#2
Deutsche Welle
July 19, 2015
Russia less-than-charitable toward charities
Tough economic times and a law that labels organizations that receive funds from overseas as foreign agents is taking a toll on charities, writes Fiona Clark in Moscow.
 
Sometimes you can see a perfect storm forming. A law that calls those who receive funds from outside the country 'foreign agents,' an economic downturn that's seen the market contract by 10 percent with no end in sight and on top of that, sanctions that have seen the value of the ruble plummet to, depending on the day, anywhere between 25-50 percent of its former value. It's a dangerous combination if you're a charity, as Dmitry Zimin, the founder of one of Russia's largest telecommunications companies has found.

Back in 2002 he started a foundation called Dynasty which supported science students and projects. His belief was that Russia's strength and future lay in the sciences and he put his considerable wealth where his mouth was and this year was set to dedicate some 435 million rubles (7 million euros) to supporting projects in that sphere. But, he made a mistake. He kept his funds off shore and has now found himself in rough seas: labelled a foreign agent.
Likening the move to having someone "spit in your face" the benefactor has decided he's not going to come to a Russian court and defend himself against the allegations, instead he'll simply stop funding the projects and the losers will be Russian science and science students.

"Harmful" law

435 million rubles is no small amount and for the first time some people who are close to the government are saying out loud that this law is akin to cutting Russia's nose off to spite its face.

The head of Russia's main business lobby, Alexander Shokhin, told Business FM radio, "If NGO's like this end up on the list, there's something wrong with the legislation." And President Putin's former finance minister, Alexei Kudrin, tweeted that the law was "harmful."

For Shona McGrahan, who has spent many years' working on a voluntary basis for various charities in Moscow, the rot began with the foreign agent law but the economic downturn has made life that much harder again. The foreign agent law meant making serious administrative changes to various charities structures which included transferring funds into local Russian trusts. Many of the people who'd had a long time involvement in running the charities simply gave up because it became too difficult and as such experienced people were lost from the causes they'd once wholeheartedly supported.

In other parts of the country, programs, like those that provided safe sex education to sex workers in St Petersburg, simply shut down.

Since that law was introduced in 2012 the economy has taken a downturn. That's left charities that were already worrying about where they stood legally now worrying where the next ruble is coming from. The International Women's Club's (IWC) co-chair in charge of charities, Katalin Dióssi, says the fund raising committee has had to work harder to come in on target. The IWC supports 17 different charities in and around the Moscow region. They include feeding the homeless, treatment for burns victims, supporting orphanages and providing education for those who are about to leave the institutions so they can find good jobs.

Fundraising difficulties

Dióssi says the international community is continuing to support charities but they are having to broaden their base and attract newcomers as the level of donations drops or as previous benefactors pull out.

"We never had much in the way of corporate donations. Rather it was embassies, the diplomatic community and private individuals. Some embassies are pulling out so we will try to attract new ones. This way we hope to keep up the level of funds."

Some of the charities the IWC supports are facing tough internal decisions themselves in terms of the programs they provide or the number of staff they employ.

One charity that helps educate orphans who are about to leave their institutions is said to be considering cutting staff and as such the number of classes it provides. Another which supports and orphanage for disabled children is wondering if it will still have enough funds to pay for visits by physiotherapists who have managed get previously bed ridden children out of cots and on their feet and walking.

Skyrocketing costs

And then there's the triple-whammy of the severely devalued rouble. "Vera" (which means "Faith") is a charity that supports the terminally ill and their families. It provides in-home care and equipment like ventilators to terminally ill patients so they can get out of intensive care and go home. It also helps pay for the treatment and accommodation costs for families with children in hospital and has 30 hospices across Russia that are currently caring for more than 300 families. But its PR spokesperson, Elena Martyanova, says they too are under pressure to make ends meet as the weaker rouble has meant prices have skyrocketed.

