhomenko)

RT: The EU has pledged to drop sanctions if the agreements made in Minsk to bring peace to Ukraine are fulfilled. But is Russia the only side responsible for ensuring peace?

PT: It was interesting during the debate. It was quite a balanced debate, it was a quite fair report, I think. There were people taking a hard line on the crisis in Ukraine, and some people are trying to understand a bit more Russia's position and where Russia was coming from. One of the peers in the debate said: "Well, the Minsk agreement is not just about Russia fulfilling the terms, but also Ukraine shouldn't try to change the terms of the Minsk agreement either." Although, there was a talk about sanctions being maintained until Minsk was fulfilled by the end of the year, the point was also made that Ukraine has to stand by its side of the bargain, it's part of the agreement as well which talks about decentralization, more rights for Eastern Ukraine, and more a degree of autonomy for the Eastern Ukraine.

RT: British Defense Secretary Michael Fallon insisted today that NATO members like Romania and Britain will not be intimidated by Russia's threats.But isn't it this rhetoric by NATO members that is causing tension in the first place?

PT: I don't think that any sort of this rhetoric is very helpful on either side. The idea that Russia is sort of saber rattling and that NATO members feel intimidated by Russia - it is a nonsense. When you consider NATO's budget is ten times larger than Russia's I don't think NATO as an organization feels intimidated by Russia at all. In fact, Russia is showing through the various maneuvers that it has been undertaking that it is not going to be browbeaten by the West. But I do agree that it would be helpful if all sides turn down the rhetoric.

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 #30
The Unz Review
www.unz.com
March 26, 2015
The Nazi Gap
BY ANATOLY KARLIN
About Anatoly Karlin: I am a blogger, thinker, and businessman in the SF Bay Area. I'm originally from Russia, spent many years in Britain, and studied at U.C. Berkeley.
[Visuals here http://www.unz.com/akarlin/nazi-gap/]

The Western media is having a field day with this motley gathering of Neo-Nazis and assorted freaks at the grandiosely named International Russian Conservative Forum - none of the more serious alternative right European parties, such as the National Front or Fidesz, bothered turning up, and neither did serious Russian nationalists - and for once they might just have a point.

The operative word being "just."

Hypocritical as they might try to make Putin out to be with this, it would be wrong to see the March 22 conference as a Russian endorsement, official or informal, of the European far right.

First off, nobody of any consequence in Russian politics turned up, excluding even the purported organizers of the event, the newly (re)formed Rodina party. It was skipped by serious Russian nationalists when they realized that the affair was going to become a total trainwreck populated by Prussian revanchists, the murderous goons of Golden Dawn, and conspiracy theories ranting about "penguin marriage" as the next phase of the homo agenda. Neither did any high-ranking official from the DNR or LNR turn up, despite the event being supposedly held in support of them.

This already puts this in stark contrast to Western politicians, whose politicians not only meet up with assorted Islamists and Neo-Nazis - John McCain is pictured below with Tyagnibok, leader of the Ukrainian fascist Svoboda Party, which used to be the Social-National Party and is exactly what it used to say on the tin:

... but happily supply them with arms and support Presidents who give them formal honors and decorations:

In August, Ukrainian chocolate sultan Petro Poroshenko awarded the leader of the pro-choice knitting club Azov Battalion, Andriy Biletsky, with the Order For Courage.

Biletsky is not only a courageous Wolfsangel-bedazzled freedom fighter, he is also the head of Ukraine's creatively named Social-National Assembly, which is committed to "punishing severely sexual perversions and any interracial contacts that lead to the extinction of the white man."

Close your eyes and try to imagine the font size 72 Caps Lock New York Times front page screamfest if it was discovered that Vladimir Putin had decorated a brain-dead maniac who has promised "to prepare [Russia] for further expansion and to struggle for the liberation of the entire White Race."

Now change "Vladimir Putin" to "Petro Poroshenko" and "Russia" to "Ukraine" and you will finally understand why we live in an upside down nightmare garbage world where people freak out about a one-day conference of fringe groups in St. Petersburg.

Which all gives a clue as to why Russia allowed the conference to go ahead: "Mr. President, we must now allow a Nazi gap!" Better to have them as your useful idiots instead of the enemy's; at the very least, they are then less likely to go fight your miners and tractor drivers in the Donbass (/s).

There are a few alternate explanations.

Perhaps the conference was allowed to go ahead because of Russia's principled regard for freedom of speech, in stark contrast to the hypocritical West. Hah just kidding.

Perhaps - although this is more an addendum to the first explanation - there was just no obvious disadvantage to hosting the conference. If the Western media didn't have this, it would just think up some other way to besmirch Russia this week or the next; frankly, as long as the current power structures are in place, worrying about Russia's image in the West is something of a lost cause, and hence maladaptive. Here an earlier example, from Hungary, is instructive. In this supposed Alt Right haven within the EU, an identitarian congress featuring speakers who were on average much more reasonable and intelligent than the wackjobs at the Saint-Petersburg conference, was banned by the ruling party Fidesz. Those people who turned up anyway, including Richard Spencer and a personal friend of mine, were arrested, held overnight, and deported from the country and banned from reentering, Schengen be damned. Predictably enough, the EU and State Department applauded this, since free speech doesn't extend to you once you leave the Overton window of acceptable discourse under Western neoliberal democracy. If by so doing, however, Fidesz hoped to gain kudos and respectability - or at least non-interference - from the powers that be, they were to be disappointed:

It need hardly be said that in the current geopolitical climate, even the most cringingly venal and submissive Russian "podpindosnik" (transl. "American worshipper") realizes that sucking up on such matters to Brussels and Washington DC will result in zero rewards or even goodwill.

Perhaps - and personally, I think this is the most likely theory - it was all just a big fuck up, instead of an elaborate geopolitical ploy or troll job on the West. From Egor Prosvirnin, whose nationalism can be thought of as something like a Russian Pegida:

"So let's tally the results: The party Rodina, which the Kremlin is currently trying to revive from suspended animation, tried to organize a 1990s-style event featuring freaks, ziegfags, and marginals, who pretend to be nationalists, in this case - European nationalists. The whole thing tanked, because European nationalists who are gaining in popularity refused the invitation to participate in the Kremlin's circus, while amongst Russian nationalists all these weird cramps provoked, in the best case, confused bewilderment. I think that as a result, one of the Kremlin's political technologists will receive a good knock from upper management.

"The only ones who benefited from this is the liberal community, which will bring up this dismal event in response to any criticism of the Ukrainian Reich for at least the next year. Maybe it was they themselves who organized it?"

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 #31
Journalitico
http://journalitico.com
March 25, 2015
The Western "free" press and how it enables and encourages ignorance
By Danielle Ryan
Reporter, The Sunday Business Post (Ireland). Danielle is an Irish journalist and blogger. She has a degree in Business and German from Trinity College Dublin and studied political reporting at the Washington Center for Politics and Journalism in Washington, DC.

I've read many pieces - and written some - about the failure of the Western press in how it chooses to cover not only Russia, but Russian media, like RT. None have hit the nail on the head quite as much as this one.

It begins with the story of a journalist fired because his reporting on Maidan and his views on Crimea did not match those of his employer. It's exactly the kind of story that Politico, Newsweek and BuzzFeed would love.

Really. It has it all. Suppression of the free press. Restriction on free speech. European "values". Russia, Crimea, Maidan, the whole works. They'd be drooling all over it for at least a week.

There's just one teeny tiny problem: The journalist in question happened to be fired from an American government-funded news outlet because he supported Crimea's reintegration into Russia and exposed neo-Nazi atrocities in Ukraine. Oops.

Close your ears, BuzzFeed! This is the kind of 'suppression of the free press' story you don't want to hear about.

Now, you might be thinking well okay, if his views were that far out of line with those of his employer, then is it really that big of a deal that he was fired?

So it might come as a greater shock to learn that the journalist in question spent 25 years airing pro-Western views for this news outlet and, during that time, was also a very harsh critic of Vladimir Putin.

His name is Andrei Babitsky and the outlet that fired him is Radio Free Europe/Radio Liberty.

And this is the sentence that set the ball rolling:

"This is not about Crimea - on this question, I'm fully agreed with Vladimir Putin's main thesis, that Russia has the absolute right to take the peninsula's population under its protection. I am aware that a significant number of my colleagues don't share this viewpoint."

As Anatoly Karlin, the author of the brilliant piece which details his firing points out, the rest of Babitsky's piece returns to his more common criticism of Russia and could in no way be classified as pro-Putin or anti-Western.

Still, a week later he was suspended for one month without pay. He came back after the month only to be fired shortly after for reasons perhaps even more unjustifiable than his support of Crimea's reunification with Russia.

Reporting from Donbas, Babitsky filmed the exhumation of four bodies in Novosvetlovka. The four people had been executed by the Ukrainian Aidar Battalion. He sent it to RFE/RL. It was published. Then, in his own words, the nationalists at the Ukrainian division of RFE/RL "became hysterical".

"All this, just because I had published a video, which only recorded what I saw with my own eyes, without any additional commentary."

The video was deleted and Babitsky was shown the door.

He recently gave an interview to a Czech daily newspaper about the entire affair. Karlin details this all more clearly and exhaustively than I will, but I want to highlight some quotes from Babitsky's interview and then from Karlin's own analysis of the ordeal.

To a clearly hostile interviewer, Babitsky explains his position on Crimea:

"I know that many Crimeans have always regarded Ukraine as a foreign state. Crimeans never felt at home there. They were annoyed by Ukrainization policies. They had the Ukrainian language forced upon them in place of Russian. Ever since its independence, Kiev has carried out an incorrect national policy towards minorities, first and foremost, in regards to the Russian one.

"The entire peninsula was overtaken in horror by what awaited it, so the separation was an unequivocal reaction to the threat that Euromaidan represented to Crimeans.

