#2
www.aseees.org
June 23, 2015
ASEEES ANNOUNCES COHEN-TUCKER DISSERTATION RESEARCH FELLOWSHIP PROGRAM

The Association for Slavic, East European, and Eurasian Studies announces the establishment of the Stephen F. Cohen-Robert C. Tucker Dissertation Research Fellowship Program for Russian Historical Studies. The Fellowship Program is made possible by a generous donation from the KAT Charitable Foundation.

Beginning in the academic year 2016-2017, the Cohen-Tucker Fellowship Program will provide up to six annual fellowships, with a stipend of $22,000, for doctoral students at US universities who are American citizens or permanent residents to conduct their dissertation research in Russia.  The program will be open to students in any discipline as long as their dissertation topics are within the scope of 19th - early 21st century Russian historical studies.

More detailed information on the Fellowship Program and its applications process will be forthcoming in late summer. The application deadline for the first year of the Program will be in early December 2015, with the decision notifications scheduled for mid-spring 2016. The Fellowship recipients will be expected to start their research trip to Russia by no later than December 2016.

ASEEES thanks the KAT Charitable Foundation for its support of and commitment to Russian studies.

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 #3
Russia Beyond the Headlines
www.rbth.ru
June 24, 2015
Could now be the time to visit Russia ?
Tourism experts answer the question.
Dmitry Davydenko and Maya Lomidze, special to RBTH

Russia: unrealized potential
Maya Lomidze, special to RBTH
Maya Lomidze is the executive director of the Russian Association of Tour Operators.

Maya Lomidze says that Russia's history, culture and nature are underserved by the lack of infrastructure for tourists.

The main phrase to apply to Russia as a tourist destination is "it has big potential." This phrase can be applied to practically all the country's regions and cities - except, perhaps, to Moscow, St. Petersburg and Sochi.

Indeed, throughout the country, there are opportunities for development. In most of Russia, there are interesting things to see and cultural experiences that will likely attract tourists, but these opportunities have not been realized.

Perhaps because of the geopolitical situation, the past year has been a watershed in the Russian tourism industry. For the first time, Russia is actually making an effort to realize some of this potential and attract tourists.

In 2014, for the first time, Russia's state tourism agencies began the process of establishing tourism representative offices abroad. This year, Visit Russia offices have already opened in the United Arab Emirates and Germany, and offices are planned for China, Finland and Italy. Although such an idea has been raised numerous times over the past 10 years, it was always met with complete rejection, accompanied by a clear lack of understanding of the value of such offices and what they could contribute to improving Russia's image abroad and increasing flows of tourists.

In comparison, there are more than 40 representative offices of foreign tourism agencies working in Russia. The popularity of certain foreign tourist destinations among Russians is significantly affected by the work of these representatives.

If the plans for opening the Visit Russia offices abroad are realized, then for the first time in its recent history - for the first time in almost 25 years of the existence of the tourist market - Russia will have the opportunity to present itself as a tourist destination. It is difficult to overestimate the importance of this step, especially this year, when preserving - let alone increasing - the numbers of foreign tourists is one of the main challenges for the tour operator business in Russia.

The external political situation and the serious cooling of relations between Russia and the West have had a significant impact on Russia as a tourist market and, consequently, on the number of Western tourists. According to Russian tour operators working in inbound tourism, in 2014, sales volumes for trips from the United States and European countries decreased by 30 percent - 40 percent.

The devaluation of the ruble, however, had a notable effect. When tours became cheaper, politics practically moved to the background. Suddenly tourists were willing to consider Russia again. Tour operators predict that demand for Russia as a tourism destination will remain at the same level as last year, which in this climate is definitely a breakthrough.

Tourists' preferences for what to see in Russia have not changed practically since Russia opened up as a tourist destination. Most travelers want to see Moscow and St. Petersburg. The Russian capital and its northern counterpart account for almost 90 percent of all tourist traffic.

The Golden Ringtowns outside Moscow are also considered popular, as is a trip on the Trans-Siberian Railway, although only 3 percent of tourists make this journey. Lake Baikal, Kamchatka and the Altai come in a very distant third, but are attractive to adventure travelers and ecotourists.

Important for both tourists and tour industry experts to remember is that political situations change, crises arise and die down, but people always travel. The main question that Russian tourism experts must answer now is whether Russia can be considered a real tourist destination, capable of attracting visitors in spite of geopolitics, or if it just has the potential to become one. There is no unambiguous answer.

It is clear, however, that the image of Russia created by its foreign posturing and its domestic political positions, and the real Russia that tourists want to see are two different things.

The beauty of St. Petersburg during the White Nights does not depend on what Russia is for or against politically. The late afternoon shine of the Volga, the pink salmon's dance in the Sea of Okhotsk near Sakhalin or the amber deposits during low tide on the shores of the Baltic Sea in Kaliningrad are eternal. They do not depend on or care who is in power.

A walk along the boulevards of old Moscow or an evening excursion to the places featured in Mikhail Bulgakov's novel "Master and Margarita" are unforgettable. As in Kazan, which is an ideal mix of European, Russian and Islamic cultures, there are any things to promote across Russia - snowmobile races in the polar snows in the Nenets Autonomous Area in April, air balloon rides in Yaroslavl and a therapeutic sleep at the beehives in Altai. But perhaps it would be better to come and see it all for yourself.
---

Politics aside, Russia has much to offer today's tourists
Dmitry Davydenko, special to RBTH
Dmitry Davydenko is the chairman of the Organizational Committee of the All-Russian Tourist Association.

Dmitry Davydenko argues that travel and appreciation of another country should not be affected by political disagreements.

If I was a tourist from, let's say France, I would definitely go to Russia. Why? To see new cities and a new country, to try the Russian cuisine and to drink some Russian vodka as the Russians drink it - from frozen shot glasses, accompanied by mushrooms or herring.

To visit the Hermitage in St. Petersburg, to take a walk on Red Square in Moscow, to buy some souvenirs on the historic pedestrian street, the Arbat, and then brag to my friends and neighbors back home about my travels to "authoritarian and aggressive" Russia and appear in their eyes as a sort of superman who is not afraid of anything, even a trip to Russia.

Possibly some of my friends would suspect that I support President Putin's regime. I would then have to tell them about everything I saw and learned in Russia.

First, I would have to tell them how people in Russia behave toward foreigners, about how foreigners are welcome guests and how Russians are happy to see them, about how many fabulous hotels there are for all tastes and income levels, about how the number of exquisite restaurants in Moscow, St. Petersburg and Sochi is greater than that of Paris or Milan, with much lower prices. I would also tell them that it is safe to walk around at night in tourist centers, that major cities are equipped with modern tourist information systems, about how prices after the December 2014 crisis have dropped by 50 percent when converted to euros.

Then I would tell my friends that Russians are really worried about the situation in southeastern Ukraine, where many have friends and relatives. I would tell them about the man-made miracle of Sochi, the home of the 2014 Olympics, the first-rate, year-round ski and beach resort built in an incredibly short period of time. The Olympic villages are still decorated with the flags of almost all the national teams that participated in the Sochi Olympics, reminding everyone that, besides political interests, there are more important events that unite the people of the world.

But most importantly, I would tell them that before making conclusions about a country and its people, one should go there and see it with his or her own eyes. One should dive into its thousand-year history and culture, speak to the people and then compare that with what is being shown on TV and printed in newspapers. One should free him or herself of all stereotypes, of politics and everything related to it and then fully enjoy the new impressions of a great country.

The treasures of the Hermitage will not be less significant if, for example, Crimea returns to Ukraine. St. Basil's Cathedral managed to endure through many wars and 70 years of communism. It will stand through the Putin era and astonish Russians and foreigners during the next president's tenure, regardless of the country's political course.

The taste of frozen vodka accompanied by a spoon of black caviar will not change with a different electoral system and the Russian winter will not become warmer if Russia allows same-sex marriages.

It's worth mentioning that even though many Russians have different views from Europeans on some social issues, this in no way prohibits Russians from visiting their favorite European cities and spending countless sums of money there - Russians spent more than 36 billion euros in the European Union in 2013.

That is why I propose, as we say in Russia, to "separate the flies from the cutlets" and not mix tourism with politics. I promise to visit Paris in October, even though I categorically disagree with the policies of the Élysée Palace.

Therefore, I suggest you travel and follow politics, but just avoid mixing these two important activities, just like sports and politics were not mixed during the 2014 Olympics.

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 #4
Christian Science Monitor
June 23, 2015
Does alleged NSA hack of Kaspersky signal new front in cyberwar?
Newly released documents reveal a systematic campaign to reverse-engineer anti-virus software produced by firms like Russia's Kaspersky Labs, allowing intelligence agencies to uncover vulnerabilities that could help subvert them.
By Fred Weir, Correspondent

MOSCOW - The latest Edward Snowden revelations - an alleged hack of a prominent Russian software firm - are creating a big stir here.

According to documents published by the Intercept Monday, the US National Security Agency and its British counterpart, GCHQ, targeted major Internet security firms, including Kaspersky Labs. They allegedly did so to reverse-engineer their antivirus products, enabling them to spy on protected networks.

A 2008 warrant request from GCHQ published by the whistleblower site says the aims of penetrating Kaspersky's most sensitive systems might include "modifying commercially available software to enable interception, decryption ... or 'reverse engineering' software" to understand how it works.

The warrant was needed because Kaspersky maintains an office in Britain. The request says that targeting the Russian IT giant was necessary because "personal security products such as the Russian anti-virus software Kaspersky continue to pose a challenge to GCHQ's CNE [Computer Network Exploitation] capability. And SRE [software reverse-engineering] is essential in order to be able to exploit such software and to prevent detection of our activities."

An NSA slideshow presentation about the covert operation, dubbed "Project Camberdada," lists two dozen companies that were targeted. They include several Russian companies, including Kaspersky and the state arms export company Rosoboronexport, but also well-known Czech, Finnish, Slovakian, and Romanian anti-virus providers. No US- or British-based firms are listed.

Russian media have reacted with predictable outrage to the revelations. The Kremlin-funded English-language channel RT suggested that Kaspersky, which has an estimated 400 million clients worldwide, gained special attention by Western intelligence agencies because of its technical proficiency.

Kaspersky said in a statement that it was investigating the allegations. "We find it extremely worrying that government organizations are targeting security companies instead of focusing their resources against legitimate adversaries and are actively working to subvert security software that is designed to keep us all safe," it said.

In recent years, Kaspersky has played a key role in unmasking alleged US cyberweapons such as Stuxnet, a sophisticated program used to attack the computer systems at Iran's main nuclear enrichment facilities, and a similar program known as Flame.

Earlier this year, Kaspersky accused US intelligence agencies of planting spy software inside computers made by leading global manufacturers.

And just this month the company's founder, Eugene Kaspersky, blogged that Kaspersky had uncovered an "advanced attack" on its internal networks by an unnamed state actor. He wrote that the malicious software, which he labeled Duqu 2.0, is a generation ahead of anything the firm has previously seen.

While Mr. Kaspersky's blog post could be a bit of calculated self-promotion - a common strategy in the sector - experts say there's little doubt that the latest Snowden revelations point to an escalating cyberwar of all-against-all that is probably much worse than is publicly acknowledged.

"It's another clear signal we need globally-accepted rules of the game to curb digital espionage and prevent cyberwarfare," Kaspersky wrote about Duqu 2.0. "If various murky groups - often government-linked - treat the Internet as a Wild West with no rules and run amok with impunity, it will put the sustainable global progress of information technologies at serious risk. So I'm once again calling on all responsible governments to come together and agree on such rules, and to fight against cybercrime and malware, not sponsor and promote it."

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 #5
The National Interest
June 24, 2015
This Is What Russia Really Wants
"I am absolutely sure that Russia is not going to yield anything," Andranik Migranyan told an audience at the Center for the National Interest.
By TNI Staff

With the European Union extending sanctions for a further six months, relations between Russia and the West remain tense. The annexation of Crimea, coupled with the continued conflict in eastern Ukraine, has convinced many in Europe and the United States that a more aggressive posture toward Moscow is imperative. But is there a different path open to both that could eventually lead to a more amicable relationship?

Andranik Migranyan, a prominent foreign policy expert and the head of the Institute for Democracy and Cooperation, a think-tank sponsored by the Russian government, appeared at the Center for the National Interest to offer some valedictory remarks about U.S.-Russia relations before he returns to Moscow. A veteran observer of the United States, he expressed confidence that Moscow will eventually persuade Washington to recognize and acknowledge it as a great power. "If you are resolute and determined to resist, in the end, America," he said, will come around. That was true in "Vietnam, Iraq, Libya, now in Ukraine. You must resist until the last." According to Migranyan, "I am absolutely sure that Russia is not going to yield anything. Russia has its interests, which are very clearly formulated."

CFTNI president Dimitri K. Simes, in introductory remarks, listed several past Migranyan predictions that had come true-he'd warned that the Obama administration's "reset" policy would run into trouble, and he'd anticipated both of Vladimir Putin's exchanges of power with Dmitry Medvedev, for example; further back, he'd spotted storm clouds on the horizon for both Yeltsin and Gorbachev.

Now Migranyan pointed to new problems. For one thing, he castigated the Ukrainian government for failing to implement the internal reforms contained in the Minsk agreement-and of even denying to its citizens that it had committed to such reforms. He argued that Moscow was trying to use its influence over the separatists in Ukraine's east, but that Washington had not exerted the same pressure on the Ukrainian government-and he expressed a great faith in Washington's influence there, suggesting that a mere call from the Vice President could stop the conflict.

Migranyan was pessimistic about the direction the conflict was headed, suggesting that the Ukrainian government is caught in a double bind: further war would likely lead to "constant defeats," yet peace would be unlikely to yield enough aid for stability. War, he suggested, would at least help the government mobilize society and defer the economic problem, and so escalation was likely. The end result, said Migranyan, would be growing pressure on the United States to arm the Ukrainian government-and, he said, several American experts had warned that more arms would not remove Russia's escalation dominance. If events go in this direction, then the "survival of Ukraine as a unified country," stated Migranyan, would be "miraculous."

Yet despite all this, Migranyan suggested that the Ukraine crisis was not the only cause of tensions between Russia and the West. Instead, he said, the broader question of the "fate of Soviet heritage" was at the root. After the collapse of the Soviet Union, he said, the West "swallowed" Eastern Europe, and it is now trying to do the same with some of the former Soviet republics. He accused the West of trying to restore the conditions of the 1990s, when Russia was weak enough that there were jokes that the Russian foreign ministry was an office in the U.S. State Department. In this vein, he expressed concerns about a Hillary Clinton presidency, on the grounds that officials from the 1990s have tended to see Russia as a country that can be written off and ignored.

Migranyan said that there was no desire to restore the Soviet Union or even to put NATO's Article 5 collective defense guarantees to the test in places like the Baltic States or Poland. Instead, he argued, Russia wants to be treated as a great power and even a partner, and this would entail Russian concerns being taken seriously-which, he said, has "never ever" happened since the fall of the Soviet Union. A major, longstanding Russian ambition, he said, has been a new security partnership in Europe, with NATO as one pillar and Russia as another. "Unfortunately," said Migranyan, "Washington treats nobody as a partner."

Russia's ambassador to the United States, Sergey Kislyak, offered extended comments as well. He differed from Migranyan's characterization of Russia as a nation seeking respect, saying that this suggested a "kind of inferiority complex." "Russia has been Russia even before [the] United States appeared on the map...we have [a] great culture, vast land, phenomenal talents..." said Kislyak. "We do not seek recognition as a normal country. We have interests, including in security, that we want to be taken on board."

In addition, Kislyak downplayed the significance of recent Russian military maneuvers off the coasts of Western countries, while warning of "muscle-flexing" by NATO forces near Russia's borders. He complained of "exercises that never stop" that serve as a "trick" to permanently deploy forces near Russia, against what was "promised to [Russia] in the Founding Act." He further said that "there is no discussion in Russia of deploying nuclear weapons in any aggressive fashion," but "NATO is on the border of violating the NPT treaty by making the non-nuclear-weapon countries of NATO participate in training for nuclear missions, something that is certainly very...troublesome to us." Kislyak stated that this was now likely the "worst period in our relations after the end of the Cold War."  

Some attendees expressed skepticism about Migranyan's reading of events, and particularly on the situation in the Baltic States. Dov S. Zakheim, a former senior official in the Bush administration and vice chairman of CFTNI, said, "I'm a little puzzled...I wasn't the greatest fan of NATO expansion when this first started, but when I listen to you talking about the great threat from the Estonians, or from the Latvians, or from the Lithuanians, it's the mouse that roared." Migranyan responded by saying that membership in NATO was prompting such countries to engage in needlessly provocative--and even outright "ugly"-- behavior toward Russia. "Don't bark [at] a big bear," he said. "It's dangerous."  It served as a reminder that numerous frictions remain not only between Russia and the United States, but also with its European neighbors. 

 #6
Russia Insider
www.russia-insider.com
June 23, 2015
Russians Pay Less Tax Than You - And Other Surprising (?) Facts
Most Russia coverage isn't just biased - it's plain wrong. Here are some real facts
By Marco Polo

Russia gets a bad press. Literally. In fact Western media coverage of Russia is almost always extremely negative. That would be excusable if it was mostly accurate, but in fact it's usually blatantly wrong. The reality of Russia is far removed from the fiction that we're meant to believe. As investors, understanding the difference is essential. Here are just some of the surprising things about Russia that you probably don't know.

In no particular order...

1. Russia has a flat rate of tax on personal income of just 13%. This compares with top rates of personal income tax of 45% in Australia, China, Germany and the UK, amongst others. The USA is slightly lower, at 39.6%, but that excludes state and local income taxes which can add a lot (Californians pay over 50% top rate). Chances are you pay more tax than the average Russian.

2. Contrary to popular belief, the oil and gas sector is not "half" the economy, or some other huge amount that's typically quoted in the media. In fact it's share is just 16%, having fallen sharply over the past 15 years as other sectors have grown much more rapidly (World Bank figures).

3. It is commonly stated that "over half" of Russian state revenues are derived from the oil and gas business, the theory being that Russia goes bust if the oil price falls. The reality? In 2013 only 27% of revenues were from this source, according to Jon Hellewig at Awara Group (Russia analysts). The largest contributor, at 29%, came from payroll taxes, despite the low flat tax (see above).

4. Russia doesn't have a stagnant and failing economy. Okay, this year it will have a recession brought about by Western sanctions and the sharp fall in commodity prices. But between 2000 and 2012 the economy grew tenfold, measured in US dollars.

5. The Russian stock market has been a great place to invest. Since its launch at the end of 1994 the MSCI Russia index is up 516% (in US dollars), compared with a gain of 355% for the MSCI USA index over the same period. This is despite Russian stocks currently trading at incredibly depressed levels, and US stocks trading in bubble territory, yet again (see here for more).

6. Despite what NATO warmongers claim, Putin is not seeking to rebuild the Soviet Union. (NATO is a Cold War relic in desperate search of a purpose.) Russian actions in Ukraine, following the Western backed coup in Kiev, were simply defensive moves against an expansionary NATO. Putin is on the record as saying "He who did not mourn the passing of the Soviet Union had no heart, but anyone who tried to re-establish it had no head." Substitute Putin for ex-UK prime minister Winston Churchill, and "Soviet Union" with "British Empire" and this makes sense. (Note for those of a sensitive disposition: I'm not trying to justify either the Soviet Union or the British Empire. I'm just saying neither is likely to reappear.)

7. US president Barack Obama recently said: "Russia doesn't make anything. Immigrants aren't flooding to Moscow in search of opportunity. The population is shrinking." He was wrong on not one, not two, but all three counts. So...either the US emperor has terrible advisors...or he was deliberately lying...or both (either way it's worrying). In fact, Russian industrial production grew 60% from 2000 to 2012 according to the United Nations Economic Commission for Europe (UNECE). Russian exports, excluding oil and gas, increased 250% over the same period and food production was up 100% (Rosstat). Russia had a trade surplus of US$40 billion in the first quarter of this year, meaning the country exported a lot more than it imported (despite sanctions).

8. What about immigration? Well, according to the UN, Russia has the second highest immigrant population in the world, standing at 11 million in 2013. That's a lot less than the USA's 46 million, but more than Germany's 10 million, the United Kingdom's 8 million or France's 7 million. Wrong again, Obama.

9. The US president also struggled with his knowledge of Russian demographics in general. It's a myth these days that the population is shrinking, as men drink themselves into an early, vodka soaked grave and children die young. The Russian population was 144 million in 2014 after growing 275,000 that year. That's only a modest increase, but it's still not a decline. Male life expectancy, while still low at 66 years, has increased by 8 years since 1999. Infant mortality rates are down by two thirds as healthcare has improved. That's real progress, even if there is much more to do.

10. The total tax take as a percentage of Russian GDP was just under 30% in 2013. That's a bit above the USA's 25%, but well below France's 44%, Germany's 37% and the UK's 36%, let alone high tax Scandinavian countries (think mid-50s). (Source: Awara Group)

11. There are no massive "capital outflows" from Russia, despite what is often reported. In fact the flows represent Russian companies paying off foreign debts. Since Russian companies can no longer trust foreign sources of finance this makes sense.