"The cost of the medical devices and machines that we buy for children with incurable diseases (such as ventilators, wheelchairs intended for patients with severe neuromuscular disorders) has risen considerably with a price hike from 30 to 50 percent," she says.

But because Vera is helping very vulnerable people the charity has decided not to reduce the amount of aid it supplied but instead to redouble its efforts to raise funds. "This year we have to bring in twice as much money than in the past, about half a billion rubles."

That's a very big sum of money, especially in a tightening economy. And it seems ludicrous that those who do have deep pockets, like Zimin, are now forced to withdraw their generosity due to poorly drafted laws.

Zimin said the move was a type of blind patriotism from a country that can't tolerate criticism and won't learn from its mistakes to improve its lot.

One of his beneficiaries, bioengineer Michael Gelfand, said it showed "the authorities themselves can no longer control their own machine for keeping control." Either that "or they believe everything that moves or breathes has to be crushed."
--
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.

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 #3
www.rt.com
July 17, 2015
A glimpse inside Russia's orphanage system
By Tina Berezhnaya, RT charities coordinator

RT has been running charity programs aimed at helping disadvantaged children and other people in need. For the past 10 years we have been friends with two orphanages and took part in many charitable initiatives. We are happy to share our experience in charity work and the amazing stories of people we met on this path.

I often hear questions on how the orphanage system in Russia works. So here is a short introduction to both the mechanics and the reasons why children find themselves in care homes.

There are two major types of social institutions taking care of children who need help in Russia. One is called "rehabilitation centers for support and psychological assistance" - this is the place children are taken to if the situation requires. There they can stay up to six months while social workers and psychologists work out their situation at home. Sometimes children are sent into the orphanage system after the loss of parents or any other carer, but more often they are so-called "social orphans" with a family, but the situation there is so deplorable kids are better off in a care home.

Drinking, drug usage and criminal activity are high on the list of reasons for children being placed in state-run homes. But sometimes families face psychological problems - for example, teenagers and their parents run into a conflict so devastating they need to live apart for a while to sort out their issues with professional help. There are all sorts of circumstances as to how children become orphans. There was one particular story involving a family of refugees - a mother with two children was travelling by train. The mother died during the trip of some undiagnosed condition. These are the situations where rehabilitation centers step in: they welcome children to their new temporary home and give a helping hand to struggling families.

At these facilities, children receive medical care, education, psychological help, and the family gets psychological consultations and often the help of a social worker in finding jobs, improving living conditions, and simply getting their lives together.

There are two ways children can leave the rehabilitation centers: They can return to their family once the problems are solved, or relocate to an orphanage if the family situation has not improved. We are helping a rehabilitation center and an orphanage in the same area, and we've seen several children from the center moving on to a care home, so that we stayed in touch and helped out all their life "in the system".

Orphanages are the homes where children live until the age of 18 - or until they enter a college or a university and move to the dorms there. Most orphanages are trying to create cozy, close, welcoming environment filled with love, respect and trust. Children live in small groups in a family-like setting where siblings are close and given some personal space. Sometimes orphanages have a school of their own, especially those with kids that require special attention, but more often kids attend a regular school with all the other children in town.

During their stay in the orphanage children receive a small allowance, and it is normally deposited into their bank accounts. The children cannot access the money until they are 16. This, however a great help when starting a life on their own, is also a problem: kids grow up without understanding how money works and no idea as to the price of things. Often teachers and social workers have to take them shopping for the first time so that they see how fast all the money can be spent. Still, often we see that boys and girls receive their allowance and spend all of it at once, thus finding themselves in very difficult situations.

Children that have nowhere to go after they graduate from school are given a one bedroom apartment by the state, as mandated by Russian law. To make sure all the property is provided and paid for, and the children move into their own homes guaranteed by the state, most orphanages work with welfare offices or have a social worker with a legal education on staff. Teaching children to take care of their property, paying the bills etc. is also the job of orphanage staff.