"Crimea escaped the bloody drama that Donbass didn't. There were 20,000 Ukrainian soldiers on the peninsula, if some fool in Kiev had given the order, the conversation would have been overtaken by heavy artillery, and Crimea would have been completely destroyed."

It's pretty clear from Babitsky's personally informed and trustworthy analysis, that Crimeans to some extent felt like second-class citizens as part of Ukraine and were terrified of the fate that awaited them and which has sadly befallen Donetsk and Luhansk. It is further clear that the vast majority of them regarded Russia, their former home, as a protector, not an invader. This is not fairytale Russian propaganda. This is genuinely how a huge number of Crimeans feel.

Not that I'd suggest for one minute that everything is absolutely rosy for everyone in Crimea. Plenty have (rightly) gone looking for - and found - the 7-10 per cent who aren't happy to have rejoined Russia. It would be impossible to have an entire population satisfied with the decisions of its government - in this instance, the new one or the old one. But that doesn't excuse US lies claiming a "reign of terror" in what is actually a peninsula untouched by the war being waged in Donbass.

My bias is more acceptable than yours!

Back to Karlin's piece. He points out that since RFE/RL is funded by the American government, they in principle should be allowed to decide how to use those resources.

He writes "If that involves kicking out journalists whose opinions and reporting overstay their welcome, then so be it" ...and acknowledges that the same goes for other state-funded news organisations, like the BBC or RT.

I am in agreement with him that, while unfortunate, that's the way it is.  The trouble is, if you can accept it from one side, you have got to accept it from the other. Anything else is pure hypocrisy - and it's the Western side most guilty of that hypocrisy. It is the Western side that likes to deny it is guided by anything other than an unwavering commitment to the "truth".

Karlin continues: "It is primarily the Western media organizations that tend to have the chutzpah to deny this and instead claim an altruistic and universal dedication to truth, objectivity, free speech, and fluffy pink rabbits".

He then quotes RT's editor in chief who has said: "There is no objectivity - only approximations of the truth by as many different voices as possible."

With that too, I wholeheartedly agree.

This brutal honestly, he continues, annoys the Western media intensely, "because they view their social arrangements and global hegemony as a revealed truth, and anything that even so much as suggests that it may be just one of many truths is equivalent to heresy".

That superiority complex is unprofessional at best and dangerous at worst.

As a journalist, writer, blogger (shill, Kremlin troll etc.)  - whatever I am - I can feel no other way than to be in support of multiple streams of information, multiple sources, multiple perspectives.

The ability humans have to close their eyes to other perspectives is the root of most of the world's problems.

For that reason, I can barely comprehend it when I hear "respected" journalists calling for the shutting down or boycotting of RT. Neither can I comprehend the sheer hypocrisy of it, given the story we have just read about Andrei Babitsky, who, so disillusioned with his former employer (of 25 years) admits that it has become "nothing more than an instrument of American propaganda".

I can't fathom, that knowing how horrifying the result of group-think in media and politics can be, that there could be any intelligent person able to propose the boycotting of a legitimate news channel.

What happened to #JeSuisCharlie and our outrage over attacks on journalists? Crocodile tears, it would appear.

The same mentality that led those murderers to the Charlie Hebdo offices, leads ignorant people to call for the boycotting of RT. That mentality is simple and it is: I'm right, you're wrong and I don't want you to be allowed speak.

Trolling in the deep

Passionate Twitter users spend a lot of time debating each other on this topic of what constitutes "real" or "legitimate" news and what doesn't. Unsurprisingly, quite the majority feel that the "real" news organisations are the ones reporting the news to their liking and the "propaganda" news organisations are the ones reporting things they don't like very much.

Mostly though, if we stick with Twitter, the debate revolves around who is a "troll", which precise views indicate trollish qualities, who is a shill, who is a liar and who is a "real" journalist etc. I've been labelled all of them at one point or another by various factions.

But to me the distinction between troll/non-troll is crystal clear.

"Trolls" ...for want of a better word - and I mean that, I really do want a better word - are those that bombard users they are in disagreement with, with non-stop, unwanted messages, failing ever to give consideration to anything other than their own bias, which they push in bullish, aggressive and often abusive ways.

In other words, trolls can't understand that it is not the views that make the troll, it's the behavior.

Non-trolls (do we have a better word yet?) ...usually ignore them and rarely, if ever, are the ones to initiate contact. They express their views, defend themselves when necessary, consider alternative viewpoints and then leave it at that.

Any massive media organisation that pushes the idea that the "truth" is my way or the highway and that it's okay to disregard other human perspectives, adds no value to anything or anyone. That goes for Russian media and Western media alike.

All that mindset does is empower the mindless masses and Twitter lunatics into thinking they need not use their brains for anything other than the daily confirmation of their own bias. It keeps them stupid, uninformed and makes them feel justified in their hateful and abusive behavior.

Unsurprisingly, RFE/RL never responded to Karlin's request for comment on Babitsky's firing.

They don't feel the need to justify themselves - and they can rest assured, that none of the Western bastions of free speech they hold so dear will hold them to account either.

Must be nice living in that world.

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 #32
Interfax-Ukraine
March 25, 2015
Poroshenko says separatism needs to be 'nipped in the bud'

Ukraine is justified in using severe methods to fight separatism, Ukrainian President Petro Poroshenko has said.

"Severe methods [to fight separatism] are completely justified to avoid paying the high price the Ukrainian people do now," Poroshenko said during events commemorating the 23rd anniversary of the establishment of the Security Service of Ukraine in Kyiv on March 25.

Poroshenko added that separatism needs to be "nipped in the bud."

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 #33
Kiev forces move 30 units of military hardware towards Donetsk - DPR agency

MOSCOW, March 26. /TASS/. The Ukrainian armed forces have moved at least 30 pieces of heavy weapons, including tanks and artillery to Donetsk, the Donetsk news agency of the self-proclaimed Donetsk People's Republic (DPR) reported on Thursday.

"A column of heavy vehicles was noticed in the morning in the area of Selidovo (about 30 km northwest of Donetsk) moving towards Donetsk," and informed source told the agency. "The column comprises some 10-15 tanks and about 20 artillery weapons of different calibre."

The withdrawal of heavy weapons from the contact line by both sides of the conflict is specified in the set of measures to implement the Minsk agreements, signed on February 12, 2015. According to the document, artillery weapons with calibre exceeding 100 mm and more must be moved away from each other at a distance of 50 km, multiple launch rocket systems - at 70 km, the Tornado, Uragan, Smerch volley fire rocket systems, as well as the Tochka missiles - at 140 km. The sides undertook to withdraw their weapons at equal distances: Kiev - from the current contact line, and the DPR and LPR republics - from the line fixed in the Minsk memorandum of September 19.

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 #34
RF insists on Kiev's dialogue with Donetsk, Lugansk, Ukraine says there is no point in it

PARIS, March 26. /TASS/. Russia keeps on insisting on a direct dialogue between Kiev and the self-proclaimed Donetsk and Lugansk People's Republics (DPR and LPR), but the Ukrainian authorities say there is no point in that. These are the results of the Wednesday meeting of political directors of the Normandy Four nations (Russia, Germany, France and Ukraine) in Paris.

"Highly topical and practical" talks

Russia was represented by State Secretary and Deputy Foreign Minister Grigory Karasin, who described the talks as 'highly topical and practical." "We have agreed that not enough is being done to implement the Minsk agreements, episodes ceasefire violations were reported," he said.

Karasin said no one was satisfied with the pace of the implementation of those provisions of the Minsk agreement that were linked with political reforms in Ukraine. "So far, progress in the process of the settlement under the Minsk agreements is balked, basically, through Kiev's fault," he noted. "We are lagging behind the schedule. The deadlines fixed in the Minsk agreements are not met by the Kiev authorities."

Dialogue lacking

The Russian diplomat stressed that all political disputes are to be settled through dialogue between Kiev and the self-proclaimed republics, as provided by the Minsk agreements. "We are most concerned over the fact that on the backdrop of relative stabilization of the combat situation political process is making no headway. The dialogue so widely talked about by Normandy Four format participants at all levels, including presidential, is lacking," Karasin said.

He noted that there were questions to the military section of the Minsk agreements. "There were reports about ceasefire violations, Donetsk's airport periodically comes under shelling, tensions are being heightened around the village of Shirokino," he said.

A major aspect of the Paris talks was the discussion of establishing working groups within the Trilateral Contact Group /Ukraine, DPR and LPR and the Organization for Security and Cooperation in Europe, or OSCE/. The Russian diplomat stressed that these processes should also proceed in dialogue between Kiev and the self-proclaimed republics.

Also, Karasin underscored the counter-productivity of Ukraine's initiatives to deploy United Nations peacekeepers or a European Union's police mission. "Such operation will take more time than the implementation of the Minsk agreements and will cross out efforts geared towards their realization," he noted. "The package of the Minsk agreements is enough to settle the crisis in Ukraine."

Kiev ready to have contacts with DPR and LPR only within the Contact Group

Kiev's representative, Deputy Foreign Minister of Ukraine Vadim Priskaiko, said the Ukrainian authorities did not take the current leaders of the Donetsk and Lugansk People's Republics as legitimate representatives of people living in those areas. "It would be politically useless to talk to the people who in fact are field commanders and who are not Ukrainians in the full sense of this word. They are illegitimate and are not representing the people who reside in these territories," the Ukrainian diplomat stressed.

At the same time, he said Kiev was not denying all contacts with Donetsk and Lugansk. "I disagree that we are unwilling to talk. Simply, there is a special format - the trilateral Contact Group - for such contacts. This group comprises representatives of both unrecognized entities. The Minsk agreements provide the same schemes for the working groups," Pristaiko said. "The format may not be ideal but work is underway."

Normandy Four may meet once a month

Normandy Four meetings may become regular. "I think we should meet once a month to discuss the problems that crop up and the steps that should be taken for resolving them," Pristaiko said after talks.