12. Russian government debt is just 13.4% of GDP. This extremely low level, which points to the strength of Russian state finances, is something that most developed countries can only dream of achieving...in about a hundred years (or after massive debt defaults or hyperinflations). Despite regular scare stories to the contrary, a repeat of the 1998 Russian debt default is not imminent.

13. Few people in Western countries understand the crucial role that the Soviet Union played in crushing the Nazis during World War II. Yet none other than British wartime prime minister Winston Churchill said that "It was the Red Army that tore the guts out of the Wehrmacht.", meaning the combined German armed forces. Including civilian casualties it's estimated that 22 to 28 million Russians died during that horrific war. That's many more than any other country, and 16 to 20 times the combined 1.4 million casualties of France, the USA and UK. This huge sacrifice should be remembered.

14. Putin is not a new "Hitler". Russia's role fighting the Nazis means it should be baffling to all, and is deeply offensive to Russians, when people compare Putin to the most vicious vegetarian to ever walk the Earth. Anyone that says things along those lines is no more than a poor comedian with bad taste. Unfortunately it's a long list of jokers, which includes Prince Charles, future British head of state (when he's not talking to plants), former US foreign minister and Democratic US presidential hopeful Hillary Clinton (when she isn't sending secret emails), Republican US senator John McCain (er, when he isn't cooking frozen french fries?), and German finance minister Wolfgang Schauble (when the Greeks aren't asking the Germans for hundreds of billions of euros to make up for what the real Nazis did).

15. As recently as 2012 Vladimir Putin set a goal to increase the country's ranking in the World Bank's ease of doing business survey to 20th by 2018. From a starting point of 112th at the time Russia leapt to 63rd by 2014. It's a remarkable achievement in a short time.

16. Obama also said of Russia recently "It is America that stands strong and united with our allies, while Russia is isolated, with its economy in tatters." We're supposed to believe everyone hates Russia. Yet again it's completely false. The government of China describes Russia as an "irreplaceable strategic ally". And ahead of a recent visit by Mr. Putin to India an official Indian government press release said "Every Indian child knows that India has no greater friend than Russia." With just those two governments on Russia's side, which represent 37% of the world population, Russia can hardly be described as "isolated". By comparison, the combined populations of the USA and its main allies in the European Union and Japan make up 13% of the world population. Just saying.

Russia and its leaders are not perfect. Far from it. But a huge amount has been achieved in the past 15 years, after the initial chaos in the 90s that followed the collapse of the Soviet Union.

If you dig just a little deeper than the consistently negative headlines then the Russian reality may surprise you.

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 #7
Kremlin.ru
June 23, 2015
Civic Chamber's plenary session

Vladimir Putin took part in a plenary session of the Civic Chamber of the Russian Federation, devoted to the 10th anniversary of this civil society institution.

In addition to the members of the federal Civic Chamber, the meeting in the Kremlin was attended by representatives of regional civic chambers from Russia's 84 regions.

Excerpts from transcript of Civic Chamber's plenary session

President of Russia Vladimir Putin: Good afternoon, friends.

It is a great pleasure to welcome you here and to congratulate you on this momentous event, the 10th anniversary of the Civic Chamber's establishment. Over the years you have accumulated a wealth of experience and implemented numerous initiatives aimed primarily at improving people's lives and fostering our country's development.

 The Chamber's composition has changed several times over these years. Undoubtedly, what is most important is that there should be continuity in your work, accumulated know-how and growing influence. This is the most convincing proof that the Civic Chamber has come into its own, and the expert community and state authorities must and do respect its views, conclusions and proposals.

 A wide variety of issues fall into your scope of activity. They include promoting interethnic relations, combating corruption, dealing with environmental problems, as well as issues in healthcare, culture and education. The Civic Chamber has become an effective body providing high-quality expert assessments, first and foremost of draft laws, as well as an effective platform for dialogue between the public and authorities.

The Civic Chamber has been influential in forming a culture of public debate, which is very important, particularly for starting the work. At the same time, we remember quite well how this debate developed. Sometimes we wanted to see qualitative improvement. I want to say again - I think you have made a significant input into this positive process.

The interests of our nation's citizens, of the public, have always been at the forefront of the Civic Chamber. I sincerely thank you for the help you provided to residents of Russian regions that were affected by various natural disasters. You promptly carry out large-scale campaigns and always collect significant resources. This active participation serves as evidence of how much you care about people and the life of society overall.

Over the past decade, many of the Chamber's initiatives have been turned into legislation or received active support from the Government. This includes contributions to the development of charitable activities and volunteer work, the creation of conditions for public monitoring of government agencies' performance, the launch of a public monitoring system over the National Final School Exam, as well as the organisation of public supervisory commissions for the observance of human rights in detention centres, regulation of gambling and certain other areas.

I would like to highlight your support for the non-governmental sector. You actively participated in the development of amendments to laws that concerned socially-focused non-governmental organisations and the creation of conditions for their work.

The Civic Chamber's initial readings of socially significant bills also had enormous significance. This is routine work that provides public access to legislation, and is a real mechanism for direct democracy, which we are consistently developing, and will continue to develop in the future.

I know that the Chamber presented a suggestion on renewing legislative regulation over the non-governmental sector, including the creation of a modern common NGO registry. The need for such amendments resulted from a thorough analysis of the work by non-governmental organisations. There are over 220,000 NGOs in Russia. We obviously need clear criteria that can be used to identify the areas of work that are most greatly needed by society. It is important that these legislative initiatives are now being developed in close cooperation with representatives of the so-called third sector.

I also welcome the new Prospects project from the Chamber. Its goal is to identify NGO leaders working on projects that are useful to society in the regions and who are held in high esteem by our citizens. I view this approach as very timely; after all, active civic and social participation not only helps address many long-standing problems, but also strengthens the patriotic spirit, promoting our shared national values. This position, this attitude towards life and towards one's nation, should be encouraged by society in every possible way.

Moreover, it is useful to know which NGOs are doing what and how their projects are working in practice, whether they are receiving budgetary assistance or other support in their regions, what difficulties they face in tackling the challenges that they were created to combat. This information is a great foundation for the future, the basis for further successful development of the third sector, which is capable of working side by side with small businesses and municipal institutions in a wide range of social areas.

Friends, public activism is strictly voluntary work. It does not promise benefits of privileges, but requires a great deal of responsibility. People engage in it following the call of their hearts, often combining it with fulfilling their professional duties and giving all their free time to public activism. Over the past decade, you have been able to do a great deal of useful and necessary work for our nation, and society rightly expects that the effectiveness of your work will only increase - in any case, that is our hope.

Thank you all very much!
<...>
Initially we planned the Russian Civic Chamber, the principles of its formation and its activities as a means to broaden the foundation of democracy in the literal sense of the word, without making a show of it. That is the case,because the existing agencies not only in our nation but in many others are insufficient.

Parliamentary democracy no longer addresses all our needs. Unfortunately, national parliaments, and not just ours, do not always fully reflect society's opinion, so this is an additional instrument. But nevertheless, we need to ensure that civic chambers are not a "second edition" of the regional parliament.

We need to carefully define their authority and formation principles. Give us your projects - we will analyse them and work on this together.
<...>
I truly believed and continue to believe that initial readings are a very important instrument in increasing the quality of legislative work, a highly important element because not only in our nation but throughout the world, and in certain countries this activity is even legalised - I am talking about lobbying, it is highly active and sometimes quite effective.

Since we are speaking openly, I'll say that it's possible that lobbying can and will likely be extended to the Civic Chamber - in the sense that initial readings, one way or another, affect the final legislative decisions. This is probably inevitable. The only thing I would like to wish is for this to always be an alternate point of view, so that these so-called lobbyists do not contrive to use all the instruments to achieve goals that are exclusively theirs. I ask you to always keep that in mind.

With such an enormous number of legislative acts adopted by the State Duma and Federation Council over the course of the year, it is highly important to know the opinions of those who believe a particular issue should be resolved somewhat differently. The law is an instrument that regulates relations in society, relations between people. It is important to balance these interests in society. So I would like to thank you for this and wish you success.
<...>
The Civic Chamber and Russian Popular Front are broad, large instruments. For example, civic chambers in the regions we just discussed are the instruments for balancing societal interests, a very important instrument to avoid any kind of monopoly, either by administrative or municipal agencies, for example, on life in a district, in a town, or the state overall. This balancing tool is highly important. In this regard, we certainly need non-profit organisations that are an even finer instrument for achieving this balance of interests. So we have supported and will certainly support further this area of activity.

Do we need any additional benefits? I have no doubt that we need some sort of support, because there are some things (I won't list them now) that look quite unfair, since non-profits face a certain burden from the fiscal authorities, and in general, their work is not aimed at generating profit. So this is highly important.

But here, we also see certain dangers, which you just mentioned, like tax benefits, because as soon as benefits are made available, some companies emerge under the guise of NGO activity that make everything - from nails to diamonds - and all of this as an NGO. Sometimes, it is very difficult to manage and identify this, sometimes even impossible. So let's think together about this system of support and keep in mind the aspect I just mentioned.
<...>
There were many questions about so-called foreign agents. I don't really want to return to this issue again, but at the same time, I also agree with the colleagues who say that certain matters require further adjustment. It's true, I have come across this myself, and it is clear that some of the wording in the law may be interpreted inconsistently, and overall can sometimes be damaging even to the work of absolutely loyal, pro-Russian organisations designed to help people.

But still, our working practices and the latest data prove that we were right in introducing this concept. A recent event - I no longer remember the name of the organisation, but it supposedly served the consumers - so it began to give recommendations on how our tourists should behave in Crimea and how they should resolve property issues in Crimea. Is that serving Russian citizens? No, that's serving the interests of foreign states with regard to Russia.

That is precisely why we introduces the "foreign agent" concept, so that foreign states do not use such instruments to meddle in our domestic affairs. Nevertheless, this sphere of activity requires additional regulation and additional analysis and corresponding decision-making. So we will continue working on this together.
<...>
(On the relationship between local authorities and the media) Of course, the authorities at any level - municipal, regional or national - should publicise their work. And to do this, we must allocate funding, because without financial provision, nothing is possible here.

But this funding should be limited, while the information should cover only certain facts, no more than that. And if budget money is essentially allocated and used for publicity purposes of certain individuals or officials, there is nothing good about that.

That is essentially the misuse of funds, and we need to come up with a mechanism that would not allow money that could be used for resolving social tasks, particularly for the construction of kindergartens, to be spent on blatant PR. I fully agree.

I have already asked the Cabinet to consider protection instruments, and the Presidential Executive Office is putting forward various solutions; we will limit expenditures in various ways. But our people are inventive. They will immediately think of some new source, seemingly not from the budget, they will involve an allied businessand so on. So public monitoring and professional assessments by the community are highly needed, and this is also an area we must work in.

But there is another danger that we have encounteredlately. You spoke about direct bribery, but there is another component: 'articles for hire'. They pay journalists for not writing anything bad about them, while those who can do that resort to blackmail, and that includes some of your guild fellows. So we need to carefully monitor what is happening within the administrative and bureaucratic community, as well as in the other one - you understand what I am talking about. It is no easy work, but it needs to be done on a regular basis.
<...>
(On the creation of public councils under regional government agencies) Naturally, a government agency is either a federal agency or a regional one. When a civic chamber is formed, let's be honest, we are all humans, when you form a civic chamber, are you going to invite critics as members? No, you will invite people who tell you nice things, or at least well-wishing experts whose opinion can be used externally and for yourself, to take it into account. That is what a smart person would do. But you would unlikely invite people who will criticise you.

We do not need to launch hostilities around regional government agencies, but we need entirely independent, good, open expertise on all decisions made at the regional level - this is highly important. Russia, like any other nation, is about its regions, so a great deal depends on the quality of work done by the regional authorities. In this respect, public control is highly important at this level. I would like to have your proposals on how to set firth these requirements to public councils. This is very important.
<...>
I want to wish you success. I want to thank you for your joint work over the course of the last several years and once again stress that the Civic Chamber is fulfilling a very important function in our nation, in our society and in the state in a very wide range of areas. Just now, we spoke about what is important for cadet corps, for motherhood and childhood, for non-profit organisations, for good-faith buyers of housing and so in. If we look at each of these issues, it does not seem that huge, but all together, they form the foundation of life of any ordinary Russian; and what could be more important?

I wish you success! Thank you very much.

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 #8
www.rt.com
June 23, 2015
Putin agrees to corrections of 'Foreign Agents Law', blasts NGOs servicing foreign interests

The Russian president has admitted the possibility of amendments to the recently introduced law requiring NGOs sponsored from abroad to label themselves as foreign agents, but added that in general this law is fit for purpose.

"There was a lot of discourse on the so called Foreign Agents Law ... I personally agree with those of our colleagues who call for additional corrections on certain points. This is right, sometimes the formulas of this law harm loyal NGOs that seek to help our citizens and organizations," Putin said at a meeting on Tuesday with members of Russia's Public Chamber.

At the same time, recent events have already proved the law on foreign agents was right in principle and much needed, the Russian leader added. He drew attention to the scandal caused by the "Society for Protecting the Consumers' Rights" NGO. On its website, they warned Russian citizens against visiting Crimea without agreeing their trips with Ukrainian authorities, adding that those who fail to follow this procedure could be denied visas to Schengen states. The claim was almost immediately dismissed by Russian officials and many people doubted that it was technically possible for European embassies to monitor the movement of Russian citizens on Russian territory. The NGO's representatives, however, insisted that this was possible in theory and impossible to prove as embassies usually don't explain the reasons behind visa refusals.

The "Society for Protecting the Consumers' Rights" had earlier called itself as a foreign agent, but emphasized it was doing it as a protest. The law only requires this from groups that receive foreign funding and participate in political activities. It was unclear if the society was doing either or both.

"The recent events with the organization that supposedly looked after consumers and started to issue recommendations on how our tourists should behave in Crimea and how citizens should approach real estate issues in Crimea... What was this? Were they looking after Russian citizens? No, they service the interests of foreign states regarding Russia," Putin said. He also noted that it was a very good example of a situation that the Foreign Agents Law was designed to combat.

The original Foreign Agents Law was introduced in Russia in late 2012. According to that act, all NGOs who receive funding from abroad, and that are even partially engaged in political activities, must register as foreign agents or risk substantial fines. Many rights groups in Russia and abroad protested the move saying it would jeopardize their existence. However, the law remained and in November last year it was expanded with a bill making it illegal for Russian political parties to receive sponsorship, or enter any business deals with NGOs with 'foreign agent' status.

In May, President Putin signed into law the bill banning the activities of foreign groups that pose a threat to national security or defense capability. It was called the 'Undesirable Foreign Groups Law.' According to it, once the organization is recognized as undesirable, all its assets in Russia must be frozen, its offices closed and distribution of any of its information materials must be banned. Leaders and members of groups that refuse to comply with the ban can face up to six years in prison.

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 #8a
RFE/RL
June 24, 2015
Consumer-Rights Advocate Calls Putin 'Paranoid' After 'Foreign-Agent' Slur
by Tom Balmforth

MOSCOW -- A Russian consumer-protection group lambasted by President Vladimir Putin as a "foreign agent" after giving cautionary advice to Russians traveling to annexed Crimea has accused Putin of "paranoia" and called him "badly informed."

Mikhail Anshakov, chairman of the Moscow-based Society for the Protection of Consumer Rights (OZPP), said his group has not been declared a "foreign agent" by the Justice Ministry and receives no foreign funding -- a crucial criterion in the 2012 legislation that Russian authorities have used to ostracize Kremlin critics.

Anshakov suggested that the president is "not authorized to give his evaluation of the activity of public organizations."

Putin on June 23 accused the OZPP of "serving the interests of foreign states" when it advised Russians to seek permission from Kyiv before traveling to Crimea, which Russia seized from Ukraine in an internationally unrecognized annexation in March 2014.

Putin said the group's travel memo vindicates the controversial "foreign-agent" law that invokes the pejorative Cold War-era term to target nongovernmental groups engaged in loosely defined "political" activities.

"Mr. Putin V.V. is badly informed, as the OZPP does not have official foreign-agent status and doesn't receive foreign financing," Anshakov wrote on Facebook. "Such statements from Mr. Putin V.V. himself and a number of his colleagues with regard to the publication of the Memo to consumers traveling to occupied territories look like symptoms of paranoia."

The consumer group e-mailed and posted on its website a travel advisory cautioning Russian citizens to liaise with Ukrainian authorities before visiting Crimea -- territory it called "occupied" -- in order to avoid being barred from traveling to Ukraine or the European Union.

While all but a tiny handful of states reject Russia's Crimea grab as illegal, Russian authorities chafe at any notion of the peninsula as "occupied" territory.

There are no known examples of the European Union or Ukraine taking retaliatory measures against Russian travelers to Crimea since the annexation, but Anshakov told Russian media that his organization has been approached by Russians seeking clarity on the issue.

Speaking at a session of the Public Chamber, a Kremlin advisory body, Putin asked of the travel memo: "Is this concern about Russia's citizens? No, this is serving the interests of foreign states with regard to Russia. This is why the notion of 'foreign agent' was brought in, so that foreign states don't use such instruments like this to interfere in our domestic affairs."

The Russian Prosecutor-General's Office has launched a probe into the consumer-rights group that could lead to a criminal case over making calls to "violate Russia's territorial integrity" -- a crime punishable by up to five years in jail.

The Roskomnadzor media watchdog has blocked the OZPP website.

After Putin's speech, ruling United Russia party lawmaker Aleksandr Sidyakin wrote to the Justice Ministry calling for it to check whether the group should be branded a "foreign agent."

While the ministry has never branded it as such, the OZPP in July 2012 voluntarily labeled itself a "foreign agent" out of solidarity with other NGOs and vowed to print the term on all its publications and public materials -- a principle stipulation of the law.

"The reaction of the authorities was to be expected," Anshakov told RFE/RL's Russian Service in an interview on June 22, before Putin's comments. "They are the ones who, above all, should be warning Russians about potential problems they could face if they travel to Crimea or buy property there and so on. They don't do that. This is unacceptable practice in bad faith on their part."

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#9
Sputnik
June 24, 2015
Putin's Performance Hits Record 89% Approval Rating - Independent Poll

Whether some media commentators like it or not, President Vladimir Putin's approval rating appears to have reached an all-time high, with a June poll conducted by independent sociological research firm Levada Center finding that some 89 percent of Russia's residents approve of the president's performance.
People walking along Liteiny Prospekt in St. Petersburg

The poll, part of a series of indicators measuring satisfaction with various levels of state power, found that 89 percent of respondents generally approve of "the work of Vladimir Putin as the president of Russia," with 10 percent generally disapproving, and 1 percent unable to answer. June's rating is a percentage point higher than the previous high, reached last October, when the president's approval rating jumped to 88 percent.

The Russian president's approval rating jumped from the low- to mid-60s in 2013 to the 80s beginning in March 2014 over his handling of the crisis in Ukraine and the subsequent crisis in relations with Europe and the United States. Russians had previously gathered around their leader in September 2008, at the onset of the world financial crisis, at which time Putin was serving as prime minister, and similarly in 2000, when Putin took up the presidency from the ailing Boris Yeltsin, whose approval ratings had hovered between 5 to 10 percent throughout the late 1990s.

Putin's approval rating remains 25 to 35 percentage points above those of other Russian government officials and organs, with 66 percent of those polled approving the work of Prime Minister Dmitri Medvedev, 62 percent that of the Russian government, 54 percent that of the Russian Duma, and 64 percent the activities of the country's governors.

Asked whether on the whole "Russia is moving in the right direction or in the wrong direction," 64 percent of respondents answered "in the right direction," with 22 percent answering "in the wrong direction," and 14 percent finding it difficult to answer.

Polling was conducted between June 19-22, 2015, with 1,600 people 18 years or older from across 46 Russian regions taking part in the poll; Levada estimates a margin of error of no more than 3.4 percent.

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 #10
Crisis? What crisis? Russia stalls on reform
By Darya Korsunskaya and Oksana Kobzeva

MOSCOW, June 23 (Reuters) - Russia's interest rates are high and inflation is racing, but all the while his country slides into recession, President Vladimir Putin denies any economic crisis.

It may be bravado linked to Moscow's standoff with the West over Ukraine. But with the European Union extending sanctions on Russia and the price of oil still low, Putin's refusal to make economic reforms worries Russian and foreign business leaders.

Russian officials from Putin down acknowledge the economy must be diversified to reduce dependence on energy exports, the government's main source of revenue. The president duly included a call for reforms in his speech at the conference.

But foreign investors say Putin has for years done little more than pay lip service to the need for reforms and a senior Kremlin official acknowledged privately: "We've done nothing to diversify the economy."

At Russia's biggest annual business conference last week in St Petersburg a straw poll during one of the main debates showed that 48.2 percent of the audience - comprising foreign and domestic business leaders - thought there would be no reforms because of a lack of political will.