Orphanages are not prisons: anyone can visit and all the contact information about every single care facility is published openly on the web. Relatives of the children in the orphanage, people willing to adopt children, or volunteers like us visit regularly. In the past few years we are seeing a very noticeable increase in the number of people adopting children. And I'm happy to say that some of our volunteers did so, too, and now come visit with their adopted children.

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 #4
Will ghost towns like US Detroit appear in Russia?
By Lyudmila Alexandrova

MOSCOW, July 16. /TASS/. Will ghost towns like Detroit in the United States appear in Russia? The problem of single-industry towns inherited by Russia from the Soviet Union is far from being resolved, despite the efforts, which the authorities are taking. In the current crisis conditions, it is unrealistic to hope for considerable progress in this area. The resettlement of these towns is hardly realistic either, experts say.

Mono-towns are communities, which exist only thanks to one or several enterprises. The Russian government's resolution suggests that there are currently 319 mono-towns in Russia. They are divided into three risk zones. Single-industry towns, which are in the most complex social and economic situation, are referred to the "red zone." Compared with 2014, the number of crisis-stricken mono-towns has increased in the country. Last year, 75 single-industry towns were in the "red zone" and now their number has risen to 94, Deputy Economic Development Minister Alexander Tsybulsky told Rossiiskaya Gazeta newspaper.

Russian state corporation Vnesheconombank established a Fund with capitalization of almost 30 billion rubles last year to assist the development of single-industry towns.

The Mono-Town Development Fund (MDF) allocates financial resources for launching real infrastructural and investment projects for building gas-fired boiler houses, sewage and water intake systems, roads, new electric and thermal power facilities that create new jobs.

However, only four out of 94 "red zone" mono-towns will receive financial support from the MDF for infrastructure construction: these municipalities are in the most difficult situation that requires immediate measures, Tsybulsky said.

The authorities can help the other single-industry towns by offering them a possibility to get the preferential regime of an advanced social and economic development territory. This mechanism pursues the same goal as the Mono-Town Development Fund: to create new jobs alternative to the town-forming enterprise.

The problem of single-industry towns in Russia has come to the fore after a high-profile incident in Pikalyovo. Residents of this mono-town in the Leningrad Region in northwest Russia blocked a federal highway in the spring of 2009 in protest against their desperate position, which exacerbated after the local town-forming enterprise was shut down. The situation prompted then-Prime Minister Vladimir Putin to interfere to help resolve the problem.
Since then, the Russian government has started for the first time ever to conduct a comprehensive policy towards single-industry towns: the state has decided to switch from allocating support funds for these municipalities to their targeted subsidizing.

Russia's Economic Development Ministry has no plans for abolishing mono-towns so far, the deputy economy minister said. According to him, the model of "managed compression" offered by experts, which envisages providing jobs/resettling residents along with deactivating or closing down a town-forming enterprise and optimizing the community's territory while preserving its social facilities, is "a rather good method," if a mono-town has no development prospects.

The state's active support for single-industry towns launched after the economic crisis of 2008-2009 and the Pikalyovo events has not produced any special effect because it was not well-thought-out, Director of the Institute of Regional Studies and Urban Planning at the Higher School of Economics Irina Ilyinykh told TASS.

"And now, considering the current crisis manifestations in the economy, the problem will only exacerbate as some industries, for example, car-making, are experiencing a decline. The problem of mono-towns can't be resolved separately from restructuring the entire economy," the expert said.

"The problem will be very acute. State support, on the one hand, is needed. But on the other hand, it demotivates the local authorities. In this situation, support should be provided to towns, which can not only live with this money but also stimulate growth. This primarily relates to the population: if there are a lot of young and well-educated people, then new ideas can be put forward," the expert said.

No practice exists in Russia for resettling mono-towns, the expert said.

"It is absolutely unreal to tell residents: start resettling immediately. Similar programs abroad are normally designed for many decades," she added.

So, most likely, this will be the process of the natural demise of towns with a small population size, the expert said.