The Russian foreign minister said in turn that the Russian side was ready for such contacts and expressed the hope there would be many in the next few months.

The date for a next meeting has not yet been appointed. So far, it is not planned to raise the level of talks to a ministerial.

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 #35
Nearly 20% would vote for Poroshenko in presidential elections - poll

KYIV. March 24 (Interfax) - As many as 19.4% of Ukrainians would vote for Petro Poroshenko in presidential elections in Ukraine if such were held now, as is seen from a public opinion survey conducted by the Razumkov Center sociological service presented at a press conference in Kyiv on Tuesday.

Another 6.5% would vote for Lviv Mayor and Samopomich party leader Andriy Sadovy, 3.8% for Opposition Bloc parliamentary faction leader Yury Boiko, 3.7% for Yulia Tymoshenko and Oleh Lyashko each, 2.6% for Anatoly Hrytsenko, 2.9% for Prime Minister Arseny Yatsenyuk, 2.6% for Dmytro Yarosh and Petro Symonenko each, 2.2% for Serhiy Tihipko, 1.1% for Oleh Tyahnybok, and 0.5% for Vitali Klitschko.

The poll showed also that 8.4% of those polled would vote for other politicians, 21.7% would not go to polling stations, and 17.3% were undecided.

The poll of 2,009 respondents aged 18 and older was conducted in all regions of Ukraine except Crimea, the Donetsk and the Luhansk regions from March 6 to 12. Its margin of error lies within 2.3%.

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#36
Lavrov: Kyiv may resort to provocation in Donbas to get arms from abroad

MOSCOW. March 21 (Interfax) - Russian Foreign Minister Sergei Lavrov does not rule out that what he called "the war party" in Kyiv might resort to some provocative acts to open the path to supplies of lethal weapons to Ukrainian government forces from abroad.

"Provocateurs in Kyiv and also those who support the war party may try to cook something hot, expecting that international public opinion would explode and arms would start flowing to Ukraine. This needs to be watched out for very carefully," Lavrov said in a Saturday analytical program hosted by Sergei Brilyov on Russian television.

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 #37
Carnegie Moscow Center
March 25,2015
Ukraine: The Kingdom of the Oligarchs
By Balázs Jarábik

A year after the collapse of Viktor Yanukovych's government, hope that the new Ukrainian government can check the power of corrupt oligarchs and install a new generation of reform-minded elites is shaky at best. Ukraine's old elites and their ways of doing business are prevailing over those who seek to build a transparent political system and a modern state built on the rule of law. So far the new government's legitimacy rests not on its track record of success in promoting reform, but on external factors, namely its ability to respond to Russian aggression and to drum up support for Ukraine in the West. Yet it is no exaggeration to suggest that prospects for the country's long-term success and cohesion will be determined by its ability to pursue far-reaching reforms to modernize the state and to check the power of the oligarchs.

Conditions are harsh, most notably a deep, unresolved humanitarian crisis in eastern Ukraine that has left more than 6,000 Ukrainians dead. With no serious international aid forthcoming and Kyiv distracted by an urgent financial crisis, the humanitarian situation in the east has been festering. The refugee crisis is growing, and the central government's ability to handle refugee flows should be among the key short-term indicators of its performance. Meanwhile, runaway inflation and falling wages impose serious economic hardships on average citizens. In the short term, the terms of the IMF bailout will only increase average Ukrainians' misery-a fact that few in the West have chosen to acknowledge. The government, for example, will be forced to cut social spending and raise electricity tariffs by 350 percent before 2017. Industrial output has already declined by 22 percent, which in turn has caused a spike in poverty and crime rates while also increasing the size of the shadow economy. Oligarchs are fighting each other, property and businesses are being expropriated by criminals, and a number of former Yanukovych-era officials are dying mysterious deaths-all of which raises questions about the country's political stability.

THE HIDDEN HAND OF UKRAINE'S OLIGARCHS

Ukrainian government officials and their backers in the West tend to focus on Russia aggression as the main reason behind Ukraine's political and economic fragility. Yet Russia's undeclared war on Ukraine alone cannot explain all of Ukraine's problems. Corruption, economic mismanagement, huge weaknesses in the financial sector, lackluster reform efforts, and infighting among elites and other vested interests are not Russian inventions. Rather, they are homegrown problems that Russia has been exploiting.

The EuroMaidan Revolution may have brought down Yanukovych (an important symbol in his own right), but it failed to diminish the role that oligarchs play in Ukrainian politics or to legitimize fully the power of the central government-especially in the eyes of oligarchs. The Maidan was an important symbol of the desire of the Ukrainian people for accountable and transparent governance. But it did not change the social contract between the people and the government because the existing patterns of governance were too strong. Ukraine's current government is arguably its most competent since independence. However, it has not yet managed to impose significant reforms to modernize the state or to re-focus the mission of the state on serving the interests of the general public. This is because the political forces of post-Maidan Ukraine-civil society activists and fighters from Donbas among them -are still too weak compared to the oligarchs.

The centrality of the oligarchs in the Maidan itself has largely been overlooked. They had their own reasons for supporting the movement: although many of them lost money, positions, and influence due to subsequent Russian aggression, Yanukovych's grip on power directly threatened their interests. These oligarchs, united against Yanukovych step-by-step, funded key resistance groups, shaped news coverage of the movement, and worked with law enforcement behind the scenes. In fact, growing oligarch support for the Maidan may help explain the extent of Yanukovych's contingency planning: perhaps it was the loss of many longtime allies that led him to pack his bags long before he actually fled the country.

While the Maidan was undoubtedly a "people power" movement directed against a hated, corrupt regime, oligarchs also played a key role in brokering the post-Yanukovych government. It was none other than Dmytro Firtash who, despite being under house arrest in Vienna, reportedly forged the deal that united political parties led by Poroshenko and Vitali  Klitschko ahead of the May presidential election.

Ukraine continues to be run by oligarchs today. Yet the power dynamics between oligarchic groups has shifted dramatically. Most importantly, the overall influence of the traditional power brokers with control over Ukraine's metallurgical and coal assets is waning. Having lost 5.8 billion dollars of his net worth in 2014, Rinat Akhmetov-Ukraine's richest man before the war-appears to be the biggest loser. However, he remains powerful and has the ability to broker relationships between Kyiv (where he lives) and Donbas (where he still controls assets). Akhmetov has ties with Aleksander Zakharchenko, the self-proclaimed leader of the Donetsk People's Republic, and he is widely believed to be working with forces on both sides of the ceasefire line. His energy business, however, has come under pressure from fellow oligarch Ihor Kolomoysky, who, until quite recently, was believed to be the biggest winner of the post-Maidan era in terms of political influence.

In the meantime, Firtash, who is fighting extradition by the United States from Austria, recently announced his intention to return to political life. He, like other oligarchs who made their fortunes in Ukraine's south and east, claims to support greater Western engagement but purports to be increasingly disturbed by the West's inability to deliver for Ukraine, especially in geopolitical terms. Akhmetov, Kolomoysky, Firtash, and others also have an interest in decentralization of Ukraine's political structures. Poroshenko has been smart enough to control this process, which is being handled by the Constitutional Commission headed by Rada speaker Volodymyr Hroisman, a staunch Poroshenko supporter.

THE VULNERABLE SOUTH-EAST

The war in the Donbas has led to a rise in patriotism across the country, but the population in south-eastern Ukraine continues to harbor pro-Russian sympathies. Of course, that does not mean many residents of region actually want to be ruled by Moscow (nor does Moscow actually want to annex Donbas) or-even worse-by the separatists. Their attitudes are shaped by growing and legitimate grievances about Kyiv's governance shortcomings in the region and worsening socioeconomic conditions.

In Kharkiv, an eastern city that remains vulnerable to separatist-led violence, the cooperation of local elites has been the key to maintaining stability. When Russia's "little green men" began showing up in the region, it was not the central government that came to the rescue. Rather, it was only through the combined efforts of the Kharkiv mayor, the minister of the interior, and a private security group hired by Kolomoysky that the situation stayed under control. But this was only a tactical alliance. There are new frictions within the regional elite in Kharkiv, and popular frustration is growing with the region's faltering economy-all of which may leave the city vulnerable once again.

Odessa, a southern city along the Black Sea, is equally vulnerable to separatist violence. Similar elite frictions combined with a host of murky ties to the underground economy and criminal groups create a potentially combustible mix. Until recently, Odessa seemed firmly under Kolomoysky's political control. The regional governor is known to be one of "his men," and the city's major reportedly has struck a deal with the Dnepropetrovsk oligarch. Still, Kolomoysky does not have full control over the region: now that he has withdrawn his armed battalions from Odessa, it is now up to state security forces to ensure peace. Either the pro-Kyiv authorities will be able to do so on their own or Kyiv will remain dependent on Kolomoisky and his associates to maintain order and stability in a region where Russia might easily foment violent conflict.

TAKING ON KOLOMOYSKY

The conflict with Kolomoysky and his March 25 removal from his government post as governor of Dnipropetrovsk may be a watershed. To their credit, the Poroshenko administration has been trying to protect the state's interests. It undercut Kolomoysky's economic influence, in part by removing his proxies from UkrNafta and UkrTransNafta, a majority state-controlled energy company that has long been his cash cow, even though he only holds a minority stake.

As governor of Dnipropetrovsk, Kolomoysky was Kyiv's key ally in the war in eastern Ukraine. He deployed his private army to fight pro-Russian separatists and prevent the spread of conflict into other regions. But he seems to have gone too far in attacking other oligarchs and has been showing his true colors in his handling of the conflict over UkrNafta and UkrTransNafta. At this point, the relationship between Kyiv and Kolomoysky has not broken down. The new interim governor of Dnipropetrovsk is not Kolomoysky's protégé. Poroshenko's hard-edged response may be viewed as remarkable as Kolomoysky is far less predictable than his fellow oligarchs since he has far fewer assets in the West. It appears that there may have been an agreement between the two men that allows Kolomoysky to keep his business interests while Poroshenko strengthens central authority. If so, that suggests that the threat of oligarch-controlled battalions may be overestimated and that the Minsk II agreement may be alive.