"Today we - half of us present here - do not believe that there will be any reforms or that there will be the political will (to carry them out)," Alexei Kudrin, a former finance minister and long-time Putin ally, said.

He warned: "A year from now we will see there are not 50 percent of us (who think this way) but 70 percent. You cannot put off solving this problem for another year or two."

In addition to encouraging growth in economic sectors beyond energy and natural resources, Kudrin said Russia must reform corrupt bureaucracy, make the judicial system more independent, develop infrastructure and improve the education system.

In a separate audience poll on how Russia could overcome its economic problems, 36.8 percent of conference attendees said it would not be able to and that a long stagnation lay ahead.

INVESTOR CONFIDENCE SHAKEN

Many Western companies have stayed in Russia despite the sanctions, but investors' confidence in Russia has sagged since the EU imposed visa bans and asset freezes on Russian officials last year and later tightened the sanctions by targeting the defence, finance and energy sectors.

"Clearly for Russia, it is important to rebuild that confidence," Ian Colebourne, chief executive officer of Deloitte in the CIS grouping of former Soviet republics, told Reuters Television.

"We are hearing about the need for reform to continue ... but from a business point of view we see supporting those reforms as necessary to get investors back into the country."

Any brickbats from inside Russia about the state of the economy are aimed almost exclusively at the government - Putin's popularity ratings soared after the annexation of the Crimea peninsula from Ukraine last year - which has responded to the downturn by cutting most spending plans by about 10 percent.

It has also loaned money to firms and banks to help them through, banned some Western food imports and urged Russian companies to use domestic parts where possible, with the aim of boosting industry at home.

Few Russians criticise Putin openly, especially at a time of confrontation with the West over Ukraine when they might risk seeming anti-patriotic.

As a result there are no signs that Putin will face any street protests over the economy, though some economists and opposition politicians warn of trouble ahead.

By suggesting last week that the 2018 presidential election should be held early to give Putin a mandate for reform, Kudrin tacitly acknowledged that the downturn and lack of reforms could eventually be a problem for the president. [ID:nL5N0Z4295}

Kudrin remains a Putin supporter and is convinced the president can win another six-year term. It is unlikely he spoke without the Kremlin's knowledge or agreement.

"BAD MANAGEMENT"

Sberbank's German Gref, head of Russia's biggest bank by assets, said the government was guilty of bad management.

"We always talk about the situation as it was 'yesterday,' about our problems in the past, but no one even tries to discuss our future situation," he said in St Petersburg.

Central bank data show foreign direct investment (FDI) was $21.0 billion in 2014, less than a third of the $69.2 billion in 2013 and even less than in 2009, the last year when Russia was in recession. That year, FDI was $43.2 billion.

Looming debt repayments are also a problem for Russian companies and an economy starved of foreign funds because of sanctions.

Jacek Pastuszka, president of Baltika Breweries/senior vice president Eastern Europe for Carlsberg Group, said: "It will require a much more structured effort to improve the foundation of the economy to bring in new capital, to improve the competitiveness of the local market."

SIGNS OF IMPROVEMENT?

There are some positive signs. Russia's central bank reduced its main interest rate by a percentage point to 11.5 percent last week, inflation has eased from 16.9 percent in April to 15.8 percent in May, and the rouble has risen to around 54 to the dollar after briefly hitting 80 in December.

But the rouble is down by more than a third against the U.S. dollar compared to before the crisis in Ukraine, capital flight was more than $151 billion in 2014 and the central bank expects the economy to decline 3.2 percent this year.

Some expect a deeper contraction and point out that it will be even harder for the government to carry out possibly painful reforms than when the economy was in better shape.

"In our base-case scenario we believe that structural reforms are unlikely," said Karen Vartapetov, associate director at S&P ratings agency in Russia, detailing projects shelved since Putin returned to the presidency in 2012 after four years as prime minister.

He said federal relations with the regions outside Moscow gave them no incentives to reform and attract investments: "There are no triggers for regional growth."

Economy Minister Alexei Ulyukayev said Russia was now in a "new reality" where economic growth, which averaged 7 percent during an oil-fuelled boom under Putin from 2000-08, would now be below the global average.

Kudrin said that even 2 or 3 percent annual growth could be out of reach for Russia in the years ahead.

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 #11
Russia's Finance Minister urges creating center of reforms

MOSCOW, June 23. /TASS/. Russia's Finance Minister Anton Siluanov urged creating center of reforms to assess budget spending effectiveness.
He made this statement speaking in the State Duma, lower house of the Russian parliament.

According to him the center of reforms which would involve lawmakers and also independent experts should define the indicators of effectiveness of specific budget spending.

Siluanov said that the so-called "program approach of forming the budget makes it possible to prepare a document which is aimed at a certain result.
According to him it is necessary to revise the state programs defining effective and realistic expenditures for each of them.

"Unfortunately, it is not a goal-oriented approach that prevails now but a 'just turned out that way' approach when we create a budget on the base of the decisions that were taken earlier not on the base of the goals and objectives that should be achieved. Therefore, we need to implement some kind of 'reset' of the system of state programs turning them into a real tool to improve the efficiency of budget spending," the minister said.

According to the report published by the World Bank in April, continued impact of sanctions and lower oil prices will push Russian economy into protracted recession.

"Medium-term growth prospects for Russia are dim. The World Bank growth outlook projects that the continued impact of sanctions and lower oil prices will push the Russian economy into a protracted recession," the document said.

The World Bank baseline scenario for Russia projects oil prices at a level of $53 per barrel, and the economic contraction of 3.8% in 2015 leading to real GDP lowering to the 2012 level.

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 #12
Russia Beyond the Headlines
www.rbth.ru
June 23, 2015
SPIEF 2015: Oil and gas deals dominate as political leaders stay away
Russian companies managed to strengthen business ties at the St. Petersburg International Economic Forum, with a number of major deals being signed in the oil and gas spheres, despite the continuing political standoff between Moscow and the West. While this year's forum was attended by the heads of BP, Shell and Alibaba, influential world leaders were conspicuous by their absence, with Greek Prime Minister Alexis Tsipras the most important political guest.
Anna Kuchma, combined report, RBTH

Despite chilly relations with the European Union and the United States, Russian companies managed to forge several important business deals at this year's St. Petersburg International Economic Forum.

The latest edition of the annual event, held in Russia's second-largest city from June 18-20, resulted in the signing of a total of 205 agreements worth 293.4 billion rubles ($5.4 billion), according to presidential advisor Anton Kobyakov.

He specified that these figures were based on "agreements, memoranda, contracts, framework cooperation protocols and declarations of intent" where they were not covered by trade secrets.

However, the sum was smaller than at the previous three forums and credit transactions were thin on the ground, with the sanctions imposed against Russia in 2014 over Moscow's role in the Ukraine crisis continuing to cast a shadow over the event - on the eve of the forum the European Union voted to extend the sanctions until January 2016.

Although the heads of some of the world's biggest corporations attended the event, including Alibaba founder Jack Ma, former British Prime Minister Tony Blair, Shell CEO Ben van Buerden and BP's executive director Robert Dudley, the most important political leader at the forum was Greek Prime Minister Alexis Tsipras.

By comparison, as Ilya Balakirev, an analyst with investment company UFS, pointed out, the main guest at the 2013 forum was German Chancellor Angela Merkel, while the 2010 event was attended by the then-president of France, Nicolas Sarkozy.

In this light, the 2015 forum will be remembered principally for the series of direct contracts and agreements concluded at the event, with Gazprom and Rosneft being the main participants.
 
Gas: Deals on Turkish Stream, Nord Stream

The forum's largest announced deal was the signing of an intergovernmental memorandum between Russia and Greece to build an extension of the Turkish Stream gas pipeline through Greece.

The document provides for the creation of a joint venture project, in which each country will get 50 percent. The bank VEB Capital, which will own the Russian share in the new company, will provide 2 billion euros. The agreement with Greece is important for Gazprom, as its Turkish Stream project should exclude Ukraine from the gas transit route to Europe after 2019.

The Nord Stream pipeline also received its continuation at the forum, with Gazprom CEO Alexei Miller signing a memorandum of intent to expand its capacity with E.ON, Shell and OMV. Two branches will be added to the pipeline, with a capacity of 55 billion cubic meters per year.

So far, the companies have not created a joint venture, but Miller estimated the transaction amount at 9.9 billion euros. Given the fact that the monopoly's stake in the project amounts to 51 percent, the Russian company accounts for nearly 5 billion euros' worth of investments.

The two branches of the pipeline will pass under the Baltic Sea, with Germany being the endpoint of the gas supply. The new pipeline is intended to help the concern to end the transit of gas through Ukraine after 2019, when the current transit agreement expires.

Miller and Russian Energy Minister Alexander Novak repeatedly stated this year that the Russian side had no plans to renew its contract with Ukraine.
 
Oil: Rosneft signs major deals with BP and Total

Russia's largest oil company Rosneft signed 57 agreements at the forum. The main deal was the sale of a 20-percent stake in the Taas-Yuryakh oil-and-gas field to BP for $750 million. This is the first major deal between Western investors and a Russian company since the introduction of sanctions against Russia by the European Union and U.S.

The field has reserves of 134 million tons of oil and gas condensate and over 155 billion cubic meters of gas. It is connected with the Eastern Siberia-Pacific Ocean oil pipeline by a separate spur.

As was announced at the forum, Rosneft may sell another 29 percent of Taas-Yuryakh - to Skyland Petroleum, a mysterious company that Russian business daily Kommersant says is an Arab fund that manages Chinese investments. However, Skyland's website describes the company as a "new oil and gas exploration and production company established in January 2015 by the British company, Vazon Energy, and additional technical staff."

Rosneft spokesman Mikhail Leontyev told RBK that Skyland's beneficiaries are known to the Russian side; it is registered as a British company with Asian investors.

Another key deal at the forum saw Rosneft and French petroleum giant Total sign an agreement for the sale of 16.66 percent of a refinery in Schwedt, Germany.

"The sale of a minority stake of the Total refinery in Schwedt meets the goal of the concern to reduce our European refining and petrochemical capacity by 20 percent by 2017," said Patrick Pouyanne, president and chairman of the board of directors at Total.

In 2014, the volume of supplies of Rosneft crude oil to Germany amounted to about 20.3 million tons, which accounted for almost a quarter of Germany's oil imports.
 
Landmark nuclear deal for Moscow and Riyadh

The forum also saw developments in the atomic sphere, with Russia's state corporation Rosatom and Saudi Arabia inking an intergovernmental agreement that gives Russian nuclear technologies access to the Saudi market.

The document creates a legal basis for collaboration between the countries in the peaceful use of nuclear energy for the first time in the history of Russian-Saudi relations.

Riyadh is planning to construct 16 nuclear power reactors at a cost of up to $100 billion, Rosatom CEO Sergei Kiriyenko said in an interview to the Rossiya 24 TV channel.

Based on reports by RBK, Kommersant and ITAR-TASS.

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 #13
Asia Times
June 20, 2015
SPIEF - St. Petersburg in the heart of the action: Escobar
BY PEPE ESCOBAR

The dogs of western fear and sanctions bark, while the Eurasian caravan passes.

And no caravanserai could possibly compete with the 19th edition of the St. Petersburg International Economic Forum (SPIEF). Thousands of global business leaders - including Europeans, but not Americans; after all, President Putin is "the new Hitler" - representing over 1,000 international companies/corporations, including the CEOs of BP, Royal Dutch Shell and Total, hit town in style.

Fascinating panels all around - including discussions on the BRICs; the Shanghai Cooperation Organization (SCO); the New Silk Road(s); the Eurasian Economic Union (EEU); and of course the theme of all themes, "The Making of the Asia-Pacific Century: Rebalancing East," with former Australian Prime Minister Kevin Rudd.

Predictably, there's been plenty of anticipation regarding the BRICs New Development Bank, with big news coming next month at the BRICs summit in Ufa. Brazilian Paulo Nogueira Batista, the new vice-president of the bank, looks forward to the first meeting of the governors.

And on another key theme - bypassing the US dollar - it was up to Anatoliy Aksakov, chairman of the Duma Committee on Economic Policy, Innovative Development and Entrepreneurship, to cut to the chase; "We need to transition to conducting mutual settlements in national currencies, and we believe that all the conditions are already in place for this."

The action was not only rhetorical. Here's just a fraction of the deals clinched at SPIEF. Predictably, it's been a Pipelineistan show all around.

- The pipes for the Turkish Stream pipeline under the Black Sea will start to be laid down this month, or at latest by July, according to Russian Energy Minister Alexander Novak.

- Gazprom's CEO Aleksey Miller and Greek Energy Minister Panagiotis Lafazanis practically clinched the extension of Turkish Stream to Greece. They are "preparing an appropriate intergovernmental memorandum," according to Gazprom.

- Gazprom also announced it will build a new double pipeline from Russia to Germany, across the Baltic Sea, in partnership with Germany's E.ON, Anglo-Dutch Shell and Austria's OMV.

In another crucial Eurasian front, India signed a framework agreement to create a free trade zone with the Eurasian Economic Union. Indian Minister of Commerce Nirmala Sitharaman was euphoric: "The two regions are big, anything done together should naturally lead to bigger outcomes."

Oh, and those were the days of Bandar Bush threatening to unleash jihadis on Russia.

Instead, a remarkable meeting took place, between Putin and Mohammad bin Salman, the Saudi deputy crown prince and defense minister (the actual conductor of the war on Yemen). This was the logical conclusion of Putin being in touch, for weeks, with the new master of the House of Saud, King Salman.

The House of Saud politely spun it as a discussion on "relations and aspects of cooperation between the two friendly countries." Facts on the ground included Russia and Saudi Arabia's oil ministers discussing a broad cooperation agreement; the signing of six nuclear technology agreements; and the Supreme Imponderable; Putin and the deputy crown prince discussing oil prices. Could this be the end of the Saudi-led oil price war?

If that was not enough, on the Asian front the superstar executive chairman of Alibaba Group, Jack Ma, went no holds barred to say: "It is high time for market players to invest in Russia." Beijing, by the way, currently estimates the value of signed and almost signed agreements with Russia at a whopping $1 trillion. Russian Deputy Prime Minister Igor Shuvalov preferred to hold a "humbler" estimate.

Well, if only other sanctioned and "isolated" nations - because of their "aggression" - could be capable of such a business performance.

And where were the Masters?

Before the St. Petersburg forum, Putin was delivering an invariable message every time he met a western leader. He would talk about bilateral trade, and then remark things could be way, way better. At the forum, it's beyond evident that the EU's policy of sanctioning Russia is a disaster - whatever the European Council decides next week.

Those masters of Kafkaesque bureaucracy at the European Commission (EC) keep swearing Europe is not suffering. Who're you going to believe? EC bureaucrats who only care about their fat retirement pensions, or this Austrian study?

And then there was The Big Meeting on the sidelines of SPIEF: Putin with Greek Prime Minister Alexis Tsipras. The question here is not Greece becoming a BRICs member tomorrow, for instance. Yves Smith at her Naked Capitalism blog may have succinctly nailed it; "The objective risk of a new Greece-Russia alliance ... is whether Europeans are worried enough about this risk to change course."

There's no evidence - yet - there will be a change of course. Iron Chancellor Merkel is now openly brandishing the Russia card - as in Moscow getting a foothold in the EU - to keep other EU nations in tune with the German austerity obsession.

As for the Last Word at the forum, it was hard to beat Tsipras; Europe "should stop considering itself the centre of the universe, it should understand that the center of world economic development is shifting to other regions."

So were there any real Masters of the Universe present at SPIEF?

In the real world, there are a number of institutions and conferences that serve as the basis for "coordination" policies. But the Masters of the Universe are not there. They pull the strings of the marionettes that attend the meetings - and then whatever they decided is coordinated below.

Putin did not miss anything by being snubbed at the G7 in the Bavarian Alps (actually G1 + "junior partners"). He would be meeting with figureheads, anyway.

The Bank for International Settlements (BIS), featuring the key central bankers, they meet once a month for "coordination purposes." The Bilderberg group, the Trilateral Commission, and Davos also meet for coordination purposes. A case can be made that SPIEF is now the key coordination forum for Eurasia. Masters of the Universe - real or self-perceived - may snub it at their own peril.

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 #14
www.rt.com
June 23, 2015
Sanctions create favorable conditions for Russian industry - trade minister

The sanctions have multiple advantages for Russia, as they motivate companies to turn to domestically produced goods and boost the economy, Russian Industry and Trade Minister Denis Manturov told RT.

"I don't want to sound cynical, but since I'm in charge of the real sector of the economy, in charge of the Russian industry, I can say we've actually benefited in more ways than one from sanctions imposed last year," said Manturov at the St. Petersburg Economic Forum (SPIEF), adding that before the sanctions were put into effect Russian companies paid less attention to domestic products.

"...now sanctions provided them [companies and consumers - Ed.] with additional motivation, and they are turning to Russian companies. This generates demand for the Russian industry. So, to me, this was an advantage, in a sense," he added.

Although it became harder to attract funds from Western markets because of the limitations, they, in turn, stimulate Russian banks and the Central Bank to lower interest rates and to provide loans on a competitive basis for Russian companies, Manturov said.

The EU announced on Monday that the sanctions against Russia are being extended until January 31, 2016 to ensure the Minsk agreement is implemented.

The sanctions include restrictions on lending to major Russian state-owned banks, defense and oil companies. The limitations also apply to the supply of weapons and military equipment to Russia as well as military technology, dual-use technology, and high-tech equipment and technology for oil production.

The potential deal to create a free trade zone with India and similar agreements between the Eurasian Economic Union (EEU) and Vietnam have inspired more countries to expand the common market, said Manturov, adding that he had already been in talks on the issue with the Egyptian minister of industry.

"We will move towards signing an agreement on a free trade zone with Egypt, as we did with Vietnam. Russia, as a member of the EEU, will actively participate in this work to take into account its interests in this process," he said.

The EEU and Vietnam signed a free trade zone agreement on May 29. It became the first free trade zone between the EEU and a third party.

On June 18 the EEU and India started talks over a free trade zone and signed a framework agreement at the International Economic Forum in St. Petersburg. The Eurasian Economic Commission Trade Minister Andrei Slepnev said he expects a similar deal to be signed with Iran soon.

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 #14a
Deutsche Welle
May 31, 2015
Sanctions: Who's really hurting in Russia?
By Fiona Clark
Fiona Clark is an Australian journalist currently living in Russia. She started her career with the Australian Broadcasting Corporation as a TV news reporter in the mid-1980's. She has spent the past 10 years working on publications such as The Lancet and Australian Doctor and consumer health websites. This is her second stint in Moscow, having worked there from 1990-92. What was to be a two-year posting is still continuing.

With the EU about to review its sanctions regime against Russia, Fiona Clark looks at how Russians are faring under the embargoes and asks if they're really having any effect on the country's leadership.
 
Russians might think I'm insane but there are times when I wander the aisles of my local supermarket and literally laugh out loud. At least it's better than crying when I see blueberries on sale for the equivalent of 16 euros a punnet (125 grams) or mixed berries for just under 20 euros. I know they may have travelled all the way from the US, but seriously, who pays these prices? I assume somebody does, but it can only be wealthy because for the average Muscovite that's about 10 percent of a weekly wage.

I know fresh berries may not be a necessity, but even staples like yoghurt and 'kasha' (buckwheat, usually eaten for breakfast or as a potato replacement with dinner) have had a hefty price hike. Strangely enough they're both locally produced so shouldn't be affected by the sanctions that Russia imposed on the EU in retaliation for the sanctions imposed on it, nor should they be affected by those imposed by the EU, or by the severely devalued ruble. In general though, most products have gone up by about 30 percent, and some, like Italian prosciutto or French cheese, have completely disappeared from the shelves. The last time I saw real Italian parmesan was in January.

The lack of these 'luxury' items has brought out the entrepreneur in some. Like kids craving their names in a tree trunk for all eternity, one clever art gallery owner has started producing fridge magnets stating "parmesan was here" or "ham was here" to remind consumers of the delicacies they used to enjoy. Now those of us who travel regularly carry them back from Europe in our hand luggage. But cheese is clearly a suspicious item. Every time I take a bag full of eight wedges of parmesan, four blocks of cheddar and an assortment of goat's cheese through Heathrow I'm pulled aside for security check. "I live in Russia," I tell them. "Sanctions. You can't get real cheese." Like a drug-addict, I explain you are allowed to bring it into the country as long as it's "for personal use only."

A boost for entrepreneurs

But what's bad for me, may not be so bad for Russian manufacturers. The sanctions have provided a huge opportunity to artisanal producers to bring their products to those who have enough money to pay for them. Like the blueberries, you may need to take out a small loan for a slice of camembert at 48 euro/kg, but Russia has a lot of wealthy people so there is a market for these products. For the average man, however, this is out of the question. Instead supermarkets now stock an array of locally produced copies of popular cheeses. There are two problems with this - the fakes don't taste anything like the real thing (think rubbery plastic), and, according to recent media reports, they may be made with palm oil, not milk products.