Removing Kolomoysky is only part of the story, and Poroshenko will have to work with others to contain the fallout. The other big question is whether the rest of the oligarchs find themselves being targeted by the regime in Kyiv ahead of the upcoming local government elections. All the while, competition over a shrinking pool of state resources may-quite understandably-fuel even more infighting.

The West has no choice but to support what it sees as the legitimate representatives of the Ukrainian people: President Poroshenko and his administration. Poroshenko has been cautiously building up central authority in Kyiv: a new law gives the president the power to appoint the head of the National Guard, in addition to his already significant influence over the National Bank, the ministries of defence and foreign affairs, and the new anti-corruption bureau. He can also count on close relationships with Rada Speaker Volodymyr Hroisman and Oleksandr Turchynov, the head of the National Security and Defence Council. Viktor Shokin, the new prosecutor general, has long been a close associate of Poroshenko's, having worked with the President in the wake of the Orange Revolution. There is no evidence to suggest that Poroshenko has been using his political power to expand his personal business interests. Still, Poroshenko is an oligarch himself, and he is seen that way by his peers. He needs to continue balancing competing groups and individuals, instead of repeating Yanukovych's mistake of aggrandizing power and property solely for himself and his entourage. And if he can't deliver a better life, a smoother functioning state apparatus, and a more effective, EU-oriented government then winning the peace in the east may mean little.

Polls suggest Ukrainian support for integration with Russia has collapsed, while support for the EU has increased slightly. At the same time, pro-EU integrationists do not have a firm majority. Growing frustration with the West may eventually foster growing sympathy toward Russia. There won't be another U-turn, of course. Ukraine will certainly stay pro-Western. But the real question is whether its leaders and elites slowly return to the time-tested balancing act between east and west that former President Leonid Kuchma developed.

By manipulating corruption schemes and playing the vested interests of Ukrainian elites off each other, Vladimir Putin could find himself, paradoxically, in a position to restore harmony in Ukraine. Such an unlikely development would, of course, take Ukraine "back to future." Yet, de-oligarchization is a work-in-progress. The recent parliamentary vote on UkrNafta/UkrTransafta directly contravened Kolomoysky's interests. The government's moves were well-choreographed and managed, came as complete surprise to Kolomoysky. The spirit of the Maidan appears to live on, giving the forces in favor of civic accountability a significant amount of support and trust from society at large. Western conditionality also plays a role, leading to substantial and critical legislative changes.

Therefore, the West may drop its "don't just talk, do something" attitude. Rather than focusing on the gap between the government's words and concrete actions, a realistic policy that stresses conditionality would be a welcome good step forward. After weeks of political confrontation, the Ukrainian parliament passed budget legislation necessary for the country to receive the IMF bailout. It was pushed through at the last minute and under external pressure that included a warning that Ukraine remains "subject to exceptional risks." Perhaps somewhat ironically, the risk of financial collapse gives the reformers and the West an upper hand. The reform process is also gaining some traction in the agricultural, energy, law enforcement, and social services sectors. Rents on public tenders have dropped, according to a corruption watchdog. (Unfortunately, according to a recent poll, over 80 percent of Ukrainians see corruption as either having not improved or having worsened since the formation of the new government).

If Ukraine continues to stay mired in its current difficulties, the current framework for Western policy is just about the only option. The challenge is in many ways similar to what we confronted before the Maidan. The ball is decidedly in Kyiv's court.

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 #38
Vedomosti
March 24, 2015
Russian paper reports analysts' take on Ukraine tycoon row
Aleksey Nikolskiy and Petr Kozlov, The Dnipropetrovsk governor's possible dismissal would strengthen the truce in Donbass. Ihor Kolomoyskyy's conflict with Petro Poroshenko could go on for a long time

Yesterday [23 March] the siloviki [security and law-enforcement officers] openly accused the entourage of Ihor Kolomoyskyy, the influential oligarch and Dnipropetrovsk Region governor, of criminal offences for the first time. Ukrainian Security Service Director Viktor [as published, in fact Valentyn] Nalyvaychenko said that Kolomoyskyy's deputies - Hennadiy Korban and Svyatoslav Oliynyk - are implicated in covering up for members of the grouping that killed a Ukrainian Security Service officer last week. A barrier was erected around the Kiev offices of the Ukrnafta oil company, which is state-owned but de facto controlled by Kolomoyskyy (who owns 42 per cent of the shares). The conflict was preceded by the appointment of a new manager at Ukrtransnafta (which manages the country's oil pipelines), which is formally owned by the state but controlled by Kolomoyskyy, and the adoption by the Council [Ukrainian parliament] of a law stating that 50 per cent plus one vote is sufficient to convene a shareholders' meeting instead of the current 60 per cent (this will make it possible to replace the management controlled by the oligarch).

In the opinion of Dmytro Marunych, director of the Kiev Energy Strategies Institute, Ukrtransnafta is of little significance, and the acquisition of control over this enterprise by the state could take months and is not guaranteed; but losing it is not critical for the businessman either. It marks the beginning of systemic actions to regain state control over state companies that Kolomoyskyy had been utilizing for his own business interests, Kiev political analyst Volodymyr Fesenko says: "The removal of Kolomoyskyy would mark the opening of a second front, which cannot be done right now  - the president realizes this and, I believe, Kolomoyskyy realizes it too - why present Putin with a gift?"

"The Kiev regime is so crazy that no possibility can be ruled out. Kolomoyskyy's departure would hardly make the Ukrainian political elite's stance with regard to a political settlement of the Donbass conflict rational or predictable," Aleksey Chesnakov, director of the Centre for the Political Situation, told Vedomosti. A person in the leadership of the self-proclaimed DPR [Donetsk People's Republic] stresses that it was Kolomoyskyy who organized the food blockade of Donbass at the end of last year and that people in the DPR would not regret his departure. If Kolomoyskyy was to disappear as a factor, the truce might strengthen since his battalions have violated the ceasefire regime more than anybody else, Col (retd) Viktor Murakhovskiy says. The departure of these battalions following the cancellation of funding by Kolomoyskyy would have little impact on the military balance since they have recorded no successes since the insurgents acquired heavy weapons, but the Dnipropetrovsk administration under Kolomoyskyy's leadership made a big contribution to logistical and medical support for the Ukrainian forces and it can be expected that this role would weaken with a less vigorous leadership, the expert feels.

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 #39
Kyiv Post
March 26,2015
Reznychenko, Kolomoisky's successor in Dnipropetrovsk Oblast, seen as close to Poroshenko
by Alyona Zhuk

The newly appointed acting governor of Dnipropetrovsk Oblast, Vitaliy Reznychenko, has yet to prove himself and has virtually no track record in Zaporizhya, where he served as governor since Feb. 21.

Reznychenko's appointment came after President Petro Poroshenko fired billionaire Igor Kolomoisky as Dnipropetrovsk Oblast governor on March 25. Kolomoisky had drawn the public's wrath when he eployed armed guards in a failed attempt assert control two state-owned energy companies where he had a minority stakes.

A former top manager of a media company with more than two decades of experience, Reznychenko only recently entered government service.

The 42-year-old worked for Ukrainian Media Holding between 1996 and 2014, a company set up by Poroshenko's chief of staff, Borys Lozhkin. Poroshenko also owned a minority share in that company. His debut in government was at the Ukrainian State Center of Radio Frequencies, an agency that distributes air frequencies.

Residents of Zaporizhya Oblast struggle to name any of his achievements in the past month.

"You see, if he failed or made some fatal mistakes, I would be able to comment. And likewise, if he started a renaissance in Zaporizhya after his arrival," says Roman Pyatigorets, the chairman of Ukrainian Voters Committee in Zaporizhyzhya. "There is nothing to evaluate."

Reznychenko was not available for comment for this story.

Others were also unimpressed with his work.

"Everyone was waiting for a strong and bright personality, but instead some clerk arrived," says political analyst from Zaporizhzhya Ihor Hromov. "The local elite took him as a temporary worker. He came - okay, he came, he'll leave - okay, he'll leave."

One complaint, according to Hromov, was that the former governor broke a longstanding tradition. Newly appointed governors of Zaporizhya usually gather local regional government council members to discuss the oblast's problems.

Pyatigorets says even his news conferences were given to a select few and behind closed doors.

Some think that Reznychenko's low profile is a good thing. Volodymyr Fesenko of the Penta think tank says that high-profile appointments are typically followed by scandals later.

"He isn't a famous person," Fesenko told the Kyiv Post. "But there is a huge shortage of leaders because of the ongoing renewal (of power). Only time and real actions will show how effective he will be as a governor."

Fesenko described Reznychenko as an honest person who knows Dnipropetrovsk because he was born there, and a representative of the president's team. If Poroshenko's introduction is anything to go by, it certainly seems to be the case.

"I can say that I have known this man for 15 years. A strong-willed, effective leader, who understands the problems of the economy," said Poroshenko after appointing Reznychenko as governor in February.

Reznychenko's 2014 income declaration showed that he made more than Hr 5.7 million that year. He also owns four properties and five cars, including a luxurious Land Rover Ranger Rover purchased last year.

Reznychenko for now will serve as a caretaker for Dnipropetrovsk Oblast. The legal procedure for his official appointment first requires a Cabinet nomination, which is then sealed by the president's decree.

Reznychenko's former colleagues from the radio frequency distributor describe him differently.

Volodymyr Korsun, who heads the center now, says Reznychenko made the agency more transparent. He was brave and decisive, as well. "He always managed to push the matter through," Korsun said.

Former vice president of UMH Grigoriy Shverk, who worked with Reznychenko for over 15 years, describes him similarly.

"Everything that he has dealt with was effective, in terms of both profit and management," says Shverk, who now serves as the deputy chairman of the National Council of Ukraine on Television and Radio Broadcasting. "He was also effective as a crisis manager."

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 #40
Pressure on Kolomoyskyi U.S. attempt to create centralized Ukraine with strong anti-Russian govt - Duma deputy

MOSCOW. March 24 (Interfax) - The events around Ukrainian governor Ihor Kolomoyskyi attest that he is not among the people the West is planning to build relations with, says Mikhail Yemelyanov, first deputy leader of A Just Russia Party faction.

"It is clear that Kolomoyskyi is not the politician with whom the U.S. and Europeans would like to deal, hence the pressure that was organized against him. Our analysts think that Kolomoyskyi lost this battle," he told reporters on Tuesday.

"To overthrow the Yanukovych government so as to bring overtly anti-Russian forces into power, Western countries, primarily the U.S., had no qualms about (using) any method and were ready for alliances with any people, be they right-wing nationalists, fascists or wicked oligarchs," Yemelyanov said.

"The U.S. surely understands that if it wants to make Ukraine a successful state, everything that is marginal, fascist, including oligarchic forces, must be removed from the political stage," the parliamentarian said.

"First they pushed Oleh Tyahnybok out of parliament, now there is this other extension of a purge of Ukraine's political field, exploiting the eastern truce and the Minsk agreements to that end," he said.

"The goal of the U.S. is to create a totalitarian Ukraine, a centralized Ukraine with a very strong anti-Russian government, armed to the teeth," the politician said.

The anti-Russian natural of the current Ukrainian government "manifests in that they want to change the Ukrainian people's system of values, as evidenced by the V-Day celebration bill submitted in Verkhovna Rada," changing the date from May 9 to May 8, he said.

"For decades, May 9 has been the sacred Victory Day for Ukrainians, for Russians and Belarusians, and such a demonstrative change of date on the eve of the 70th V-Day anniversary shows that the forces which came to power are by no means sharing the Ukrainian values relating to the Victory," the Russian Duma member said.

"If Rada makes such a decision, it will do so against the will of its own people," Yemelyanov said.

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 #41
www.businessinsider.com
March 26, 2015
Ukraine's whole banking system is falling apart
By Tomas Hirst
[Charts here http://www.businessinsider.com/ukraines-banking-system-is-falling-apart-2015-3]
 
Ukraine's banks are suffering as a combination of a currency collapse and a deep recession stretch their balance sheets to breaking point.

So far this year 12 Ukrainian banks have lost their licenses and 14 have been placed under temporary administration, according to ratings agency Moody's. That comes after 17 banks lost their licenses last year as the collapse of President Viktor Yanukovych's government and the ensuing civil war in the east of the country pushed the country into a deep recession.

Yet most of the banks current woes can be traced back to a single factor - the collapse of the hryvnia.

In February the Ukrainian currency fell over 30%, hitting record lows against the dollar, as the country's central bank scrapped foreign-currency auctions and whacked up its key interest rate from 14% to 19.5% in a move that was intended to move shift the hryvnia closer to a free-float.

However, it caused the currency to plummet:

While the plunge did stop the government having to burn through its dwindling foreign currency reserves at quite as fast a pace, it left a banking system with 40% of the loans on their balance sheets denominated in foreign currencies (mostly in dollars) heavily exposed. Just as in Russia, the main problem faced by the banks is that while a large amount of their debts are denominated in foreign currencies their revenues are overwhelmingly local currency.

So Ukraine's banks have a huge currency mismatch problem between what they owe and what they are bringing in to pay it. In other words, their debts have become much, much more expensive over the past couple of months and they're struggling to stay afloat.

Add that to an economy which is expected to shrink by between 5.5% and 12.2% this year (with the former being the IMF's current base case) and a government that is already heavily reliant on external creditors to pay its bills and you can easily see that the banking system is in a whole world of trouble.

This is how that trouble is now presenting itself - the average regulatory capital adequacy ratio (the buffer that banks have to hold to protect depositors from potential shocks) in Ukrainian banks fell below the 10% regulatory minimum in February.

Such has been the extent of the squeeze that international bodies are currently working with the government in Kiev to agree a relaxation of capital adequacy rules for the nation's banks. That, however, would still likely require some form of recapitalisation of the system just as we have seen in Russia following the ruble collapse.

The drop in the system-wide CAR increases the urgency of recapitalising Ukraine's fragile banking system. The central bank has been working with the International Monetary Fund (IMF) in recent weeks to implement plans aimed at attracting private capital to recapitalise viable Ukrainian banks, while resolving mostly smaller banks. The NBU and IMF recently agreed that some forbearance on capital indicators was appropriate, and that solvent banks would only be required to gradually reach the 10% minimum by the end of 2018, although CARs as of the end of January 2016 would need to be at least 5%.

How the Ukrainian state is going to entice private sector capital to fund this recapitalisation given its precarious position and uncertain economic prospects remains an open question. Moreover, a state recapitalisation does not seem feasible as the government faces a renegotiation of hefty debt repayment obligations of its own this year with its international partners.

Yet such are the stakes that official creditors may decide that rescuing the fragile banking system is preferable to allowing it to capitulate and risk the complete collapse of the domestic financial system in the country.

As the Ukraine crisis drags on the danger, of course, is that adding to the already large bailout bill could be seen by some as throwing more money down an apparently bottomless pit.

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 #42
Some 10,000 miners go on strike in western Ukraine

KIEV, March 24. /TASS/. Some 10,000 miners are taking part in a protest rally in the city of Chervonohrad in western Ukraine's Lviv Region, all seven mines of the Lvovugol enterprise have been shut down, the Confederation of Free Trade Unions (CFTU) of Ukraine reported Tuesday.

"Ten thousand miners have stopped work and entered a new phase of an early strike. They are demanding that closure of mines be stopped, and are insisting on the resignation of Energy and Coal Industry Minister [Vladimir] Demchishin," chairman of the Independent Trade Union of Ukraine's Miners Mikhail Volynets said.

Miners are holding posters where their key demands are written: resignation of [Energy and Coal Industry Minister] Demchishin and full repayment of wage arrears for January and February [as of March 24, only 10 million hryvnias out of 95 million have been paid].

Otherwise, miners said they would block an international highway.

Earlier Tuesday, miners held a rally in the town of Dmitrov in the Lviv Region. On Monday, miners held a rally in front of the Lvov administration building. A few hundred miners demanded that wage arrears for January-February be paid to them.

Earlier, miners organizations held a number of protest rallies in front of the presidential administration, the cabinet of ministers and the Verkhovna Rada, Ukraine's unicameral parliament, in Kiev.

Miners demanded that wage arrears be repaid to them and amendments be introduced into the law "on Ukraine's state budget for 2015," to stipulate expenditures for stable work and development of the coal industry, labor protection and wages for miners.

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 #43
Interfax-Ukraine
March 25, 2015
Yatsenyuk says Ukrainians must choose NATO membership through referendum

Ukraine can only become a NATO member after the reforms being conducted in the country are implemented and a referendum on membership has been held, Ukrainian Prime Minister Arseniy Yatsenyuk has said.

"If a few years ago this wasn't on our radar, then [it is] now my political position - it is on our radar. Ukrainians, after the implementation of reforms, must decide on Ukrainian membership of NATO, and the alliance would get one more member which would protect freedom and democracy from aggression," Yatseniuk said, while speaking at the third Kyiv Youth Security Forum entitled "the Role of the New Generation in Saving Peace and Safety" on March 25.

According to Yatseniuk, "for over a decade Russia has spent billions of dollars on defense, we lost Crimea and we got Russian soldiers and tanks in Ukrainian territory. We lost 6,000 lives to the imperialist ambitions of Russia and its leaders, because for over a decade our western partners were a little blind and a little deaf [to Russian aggression], because Ukraine did not receive the NATO Membership Action Plan in Bucharest, and because the world responded insufficiently to Russia's attack on Georgia in 2008."

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 #44
Sputnik
March 25, 2015
Ukraine in NATO? 'Unnecessary and Harmful' - Brzezinski

MOSCOW (Sputnik) - Ukrainian membership of NATO is not only unnecessary but may turn out harmful, former US National Security Advisor Zbigniew Brzezinski said in an interview with Polish newspaper Gazeta Prawna on Wednesday.

In December 2014, Ukraine canceled the country's non-aligned status, confirming its intentions to join NATO.

"Ukraine definitely needs to be helped, provided with equipment. Should [Ukraine] join NATO in future? It is generally not necessary. Perhaps even harmful," Brzezinski said.

Earlier in March, Brzezinski said that the United States should ensure that even if Ukraine joins the European Union, it will not become a member of NATO.

Despite Kiev's aspirations to become part of the alliance, NATO officials have repeatedly stressed that the country needs to implement a wide range of reforms before pursuing bloc membership. Accession to NATO requires unanimous approval by all 28 members of the Alliance.

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 #45
Voice of America
March 25, 2015
In Shattered Ukraine Town, Residents Rebuild Lives
By Adam Bailes

DEBALTSEVE, UKRAINE-Broken tanks sit on the edge of Debaltseve, remnants of retreating Ukrainian government forces. Hundreds of buildings lie in ruin.

Heavy shelling and GRAD rockets pounded this strategic eastern Ukraine town for weeks as the military tried to fight off advancing Russian-backed separatists. The separatists took control of Debaltseve in February, days after a cease-fire agreement with Ukraine's Kyiv government was signed. Amid the fighting, many civilians fled.

Debaltseve now flies the flag of the Donetsk People's Republic (DNR). But with the town back to relative peace, people are returning to their homes. They're emerging from basements, sweeping away rubble, patching windows and beginning to rebuild their lives.