Since the sanctions started a year ago Russia has imported 39 percent more palm oil, and Russia's agricultural watchdog, Rosselkhoznadzor, says much of that is destined for the fake cheese market which now makes up some 50 percent of the cheeses in the supermarket fridge.

But is it the sanctions that have driven the prices up? Before they were introduced Russia was already looking down the barrel of an economic downturn. Then the oil price plummeted, dragging the ruble down with it. And the result of all these things combined is that inflation is up - this April it was running at 16 percent, more than twice as high as it was a year earlier. But strangely enough people don't seem to be angry - yet. The general attitude, as one taxi driver told me, was that "we've been through tough times before and we know how to survive."

They are however, being prudent with their finances. One local newspaper, The Moscow Times, cites a survey showing that more than 50 percent of Russians have reduced their spending and almost 20 percent have no disposable income left after paying for food and housing. They're cancelling holidays abroad and tourism to Europe is down 30 percent. And businesses are feeling the pinch. Government statistics show retail spending has dropped 9.8 percent in the year to April 2015.

Clothes shops and restaurants are shutting their doors and over the past few weeks I've noticed that stalls at my local food market are disappearing as increased rents drive vendors out. One meat seller explained that she pays 5,000 rubles (about 90 euros) a day to rent a one meter length of bench space (unrefrigerated) to sell her pork. On top of that she has to pay 4,000 rubles for her butcher and overnight refrigeration. "I'm sorry for my language," she says, "but they even charge you 100 rubles just to go to the toilet. 100 rubles!" That's about 1.80 euros - more than three times the average 50 cents charged in Germany.

Collusion and stagnation

In total each month she pays out 270,000 rubles. She has to sell a lot of meat to cover that. Unfortunately though salaries aren't growing. In fact government statistics show real wages have fallen by just over 13 percent in the year to April 2015. Faced with an economic slowdown many companies are cutting workers' pay or cutting their hours, or simply laying them off. The Ministry of Labor said that the number of people officially registered as unemployed increased by 3.4 percent to over 900,000 in late January. The Russia and India Report says that's the equivalent of about 30,000 losing their jobs in just one week.

For foreign companies operating in Russia it's not all bad news. The devalued ruble means staff are costing them about 30 percent less than usual. Workers aren't happy but as one country manager told me, he and his competitors in the IT industry have had discussions and will only raise the pay of their staff if they do it in unison.

If they act unilaterally they risk a flood of resignations as staff flock to the higher paying company, giving the first to raise rates a cherry picking opportunity.

And it's good for exports. A devalued ruble makes Russia's raw materials more competitive on the world market - ironically helping many of the oligarchs on the sanctions list to increase their profits.

I'm no economist, but less disposable income can only mean less demand - effectively rubbing salt into an already wounded economy that's set to contract by around 4 percent this year. It's hard to say how much of this is the result of the slowing economy, the falling oil price or the sanctions, but it's even harder to tell if that elite inner circle who were supposed to be the real targets of sanctions are hurting. They may not be holidaying this summer in Cannes, Mallorca or Australia - as the sanctioned CEO of Russia's railways, Vladimir Yakunin said "I am sorry I won't be able to see the kangaroos there." But instead he'll visit the white tigers at a Sochi wildlife refuge.

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#15
Moscow Times
June 24, 2015
Russians Are Loyal to Russian State, Not Putin
By Gleb Kuznetsov
Gleb Kuznetsov is a Moscow-based political commentator.

When trying to get some perspective on elections by classifying them according to general principles, it becomes obvious that narrowly defined "political technologies" provide little insight and are of no interest to anyone but the few who work in that field.

Some might claim that Party X won the elections and "opened a new political era and achieved a technological breakthrough" by using Twitter to raise voter turnout, calling for a referendum on this or that subject, opening a community liaison office or disseminating propaganda in WhatsApp.

But a second group would say "No, Party Y in a neighboring country did all of the same things but lost the elections. Party X won because it successfully rode the wave of voter sentiment opposing immigration or supporting feminism and liberal values," and so on. A third group might argue that Party X won because it had a strong leader who was able to rally voter support during the campaign.

All of these arguments are worthless when it comes to understanding reality. They have meaning only for those in political marketing who earn their living from election campaigns. One sells voter databases for direct mailings, another takes money for writing ads and a third reaches the masses by coaching the candidate.

What difference does it make if a candidate appeals to voters through Twitter, Facebook, television or printed fliers? The goal is the same: convincing people to vote for the right candidate.

The main question is not the eternal and artificial conflict of "the medium vs. the message." After all, one cannot exist without the other. Nor is it the "message" or "narrative" that a party or candidate delivers. In any political conflict - and elections are always conflicts - there is one main question, and victory inevitably goes to whichever side can best articulate it.

That question is sometimes directed at voters and might concern political traditions or touch on the most vulnerable aspect of the political system itself. The main thing is that it sets the ground rules for the political "war" - and it is always the rules that determine the winning side.

That main issue in the November 2014 midterm elections in the United States was: "Do you want to send a message to the president?" Because voters always want to voice their displeasure, the political party holding the White House has won midterm elections only three times in U.S. history - just once in the three midterms under former U.S. President Franklin D. Roosevelt, the most popular Democratic leader of all time, once under former U.S. President Bill Clinton and once under former U.S. President George W. Bush - and that following the terrorist attacks on Sept. 11, 2001.

What point is there to even discussing the methods and ideology of the conservative Tea Party movement if the Republicans were destined to win the 2014 midterms anyway, no matter how hard the Democrats tried?

The question to voters during the last French elections for the General Council of departments was: "Are you as fed up as the rest of us with the socialism of President Francois Hollande?" The overwhelmingly positive response to that question determined the winners in that election.

In fact, two more right-wing parties besides those of former French President Nicolas Sarkozy and Marine Le Pen managed to benefit from that question and win strong results, simply by applying the correct political formula in that situation.

In Turkey, the main issue in the parliamentary elections was: "Are you willing to give everything to Turkish President Recep Erdogan?" Of course, the inevitable answer was: "No, we are ready to give a great deal, but not everything." As a result, Erdogan was able to win the most votes, but not enough to achieve his primary goal of transforming the country into a presidential republic and concentrating all power in his own hands.

The main question in Britain was: "Is it possible to manipulate a traditionalist political system during a period of stability and with a political agenda that citizens find uninteresting?" The answer: Yes, if you focus exclusively on the weak points of the system and use key indicators to highlight them, you've as good as won.

British Prime Minister David Cameron got the whole country in an uproar with a proposed referendum on the European Union, but it was only a cover for a campaign by his Conservative Party to target "wavering" districts to counter a self-satisfied, "national" campaign by the Labour Party.

The question before Russian voters is both simple and obvious: "Do you have faith in the state or not?" Every election in Russia invariably reverts to a referendum measuring voters' faith in the authorities as well as their loyalty to the ruling regime and willingness to place the interests of the state far above their own. Such an agenda naturally eclipses all issues related to the candidates' personalities, party platforms and political messages.

That is the perennial core issue in Russian elections. It will play the central role in parliamentary elections in 2016, presidential elections in 2018 and so on, ad infinitum. It is this ritual expression of faith in the Russian state - and definitely not the authorities' various manipulations of the electoral system and the vote count - that ensures victory for the ruling party and sky-high ratings for President Vladimir Putin.

The main issue is really the fact that the basic question before Russian voters changed from "Which path of development do you choose?" in the wild 1990s, to the subsequent "Do you place the Russian state above all else?" It is not the president's unique skills and personal qualities, as the loyalists argue, or widespread electoral fraud, as the opposition argues.

The whole point of political technologies and strategies is to find the optimal formulation of the basic question to put before voters. Or, if that issue or question is already set in stone - as with midterm elections in the United States - to focus on "damage control" and to fight for minor victories on "gray" or politically marginal issues. The Russian opposition does not demonstrate this ability. It focuses on technology instead. Its members fail to understand that the people continue to vote for Putin because they see elections as a referendum on their loyalty to the state - regardless of whether the opposition runs an Internet campaign, in the "most free and unrestricted venue," or appealed to people's deep dissatisfaction with government corruption and the condition of health care.

It is that issue of loyalty to the state as such, this so-called "Russian conservatism" that remains the core idea enabling the ruling authorities and their party - whatever its name at the given moment - to consistently achieve victory in national elections.

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 #16
Russia Direct
www.russia-direct.org
June 23, 2015
How Western energy sanctions on Russia have backfired
Falling oil prices have had a far greater impact on Russia's energy sector than sanctions, which have only served to ratchet up tensions between Russia and the West and raise unsettling questions about global energy security.
By Nikolay Pakhomov and Daniel Wagner
Nikolay Pakhomov is an expert at the Russian International Affairs Council (RIAC). He is a commentator in a number of Russian and international media outlets, including Politcom.ru. Daniel Wagner is CEO of Country Risk Solutions and author of the book "Managing Country Risk".

Western sanctions on the Russian energy sector have so far not had the intended devastating impact on Russian energy companies. Sanctions certainly did restrict the flow of Western investment, equipment and technology necessary toward the development of oil and natural gas fields in Russia, and the overall impact on Russia's energy sector was indeed significant.

However, by forcing Russia to shift its focus from Europe to Asia, sanctions may have actually strengthened - not weakened - the Russian energy sector's long-term prospects, while simultaneously derailing progress on a number of important international issues.

Russian Minister of Finance Anton Siluanov has estimated the annual loss for Russia due to sanctions at approximately $40 billion, in addition to the $100 billion in revenue lost as a result of last year's fall in global oil prices (which would have happened anyway). Unlike the sanctions against Iran, the main intention of sanctions against Russia was not to stop its oil and gas from getting to the world market, but to significantly diminish prospects for the sector's development in the long run.

Reserve depletion levels are the more pressing issue for Russia. According to studies on Russia's oil industry, the depletion level of recoverable reserves exceeds an average of 50 percent of the developed oil fields, while the degree of depletion is critical in the Urals and Volga region (in excess of 60 percent) and in the North Caucasus (nearly 80 percent).

To improve long-term production capabilities, Russia needs to develop new fields (including deep-water, Arctic offshore or shale projects), but the country lacks both the technology and investment necessary to do so. Western sanctions targeted exactly these types of ventures, prohibiting the provision, export or re-export of goods, services, or technology in support of exploration or production. In that regard, the sanctions have hit Russia hard indeed.

Russia offset the impact of sanctions by turning to Asia

Russia has been able to seek other sources of support for its energy sector, primarily from China and other Asian countries. After ten years of negotiation, Russia and China signed a major pipeline gas deal in 2014 that is expected to transfer Russian gas to China through the new pipeline "Power of Siberia", starting in 2019. The presidents of both countries also signed a memorandum of understanding for the second Siberian gas pipeline on the Western-Siberia route through the Altai Mountains.

The 30-year agreement enabling the creation of the Power of Siberia will likely withstand any short or medium-term economic or political pressures that may appear in either Russia or China. There is a question about whether the fundamental assumptions and projections behind the agreement will endure for the coming three decades, however. For example, will China's demand for oil continue to grow at the pace that it has over the previous three decades and continue to be an incentive to purchase as much oil from Russia?

Also, given the history between China and Russia, there is no guarantee that bilateral relations will remain conflict-free, particularly as there remain some unresolved border disputes between the two nations. It is important to bear in mind that both powers seek to enhance their ability to achieve their economic and military objectives in overlapping parts of the world, such as Central Asia, the Middle East, Southeast Asia and Japan. They are not natural political allies.

Russian-Asian cooperation is also evident from gas pipeline consultations with South Korea, Japanese law makers' support for a pipeline from the Sakhalin fields to Japan, and interest on the part of the Indian government for building a pipeline from Russia. Russia's oil and gas continues to be imperative for Europe - as Europe remains dependent on Russian gas - and will grow in importance to Asia.

The development of shale gas fields in Europe has almost completely stopped due to high production costs and environmental concerns. When U.S. shale starts to be exported, it is likely to be sold mainly to Asia, where prices are higher and the infrastructure to import the product already exists. Other plans to supply Europe with natural gas - including pipelines from the Caspian region -remain at the inception stage, despite nearly two decades of European interest and support from the U.S.

Russia has no choice but to diversify its energy exports, and its ability to do so beyond its current initiatives appears to be good, which will give Russia the necessary flexibility to hedge against future risks. Russian political and business leaders have recently stated that despite the sanctions and other issues with Europe (such as the EU's third energy package) Russian energy companies will continue to work there, which means that it will be harder for Western sanctions to stand the test of time.

The European Union must renew sanctions annually (which it has just done for the coming six months), whereas the U.S. must specifically stop them. Many European nations are under pressure from their respective business communities to stop the sanctions, whereas the U.S. is likely to keep them in place for many years to come, unless there is some fundamental change in the state of Russia-U.S. relations.

Western nations' decision not to impose sanctions blocking the export of Russia's oil and gas to the world market was deliberate, as the world needs Russia's natural resources. If Russia had been restricted in this way, the result would have been significantly higher global oil and gas prices, so they were crafted so as not to have global repercussions. If the West were to try to impose broader sanctions, such as to restrict Russia's banking sector, it could easily blow back in the form of an alternative currency union between Russia, China and its trading partners that excludes the use of the U.S. dollar.

For some time now, Western critics of European-Russian cooperation in the energy sector have been questioning Russia's ability to support the required level of energy production, yet Russia continues to fulfill all contracts. Understanding the long-term importance of Russia's energy resources, some European (and American) energy companies are looking for ways around the Western sanctions.

The entire situation has essentially evolved into a game of chicken, where Russia's energy sector and economy are pressured while the West risks creating an even more tenuous global energy security environment. It is one thing to impose sanctions on the 29th largest economy in the world (Iran), and another to do the same on the world's 10th largest economy by GDP (Russia), which has extensive trading relationships around the world.

In truth, the negative impact on the Russia economy and oil industry has much more to do with the decline in the price of oil than the imposition of sanctions. The more important issue is the evolving landscape among the oil producing nations regarding oil production levels.

How energy sanctions have backfired

While the West was doing what it knows best - imposing sanctions on Russia in retaliation for behavior it disagreed with (the re-incorporation of Crimea and support for rebels in Eastern Ukraine), it appears not to have thought out the potential consequences for Europe, or the changing dynamics of the global trade in oil and gas.

Having only partially succeeded in its original objective, and in turn having resulted in closer relations between Russia, China, and other Asian nations, lawmakers on both sides of the pond may now be regretting having imposed sanctions in the first place, particularly as the new sanctions regime has served to emphasize how very different the relative costs and benefits of sanctions have been for Europe versus the U.S., based on their levels of trade with Russia. Europe has been significantly negatively impacted, while the U.S. has not.

As a result of the sanctions, arms control between Russia and the U.S. is virtually dead, as is important potential cooperation between Russia and the U.S. on a host of other issues, ranging from Syria and Iran to the global fight against terror.

A generally heightened state of tension has emerged, prompting military chest thumping from both sides, alleged cyber-attacks, and the death knell of any thought of another attempted "reset" in bilateral relations. When faced with an external threat, Russian nationalism goes into hyper-drive, and the average Russian circles the wagons in response. Mr. Putin's rankings remain above 80 percent in national polls. Which Western leader can say that?

Did Western policy makers consider all this before they pushed for the imposition of sanctions? Apparently not, for if they had, they would not have pursued them quite as vigorously in the first place. Surely, by now, they should know that Mr. Putin does not blink, and that he is a worthy adversary.

The truth remains that the U.S. needs Russia for its own foreign policy objectives a lot more than the reverse. That will continue to be true for the foreseeable future. U.S. lawmakers should perform a hard cost-benefit analysis before considering next steps. In agreeing to continue sanctions only for another six months, the EU appears already to have taken a step in that direction.

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 #17
Moscow Times
June 24, 2015
Shadow of Islamic State Hangs Over Russia
By Alexander Shumilin
Alexander Shumilin is the director of the Center for the Analysis of Middle East Conflicts with the Institute for U.S. and Canadian Studies at the Russian Academy of Sciences.

It is impossible to say with certainty how many people holding Russian passports now fight for the Islamic State. This is because such "volunteers" hail not only from Russia itself, but also from former Soviet republics and communities of North Caucasus refugees now living in Europe. What's more, once they join up with IS in, say, Syria or Iraq, they do not always reveal their nationality immediately, hoping to protect loved ones back in Russia from negative repercussions.

What is interesting in this regard is the fact that the Russian Foreign Ministry and Federal Security Service offer different estimates of their numbers. For example, the Foreign Ministry reported that approximately 800 Russian citizens were fighting with IS in early 2015, increasing that number only modestly in subsequent months.

By contrast, the FSB kicked off the year with an estimate of more than double that figure, 1,700 Russians, and by June agency head Alexander Bortnikov was already quoting a figure of closer to 5,000.

That discrepancy probably stems from each agency's differing goals. The Foreign Ministry probably tends to underestimate their numbers so as to discourage the domestic and global press from attributing a Russian role to IS attacks.

However, the FSB reports larger numbers, first in order to show the scale of the Islamist underground threat to Russia that the agency must battle, and second to prove that the FSB has made it so difficult for the terrorists to operate on Russian territory that they must go abroad to fight with the IS instead.

These "volunteers" leave their homes in different countries - including Europe and the United States - to join the ranks of terrorists in Syria and Iraq primarily because they have grown disillusioned by the socio-political, and to some extent economic conditions at home, making them more susceptible to the propaganda of radical Islam.

Whereas Muslim immigrants in Europe have difficulty integrating into what is for them a very unfamiliar society, the Muslims in Russia face serious difficulties at home.

This is especially true in the North Caucasus, where most leaders are authoritarian, clans struggle for dominance according to the principle of "For my friends, everything, for others, the law" and where nearly total corruption and impunity before the law characterize almost everyone with close ties to the ruling authorities.

Such conditions cannot but generate feelings of frustration and protest, especially among young people. Up until 2014, such youth would sometimes join the local underground, risking death if caught in one of the special operations the authorities regularly conduct, and automatically condemning their relatives to the "black list" on file with the local authorities. But now they can join the IS in Syria or Iraq to fight for "Islamist-style justice."

Radical Muslim recruiters are always ready to help them "quietly" disappear so as to escape notice by relatives and officials, often to resurface later in a designated location and bearing a new name. As a result, their relatives, although troubled, live in relative safety because the young man in question did not join the underground.

As for the newly minted recruits, they gain experience in the global struggle as it unfolds in the Middle East, preparing them to later apply those deadly skills in their homeland. In other words, the North Caucasus underground is losing its potential recruits, rendering it less dangerous for the local authorities.

Human Rights Watch mentions another contributing factor - namely, the frequent use of unjustified and excessive force by Russian security forces in "cleansing" population centers in the North Caucasus. The destruction of homes, creation of special detention zones and torture described by human rights activists have prompted many young people to seek revenge. They either escape into the woods to prepare for their militant return, or else join the IS.

Another method used for finding recruits in Russia and Europe is to find young Muslims eager to learn more about their faith and gradually transform them from moderates into radicals. This is most often accomplished with the help of mentors who are either part of their social group or who correspond with them via the Internet.

That is how Moscow State University student Varvara Karaulova ended up in Turkey on her way to joining the IS where she was intercepted by that country's intelligence agencies.

And although Russian intelligence agencies might find this type of recruit more or less understandable, there is a second type that is more perplexing and that poses a growing threat to Russia.

These are usually young people from any of Russia's regions that are just learning about Islam for the first time, and who are at risk of accepting this distorted, radicalized version of the religion as correct. Once those individuals experience personal difficulties, they might become tempted by the radicals' slogan "Islam is the solution" and start on the path toward the IS.

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 #18
Armenia is not immune to 'color revolution' - Kosachyov

MOSCOW. June 24 (Interfax) - Federation Council International Affairs Committee Chairman Konstantin Kosachyov has detected 'color revolution' symptoms in the latest events in Armenia.

"The situation is developing as a conflict of people displeased with the economic and social situation in Armenia," Kosachyov told reporters on Wednesday.

"But one should not be mistaken: practically every 'color revolution' started with such events and eventually developed into political episodes. I think that Armenia is not immune to this scenario," the parliamentarian said.

In his words, Russia has long been aware of the number of foreign non-governmental organizations working in Armenia. "There are hundreds of organizations, and most of them are trying one way or another to set public sentiments in Armenia against Russia and to incline civil society to the so-called pro-Western choice. This is another colossal mistake of those who are stirring such feelings, because this is another offer to choose between the West and the East, the North and the South, Russia and the EU made to a sovereign state, this time, Armenia," Kosachyov said, adding that the choice was "absolutely artificial."

"This kind of choice has ripped Ukraine into pieces and this rupture is ongoing. This can happen to any country, this is an unseemly and unfair political game, and it harms states and average people," said Kosachyov, assuring reporters that Russia would not stay aside of the Armenian events.

"Although it is premature to draw any conclusions, we will monitoring this situation very carefully and will respond to the evolving events," Kosachyov said.