In the Festivaljnaya neighborhood, retiree Maria tried to repair her shattered windows. The graffiti on her door says, "People Live Here Not Soldiers."

"We have only one question: Why did they fire into civilian houses?" Maria asked. "Who fired here, because neither Ukrainians nor pro-Russian soldiers were in this area."

Emerging from underground

Eliza said those who stayed lived underground. Even now, she said she cannot hear properly after the constant shelling.

"We spent more than one month in the basement," she said. "We've been under the fire. We were too scared to leave. We heard GRAD rockets. We had a lack of food."

Although much of Debaltseve has no power, water or gas, the population has grown in the past two weeks from 3,000 to more than 10,000 as people return.

Dmytriy said he feels Debaltseve has been "liberated" by the separatists.

 "After such actions, I think less than 3 percent now support Ukraine," he said. "The majority do not want Ukraine."

The DNR, now paying pensions and supplying construction materials, appears to be winning support here.

"I've received a one-thousand Hryvnias pension recently" - worth $43 - "and my wife as well," Dmytriy said, adding that he'd also received food rations as a form of humanitarian aid. "Now the DNR promises to open banks and create a banking system to rearrange payments. We are patient because they are our people and we trust them.

"I wish Ukrainians never come back here."

'Situtation here is getting better'

People lined up outside an aid center distributing food parcels, which a representative said was delivered by the Russian Federation.

"The situation here is getting better," said Tatiana, a volunteer aid worker. "One of the day-care facilities is open and has 33 children. Starting on the first of April, all schools should be opened. In more than 50 percent of Debaltseve, there is electricity, water."

Despite that optimism, residents worry that the conflict, which has already claimed more than 6,000 lives, could flare up again.

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 #46
Deutsche Welle
March 20, 2015
The woman who leads a rebel Ukraine army unit
Previously, she worked at a casino. She now leads an artillery unit in eastern Ukraine. DW's Kitty Logan travels to Donetsk to meet one of the female leaders of the self-declared "People's Republic."
Author Kitty Logan, Donetsk, Ukraine

She goes by the code name "Nut" - a young woman in her twenties with close-cropped, red hair. She wears a standard issue rebel soldier's uniform. She does not want to reveal her identity.

Nut sits in her room in the stark, sparsely furnished barracks in the Petrovsky district, a suburb to the southeast of rebel-held Donetsk. A machine gun is propped up beside her narrow, single bed. Her loyal dog, Loki, growls at visitors.

This quiet, slight woman from Donetsk is in charge of an artillery unit of 50 men in the rebel Oplot battalion. The battalion is led by the "Prime Minister" of the self-declared Donetsk People's Republic himself, Alexander Zakharchenko.

The ceasefire means the heavy weapons have been officially withdrawn from the front lines. But before the Minsk agreement came into place, Nut played a key role in the fight for Debaltseve (pictured top) and other major battles against Ukrainian government forces. It is a big change from her former life.

"I was working in a local casino, but it closed down," she says. "Because of this conflict, plenty of people have lost their jobs. We had to look for any kind of job."

'We're taking a risk'

Nut says fighting near her home spurred her decision to join the rebel ranks.

"Personally, I also feel [that], if I would stay at home, I would die from shelling anyway," she says.

Nut rose quickly through the ranks to become a captain. "I had to learn very quickly how to handle heavy weapons," she says. "When I reached a certain level, officers in charge decided to give me a higher rank. I don't know why. Maybe because of my personal qualities, or my knowledge."

She says that being a woman has never proved an obstacle to serving on the front lines. "Guys are not afraid to follow me," she says. "They know that I give correct orders. Not the kind of commands that will create extra risk."

But there are risks. Over 6,000 people have been killed in this conflict so far. It is not clear how many of those were from the Oplot battalion. But the kind of heavy weaponry Nut works with causes a great deal of casualties.

"For sure, we're taking a risk," she says. "Usually, artillery fights against artillery. So if we can reach them, it means that they can reach us. It depends how good the teamwork is, how fast the unit can pull back from the position to avoid losing weapons, ammunition."

And a priority, of course, is not losing anyone, she says.

"We've had to pull back under fire many times."

Coming conflict

The number of other female soldiers serving in the various rebel armies in eastern Ukraine is unknown. In this particular unit, the only other women are a cook and a nurse.

Nut says her role as a female captain is an important one.

"When it's about protecting your homeland, women are on the same level as men. Sometimes women can even be [tougher] than men. So it's really important to have women in this war."

She says the men in her unit are of the opinion that, if she's going, they're not afraid to go, either.

"It boosts their morale. Both men and women can be good or bad commanders. If a person with higher rank is giving orders, we have to obey it, [whether] male or female.'

Most of the men who serve under Nut are away for training when we visit. She says she cannot tell us where they are.

Nor can she show us where the artillery she operates is usually stored. This, she says, is because it has been pulled back from this area to comply with the terms of the Minsk agreement.

But Nut and the soldiers at the barracks are waiting for the next phase of the conflict to resume.

"We're fighting for our land," she says. "If Ukrainian soldiers are forced to fight, we will fight them back."

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 #47
Real Clear World
www.realclearworld.com
March 25, 2015
The Right Peace for Ukraine
By Sergei Lyovochkin
Lyovochkin is a member of Ukraine's Verkhovna Rada, or parliament, where he is a leader of the Opposition Bloc.

"There was never a bad peace nor a good war," Benjamin Franklin once said.  The Russian language version of this is somewhat more direct: Bad peace is always better than a good war. In Ukraine today, we have a bad peace. Although violations of the cease-fire occur daily, full-scale warfare has, for now, abated. But it could start again, and our situation is as precarious as ever. We as Ukrainians need to unify now, before it is too late. The next step to be taken is not on the battlefield - it is in Kiev.
 
The world has seen how unpredictable our adversary is. Yet our fate today depends as much as ever on ourselves, and on whether we learn from past events or repeat mistakes.
 
One year has passed since Russia annexed Crimea. Let us take stock of the current situation. Two well-armed groups tied to the breakaway Donetsk and Luhansk people's republics challenge Ukrainian forces, and the zone of recent warfare is located in direct proximity to other regions, such as the Nikolaev and Zaporizhya oblasts, where the reactors of two of Ukraine's four nuclear power plants are located. Civilians are suffering, and residents of Donetsk and Luhansk, who have been deprived of social support from Kiev, have so far borne the brunt of that suffering.
 
The periodic shooting wears on, despite the Minsk agreements. As it does, the mood in Ukraine darkens. If full-scale warfare resumes in the area surrounding Mariupol - a key industrial center and a seaport - an escalation of the conflict is inevitable. Last week, USA Today reported a story out of Mariupol citing a poll in which more than half of respondents in the Southeast said that what they want most are "peace and pensions.'" Millions more throughout the country agree with them.
 
In parallel, consider what has been delivered against the promise of the "Revolution of Dignity" that preceded the conflict. Corruption has not receded in the last year, and real reforms are lagging. The state financial inspector recently reported to Ukraine's parliament that members of the current government may have defrauded the country of hundreds of millions of dollars.
 
Meanwhile, politically motivated persecution is on the rise: In the last two weeks, three former members of parliament from the former ruling party have committed suicide in the face of pressure from authorities. Inter, one of the Ukraine's top TV stations, whose news programs are sometimes critical of the government, has had its signal intermittently blocked during its news broadcasts. Now, the regulators threaten to revoke the channel's licenses on the specious basis that a popular holiday program included Russian showmen.   
 
Political imbalance also threatens a viable peace, as well as the development of the economy in Ukraine. Detached from our industrial heartland, it will be very difficult for our economy to regain its balance. Just as noxious as the separatists, economic devastation and worsening corruption threaten the health of our country. The most effective rebuke of Ukraine's aggressors would be for all sides of the political divide within the country to work together toward democratic stability. Instead of prosecuting the opposition and making examples of former officials, who for the most part have committed no crime, the current government could work with them to achieve reforms that work, aiming its guns against actual, persisting corruption.
 
Our goal today should be to impose a cease-fire that holds, and to end all fighting now, before the damage reaches epic scale. After Maidan, when we got annexation and war instead of EU accession, a deficit in trust widened. Today, when a deputy U.S. secretary of state stops in Kiev, it would be worth his time to visit with both sides of the internal political divide, rather than have it seem like the United States is taking sides. After all, the goal is a united, democratic, and prosperous Ukraine.This goal cannot be achieved if the rights of one group in society are favored over another, nor if the rule of law is applied selectively.
 
Several months ago, one of my colleagues suggested one of the best bridges to peace so far: the introduction of UN peacekeepers to the conflict zones. Finally, the idea is catching on. It will take the combined efforts of the Organization for Security and Co-operation in Europe, the United Nations, and other multilateral bodies speaking with one voice to achieve on the ground what the Minsk rounds alone have not yet done.
 
In the meantime, we need to focus on what Ukrainians can do for ourselves right now. The Second Minsk Agreement calls for constitutional reform, and this could be a way to reform the state, decentralize the government, create new incentives for development outside of Kiev, and develop mechanisms to root out corruption in our country. But if we abuse this opportunity, our past mistakes will only compound themselves. An amended Constitution could create a better system - one that would protect all Ukrainians and create a new system of checks and balances. It needs to do that.
 
What the war has obscured is the fact that the new government is operating in much the same way as the one it ousted. It decides which judges are loyal and which are not, which businesses are protected and which are not, and who should be seen in the media versus who shouldn't. A war-weary public senses this. Increasingly it looks at the current government and shrugs.
 
Bad peace is a bad deal for Ukraine, and "good" war is a fallacy. We should reject both. Instead, this is precisely the time to propose the kind of agreement that puts the interests of the Ukrainian people first, including our compatriots on the ground in Donetsk and Luhansk oblasts. By showing that we're in this together, that we are driving our own economic reform - as  opposed to hoping others will do it for us - we create the best chance to defend ourselves as a united Ukraine.