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 #19
Russia Insider
www.russia-insider.com
June 23, 2015
Greenwald: Putin's 'Trolls' Are No Match for UK's Internet Manipulation Program
NSA files published by Greenwald expose unit within British intelligence that plants stories, sets up bogus sites and plants comments on the Internet in a far more systematic way than anything the Russians are accused of.
By Alexander Mercouris

It has become almost an article of faith in the Western media - especially the British media - that the Russian government (or "Putin") employs a huge troll army to plant pro-Russian and pro-Putin stories on the internet.

Many of these stories come with pictures of a building in St. Petersburg that is supposed to be some sort of "troll factory" - presumably the base of this great troll army.

I don't know the truth about this story.  Some of the claims made about the building in St. Petersburg look to me less than convincing.  It seems that a key source for the story is not a disillusioned employee as some have claimed, but is instead a mole who deliberately infiltrated the building in order to "expose" it.

Against that common sense says the Russians are in the business of trying to influence opinion - like everyone else - and that they are hardly likely to do so without using all the methods available to them.  

Common sense however also says that claims about Putin's "troll army" are vastly exaggerated to  explain away the large number of negative comments that commonly appear in the discussion threads of anti-Russian articles in the Western media.  

There are far too many of these, and the English in which many of them are written is much too good - and their content is far too sophisticated - for most of them to be the work of poorly paid trolls.

What now gives the story an interesting new twist is that Glen Greenwald has now published more material from Snowden's files that shows that the British intelligence services are busy doing exactly the thing the Western media accuses the Russians of.

The article, which I attach below, shows that there is a secret unit within the British intelligence service that is keeping itself busy with precisely such activities though at a much more sophisticated level than anything the Russians have so far been accused of.  

That of course comes as no surprise. Some of the methods used, which are discussed in the document Greenwald has published, look to me to be on the borderline of legality - or even to cross it.  

What is one to make for example of information from the document that the British intelligence service sets up "spoof trade sites (or sellers) that may take a customer's money and/or send customers degraded or spoof products"?

Even if this is done to disrupt the work of drug dealers or pornographers, I don't see how theft of customers' money can be legally justified.

To those who place heavy weight on photos and videos that appear on social media sites - such as for example in trying to work out what happened to MH17 - I would also point to one section of the document which says that the British intelligence service uploads "YouTube videos containing "persuasive" communications".

That this sort of thing is continuously going on and is being done not just by the British is or should be common knowledge.  

Let me repeat again what I have previously said - nothing that appears on a social media site or on YouTube or indeed anywhere on the Internet can be treated as evidence of anything unless its provenance can be fully and incontrovertibly established - which more often than not it can't be.

I doubt that Greenwald's latest revelations are going to be widely circulated in the Western media. Certainly I don't expect them to get anything like the attention that was given to the far less reliable stories of the "St. Petersburg troll factory". As I write this the British media is largely ignoring Greenwald's story.

However, when the story of "Putin's troll army" resurfaces - as it will - let us try to remember the information Greenwald has provided us before it vanishes down the media memory hole.

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The spy unit responsible for some of the United Kingdom's most controversial tactics of surveillance, online propaganda and deceit focuses extensively on traditional law enforcement and domestic activities - even though officials typically justify its activities by emphasizing foreign intelligence and counterterrorism operations.

Documents published today by The Intercept demonstrate how the Joint Threat Research Intelligence Group (JTRIG), a unit of the signals intelligence agency Government Communications Headquarters (GCHQ), is involved in efforts against political groups it considers "extremist," Islamist activity in schools, the drug trade, online fraud and financial scams.

Though its existence was secret until last year, JTRIG quickly developed a distinctive profile in the public understanding, after documents from NSA whistleblower Edward Snowden revealed that the unit had engaged in "dirty tricks" like deploying sexual "honey traps" designed to discredit targets, launching denial-of-service attacks to shut down Internet chat rooms, pushing veiled propaganda onto social networks and generally warping discourse online.

Early official claims attempted to create the impression that JTRIG's activities focused on international targets in places like Iran, Afghanistan and Argentina. The closest the group seemed to get to home was in its targeting of transnational "hacktivist" group Anonymous.

While some of the unit's activities are focused on the claimed areas, JTRIG also appears to be intimately involved in traditional law enforcement areas and U.K.-specific activity, as previously unpublished documents demonstrate. An August 2009 JTRIG memo entitled "Operational Highlights" boasts of "GCHQ's first serious crime effects operation" against a website that was identifying police informants and members of a witness protection program. Another operation investigated an Internet forum allegedly "used to facilitate and execute online fraud." The document also describes GCHQ advice provided "to assist the UK negotiating team on climate change."

Particularly revealing is a fascinating 42-page document from 2011 detailing JTRIG's activities. It provides the most comprehensive and sweeping insight to date into the scope of this unit's extreme methods. Entitled "Behavioral Science Support for JTRIG's Effects and Online HUMINT [Human Intelligence] Operations," it describes the types of targets on which the unit focuses, the psychological and behavioral research it commissions and exploits, and its future organizational aspirations. It is authored by a psychologist, Mandeep K. Dhami.

Among other things, the document lays out the tactics the agency uses to manipulate public opinion, its scientific and psychological research into how human thinking and behavior can be influenced, and the broad range of targets that are traditionally the province of law enforcement rather than intelligence agencies.

JTRIG's domestic and law enforcement operations are made clear. The report states that the controversial unit "currently collaborates with other agencies" including the Metropolitan police, Security Service (MI5), Serious Organised Crime Agency (SOCA), Border Agency, Revenue and Customs (HMRC), and National Public Order and Intelligence Unit (NPOIU). The document highlights that key JTRIG objectives include "providing intelligence for judicial outcomes"; monitoring "domestic extremist groups such as the English Defence League by conducting online HUMINT"; "denying, deterring or dissuading" criminals and "hacktivists"; and "deterring, disrupting or degrading online consumerism of stolen data or child porn."

It touts the fact that the unit "may cover all areas of the globe." Specifically, "operations are currently targeted at" numerous countries and regions including Argentina, Eastern Europe and the U.K.

JTRIG's domestic operations fit into a larger pattern of U.K.-focused and traditional law enforcement activities within GCHQ.

Many GCHQ documents describing the "missions" of the "customers" for which it works make clear that the agency has a wide mandate far beyond national security, including providing help on intelligence to the Bank of England, to the Department for Children, Schools and Families on reporting of "radicalization," to various departments on agriculture and whaling activities, to government financial divisions to enable good investment decisions, to police agencies to track suspected "boiler room fraud," and to law enforcement agencies to improve "civil and family justice."

Previous reporting on the spy agency established its focus on what it regards as political radicalism. Beyond JTRIG's targeting of Anonymous, other parts of GCHQ targeted political activists deemed to be "radical," even monitoring the visits of people to the WikiLeaks website. GCHQ also stated in one internal memo that it studied and hacked popular software programs to "enable police operations" and gave two examples of cracking decryption software on behalf of the National Technical Assistance Centre, one "a high profile police case" and the other a child abuse investigation.

The JTRIG unit of GCHQ is so notable because of its extensive use of propaganda methods and other online tactics of deceit and manipulation. The 2011 report on the organization's operations, published today, summarizes just some of those tactics:

Throughout this report, JTRIG's heavy reliance on its use of behavioral science research (such as psychology) is emphasized as critical to its operations. That includes detailed discussions of how to foster "obedience" and "conformity":

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 #20
EUObserver
https://euobserver.com
June 23, 2015
Russian propaganda wins EU hearts and minds
By ANDREW RETTMAN

Kremlin media are shaping the views of a sizeable pro-Russia constituency in the EU, experts and officials warn.

The numbers show, according to US pollster Pew, that one in three Germans and one in four French people think the EU should relax Russia sanctions.

Overall approval of Russian leader Vladimir Putin is down in Europe. But one in four Germans, especially in east Germany, do have confidence in him, in what they call "Putinverstehers", or, "Putin-understanders".

Almost half of French people also blame Kiev for the conflict in east Ukraine. Thirty four percent of Germans blame it. Twelve percent of Germans blame the West.

Bruce Stokes, the director of Pew, which published the survey on 10 June, told Globsec, a security congress in Bratislava last weekend, that the pro-Russia bloc is "a significant minority".

Referring to Russian propaganda inside the EU, he said: "There's some evidence this is having an impact".

Peter Kreko, the head of Political Capital, a think tank in Budapest, added: "Considerable parts of the population in several member states are sympathetic to Russia".

"In Greece, more people sympathise with Russia than the EU. In Italy, France, Hungary, and Slovakia, there's a sizeable chunk of people who are buying the Russian narrative."

PR budget

Yevhen Fedchenko, a Ukrainian academic who runs stopfake.org, a propaganda-debunking website, said one reason for Russia's success is the size of its PR budget.

The Kremlin, by its own admission, is spending at least €643 million on media this year.

"It began with Russia Today after the Orange Revolution in Ukraine [in 2005]", Fedchenko noted.

"They're adding new, so-called media every year. Few people talk about Sputnik [a Russian website and broadcaster]. It's growing every week, with a new language, a new country. It uses local journalists and local languages, so that it competes with local information".

He said Russian propaganda is becoming more sophisticated.

In the initial phase of the Ukraine conflict, media ran fake stories about Ukrainian atrocities, which were easy to debunk.

It later began disseminating conspiracy theories, for instance: that flight MH17 contained corpses and that Ukraine shot it down in a false flag operation.

Now it's propagating relativism: The idea that no source of information can be trusted.

It's also mixing propaganda with entertainment, the way the West used Hollywood films in the Cold War.

Fedchenko said Russia recently broadcast a lullaby show for children which used puppets to say why it was right to annex Crimea: "They're explaining to kids why it's OK to take another country's territory".

Article V

Linas Linkevicius, Lithuania's foreign minister, who also spoke at Globsec, compared it to "littering" of people's minds.

"The littering of Oceans is discussed at world summits. But littering of minds is not being seriously addressed", he said.

Lithuania fears that Russian aggression in Ukraine could be repeated in the Baltic states. But the same Pew survey noted that most French, German, and Italian people don't want their countries to defend a Nato ally against Russia.

"I'm not surprised", Linkevicius told EUobserver.

"There's a gap between European leaders and citizens. We have to do more", he added.

"But there's solidarity in the alliance [Nato] and Article V of the Treaty [on collective defence] is not based on opinion polls ... if you did a similar survey in military circles, you'd get a different result".

Its EU impact aside, the Kremlin narrative dominates in Russia, where state media have a near monopoly.

Inside Russia

Pew, which held interviews with 1,000 Russian people, says 61 percent believe parts of other countries belong to Russia and that dissolving the Soviet Union was a mistake.

"People, overwhelmingly, think that Putin is doing a good job, handling foreign policy, the EU, energy policy. Even on handling corruption", the pollster's Stokes said.

Anti-Western content is also making an impact.

Russians' approval of Germany is comparable to Arab countries' approval of the US after the 2003 Iraq war, Stokes noted.

For his part, Robert Pszczel, who was, until recently, Nato's spokesman in Moscow, warned that the propaganda goes beyond defending Putin's image.

"I saw the 9 May parade [a WWII memorial in Moscow] and I don't have a problem with kids cheering when they watch their country's tanks go by ... but I do have a problem when the biggest cheer, the kind you hear at a hockey match, comes when they watch Iskanders go by", he told Globsec, referring to Russian missiles, which were recently repositioned to strike Berlin and Warsaw.

"You should see the billboards, five storeys high, saying [Boris] Nemtsov [a murdered opposition leader] is a traitor. Somebody paid for that. Somebody gave a permit for it", Pszczel added.

"The question is what is this country up to? ... It looks like a country preparing for war."

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 #21
EUObserver
https://euobserver.com
June 23, 2015
EU drafts plan on Russia's media 'misuse'
By ANDREW RETTMAN

EU institutions aim to counter Russian propaganda with "positive" messages, media funding, and closer regulation, a new action plan says.

The plan, a nine-page paper drafted by the EU foreign service and seen by EUobserver, will be discussed by ministers at a general affairs council on Tuesday (23 June), with a view to adoption by leaders on Thursday.

It notes that Russia's "use and misuse of communication tools" has "played an important role in the dramatic political, economic, and security-related developments" in the EU's eastern neighbourhood in the past 18 months.

It calls for "promotion of EU policies" in former Soviet states, support for "independent media", and "increased public awareness of disinformation activities by external actors".

It says a new EU foreign service cell, called East StratComTeam, which is to be up-and-running by September, will shepherd activity.

It's to "develop dedicated communication material on priority issues", which will be "put at the disposal of the EU's political leadership, press services, EU delegations, and EU member states".

It notes the material, to be circulated in Russian and in local languages, should "allow citizens to easily understand that political and economic reforms promoted by the EU can, over time, have a positive impact on their daily lives".

It says that "rather than explain the detail of EU policies and programmes, [it] should clearly explain their benefits to the people of the region ... in clear language, and based on real-life success stories that will resonate".

EU institutions will also work with NGOs "to raise awareness of [Russian] disinformation activities amongst the general public".

They will tap the so-called Open budget line in 2015 to 2020 for "targeted training and capacity building of journalists and media actors" in countries such as Georgia, Moldova, and Ukraine.

On the regulation front, the EU foreign service notes that "media policy remains primarily a national competence".

But with some Russian media, such as RT or Sputnik, broadcasting fabrications and hate speech from their bureaus in EU cities, it says "the EU ... will work to improve co-operation between national regulators, including through meetings of the European Regulators Group", an audiovisual body.

It also says the European Commission will "table a new legislative proposal to improve the regulatory environment and take account of current challenges".

The plan is the fruit of three months' reflection by the EU diplomatic corps.

It was circulated to EU ambassadors on 16 June.

A diplomat from one northern EU member state described it as a "pragmatic, low-level approach". He noted that "the action plan is a living document, which can be expanded later".

Diplomats from former Iron Curtain EU countries, many of which see Russian propaganda as an immediate threat, have ridiculed it.

One contact told EUobserver: "It's weak. We hope the ministers will strengthen it when they meet on Tuesday". A second contact said: "It's a piece of crap".

UK perspective

By comparison, the UK, in April, created a 1,500-man unit in the British army, the so-called 77th Brigade, to engage in psychological operations.

It will focus on social media, targeting Russian and Islamic State propaganda.

But for his part, Daniel Korski, an advisor to British PM David Cameron, who used to work for the EU foreign service, said effective communication doesn't need more officials in the small East StratComTeam.

"It's much less to do with funding new institutions or schemes. It's more about rapid reaction by politicians and institutions, so that when a statement is blatantly false, we're quick to debunk it and to say what we stand for", he told Globsec, a security congress in Slovakia last weekend.

Korski, who worked on British PM David Cameron's election campaign, noted that EU states already have adequate infrastructure.

"We already have structures which are capable of reacting very quickly to media developments, of debunking negative messages: Tthey're called political parties", he said.

Gloves off

Robert Pszczel, Nato's former spokesman in Moscow, told Globsec the EU should "take off the gloves".

"We have to talk back. It doesn't mean we engage with Russian propaganda tit for tat ... but we have to talk back because silence is interpreted in the wrong way".

He said Russian VIPs are prone to self-contradiction and hollow arguments.

"I'd like to see Western media invite more Russian officials on talk shows. I'd like to see them take on people like Chizhov [Russia's EU ambassador] or Churkin [its UN ambassador] because they'll win", he noted.

"They contradict themselves: One minute it's 'gay EU' and 'Nato is a paper tiger'. The next minute it's 'neo-Nazi EU' and 'Nato is a terrible menace'."

He gave his own TV clash with Russian nationalist MP Vladimir Zhirinovsky as an example.

"If Mr Zhirinovsky says: 'We [Russia] have nukes, so, aaargh!', it's easy to say: 'Well, we [Nato countries] have nukes as well'. It made him keep quiet for a while".

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 #22
Rossiyskaya Gazeta
June 15, 2015
Russian academic comments on US-China military agreement
Konstantin Volkov, Washington Ends 'Cannonade.' China Concludes Agreement With United States on Cooperation in the Military Sphere

China has signed an agreement with the United States on cooperation in the military sphere. This document, which was certified by Raymond Odierno, chief of staff of the US Army, and Fan Chanlong, vice chairman of the Chinese Central Military Commission, is the first treaty of its kind in recent years.

It is expected that the PCR Army will take part in the RIMPAC exercises organized by America as early as next year. In addition, the sides reached terms on a number of agreements concerning the code of behaviour of the two states' pilots and seamen during accidental encounters in the air and at sea. Rossiyskaya Gazeta discusses with Aleksey Maslov, leader of the Higher School of Economics' School of Oriental Studies, whether the agreement between China and the United States threatens Russia's interests.

"The most important thing is not just the contents of the treaty, but also the time when it was concluded. Let me recall that, during the past few weeks, all mass media outlets had been actively talking about the terribly heated situation in the region of the South China Sea. The possibility of large-scale military clashes in this region was almost discussed. The Americans repeatedly published in their newspapers articles reporting that China was stationing field artillery on the disputed islands and seeking to expand the maritime zone controlled by Beijing.

"And suddenly, China and the United States, unexpectedly against this confrontational background, conclude a major military agreement. Moreover, China which had also responded extremely sharply to the United States in the mass media and called on it not to intervene in the country's internal affairs, unexpectedly signed the document. Insofar as the agreement was not prepared in a single day, it should be understood that the campaign launched on both sides in the mass media was a kind of preliminary "cannonade." It was supposed to camouflage the military agreement that was being prepared at that time. With this agreement, China is seeking one simple, but for it, extremely important goal: It once again acquires an equal distance from Russia and the United States, so that no country should regard Beijing as its exclusive partner. And at the same time, it is getting countries to compete among themselves for partnership with China. This is the main thing that Beijing is seeking right now by signing a military agreement with the United States. And the second aspect of the signed document. China is showing the whole world that it is not a country that supports any one-sided decisions. China is seeking to ensure that it will now be looked on as one of the most able and flexible partners on the plane of the realization of political power in East Asia.

"And finally, a word about what is undoubtedly astonishing about this agreement, something that many observers had thought impossible. You see, the United States is bound by an agreement with Taiwan from 1972.

"Under this agreement, in the event of a military operation by Beijing against Taiwan, the United States must support its ally, including by using force. But the new agreement between Washington and Beijing, while it does not nullify the United States' resolve in principle to use military force in any conflict in the East Asia region, it essentially puts it in doubt."

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 #23
Washington Post
June 24, 2015
How Russians learned to stop worrying and love the bomb again
By Karoun Demirjian
Karoun Demirjian is a reporting fellow in The Post's Moscow bureau. She previously served as the Washington Correspondent for the Las Vegas Sun, and reported for the Associated Press in Jerusalem and the Chicago Tribune in Chicago.
 
KUBINKA, Russia - President Vladimir Putin's announcement last week that Russia would expand its nuclear arsenal with 40 new missiles sparked fears the Kremlin might thrust the world back into a Cold War-type armed standoff.

"Nobody wants to, I think, go back to a kind of Cold War status," U.S. Secretary of State John F. Kerry worried. "Nobody should hear that kind of announcement from the leader of a powerful country and not be concerned about what the implications are."

But many Russians think it's a great idea -- especially if it strikes a little fear into the heart of America.

"We're proud that we're building up our arsenal. We want them to be afraid of us," said Ekaterina Ivanova, 65, at Russia's first international military technology expo last week, the locale Putin chose to deliver his announcement about the new intercontinental ballistic missiles. "Because during the Soviet Union, people were afraid of us, and they respected us.

"America does not respect us now," Ivanova added, pinpointing the evisceration of relations to about the time the West slapped Russia with sanctions over the annexation of Crimea. "Arms control was a good idea -- until the moment when America and NATO started to threaten us."

Tens of thousands of Russians, of all ages and walks of life, visited the expo outside Moscow last week to ogle Russia's military hardware, old and new -- including some of Russia's best-known nuclear missile systems.

"Russian technology and arms are the best in the world," declared Denis V., 32, who looked strikingly like Putin with his bald head and sunglasses, save for the white Chihuahua he cradled in his arms as he stood behind a Topol missile launcher on display. "You cannot win against Russia. Russia is unconquerable. So the more we have, the less aggression we will face from other nations."

Russians have always taken pride in their country's military prowess, both in terms of the machinery they have developed and the lives they have sacrificed in various international conflicts. But the conversation surrounding nuclear force has generally been tempered by the rhetoric of restraint: Russians are quick to tell you, for example, that their country never dropped a nuclear weapon on people the way the Americans did, and remind you that during the Soviet Union era, leaders always soberly characterized their participation in the arms race as necessary efforts to guarantee world peace.

Now, however, many Russians are shrugging off Putin's proposed nuclear buildup as needed bold talk -- and of no great significance.

"The Soviet Union used to put 500 nuclear weapons into circulation at a time, and now we're just talking about 40. It's not a big deal," said Marina Bulova, 34, who came to the expo with her husband and son. "There will be no war. Everybody will be fine. If it is ever a war, it's an information war, nothing more."

Vladimir Zadorov, 29, wasn't so sure about dismissing the potential for danger in Putin's plans -- he sees "a new arms race" in the works and thinks "40 weapons is enough to destroy the world, don't you?" But even so, he supports the buildup and thinks 40 new nukes is actually Putin showing some restraint.

"I worry about war. But I also worry that Russia might be conquered or attacked by our enemies," Zadorov said.

He wouldn't specify which enemies he meant, though, without a little prompting. Did he mean the United States? "Maybe," he said, with a sheepish grin. "As far as I know, we have good relations with China."

Putin, for his part, has been waving off accusations that his "loose rhetoric" on Russia's nuclear aspirations, as U.S. Secretary of Defense Ashton Carter put it, is irresponsible or dangerous, and arguing that Russia is only modernizing its military stores.

The move is not entirely isolated, however. Putin has expressed concern about expansion of a missile shield in Europe, and for months the United States has alleged that Russia has violated the 1987 Intermediate-Range Nuclear Forces treaty, an accord Russian leaders have intimated no longer serves their interests.

It remains to be seen whether adding 40 intercontinental ballistic missiles will put Russia on the path toward noncompliance with its strategic arms reduction treaty obligations. Under the New START treaty, Russia and the United States must both reduce their number of deployed and nondeployed intercontinental ballistic missile launchers, submarine-launched ballistic missiles and heavy bombers to no more than 800 each, and no more than 700 deployed, and the stock of warheads on deployed ICBMs and SLBMs to no more than 1,500 each by February 2018. At last count, Russia had 890 such weapons, 515 of them deployed, with 1,582 warheads.

Most Russians, like most Americans, do not keep a running tally of their country's nuclear arsenal and simply have a gut reaction when they hear their president announcing new nuclear ventures.

But what may be most remarkable is that not even the most circumspect, anti-war attendees at last week's military expo were willing to question Putin's decision to pour resources back into building up Russia's nuclear arsenal at a time when the country is supposed to be focused on dismantling it.

"When we were driving up to the expo and we saw the field and the displays, I cried -- I am a woman against war," said Vera Glatun, 60, the daughter of World War II veterans, who came to the expo with her husband, daughter and grandson. "But I trust my president, and I'm sure he is doing whatever he can to make sure our life is peaceful. It may sound scary, but if it's necessary, it's necessary."

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#24
U.S. plans to deploy heavy weapons in Europe unrelated to real threat - Russian SC Deputy Sec Lukyanov

ULAN-UDE. June 24 (Interfax) - U.S. plans to deploy about 250 pieces of heavy weaponry in seven European countries can be explained with unhealthy agitation rather than a real threat, Russian Security Council Deputy Secretary Yevgeny Lukyanov has said.

"The unhealthy agitation of certain states, new members of the Atlantic alliance, is not a rationale for the existence of some threats. Rather they should see a doctor," Lukyanov told reporters on Wednesday, answering a question from Interfax.

"I cannot determine the potential of this nomenclature of armaments," Lukyanov said, commenting on U.S. plans to deploy about 250 pieces of heavy weaponry in seven European states.

"Probably, this is more about therapy than about surgery. This therapy is addressed to these beneficiaries - the Baltic countries, Poland and Romania," the deputy secretary of the Russian Security Council said.

Lukyanov said that the United States already had plenty of armaments and servicemen stationed in Europe. "How many pieces of heavy armaments are deployed at the Ramstein base in Germany? How many U.S. servicemen are stationed there on a permanent basis?" he asked.

The New York Times reported earlier, quoting U.S. officials, that the Pentagon was considering the possibility of deploying heavy armaments in East European countries as a countermeasure against 'possible Russian aggression' in the region. The newspaper said the United States might bring tanks, infantry combat vehicles and other types of heavy weapons required to arm 5,000 servicemen to bases in the territory of East European NATO allies.

Estonia, Latvia and Lithuania have backed these plans.

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 #25
Antiwar.com
June 23, 2015
NATO-Russia Collision Ahead?
by Patrick J. Buchanan

"U.S. Poised to Put Heavy Weaponry in East Europe: A Message to Russia," ran the headline in The New York Times.

"In a significant move to deter possible Russian aggression in Europe, the Pentagon is poised to store battle tanks, infantry fighting vehicles and other heavy weapons for as many as 5,000 American troops in several Baltic and Eastern European countries," said the Times. The sources cited were "American and allied officials."

The Pentagon's message received a reply June 16. Russian Gen. Yuri Yakubov called the U.S. move "the most aggressive step by the Pentagon and NATO since the Cold War." When Moscow detects U.S. heavy weapons moving into the Baltic, said Yakubov, Russia will "bolster its forces and resources on the western strategic theater of operations."

Specifically, Moscow will outfit its missile brigade in Kaliningrad, bordering Lithuania and Poland, "with new Iskander tactical missile systems." The Iskander can fire nuclear warheads.

The Pentagon and Congress apparently think Vladimir Putin is a bluffer and, faced by U.S. toughness, will back down.

For the House has passed and Sen. John McCain is moving a bill to provide Ukraine with anti-armor weapons, mortars, grenade launchers and ammunition. The administration could not spend more than half of the $300 million budgeted, unless 20 percent is earmarked for offensive weapons.

Congress is voting to give Kiev a green light and the weaponry to attempt a recapture of Donetsk and Luhansk from pro-Russian rebels, who have split off from Ukraine, and Crimea, annexed by Moscow.

If the Pentagon is indeed moving U.S. troops and heavy weapons into Poland and the Baltic States, and is about to provide arms to Kiev to attack the rebels in East Ukraine, we are headed for a U.S.-Russian confrontation unlike any seen since the Cold War.

And reconsider the outcome of those confrontations.

Lest we forget, while it was Khrushchev who backed down in the Cuban missile crisis, President Eisenhower did nothing to halt the crushing of the Hungarian rebels, Kennedy accepted the Berlin Wall, and Lyndon Johnson refused to lift a finger to save the Czechs when their "Prague Spring" was snuffed out by Warsaw Pact tank armies.

Even Reagan's response to the crushing of Solidarity was with words not military action.

None of these presidents was an appeaser, but all respected the geostrategic reality that any military challenge to Moscow on the other side of NATO's Red Line in Germany carried the risk of a calamitous war for causes not justifying such a risk.

Yet we are today risking a collision with Russia in the Baltic States and Ukraine, where no vital U.S. interest has ever existed and where our adversary enjoys military superiority.

As Les Gelb writes in The National Interest, "the West's limp hand" in the Baltic and "Russia's military superiority over NATO on its Western borders," is "painfully evident to all."

"If NATO ups the military ante, Moscow can readily trump it. Moscow has significant advantages in conventional forces - backed by potent tactical nuclear weapons and a stated willingness to use them to sustain advantages or avoid defeat. The last thing NATO wants is to look weak or lose a confrontation."

And NATO losing any such confrontation is the likely outcome of the collision provoked by the Pentagon and John McCain.

For if Kiev moves with U.S. arms against the rebels in the east, and Moscow sends planes, tanks and artillery to annihilate them, Kiev will be routed. And what we do then?

Send carriers into the Black Sea to attack the Russian fleet at Sevastopol, and battle Russian missiles and air attacks?

Before we schedule a NATO confrontation with Russia, we had best look behind us to see who is following America's lead.

According to a new survey by the Pew Global Attitudes Project, fewer than half of the respondents in Britain, France, Germany, Italy and Spain thought NATO should fight if its Baltic allies were attacked by Russia. Germans, by a 58-38 margin, did not think military force should be used by NATO to defend Lithuania, Latvia and Estonia, though that is what Article 5 of the NATO charter requires of Germany.

Americans, by 56-37, favor using force to defend the Baltic States. On military aid to Ukraine, America is divided, 46 percent in favor, 43 percent opposed. However, only 1 in 5 Germans and Italians favor arming Ukraine, and in not a single major NATO nation does the arming of Ukraine enjoy clear majority support.

In Washington, Congressional hawks are primed to show Putin who is truly tough. But in shipping weapons to Ukraine and sending U.S. troops and armor into the Baltic States, they have behind them a divided nation and a NATO alliance that wants no part of this confrontation.

Unlike the Cuban missile crisis, it is Russia that has regional military superiority here, and a leader seemingly prepared to ride the escalator up right alongside us.

Are we sure it will be the Russians who blink this time?

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#26
The New York Times
June 24, 2015
Cold War Without the Fun
By Thomas L. Friedman

Let's see, America is prepositioning battle tanks with our East European NATO allies to counterbalance Russia; U.S. and Russian military planes recently flew within 10 feet of each other; Russia is building a new generation of long-range ballistic missiles; and the U.S. and China are jostling in the South China Sea. Did someone restart the Cold War while I was looking the other way?

If so, this time it seems like the Cold War without the fun - that is, without James Bond, Smersh, "Get Smart" Agent 86's shoe phone, Nikita Khrushchev's shoe-banging, a race to the moon or a debate between American and Soviet leaders over whose country has the best kitchen appliances. And I don't think we're going to see President Obama in Kiev declaring, à la President Kennedy, "ich bin ein Ukrainian." Also, the lingo of our day - "reset with Russia" or "pivot to Asia" - has none of the gravitas of - drum roll, please - "détente."

No, this post-post-Cold War has more of a W.W.E. - World Wrestling Entertainment - feel to it, and I don't just mean President Vladimir Putin of Russia's riding horses bare-chested, although that is an apt metaphor. It's just a raw jostling for power for power's sake - not a clash of influential ideas but rather of spheres of influence: "You cross that line, I punch your nose." "Why?" "Because I said so." "You got a problem with that?" "Yes, let me show you my drone. You got a problem with that?" "Not at all. My cyber guys stole the guidance system last week from Northrop Grumman." "You got a problem with that?"

The Cold War had a beginning, an end and even a closing curtain, with the fall of the Berlin Wall. But the post-post-Cold War has brought us full circle back to the pre-Cold War and the game of nations. There was a moment when it seemed as though it would all be otherwise - when it seemed that Arabs and Israelis would make peace, that China would evolve into a more consensual political system and that Russia would become part of Europe and the G-8. That was a lifetime ago.

Now Western reporters struggle to get visas to China, no American businessman with a brain takes his laptop to Beijing, Chinese hackers have more of your personal data now than LinkedIn, Russia is still intent on becoming part of Europe - by annexing a piece here and a piece there - and the G-8 is now the G-1.5 (America and Germany).

When did it all go sour? We fired the first shot when we expanded NATO toward the Russian border even though the Soviet Union had disappeared. Message to Moscow: You are always an enemy, no matter what system you have. When oil prices recovered, Putin sought his revenge for this humiliation, but now he's just using the NATO threat to justify the militarization of Russian society so he and his fellow kleptocrats can stay in power and paint their opponents as lackeys of the West.

NATO's toppling of the Libyan leader Muammar el-Qaddafi, the Arab Spring and the Moscow street protests that followed rattled Putin, said Sergei Guriev, the noted Russian economist now based in Paris. "Putin understood that he lost the Russian middle class and so he started to look for legitimacy somewhere else" - in hypernationalism and anti-Americanism.

But Guriev makes an important point. "If not for the Western sanctions on Russia, East Ukraine would already have been part of Russia today," he said, adding that there is nothing Putin fears more than Ukraine succeeding in diminishing corruption and building a modern economy that would be everything Putin's Russia is not. Guriev is worried, though, that the anti-Western propaganda Putin has been pumping into the veins of the Russian public will have a lasting effect and make his successor even worse. Either way, "Russia will be a big challenge for your next president."

The Chinese leadership is not as dumb or desperate as Putin - and needs access to U.S. markets more - so, for now, China's leaders still behave with some restraint in asserting their claims in the South China Sea. But the fact is, as the Asia expert Andrew Browne noted in The Wall Street Journal, "the U.S.-China relationship has lost its strategic raison d'être: the Soviet Union, the common threat that brought the two countries together." They have not forged a new one, like being co-managers of global stability.

In short, the attraction of the U.S. economy and the bite of U.S. sanctions are more vital than ever in managing the post-post-Cold War game of nations, including bringing Iran to nuclear talks. We may be back to traditional geopolitics, but it's in a much more interdependent world, where our economic clout is still a source of restraint on Moscow and Beijing. Putin doesn't disguise his military involvement in Ukraine for nothing; he's afraid of more U.S. banking sanctions. China doesn't circumscribe its behavior in the South China Sea for nothing; it can't grow without exporting to America. It's not just our guns; it's our butter. It's why we should be expanding U.S.-shaped free-trade deals with Asia and Europe, and it's why the most important source of stability in the world today is the health of the U.S. economy. We can walk softly only as long as we carry a big stick - and a big wallet.

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#27
www.rt.com
June 23, 2015
The Pentagon goes nuclear on Russia
By Pepe Escobar
Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia.

We all remember how, in early June, President Putin announced that Russia would deploy more than 40 new ICBMs "able to overcome even the most technically advanced anti-missile defense systems."

Oh dear; the Pentagon and their European minions have been freaking out on overdrive ever since.

First was NATO Secretary-General, Norwegian figurehead Jens Stoltenberg, who condemned it as "nuclear saber rattling."

Then there's Lt. Gen. Stephen Wilson, the head of US Global Air Strike Command - as in the man responsible for US ICBMs and nuclear bombers - at a recent briefing in London; "[They've] annexed a country, changing international borders, raising rhetoric unlike we've heard since the cold war times..."

That set up the stage for the required Nazi parallel; "Some of the actions by Russia recently we haven't seen since the 1930s, when whole countries were annexed and borders were changed by decree."

At His Masters Voice's command, the EU duly extended economic sanctions against Russia.And right on cue, Pentagon supremo Ashton Carter, out of Berlin, declared that NATO must stand up against - what else - "Russian aggression" and "their attempts to re-establish a Soviet-era sphere of influence."

Bets are off on what this huffin' and puffin' is all about. It could be about Russia daring to build a whole country close to so many NATO bases. It could be about a bunch of nutters itching to start a war on European soil to ultimately "liberate" all that precious oil, gas and minerals from Russia and the Central Asian "stans".

Unfortunately, the whole thing is deadly serious.

Get your tickets for the next NATO movie

Vast desolate tracts of US 'Think Tankland' at least admit that this is partly about the exceptionalist imperative to prevent "the rise of a hegemon in Eurasia." Well, they're not only "partly" but totally wrong, because for Russia - and China - the name of the game is Eurasia integration through trade and commerce.

That condemns the "pivoting to Asia", for the moment, to the rhetorical dustbin. For the self-described "Don't Do Stupid Stuff" Obama administration - and the Pentagon - the name of the game is to solidify a New Iron Curtain from the Baltics to the Black Sea and cut off Russia from Europe.

So it's no surprise that in early June, the Pentagon's Office of Net Assessment, in itself a think tank, hired another think tank, the Center for European Policy Analysis (CEPA) to churn out - what else - a bunch of war games.

CEPA happens to be directed by A. Wess Mitchell, a former adviser to former Republican presidential candidate and master of vapidity Mitt Romney. Mitchell - who sounds like he flunked history in third grade - qualifies Russia as a new Carthage; "a sullen, punitive power determined to wage a vengeful foreign policy to overturn the system that it blames for the loss of its former greatness."

Russian intelligence is very much aware of all these US maneuvers.So it's absolutely no wonder Putin keeps coming back to NATO's obsession in building a missile defense system in Europe right at Russia's western borderlands; "It is NATO that is moving towards our border and we aren't moving anywhere."

NATO, meanwhile, gets ready for its next super production; Trident Juncture 2015, the largest NATO exercise after the end of the Cold War, to happen in Italy, Spain and Portugal from September 28 to November 6, with land, air and naval and special forces units of 33 countries (28 NATO plus five allies).

NATO spins it as a "high visibility and credibility" show testing its "Response Force" of 30,000 troops. And this is not only about Russia, or as a rehearsal in pre-positioning enough heavy weapons for 5,000 soldiers in Lithuania, Latvia, Estonia, Poland, Romania, Bulgaria and Hungary.

It's also about Africa, and the symbiosis NATO/AFRICOM (remember the "liberation" of Libya?) NATO Supreme Commander Gen. Breedhate, sorry, Breedlove, bragged, on the record, that, "the members of NATO will play a big role in North Africa, the Sahel and sub-Saharan Africa."

Feel the love of my S-500

As far as Russia is concerned, all this warmongering hysteria is pathetic.

Facts: under Putin, Russia has actively rebuilt its strategic nuclear missile force. The stars of the show are the Topol M - an ICBM which zooms by at 16,000 miles an hour - and the S-500 defensive missile system, which zooms by at 15,400 miles an hour and effectively seals off Russian airspace.

Russian intelligence identified as early as the dawn of the new millennium that the weapons of the future would be missiles; not clumsy aircraft carriers or a surface fleet which can easily be smashed by top-class missiles (as the new SS-NX-26 anti-ship, Yakhont missile which zooms by at 2.9 Mach).

The Pentagon knows it - but hubris dictates the "we're invincible" posing. No, you're not invincible; silent Russian submarines offshore the US could engage in a nuclear turkey shoot knocking out every major American city in a few minutes with total impunity. In only fifteen years Russia has jumped two generations ahead of the US on missiles and may be on the verge of a first strike nuclear capacity, while the US can't retaliate because the Pentagon can't get through the S-500s.

Public opinion in the US doesn't know any of this - so what's left is posturing. We're back to the Chairman of the Joint Chiefs of Staff Gen. Martin Dempsey spinning the US is "considering" deploying land-based missiles - with nuclear warheads - that could reach Russian cities across Eurasia.

This does not even qualify as a childish - and unbelievably dangerous - provocation. These missiles will be useless. The US has submarine-based missiles available, and they cannot get through Russian defenses either; the S-500s will do the job. So if the Pentagon and NATO really want war, wait until next year or 2017 max - with 'The Hillarator' or Jeb "I'm not Bush" at the White House - when the S-500 deployment will be completed.

Putin knows extremely well how dangerous is this posturing. That's why he emphasized that the US unilateral withdrawal from the 1972 Anti-Ballistic Missile (ABM) Treaty - which established that neither the US nor the USSR would try to neutralize each other's nuclear deterrence by building an anti-missile shield - is pushing the world towards a new Cold War; "This in fact pushes us to a new round of the arms race, because it changes the global security system."

Washington unilaterally withdrew from the ABM Treaty during the "axis of evil" Dubya era, in 2002. The pretext was that the US needed "protection" from rogue states, at the time identified as Iran and North Korea. The fact is this cleared the Pentagon to build a global anti-missile system directed against - who else - the only true "threats" against the hegemon; BRICS members Russia and China.

Terminator Ash on a roll

Under neocon Ash Carter - compared to whom Donald Rumsfeld barely qualifies as Cinderella - the Pentagon wants to go Terminator all the way.

"Options" being considered against Russia are an offensive missile shield across Europe to shoot Russian missiles (totally useless against the Topol M); a "counterforce" (in 'Pentagonese') that implies pre-emptive non-nuclear strikes against Russian military sites; and "countervailing strike capabilities", which in 'Pentagonese' means pre-emptive deployment of nuclear missiles against targets - and cities - inside Russia.

So we're talking about the unthinkable here; a pre-emptive nuclear strike against Russia. There's only one scenario if that happens; a full-scale nuclear war. The mere fact that this is considered an "option on the table" reveals everything one needs to know about what passes for "foreign policy" in the heart of the Indispensable Nation.

In Iraq, a pre-emptive strike - although non-nuclear - was "authorized" based on non-existent weapons of mass destruction (WMDs). So the whole planet knows the 'Empire of Chaos' is capable of fabricating any pretext. In the case of Russia, the Pentagon may play 'Ultimate Terminator' all they want, but it won't be a walk in the park; after all in less than two years Russian airspace will be effectively sealed by the S-500s.

Beware of the 'Shock and Awe' you want. Still, no chance the Pentagon will take Putin seriously (Ash Carter, on the record, is a sucker for regime change.) Recently, the Russian President couldn't be more explicit; "This is no dialogue. It's an ultimatum. Don't speak the language of ultimatums with us."

MAD - Mutually Assured Destruction - is way over. It kept a somewhat uneasy peace during seven decades of Cold War. Cold War 2.0 is as hardcore as it gets. And with all those Breedhate Strangeloves on the loose, nuclear madness is now at five seconds to midnight.
 

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 #28
Counterpunch.org
June 23, 2015
Kid Glove Treatment of the Extreme-Right
The Murder of Journalist Oles Buzina in Ukraine
By ROGER ANNIS
Roger Annis is an editor of the website The New Cold War: Ukraine and beyond.

Two people were arrested in Ukraine on June 18 for the murder of journalist Oles Buzina on April 16, 2015. The two are said to be members of neo-Nazi paramilitary forces. Andriy Medevko and Denys Polischuk appeared in court separately on June 19. They were denied bail and will appear again in court in August.