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 #48
E-International Relations
http://www.e-ir.info
March 24, 2015
Crimea: People and Territory before and after Annexation
By IVAN KATCHANOVSKI
Ivan Katchanovski teaches at the School of Political Studies and the Department of Communication at the University of Ottawa. He was Visiting Scholar at the Davis Center for Russian and Eurasian Studies at Harvard University, Visiting Assistant Professor at the Department of Politics at the State University of New York at Potsdam, Post-Doctoral Fellow at the Department of Political Science at the University of Toronto, and Kluge Post-Doctoral Fellow at the Kluge Center at the Library of Congress. He is the author of Cleft Countries: Regional Political Divisions and Cultures in Post-Soviet Ukraine and Moldova and co-author of Historical Dictionary of Ukraine (2d edition) and The Paradox of American Unionism: Why Americans Like Unions More Than Canadians Do, But Join Much Less.
[References here http://www.e-ir.info/2015/03/24/crimea-people-and-territory-before-and-after-annexation/]

Crimea before Secession and Russian Annexation

Crimea became a major flashpoint of a domestic conflict in Ukraine, and an international conflict involving Russia and the West, after the largely peaceful Euromaidan mass protests ended with a violent overthrow of the Viktor Yanukovych government in February 2014 (See Katchanovski, 2014 and Sakwa, 2015). Before its secession with direct Russian military support and its annexation by Russia in March 2014, Crimea already had a history of separatism in Ukraine. But this region avoided a violent conflict during the break-up of the Soviet Union, in contrast to Transnistria in Moldova, Abkhazia and South Ossetia in Georgia, Nagorno Karabakh in Azerbaijan, and Chechnya in Russia.

The Crimean Peninsula was historically populated by different people, and it was a place of many wars and conflicts. Its early inhabitants included the Cimmerians, the Scythians, and ancient Greeks, whose colonies were located on the Black Sea. The Goths, the Huns, Kievan Rus, Genoese and Venetian merchants, and the Mongol-led Golden Horde controlled various parts of the Crimean Peninsula over different historical periods in the end of the first millennium and the beginning of the second millennium. The Crimean Khanate emerged from the Golden Horde in the 15th century, and it later became a vassal state of the Ottoman Turkey. The Crimean Tatars often raided the Ukrainian, Polish, and Russian territories as a part of military campaigns and to capture large numbers of slaves. As a result of Russian-Turkish wars, Crimea was seized by the Russian Empire in 1783, and a significant part of the Crimean Tatar population resettled or was forced to move to the Ottoman Empire. The Crimean War in 1853-1856 brought a military defeat of Russia from an alliance led by Great Britain, France, and the Ottoman Empire, but the peninsula remained in the Russian Empire (Magocsi, 2014).

During and in the aftermath of World War I, the Bolshevik Revolution, the Civil War, and Ukraine's brief independence from the Russian Empire, control over Crimea was seized by the Ukrainian government, German military, the Russian White Armies, and then by the Bolshevik Red Army in 1920. In 1921, the Crimean Autonomous Soviet Socialist Republic was established as a Crimean Tatar autonomy in Soviet Russia and then as part of the Russian republic in the Soviet Union. However, the Soviet policy of Tatarisation was ended by Joseph Stalin. The artificial famine of 1932-1933 affected Crimea much less than neighbouring agricultural regions in Soviet Ukraine and Kuban in Russia. But mass political terror in the mid-1930s claimed large numbers of Crimean residents, arrested and executed or exiled to Gulag. Crimea became a major battlefield and a killing field during World War II and the German occupation in 1941-1944. In 1944, Stalin imposed a collective punishment on the Crimean Tatars, charging the entire ethnic group with collaboration with Nazi Germany. The Soviet government deported all of the Crimean Tatar population and other smaller ethnic minorities to Central Asia in 1944, and the formal Crimean autonomy was eliminated. A significant proportion of the Crimean Tatars perished during this ethnic cleansing and in its aftermath, primarily as a result of lack of food and medical care. A large number of migrants from Russia and Ukraine were settled in the region. In 1954, Nikita Khrushchev, the new Communist leader of the Soviet Union, transferred Crimea from Russia to the Ukrainian republic (Katchanovski, Kohut, Nebesio, and Yurkevich, 2013, pp. 115-116; Magocsi, 2014).

Separatism in Crimea started to manifest itself during the political liberalisation of perestroika and glasnost initiated by Mikhail Gorbachev, a reformist Communist leader of the Soviet Union. In January 1991, 93 per cent of the Crimean voters supported granting their region the status of the Crimean Autonomous Soviet Socialist Republic within the Soviet Union (Sasse, 2007, p. 138). At the same time, in the Ukrainian referendum on 1 December 1991, 54 per cent of the voters in Crimea backed the independence of Ukraine, much less than the national average of 91 per cent. However, the pro-Russian separatist movement grew popular during the first several years of independent Ukraine. The Russia Bloc, which favoured an independent Crimea or the region's reunification with Russia, received 67 per cent of the votes in the 1994 parliamentary election. Yury Meshkov, its candidate, won 73 per cent of the votes in the second round of the 1994 presidential election in Crimea.

Major differences along ethnic lines concerning support for separatism in Crimea became evident in the 1990s. Crimea was the only region of Ukraine with a majority ethnic Russian population. The 2001 census recorded 58 per cent of the population of Crimea, including Sevastopol, as ethnic Russian, and 24 per cent as ethnic Ukrainians. The Crimean Tatars constituted 10 per cent of the population (calculated from Vseukrainskyi, 2014). The 1996 USIA/SOCIS-Gallup survey showed that 59 per cent of ethnic Russians in Crimea supported their region joining Russia. A significant percentage of ethnic Ukrainians (41 per cent), and a much lower percentage of the Crimean Tatars (8 per cent), expressed the same preference. Conversely, 13 per cent of Russians and 29 per cent of Ukrainians in Crimea, and more than half of the Crimean Tatars (54 per cent), favoured their region remaining a part of Ukraine (USIA, 1996).

The absolute majority of the Crimean Tatars returned to Crimea in the end of the 1980s and the beginning of the 1990s (Allworth, 1998). They established and overwhelmingly supported their own ethnically-based political organisations, such as the Mejlis. Crimean Tatar leaders and organisations opposed pro-Russian separatism, and they allied with nationalist Ukrainian parties and politicians (Drohobycky, 1995; Katchanovski, 2005; Sasse, 2007).

Internal divisions and policies of the Ukrainian government led to the disintegration of the Russia Bloc in the middle of the 1990s. In 1995, the Ukrainian President Leonid Kuchma temporarily suspended the Crimean constitution and abolished its presidency. While Crimea retained its status as an autonomous republic in Ukraine, influence of the central Ukrainian government in the region increased significantly, both de jure and de facto. The Communist Party of Crimea and then the Party of Regions, which formed an electoral alliance with the Russian Bloc, became the most popular political forces in the region. However, overtly separatist pro-Russian organisations did not receive strong support in the regional elections since the mid-1990s (Sasse, 2007). Such developments led to conclusions that the pro-Russian secessionist movement in Crimea failed, that a potential conflict in Crimea was successfully prevented, and that this autonomous region became integrated into the Ukrainian polity (Kuzio, 2007; Sasse, 2007).

However, some other studies argued that separatism retained a significant popularity in Crimea and that its potential secession remained a possibility (Katchanovski, 2006). For example, the 2001 Razumkov Center survey showed that 50 per cent of the respondents in Crimea favoured their region becoming a part of Russia, and an additional 9 per cent preferred to see their region as an independent state (calculated from Krym, 2001). The separatist preferences in Crimea increased significantly after the 'Orange Revolution' in 2004 brought a pro-Western and nationalist president, Viktor Yushchenko, to power. Viktor Yanukovych, a relatively pro-Russian presidential candidate, failed to gain power in Ukraine through the falsification of the election results, but he received overwhelming backing in the region.

In the 2008 Razumkov Center survey, conducted soon after the Russian-Georgian war following an attempt by the Georgian government to seize the de-facto independent secessionist region of South Ossetia, 73 per cent of the Crimeans, who made their minds on this issue, backed the secession of Crimea from Ukraine with a goal of joining Russia (calculated from AR Krym, 2008). In this survey, 85 per cent of ethnic Russians, 65 per cent of ethnic Ukrainians, and 17 per cent of the Crimean Tatars wanted their region to secede from Ukraine (calculated from AR Krym, 2008). When asked separately in the same survey, 47 per cent of the respondents in Crimea, including 49 per cent of ethnic Russians, 45 per cent of ethnic Ukrainians, and 39 per cent of the Crimean Tatars, favoured the independence of Crimea. The 2008 Razumkov Center survey showed that 59 per cent of the Crimean Tatars supported Crimea becoming a Crimean Tatar national autonomy in Ukraine. Separately, 33 per cent of the Crimean Tatars backed the unification of Crimea with Turkey.

However, the outright secessionist preferences in Crimea declined afterwards, and they were expressed by 38 per cent of the respondents in the 2009 Razumkov Center poll. Thirty per cent voiced such views in the 2011 Razumkov Center poll after Yanukovych won the 2010 presidential election with promises of closer political and economic cooperation with Russia and making Russian the second state language in Ukraine (Iakist, 2011, p. 27). The 2011 Razumkov Centre survey showed that combined support for joining Russia and independence of Crimea decreased among ethnic Ukrainians to 25 per cent, from 35 per cent, in 2009. Attitudes of ethnic Russians demonstrated a similar decline of separatist preferences to 35 per cent from 43 per cent. Such separatist attitudes among the Crimean Tatars remained the same in 2011 (28 per cent), compared to 2009 (27 per cent), but their support for joining Turkey increased from 4 per cent in 2009 to 21 per cent in 2011 (Razumkov Center, 2011, p. 27).