Polischuk was released on bail on June 23. He was greeted upon release by a crowd of Right Sector members. Bail of five 5 million hryvnia (US$230,000) was paid by Oleksiy Tamrazov, owner of the media conglomerate Media Group and one of the wealthiest oil/gas businessmen in Ukraine. (UNIAN News, June 23, 2015)

Both men are in their mid-20s. Korrespondent reported that a third suspect had been arrested. He was later released without charge.

The Ukraine news agency Interfax reports that Medevko is a member of the extreme right paramilitary battalion, Kyiv-2. It was formed with the participation of the 'C14' paramilitary group associated with the Svoboda Party. He has served as an aide to Svoboda Party member of the Rada (Parliament) Eduard Leonov.

UNIAN News reports that Polischuk is a member of the UNSO Battalion. It is an arm of the Social National Assembly, a fascist party.

Oles Buzina was a Ukrainian writer and journalist who was outspoken against the overthrow of the elected President Viktor Yanukovych in February 2014. He went on to oppose the civil war course in eastern Ukraine of the right-wing government that replaced that of Yanukovych. He was gunned down in broad daylight in front of his home in Kyiv.

Stealing and pillaging by battalions

The arrests of Oles Buzina's alleged killers occurred as an internal squabble erupted between officials of the Kyiv government and leaders of another right-wing battalion. On June 17, Ruslan Onishchenko and seven of his cohorts in the 'Tornado Battalion' were arrested by Ukrainian police at the request of Gennedy Moskal, the appointed 'governor' of the Ukraine-controlled territory of Lugansk region.

They are accused of smuggling for profit as well as lawless actions against civilians, including thefts, assaults, kidnappings and torture.

According to RT.com, Ruslan Onishchenko has been convicted five times of violent crimes. Before the latest squabble, he was presented by Kyiv officials as a hero of its 'Anti-Terrorist Operation' in eastern Ukraine.

The Ukrainian television program Podrobnosti (TV-channel Inter) aired a story on June 19 containing recorded conversations of Onishchenko with his cohorts. The story was headlined, 'Without tortures, life would not be a life'.

"Some soldiers of the Tornado Battalion have contacted us," reported the program. "They have given us a recording of the conversation of battalion commander Ruslan Onishchenko with one of his deputies who uses the call sign 'Mujahideen'.

"This conversation is proof of the fact that the battalion is engaged in marauding and torture. We have checked the soldiers who gave us the tape recording via our sources, and they are listed as enrolled in the battalion.

"'Without tortures, life would not be a life. Nothing raises your vitality as when you're holding someone's life,' says the soldier with the call sign 'Mujahideen'."

"In an exclusive interview with Podrobnosti, the soldiers also told about the torture of people. Prisoners were kept in basements. They were beaten with sticks and sexually assaulted. In addition to performing combat tasks, soldiers were ordered by Ruslan Onishchenko to steal civilians' vehicles and equipment.

"'Most people who are found intoxicated or homeless were detained and forced to perform work for us-to build something, to weld something. Cars were simply taken by force from ordinary civilians. They were beaten with sticks- that's all on the video, what was previously heard. They really raped one man, and Mujahideen recorded it all.

"'We had ten prisoners. Onishchenko encouraged the taking of prisoners and gave the 'green light' to such actions. 'These are your prisoners - do with them what you want', he would say.'"

"'He, too, would say that without torture, life is boring', the fighters of the battalion told us."

Sputnik News quotes Ukrainian Military Prosecutor Anatoly Matios as telling a television program that of 80 of the group's members investigated, half were found to have criminal records. Sputnik says that Interior Minister Arsen Avakov has moved to limit the public relations damage by ordering the dissolution of the battalion.

It's been a bad several weeks for Ukraine's battalions. On June 11, the U.S. Congress voted to ensure that no funding or military training or equipping would go to the so-called Azov Battalion because of its openly neo-Nazi identification.

But a dissolution of that outfit is certainly not in the cards. Its role has been vigorously endorsed by Ukrainian government officials and it happens to control the industrial and port city of Mariupol in the southeast of Ukraine.

On June 13, the group staged a military parade through the streets of Mariupol to mark one year of its control of the city. On hand to cheer the "national heros" were no less than Interior Minister Avakov and National Security and Defense Council Secretary Oleksandr Turchynov. Among those giving a speech to the ceremony with Turchynov and Avakov alongside was neo-Nazi leader Andriy Biletsky.

Another extreme-right party, the Right Sector, is keeping up its pressure on the Kyiv government not to relax the civil war they are jointly pursuing in the east.

Kid glove treatment of the extreme-right in Ukraine

Reports of torture and marauding by the extreme-right battalions in Ukraine are commonplace in the country. It is one of the reasons why opposition to the war is high, and growing. For example, a protest of more than one thousand people was staged on June 17 in the streets of Kyiv surrounding the U.S. embassy (video here). But barely a word of such news finds its way into the pages and broadcasts of Western media. A rigorous, de facto censorship prevails over anything that does not fit a 'blame Russia' narrative for describing the war in the east of the country.

Western editors, journalists and politicians politely call the far-right paramilitary battalions "volunteer" battalions and they parrot the line that Russia has a large, occupation troop presence in Ukraine.

Mainstream press is nearly universal in its description of the crisis in Ukraine as caused by "Russian aggression", including a Russian "annexation" of Crimea in March 2014. For example, Canadian Press writer Murray Brewster writes in a syndicated article with a straight face on June 19, "Ukrainian President Petro Poroshenko has made it clear there will be no reforms [that is, measures responding to the grievances of the people of eastern Ukraine] as long as Russia keeps troops in his country."

In Canada, there has been across-the-board political support for the war being waged by the Kyiv government and its allied battalions. Recently, news of the role of the extreme right in the war in Ukraine (news only to those feigning ignorance or whose heads have been in the sand during the past 14 months) was ever-so-briefly reported following the vote in the U.S. Congress on June 11 to deny funding to some of the extremist battalions.

The U.S. vote caught Canadian politicians with their pants down. The more faint-hearted or embarrassed among them reacted with variants of, 'Gee, I didn't know. Someone should do something about this.'

One tactic to lessen international attention on the extremist battalions and gain them access to Western military training and arming has been to integrate them into Ukraine's National Guard. When Canada's defense minister, Jason Kenney, was placed on the hot seat following the U.S. Congress vote, he smoothly replied that only units of the National Guard and the regular Ukraine army would receive training from the military mission that Canada is soon to land in Ukraine.

The prominence of the extreme-right in Ukraine pre-dates its role in the overthrow of the country's elected president in February 2014. An article in the September 27, 2013 edition of the Russian-language Korrespondent happens to feature a photo of a younger Andriy Medevko. He is delivering a Nazi salute. The article examined the widely-reported phenomenon at the time of neo-Nazi football hooligans running amok in Ukraine.

News reports of neo-Nazi hooliganism in Ukraine (and Poland) was de rigeur in certain international press in 2012 and 2013 when the European press descended on Donetsk for the Euro-2012 football tournament. Here are some samples of media coverage in British newspapers in 2012:

* The Daily Mail, May 27, 2012
* The Guardian, June 1, 2012
* The Telegraph, May 30, 2012

But such reporting was "switched off" in 2013 as the Euromaidan protest movement arose and quickly gained favour in Western capitals. The NATO military alliance saw in Euromaidan an opening to press its historic anti-Russia drive, so NATO's narrative of a "Russian invasion" of Ukraine soon became the only accepted story in Western media.

In Canada, the fundraising efforts of the far-right battalions have been featured and promoted in two of the country's largest newspapers-the Globe and Mail and the Toronto Star. Elected members of Parliament of the three large parties in Ottawa as well as the premier of Canada's largest province, Ontario, have happily joined in public forums and other events featuring spokespeople for the Right Sector and other extreme-right figures from Ukraine.

Western media has been all but silent over the killings and jailings of journalists occurring in Ukraine. The few who reported the murder of Oles Buzina invariably referred to him as "pro-Russian", referring to his outspoken writing in opposition to the murderous civil war in the country.

Ukraine has become one of the most dangerous countries in the world for journalists to work. But don't go looking for that story in the world's mainstream press-you won't find it. Nor will you find a hint of the political repression being meted out daily by the combination of the Ukraine government and right-wing street vigilantes.

Will those arrested for the murder of Oles Buzina face justice? Time will tell. The pro-Euromaidan purging of Ukraine's state and judicial apparatus which was codified in a law adopted last September is not aimed at fixing the injustices and corruption endemic to Ukraine's economy and its judiciary. As the Vox Ukraine project reported in December of last year:

The discussion of judicial and general lustration in Ukraine is permeated by comparisons with Central European countries and their experience with lustration in the early 1990s.  However, these comparisons are misguided, because both the goals and methods of Central European lustration were different.  Central European lustration policies were mainly about exposing truth, rather than about punishing individuals.

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 #29
Russia Insider
www.russia-insider.com
June 23, 2015
Poroshenko's Corruption Crackdown Is a Sad Farce
Poroshenko claims that under his virtuous leadership, thousands of corrupt officials have been put behind bars. The problem? He refuses to provide any evidence to support his assertion.
By RI Staff

Readers may recall the March arrest of the director of Ukraine's emergency services ministry, Sergiy Bochkovsky, on live television - what the New York Times described as "a carefully orchestrated spectacle calculated to dramatize a newly aggressive anticorruption campaign". Prime Minister Arseniy Yatsenyuk, who was in the room during the made-for-TV crackdown, declared it a warning to public officials about abusing their offices.

Two days later, Bochkovsky was released "for lack of evidence" - sending a slightly different message to public officials.

Today, Ukraine remains the most corrupt nation in Europe. But attempts by Kiev to present itself as a model of republican virture continue without any apparent sense of shame. According to the Kyiv Post:

"Despite repeated requests, the Presidential Administration has failed to provide to the Kyiv Post - or anyone else, to the newspaper's knowledge - with a list of 2,702 former officials that President Petro Poroshenko says were convicted of corruption over the past year."

In a Wall Street Journal op-ed published on June 10, Poroshenko wrote: "Over the past year, 2,702 former officials have been convicted of corruption."
Yes, "The Wall Street Journal" and "a bold-faced lie" in the same sentence. Coincidence? You decide.

Here's the funny thing about the universe: It doesn't matter how many self-righteous op-eds you write - the Moon is still not made of cheese. On paper (or CNN), Ukraine might appear to be a land of promise. And it is, if you are a criminal.

For everyone else - enjoy the bogus TV arrests and randomly generated, completely fake statistics.

Think of all the poor people who have perished for this.

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 #30
Sputnik
June 24, 2015
EU Confirms It Wants Donbass Special Status to Be Permanent

Representatives of the European Union have confirmed that Brussels' position regarding the special status of Donbass areas currently under control of Donetsk and Lugansk People's Republics is that it should be permanent.

The European Union representatives have confirmed that Brussels favors a permanent special status for areas of Donbass currently under control of Donetsk and Lugansk People's Republics.

The Ukrayinska Pravda newspaper wrote on Tuesday that the call to give the breakaway areas a permanent special status was made by the European Commissioner for Neighbourhood Policy and Enlargement Negotiations Johannes Hahn during a meeting with Ukrainian lawmakers and President Petro Poroshenko in Kiev.

This request was confirmed by the Deputy Chairman of Committee of Verkhovna Rada of Ukraine on Foreign Affairs, Ivanna Klympush-Tsintsadze, who said that "Europeans call for the special status of Donbass' strategy proposal not to be limited to three years but to work on a permanent basis."

On Wednesday, the newspaper published an official comment by EU representatives confirming that Brussels' position is to make this status permanent:

"Article 11 of the Package of Measures outlines the agreement in relation to carrying out constitutional reform in Ukraine, including providing for adopting permanent legislation on the special status of certain areas of the Donetsk and Luhansk regions until the end of 2015," the comment reads.

Serhiy Sidorenko, author of the Ukrayinska Pravda article, bemoaned the position chosen by Brussels, saying he hoped criticism from both politicians and the media would prompt the EU to change its course.

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#31
Bloomberg
June 23, 2015
IMF Staff Said to View Ukraine Russia Bond as Official Debt
by Elena Popina and Marton Eder

International Monetary Fund staff formed a preliminary view that $3 billion in bonds sold to Russia by Ukraine should be classified as official rather than private debt, according to a person familiar with the matter.

Treating the bonds as state aid, as Russia has sought, would exclude them from the bond restructuring Ukraine is negotiating with a creditor group led by Franklin Templeton, potentially placing a greater burden on private bondholders.

A ruling in favor of Moscow would remove another source of conflict for Ukraine, which has been fighting an insurgency against pro-Russian separatists in its easternmost regions for more than a year. It may also raise tensions with private bondholders with whom it has been deadlocked over the need for a writedown to principal. Ukraine paid a $75 million coupon on the bond Monday.

"It makes unclear things clear and brings some order into long-lasting disputes," Vladimir Miklashevsky, a strategist at Danske Bank A/S in Helsinki, said by e-mail Tuesday. "We shouldn't exclude full repayment as there is a will to do things correctly: coupons were paid on time. However, if the coffer is empty, a pure will is not enough."

The status of the bonds is subject to approval by the IMF's executive board, said the person, who asked not to be identified because the deliberations are private. Russia has said its debt should be treated as official aid and repaid in full when the bonds mature in December, while Ukraine argues that the debt was structured as a Eurobond under U.K. law and is therefore liable to the same treatment as private creditors.

Market Access

Ukraine's next maturity, a $500 million Eurobond due on Sept. 23 fell 0.41 cent to 52.28 cents on the dollar by 1:12 p.m. in Kiev, retreating from the highest close in a week. The nation's $2.6 billion July 2017 note rose 1.59 cents to 48.46 cents.

A change in how the IMF regards the Russian bond may make it harder for creditors to argue that a so-called haircut on their principal holdings isn't necessary to achieve the IMF's restructuring targets.

Ukraine is pressing bondholders to accept a 40 percent writedown and the government will impose a moratorium in a few weeks if the offer isn't accepted, a person familiar with the talks said on Friday.

Halting debt payments would have long-term implications for the country's access to international bond markets, Kristin Lindow, a senior vice president at Moody's Investors Service, said in an interview Friday in London.

Haircut Odds

"A haircut on their debt is even more likely now," Regis Chatellier, a London-based director of emerging-market credit strategy at Societe Generale SA, said by e-mail Tuesday. Russia wouldn't have accepted any kind of restructuring and private creditors are becoming more and more isolated, he said.

A spokesman for the creditor group declined to comment on the repercussions of any change in the IMF's view on the bond.

The debt, which was sold by former Ukrainian President Viktor Yanukovych before he was toppled in February 2014, is one of several front lines in the conflict with Moscow. Ukraine has accused Russia of supporting separatists in its easternmost regions since the annexation of the Crimean peninsula in March last year. Even as a fragile cease-fire holds, the economy will probably contract by 9 percent this year, according to the IMF.

Ukraine President Petro Poroshenko said last week that the bond was a "bribe" to his predecessor aimed at keeping Ukraine in Russia's orbit and out of a European Union trade pact. Russian President Vladimir Putin said on Tuesday that he wants it to be repaid.

Washington Meeting

Under the Washington-based fund's policy, countries receiving loans from the fund can't be overdue on debt payments to other official creditors. The IMF said earlier this month that it can keep supporting Ukraine even if it stops servicing debt held by private bondholders.

The crisis lender will hold talks with the creditor group and the Ukrainian government next week in Washington, it said yesterday.

"Both sides are pretty determined not to make any concessions on the issue of the haircut," Moody's Lindow said. "It would really take both sides relenting on that determination to be able to reach a deal."

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 #32
The Guardian
June 20, 2015
Goodbye, Lenin: how a weighty symbol of the Soviet past divided a Ukrainian city
Bitter arguments among local councillors and citizens over the fate of the communist hero's statue highlighted a deep generational rift
By Paul Gogo

In Sloviansk, a city in the Donbass region of eastern Ukraine, council meetings have rarely been as turbulent as they were towards the end of last month. The reason was the decision by the mayor, Oleg Zontov, to move for a vote over the application of a law that had only just been passed by the Ukrainian president, Petro Poroshenko. This "law on the condemnation of communist and Nazi totalitarian regimes", voted through by parliament on 9 April, prohibits all defence of Nazism and communism.

The sale of communist souvenirs, and even the singing of the Internationale, is now banned in Ukraine. Individual offenders risk up to five years in prison. Members of organisations risk up to 10. The legislators were seemingly not worried about the risk of deepening the cultural abyss between western Ukraine and the Russophone east of the country, a centre of Soviet industrialisation between 1930 and 1950, and a place where nostalgia is ever present.

In Sloviansk, the mayor belongs to the Poroshenko bloc and he decided to apply the new law in his own way, targeting the statue of Lenin that enjoys pride of place opposite city hall. The national law has not yet taken effect, but debates are already under way over changing communist-era names of Ukrainian cities. Dnipropetrovsk, for instance, (named after the celebrated revolutionary Grigory Petrovsky) could be quickly retitled.

At the Sloviansk council meeting of 29 April, a vote on the "dismantling of the monument to Lenin, situated in October Revolution Square" was added to the order of business. But "the meeting was suspended and the vote postponed," explained Edouard Torskiy, a journalist with Delovoy Slavyansk, when "militant communists barged in on the meeting, threatening a return of separatist forces if the councillors targeted Soviet symbols".

Last year this city was seized by pro-Russian separatists led by Igor Girkin, a former Russian army officer who also goes by the name of Strelkov (Shooter). For a time it became the epicentre of the fighting between pro-Russia rebels and pro-Kiev forces. Strelkov briefly became minister of defence for the self-proclaimed Republic of Donetsk, taking numerous hostages, including journalists and observers from the Organisation for Security and Cooperation in Europe. The city changed hands again in June 2014 after fierce bombardment. But tensions are still high, in both the city and among its politicians, because the pro-Kiev mayor is in a minority on the council.

The elected officials are more or less the same as before. The majority belong to the Party of the Regions, the organisation headed by former Ukrainian president Viktor Yanukovych, who fled the country after the Maidan revolution, and the Communist party. The next local elections will take place in October.

Towards the end of last April, the giant Lenin statue had already been vandalised, covered in pink paint and adorned with a Ukrainian flag as a scarf. Around its base, placards explained "how to spot a separatist", offering tips on recognising signs of separatism in one's neighbours.

To begin with, local nationalists appeared to leave it to the councillors to decide the fate of the statue - though since the beginning of the war, and well before the "de-communisation" law was passed, more than 100 statues of Lenin have been demolished, many in the middle of the night.

On 27 May a new council meeting was scheduled and Zontov placed the statue on the order of business again. All of Sloviansk's nationalist groups attended to express support for its removal, with nationalist parties Svoboda and Right Sector turning out en masse. The number of nationalist militants has boomed since the war began, even though the number of MPs from these two groups only went up to seven out of 450 at the general election last October. In Sloviansk the nationalists have long been frustrated at their lack of representation on the council.

At the meeting the nationalists' constant interruptions led to a scuffle before the issue of the statue had even been broached. However, after temporarily halting proceedings, the mayor was able to start the debate. "I am responsible for the political life of our city," he said. "There are many different points of view in our council. To find compromises, we have to talk with each other and take a decision today."

Zontov proposed that, rather than being destroyed, the statue should be sold at auction or placed in a museum. As he spoke, nationalists in combat dress took position close to the council members. Then a man shouted from the public area: "I have in my hand a letter signed by 4,000 residents. People are against the destruction of the statue because it's part of their history, part of their youth. You should listen to the opinions of your fellow citizens."

The ensuing row deepened the divide between the younger generation, which looks towards Europe, and their often nostalgic elders, who lived under the USSR. The self-declared "patriots" shouted: "Shame on you! Glory to Ukraine. Glory to our heroes!" Then a young nationalist militant told the assembly: "It was Lenin who began the process of destruction of Ukraine. He brought the famine to Ukraine from 1922, then he launched a violent collectivisation. He created an ideology that killed millions of people."

Another young man berated the councillors: "You are 'provocateurs'. We are the descendants of people assassinated by that man. We are going to make that statue disappear. Now you are going to decide whether it's destroyed or whether it's removed. That is the choice we give you."

The uproar resumed with loud shouts of "separatists" filling the hall, followed by cries of "Shame on you". Zontov brought the meeting to an early close, but shouted above the clamour: "We have six months to resolve this question. Come to the next meeting."

In the hall afterwards, militants flourished a placard calling for "Sloviansk without Lenin." Tamara, an opposition member, left the assembly assailed by insults from the young nationalist militants, but didn't seem too bothered. "Our mayor doesn't do anything for this city. He only offers suggestions for destruction," she said. "He has found 50 people to support his plan. We have collected 4,500 signatures against the destruction of the statue. Even if Lenin wasn't a good human being, he was part of our history and you don't wipe out history like that."

But in the end the debate was settled by the minority. In the early hours of 3 June, militants from Right Sector tore the statue down.

This article first appeared in the French newspaper Libération

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 #33
Business New Europe
www.bne.eu
June 23, 2015
Extended EU-Russia sanctions create risky new status quo
bne IntelliNews

Moscow is preparing to prolong retaliatory measures against the EU, after the bloc extended for six months economic sanctions against Russia, raising the prospect of a frozen conflict in Ukraine that analysts say will damage both sides.

Following the expected June 22 extension decision by the EU foreign ministers over what they termed  "Russia's destabilising role in eastern Ukraine", Moscow ministries were instructed to draw up proposals for renewing counter-measures for submission to President Vladimir Putin.

In response to a first wave of EU sanctions last year, Russia in August banned imports of fruit, vegetables, meat, poultry, fish, milk and dairy products not just from the EU but also the US, Australia, Canada and Norway. The imports were valued at $9bn.

The latest embargo approved by the EU Foreign Affairs Council was formally enacted with its publication in the European Union's Official Journal on June 23, extending the sanctions until January 31, 2016.

Underscoring the tit-for-tat pattern of recent months, Kremlin spokesman Dmitry Peskov reiterated Russia's position that "the principle of reciprocity in the sanctions dialogue is a universal constant", meaning that Moscow intends to give as good as it gets.

The market reacted calmly to the developments. "The market has long assumed this outcome, so the news is neutral for Russian equities," Sberbank Investment Research analysts wrote.

The EU and US used sanctions imposed last summer to cut off Russia from international capital markets, while restricting access to modern technologies in the defence and energy sectors. Isolation of Russian banks and companies from the global capital markets has been painful, Andrei Belousov, an aide to Putin, told the Wall Street Journal on June 20. But the Russian financial system was fast adapting to new realities, he added.

Russia and Western countries are set to maintain a "status quo" in sanctions and counter-sanctions for the foreseeable future, according to Belousov.

Wild card

However, analysts warned of a dangerous aspect to the perceived new balance amid the sanctions. "What Belousov didn't mention in his comments [on June 20] was that the status quo is only a temporary remedy, and that Russia needs more sanctions lifted if it is to avoid an economic meltdown in two years' time," commented Zenon Zawada, an analyst with the Kyiv-based investment bank Concorde Capital. "This is the big wild card in the conflict, the outcome of which can't be predicted. Putin will either have to find a way to back out of Donbas and Crimea and admit defeat, or expand the conflict."

The West and Russia are reaching compromises behind the scenes that are oriented towards freezing the conflict in Donbas, Zawada added. "A frozen conflict acts as a drain on both the Ukrainian and Russian economies, both of which will be severely damaged by the time it's resolved, which could be many years down the road," he wrote.

Economic effects of the embargo on the sides in the Ukrainian conflict are becoming more pronounced, according to the latest data of Russia's Rosstat state statistics office. Russia's trade turnover in Ukraine dropped 60% y/y in the first five months of 2015, the statisticians said on June 23. Food imports to Russia overall were down 40.7% y/y in January-April, while trade turnover with the EU shrank at the fastest rate out of all non-CIS partners in January-April, contracting 37.5% y/y

Game of two halves

The EU has complained that Russia has been dragging its heels and failed to implement its side of the Minsk ceasefire agreements. The first version was signed in Minsk in September 2014 between France, Germany, Russia, Ukraine and rebel leaders of the Donbas region. The second version (Minsk 2) was signed in February 2015.

Recent fighting close to the coastal city of Mariupol earlier in June included the use of heavy artillery by both Russian and Ukrainian forces, according to reports, in clear violation of the new accord, but it remains unclear who brought their heavy guns back up to the front line first. However, it is clear that the Kremlin is continuing to supply the rebel forces and a genuine and full ceasefire seems as far away as ever.

The Russian side has counterclaimed that Ukraine has not met its commitments under Minsk II. During the question and answer session at the recent St Petersburg International Economic Forum (Spief), Putin told moderator Charlie Rose: "We believe that the settlement should be, as I said, to fulfil the Minsk agreement. And the key point here, of course, are the elements of a political settlement."

"The first is [Ukrainian] constitutional reform, that is included in the Minsk agreement, and includes the granting of autonomy or, as Ukrainians say, 'the decentralisation of power'," Putin said.

"Secondly, it is necessary to extend the previously adopted law on the special status of these territories, Luhansk and Donetsk, the unrecognised republics, to use it and to begin to apply the law. It is accepted but has not yet been realised. To do this it is necessary to adopt a resolution of the Verkhovna Rada - the Ukrainian parliament - and this condition is also included in the Minsk agreement," the Russian president said. He added: "The third thing you need to do - it is necessary to adopt a law on amnesty. It is impossible to conduct a political dialogue with the people who are at risk of criminal prosecution."

Votes in the Rada are due this autumn, but the form of the autonomy or decentralisation of power in the disputed regions remains unclear. Putin was suggesting that Russia will not withdraw its interference in the region until there is some sort of political resolution to these two questions that the Kremlin likes. That leaves Ukrainian President Petro Poroshenko in a difficult position as he cannot afford to be too generous on any of these counts, whereas Putin was making it clear he is expecting a lot before Russia withdraws. In the meantime, the military stalemate and sporadic clashes will continue, with more than 6,400 people killed since the conflict began in April last year.

Meanwhile, the meeting of the "Normandy Quartet" (Russia, France, Germany and Ukraine) foreign ministers met in Paris late on June 23, confirming in a declaration their adherence to the Minsk 2 agreements and calling for a de-escalation and ceasefire in Donbas.

Ukrainian eye of the storm

When the Council of the European Union on June 22 approved a prolongation of the sanctions, thereby increasing pressure on Moscow to use its influence to halt the insurgency in East Ukraine, it blamed the move on Moscow's failure to implement Minsk 2.

The "EU has extended economic sanctions against Russia until 31 January 2016, with a view to complete implementation of Minsk agreement," Foreign Affairs Council press officer Susan Kiefer tweeted.  

The Russian Foreign Ministry responded in a statement that it was "deeply disappointed that once again in the EU, the view of the Russophobic lobby has prevailed" through the prolongation of the "illegal restrictions". It stressed that Russia should not be held fully responsible for the implementation of the Ukraine ceasefire and that Kyiv held the key to a settlement.

The ministry also said the decision to extend the sanctions on June 22, the day Russia commemorates the invasion of the USSR by Nazi Germany in 1941, looked "particularly cynical".

Tying sanctions against Russia to implementation of the Minsk agreements was doomed to failure, added Konstantin Kosachev, chairman of the foreign affairs committee in the Federation Council, the upper house of Russia's parliament. "Linking sanctions to actions of third persons is a no-win and senseless tactics," Kosachev wrote on his Facebook page.

Actually, thanks for the sanctions

Russian officials have mounted a brave front in recent weeks over the sanctions, which they say have encouraged Russia to become more self sufficient and strengthened ties with international partners to the East.

"Thank you to those countries who adopted sanctions against us, I mean this absolutely honestly," Prime Minister Dmitry Medvedev said on June 11. "In economic terms, all the sanctions imposed have of course led us to cooperate with the Asiatic countries more actively."

Alexander Brechalov, secretary of the Russian Public Chamber, said that "extension of sanctions by our Western partners is only positive for us so far". He added: "The longer the sanctions stay in place, the better it will be for businesses, especially those operating in the sphere of import substitution," he said.

But while Russia may be becoming more self-sufficient with its import substitution programme and boosted its ties with China, the fear of international isolation has spurred on capital flight. According to Kremlin aide Belousov, the outflow will reach around $100bn in 2015, or $50bn excluding paying debt to foreign banks.

Compounding warnings of a harmful economic backlash in both directions, a new study by the Austrian Institute for Economic Research (WIFO) estimates that sanctions against Russia and counter-sanctions endanger 2mn jobs in the EU and will cost the union as much as €100bn in lost trade.

The report is based on the results for the first quarter of 2015, during which many previously existing export contracts expired without renewal. Estonian and Austrian exports to Russia fell by nearly 50% and 37.2% respectively, while the study recorded a one-third overall drop in EU exports to Russia.

Extrapolating these results, Germany could face the loss of around half a million jobs and €27.6bn in value compared to 2013. Europe's agriculture has been especially hard hit by Russian retaliatory sanctions against food imports, which put at risk around 265,000 jobs, according to the study.

However, the drop in trade is not just a result of the sanctions, say the authors, but also a result of a contraction in the Russian economy because of a nearly 50% drop in oil prices, as well as a corresponding devaluation of the ruble.

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 #34
Fort Russ/Die Welt
June 19, 2015
Die Welt: Cost of sanctions for Europe" 100 billion (100,000,000,000) euros

Vladimir Putin has always warned that sanctions against Russia will hurt Europe. The EU denies it, but economists have now calculated how expensive the crisis is getting, especially for Germany.

Die Welt June 19, 2015
http://www.welt.de/wirtschaft/article142742046/Russland-Krise-kostet-Europa-bis-zu-100-Milliarden-Euro.html
There is a video in English at this site
By Jörg Eigendorf, Andreas Maisch, Eduard Steiner, Andre Tauber
Translated from German by Tom Winter

The economic crisis in Russia has far worse consequences for the countries of the European Union (EU) and Switzerland than was expected. According to a calculation by the Austrian Institute for Economic Research (WIFO), there are more than two million jobs and 100 billion euros worth at risk.

The scientists' study, done exclusively for the Alliance of Leading European Dailies (LENA), assumed a "worst case scenario." "The export failures that we had assumed last autumn at worst, are now a reality," says Oliver Fritz, one of three authors of the study. The sanctions against Russia and the Russian response played a decisive role. "If the basic situation goes unchanged, our most pessimistic scenario is foreseeable."

The effect could only be mitigated if the companies export more to other countries. There were some signs, of this at least in respect of agricultural products.

European foreign ministers will decide on Monday in Brussels about continuing sanctions against Russia. Already at the G-7 summit in Elmau, the heads of state had agreed to maintain the sanctions against Russia until the Minsk II agreements, set in February, are fully implemented.

Putin could see his words confirmed

In this regard there is some suspense vis-a-vis Russian President Vladimir Putin's appearance this Friday at the International St. Petersburg Economic Forum. As a prelude to the summit, spectacular deals in the billions were announced between Russia and the energy conglomerate E.ON and with Siemens.

Putin will feel confirmed in his warnings that trade restrictions will have serious consequences for the economies of the EU - as Russia came up with counter-sanctions in August. In Germany alone, the calculations according to WIFO amount to half a million jobs and about 27 billion euros.

The ongoing crisis could cost Germany something more than one percentage of economic performance in the coming years, if there is no change in the framework of data, the WIFO has calculated.

No other major European economy would be so severely affected. Italy would thus lose a little more than 200,000 jobs and 0.9 percent of economic power, France, almost 150,000 jobs and 0.5 percent.

European Commission comes to a different conclusion

The assumptions and conclusions of the WIFO study differ from those in the latest sanction confidential report from the European Commission, which circulated in diplomatic circles. The Commission concludes that the impact of trade restrictions on the European economy are "relatively small and manageable" - especially for companies selling some of their goods abroad, as well as in the agricultural sector.

The Commission at the end of May was optimistic that the existing negative effects of trade restrictions would again come down. The different assessments stem from the fact that the Commission carries out a short-term view and assumes that the negative effects are now getting milder.

The scenario of WIFO economists is, however, based on the assumption that the bad situation in the first quarter will continue through 2015. They also take into account so-called knock-on effects because of higher unemployment and lower demand.

In the WIFO scenario there is a distinct drop in economic strength. If one uses not just the export trend in the first quarter 2015, but also last years far better final quarter, about 1.9 million jobs and almost 80 billion euros in added value are vulnerable to the Russian crisis, including sanctions in Europe.

Economist Fritz also points out that because of the oil price fluctuations and the decline of the ruble, it is impossible to distinguish the direct effect of trade restrictions. "We consider the Russian import activities as a whole," says Fritz. "Here we firmly maintain that the sanctions have a significant adverse effect, if we also take into account Russia's reaction to the EU's measures."

Eckhard Cordes, Chairman of the Eastern Committee of German Economy, is hardly optimistic: "The first quarter of 2015 is a good indicator for the assessment of the situation. Through then, since spring 2014 we've been sinking. Now perhaps we've hit bottom... we don't know yet. "

Yet the situation is manageable, says Cordes, who as chairman of the wholesaler Metro, used to have close connections to Russia. "But if this development continues any longer - let's say for another year -  then the German-Russian relations will suffer serious harm."

The Chairman of the Eastern Committee is especially concerned that competitors from China or other countries will step in and take advantage. "We are hearing it more and more: 'The Chinese aren't so much worse thanthe Germans.' This is worrying. "

Public information deficit is unmistakable

The Kremlin prohibited the import of many agricultural products and foodstuffs such as milk, fruit, vegetables, cheese and meat from the European Union in August 2014. This has especially hurt countries such as Italy, Spain or the Netherlands.

From the scientific side, the monitoring of the sanctions is sharply criticized. "The European Union has no benchmarks or models to measure the effectiveness of sanctions," says Borja Guijarro-Usobiaga, of the London School of Economics.

This is contested in the EU Commission. One reflects on data from Member States' own figures, and public sources, and assesses them with a view to the overall context.

A deficit of public information is at least unmistakable. After researching, the LENA reporter in Brussels interrogated the Commission in strict confidence about the economic consequences in the EU countries. But not even the MEPs know this Commission report.

Even the ministries of the Member States were only in formed orally about reports to the Commission on the consequences of the sanctions - presumably so that the numbers would not reach the public. The big fear was not to hand the Russian important information.

Collaboration: C. Bonini, C. Delgado, N. Lombardozzi, J. Meletti, C. Pérez, P.-A. Sallier, M. Stäuble

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 #35
Forbes.com
June 21, 2015
Are European Companies Ignoring E.U. Sanctions On Russia?
By Kenneth Rapoza

It's been nearly a year since sectoral sanctions were slapped on Russia for its involvement in helping create a frozen conflict in Eastern Ukraine. European and American companies banned financing of Russian energy firms, and banks. They banned any joint venture deals with Russian oil and gas companies that involved exploration and production, or the selling of technologies used in E&P. But if a string of memorandum of understandings signed during last week's St. Petersburg International Forum puts anything in the spotlight this week it is this: some very powerful entities in the E.U. have had it with sanctions.

For example, Gazprom, Shell, E.ON and Austria's OMV Group signed a memorandum last Thursday for a joint venture deal involving a new pipeline that will hopefully one day have the capacity to ship 55 billion cubic meters to European each year. That is bigger than the existing Nord Stream pipeline that takes Russian gas westward.

"Extra gas transmission facilities along the shortest route connecting gas fields in Russia's north to European markets will provide for higher security and reliability of supplies under new contracts," Gazprom CEO Alexey Miller said in a statement last week.

Gazprom shares have outperformed the Market Vectors Russia (RSX) exchange traded fund over the last five days, up 3.66% in dollar terms. The market is being reminded just how important this company is to keeping air conditions firing and baseboards heated throughout Europe.

On one hand, European energy companies are getting ready for the end of Western sanctions, which are  not expected to end until next January. On the other hand, lawyers at these firms are working overtime to make sure they're successful at  loopholing the E.U.

Ben van Beurden, CEO of Shell, said Gazprom will remain an important part of Europe's energy matrix for some time to come. "Natural gas will remain an integral part of the European energy mix, that's why such new projects are important to satisfy the demand for energy carriers, especially with an account of the declining domestic gas production in Europe," he said.

Shell and Gazprom also signed an Agreement of Strategic Cooperation last week. The document provides for developing the strategic partnership between Gazprom and Shell across all segments of the gas industry, from upstream to downstream, including a possible asset swap.

Absent from the St. Petersburg Forum were any announced deals with American oil and gas.  ExxonMobil has been cut out of its $700 million joint venture with Rosneft in the Kara Sea because of Washington's sanctions against the company. Meanwhile, its European rivals are muscling in on one of the cheapest places in the world to drill for hydrocarbons.

The St. Petersburg International Forum, which concluded in the northwestern Russian city on June 20, is a testament to how Russia remains a one trick pony. The deal making is all Gazprom and Rosneft. It's as if Russia's private sector, including investor favorites like pay processing firm Qiwi and Russian supermarket player Magnit, does not exist.

Gazprom also inked a sanction breaking 300 million euro loan from UniCredit Austria, state media reported on Sunday.

Last July, the E.U. banned its companies to sign any new financing deals with Russia. In September, the E.U. placed even more restrictions on Russia's access to E.U. capital markets. The sanctions state that individuals and corporations from the E.U. are banned from providing loans to five major Russian state-owned banks, including Sberbank and VTB Bank, and the three state owned energy companies, of which Gazprom tops the list.

The September sanctions, which went into effect on the 12th of that month, said that companies could no longer provide services related to the issuing of financial instruments, including broker relationships.

In addition, certain services necessary for deep water oil exploration and production, arctic oil exploration or production and shale oil projects in Russia were also banned.

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 #36
Stratfor.com
June 23, 2015
Conversation: The Standoff Between Russia and the West Over Ukraine

Video Transcript

Lauren Goodrich: Hello, my name is Lauren Goodrich, and I'm the senior Eurasia analyst here at Stratfor. I'm joined by Sim Tack, our military analyst, and today we're going to be discussing Russia, the West and the ongoing standoff over Ukraine. So Sim, today is the next round of foreign minister talks in Paris between the Normandy four, so Ukraine, Russia, France, Germany and Ukraine. And going into these talks, Russia made it very clear that it does not want the United States to be part of these talks. And this comes right as the United States has a senatorial delegation inside of Ukraine meeting with Poroshenko, who keeps saying that Russia is escalating on the ground inside Ukraine. So, Sim, are we actually seeing an escalation on the ground?

Sim Tack: We actually have seen a relative escalation over the past two weeks in eastern Ukraine. It's important to qualify that what we are not seeing is a return to large military offensives where, you know, the separatists or the Ukrainians are trying to recover large portions of terrain. What we have seen, however, is a general escalation of the number of ceasefire violation incidents, and we have also seen the separatists and Ukraine actually push equipment that they were supposed to have withdrawn under the Minsk II agreement, they've basically been pushing those back to the front lines, and we've seen them use those again. And quite notably today has actually seen a relative decrease in that number of violations, which could potentially be related to the start of the Normandy talks, although there are several dynamics playing into each other there that define the level of intensity on the front lines.

Lauren: Now is this just on the Ukrainian side, I mean, on the Russian side or is Ukraine as well, both ramping up?

Sim: We are seeing both sides conduct activities that they weren't conducting before. One of the big questions, of course, is who shot first. There is one story line as told by the Ukrainians that has the separatists ramping up their activities and Ukraine of course has to respond to this to maintain their defensive positions around them. Of course, from the separatist side, their claim is that it is the Ukrainians that are trying to escalate the situation and restart an offensive. That particularly is very difficult to pinpoint, and on a tactical level, in different locations along the front line, that might actually be different. Like, in some places Ukrainian forces might be breaching the cease-fire towards the separatists, while it would be the opposite in other locations.

Lauren: Now we're seeing this as Russia is stepping back and shaping the perception of what's taking place on the ground within the negotiations in the Normandy four, in that Russia's not looking for an immediate agreement anymore. Russia initially from what we could've seen, was really pushing for an agreement on Minsk, because it needed sanctions lifted on Russia from the EU and from the United States.

However the EU has now said sanctions are going to be in place for at least another six months. The United States has given no indication of lifting sanctions. And so because of this Russia is more comfortable in keeping the pressure inside of Ukraine tactically. But, at the same time, it is shaping the perceptions going into these talks that negotiations are going to be going for a very a long time, and that these negotiations aren't just about what's happening in eastern Ukraine, but it's the larger Western-Russia standoff, in that you have Presidential Administration Sergei Ivanov say, "There will be no easing of tensions between Russia, the U.S. or the West unless there's a settlement in Ukraine." And then you have people like Security Council Chief Patrushev say the United States is aiming to actually collapse Russia via Ukraine.  And so it's not just about Ukraine anymore. It's a much wider discussion going on between Russia and the West. And we're also seeing this from the United States' perception, in which the Pentagon has indicated that they're settling in for a long standoff now. This is not just about Russia and the United States negotiating over Ukraine, but this is about the greater U.S. versus Russia in the context of Eurasia as a whole. And so what are you seeing as far as tactically between NATO and Russia outside of Ukraine?

Sim: Actually what you're talking about there from the Pentagon's perspective, one of the major things they have done is they continue to push forward with the deployment of forces to eastern Europe. So basically the United States will be rotating a brigade-sized unit through several different exercises with local countries there also depending on the NATO framework that is established there.

Lauren: And so this is part of the greater ramp-up that we have seen in tensions between NATO and the United States and Russia over the past year since the regime change in Ukraine, correct?

Sim: That's correct. And we've also seen NATO itself as an organization conduct similar moves. We've seen the Wales summit last year in September decide on expanding the size of the NATO response force, which is about to double, as well as setting up a separate response force that will actually have certain units pre-deployed in Eastern Europe.

Lauren: So it seems that we're not going to see any breakthrough in either the talks between the Normandy four or between the United States and Russia anytime soon. It seems that tensions are going to remain pretty heightened for the foreseeable future. Very interesting information, Sim, thank you.  And thank you for watching. For more information on this topic, please go to Stratfor.com.

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