Polls indicated that pro-Russian separatism in Crimea had significant but minority support during the Euromaidan. The absolute majority of Crimeans backed the Yanukovych government and opposed the Euromaidan, which started as a mass protest against backtracking by the Yanukovych government on the association and free trade agreement with the European Union, and then turned into the anti-government protest and a rebellion in western and a number of central regions.

Yanukovych, during his presidency, and his semi-oligarchic Party of Regions opposed separatism in Crimea, while receiving the support of the majority of voters in this region in various parliamentary and presidential elections. Yanukovych regarded Crimea as another source of enrichment for his personal network of family, politicians, and oligarchs, and he appointed a number of his associates from Donbas to senior positions in Crimea.

Top Russian leaders, such as President Boris Yeltsin in the 1990s and President Vladimir Putin prior to the overthrow of the Yanukovych government in February 2014, did not support separatism in Crimea. However, the Russian government declared that the NATO membership of Ukraine was an unacceptable threat to security of Russia. Putin stated during the NATO summit in Romania in April 2008 that such a move could result in a break-up of Ukraine along regional lines, and he reportedly claimed that Ukraine was an artificial country, which included historically Russian regions along with other regions (Dzerkalo tyzhnia, 2008).

Some other Russian leaders - such as Yury Luzhkov, the mayor of Moscow, and various nationalist and communist opposition politicians - publicly refused to recognise Crimea or Sevastopol City as parts of Ukraine, and they expressed their backing for reunification of entire Crimea or Sevastopol with Russia. In spite of differences and tensions, the Russian and Ukrainian governments managed peacefully to divide the Black Sea Fleet after the collapse of the Soviet Union, but Russia was able to maintain its navy presence in Sevastopol. In 1997, the two countries signed an agreement granting the Russian Black Sea Fleet a 20-year lease of the Sevastopol navy base. In 2010, President Yanukovych signed another agreement with Russia that extended the lease of the Sevastopol navy base by the Russian Black Sea Fleet for 25 years after the original lease was supposed to expire in 2017, in return for a discount for natural gas imported by Ukraine from Russia.

Crimea during and after Secession and Russian Annexation in 2014

The violent overthrow of the Yanukovych government in February 2014 gave a significant boost to separatism in Crimea. The Russian government used this overthrow to reverse its previous policy and to start backing both separatists and the annexation of Crimea. Yanukovych fled from eastern Ukraine to Crimea on 22 February, and the Russian military, there on instructions from the Russian government, helped him to escape to Russia.

The new government and the media in Ukraine, and their counterparts in Western countries, presented the change of the government as a result of peaceful mass protests during the Euromaidan. They maintained that Yanukovych abandoned his presidential position and fled from Ukraine because of his responsibility for the massacre of the Maidan protesters on 20 February 2014. Evidence, however, indicates that elements of the far right and oligarchic organisations were involved in the mass killing of both Maidan protesters and the police, and that this massacre played the decisive role in the overthrow of the Yanukovych government (Katchanovski, 2014).

The Russian leaders and the media often characterised the overthrow of Yanukovych as a fascist coup, and they justified support of separatism and annexation of Crimea by protection of ethnic Russians from the Ukrainian 'fascists' and by the Russian national security interests to prevent it from losing control of the main Black Sea naval base and its falling under control of NATO. Russian military forces without insignia, along with separatist 'self-defence' formations, seized control over the Crimean parliament building, other government buildings, and Ukrainian military installations in the peninsula. However, the Russian government initially denied its direct military intervention in Crimea, in spite of evidence that Russian military units ('little green men') were operating along with separatist armed units in Crimea beyond the Russian naval base in Sevastopol, and that they were seizing Ukrainian military units and government headquarters.

The Crimean Parliament, headed by Vladimir Konstantinov from the Party of Regions, refused to recognise the new government of Ukraine. The parliament at the end of February 2014 elected Serhii Aksyonov, a pro-separatist leader of the Russian Unity party, as the new Prime Minister of the Crimean autonomy (Aksyonov was reportedly involved in organised crime in the past). The parliament of the Crimean autonomy and the Sevastopol city council unilaterally declared their independence from Ukraine and set up a referendum on this issue. The official results of the referendum held on 16 March 2014 reported that 97 per cent of the voters in Crimea supported joining Russia.

The Ukrainian government and the media, and to a large extent their Western counterparts, characterised separatism in Crimea as having minority support and the referendum as illegal and falsified. The separatism in the region was attributed mostly to direct military intervention by Russia. However, the analysis of various survey data indicates that support for separatism in Crimea increased significantly after the Euromaidan that resulted in the overthrow of the relatively pro-Russian government. There is no directly comparable and publicly available reliable survey data concerning popular support for separatism and joining Russia in Crimea after the Euromaidan. However, in a Pew Center survey in April 2014, 91 per cent of the respondents in Crimea stated that the referendum was free and fair (Pew Center, 2014).

In contrast to Donbas, a separatist region in eastern Ukraine, Crimea avoided a violent conflict. Large sections of Ukrainian military, security service, and police forces on the peninsula switched their allegiance to the separatists and then to Russia, while others were blockaded and disarmed by the Russian military and the Crimean self-defence and returned to Ukraine. Major Crimean Tatar organisations, in particular the Mejlis, were the most vocal opponents of the secession and annexation of Crimea, and they boycotted the 16 March referendum. Over several days following this referendum, the former Crimean autonomous republic and the city of Sevastopol were formally incorporated into the Russian Federation. The Russian government justified its annexation of Crimea by humanitarian intervention and the precedent of Kosovo independence. However, the new Ukrainian government, the US and other Western governments, and most members of the United Nations, rejected the unilateral secession and annexation of Crimea as illegal under the international law.

The Ukrainian government's official stance, expressed, for example, by newly elected president Petro Poroshenko, is to reunite Crimea with Ukraine. The use of military force to take back control over Crimea was raised as a possibility by some Ukrainian officials, but such an option is very unlikely because it would lead to a war with the much more powerful Russia. By the end of 2014, the Ukrainian government moved to impose a limited blockade of Crimea by suspending train and bus links.

The Western governments rejected the possibility of using their military forces in Crimea. The US government, and governments of the European Union members and other Western countries, imposed economic and travel sanctions against separatist leaders of Crimea and Russian government officials for the annexation of the region. The sanctions also prohibited or severely restricted work of US and other Western businesses in Crimea. For example, following a new round of the US sanctions, Visa and MasterCard blocked the use of their credit cards in this region in December 2014.

However, the Russian government refused to reverse its annexation of Crimea and to negotiate any deal that would change the status of this region. In the September 2014 elections, the United Russia party of President Putin won 71 per cent of the votes in Crimea. Ukrainian and Crimean Tatar parties and organisations were generally limited or curtailed in their ability to continue functioning, and some of their local leaders and activists were subjected to violence, threats of violence, detention, or expulsion from Crimea.

The Future of Crimea

The secession of Crimea from Ukraine with help of the direct Russian military intervention, and the subsequent annexation of the region by Russia, represented a major turning point in the political history of the region, which experienced many conflicts in the past and was controlled by different powers during various historical periods. The significant rise in separatist orientations in Crimea after the Euromaidan, the direct Russian military intervention in support of pro-Russian separatists, and the Russian annexation of Crimea imply that a return of Crimea from Russia to Ukraine is virtually impossible. However, Crimea in its current status quo is likely in the foreseeable future to remain a point of conflict between Ukraine and Russia, and between the West and Russia.

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 #49
Sputnik
March 26, 2016
Pentagon 'Wall of Silence' Will Not Solve Ukraine Crisis - Russian Embassy

Even during the Cold War the US and USSR maintained military-to-military contacts amid crisis situations, Deputy Chief of Mission at the Russian Embassy in the US Oleg Stepanov said. But all communication between Washington and Moscow has been curtailed under US President Barack Obama's administration, he added.

WASHINGTON (Sputnik) - The United States needs to open military and intelligence communication channels with Russia as silence will not resolve tensions over the conflict in Ukraine, Deputy Chief of Mission at the Russian Embassy in the United States Oleg V. Stepanov, told Sputnik.

"You have to talk when you're in crisis. You cannot put up a wall of silence and think that problems will go away by themselves. In order to solve the problem, you need to talk," Stepanov said on Wednesday. "Unfortunately, the Pentagon cut-off all those contacts with our [Defense] Ministry."

Stepanov's comments came after a lecture at Johns Hopkins University's School of Advanced International Studies, during which he frankly explained that US-Russian relations are at its lowest point since the Cold War, primarily because of the lack of mechanisms for interaction.

Yet even during the Cold War, according to Stepanov, the United States and Soviet Union maintained military-to-military contacts amid crisis situations. But all communication between Washington and Moscow has been curtailed under US President Barack Obama's administration, he added.

The crisis in Ukraine itself was driven by breakdowns in communication and misunderstandings, Stepanov said. He stated that this began with an "unconstitutional and undemocratic" coup in Kiev that the United States failed to condemn, followed by a failure in diplomacy with eastern Ukraine.

"The original cause of the crisis in Ukraine, as we see it, lies in the inability of the US and Kiev to conduct peaceful dialogue with its [Kiev's] own people," Stepanov noted.

On Wednesday, Ukraine Deputy Foreign Minister Vadym Prystaiko said that Kiev had no intentions of holding direct talks with eastern Ukraine's pro-independent forces, governing large areas.

In February, the Normandy Four, including the leaders of Russia, Ukraine, France and Germany facilitated a deal aimed at ending the military conflict between Kiev forces and independence militias.

The truce stipulated a ceasefire that came into force on February 15, heavy weaponry pullout, an "all-for-all" prisoner exchange and granting special status to Ukraine's southeast regions.

The fighting has claimed over 6,000 lives since April 2014, according to the United Nations.

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