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 #5
Moskovskiy Komsomolets
July 9, 2015
Former Kremlin internal policy chief interviewed on Putin's role in politics
Interview with Oleg Morozov, former head of the Russian Presidential Staff internal policy administration, by Mikhail Rostovskiy: "Testimony of retired Kremlin official Oleg Morozov"

In the spring of 2015, a kind of mini-earthquake occurred in the closed world of the Russian top political elite. Oleg Morozov, the holder of the nonpublic, but exceptionally influential post of chief of the Kremlin's internal policy administration, unexpectedly resigned "for family reasons." Behind this opaque formula there usually lies either a scandal or disfavour, or something else just as unpleasant. But in the case of Oleg Morozov, a former long-serving first deputy speaker of the State Duma, "family reasons" turned out to be precisely that.

Although he has given up his gruelling daily work in the Presidential Staff because of the need to devote more time to his young family, Oleg Morozov remains an active and influential member of the same Kremlin cohort that he has formally quit. Oleg Morozov gave his first major interview in his new guise to Moskovskiy Komsomolets.

[Rostovskiy] Oleg Viktorovich, last year your close political comrade in arms, Vyachelsav Volodin, first deputy leader of the Russian Federation Presidential Staff, stated: "If there is Putin, there is Russia. If there is no Putin, there is no Russia." Has a cult of personality officially appeared in our country?

[Morozov] Vyachelsav Volodin has already answered this question himself dozens of times. This formula by no means denotes a cult of personality. It means that in the country there exists a leader who is the generator of virtually all the fundamental basic decisions on the state's paths of development. Many people believe that the strategic ideas that the authorities promulgate are the plans of some kind of high-browed apparatchiks. But it is Putin himself who, to a significant degree, first gives expression to these strategic ideas - either publicly, or privately. Volodin's sentence, in my understanding, means this: There is a leader, there is a pivot on which the country turns. There is a rating of trust in the authorities that is the guarantor of internal political stability in the state.

[Rostovskiy] If Putin is the pivot on which the country turns, is not this system, by definition, very vulnerable? After all, the president is merely a human being who is not insured against anything.

[Morozov] Yes, in a certain sense, this system is vulnerable - in the respect that you mentioned. We are all human beings, we are all mortal. And we can only wish Putin long years of life and health. But the invulnerability of the political system that the president is building lies in the following: Putin is creating not a system of personal power, but a system in which huge mechanisms are beginning to operate. The most obvious example is the Army. Remember how, in 1999, Putin, by his own admission, gathered with difficulty the few combat-capable divisions from across the country that, after the attack by gunmen on Dagestan, left to fight for the unity of Russia in Chechnya? Compare this with the current Russian Army, which has once again acquired a sense of its own dignity and self-belief. We cannot know whether Russia will or will not have Putin tomorrow or the day after tomorrow. But we can be confident that Russia will still have the mobilized and well-equipped Army that has been recreated under Putin.

[Rostovskiy] I am afraid that not everyone will agree with your thesis that Putin "is not building a system of personal power." Even you yourself admit that the president is "the main generator of ideas on the country's paths of development." Surely this is the sure sign of a system of personal power?

[Morozov] I wish to answer your question with another question: Is it a long time since you last re-read the Russian constitution? Not long ago, you say? In that case, you should recall Article 80, whose third paragraph says: "The Russian Federation president, in accordance with the constitution and the federal laws, determines the main directions of the state's domestic and foreign policy." This is precisely what Putin does - he does not have the right not to do so. Russia is not simply a country with centuries-old traditions of a strong central authority; Russia is a country that, in principle, cannot exist without a strong central authority. Attempts to weaken this strong central authority lead by no means to the strengthening of democracy in the state, as certain people naively hope. They lead to the intensification of centrifugal tendencies in the country and create a threat to its stability and territorial integrity.

In the Presidential Staff, I had, among other duties, the following interesting duty. It was not always convenient for Volodin, because of his status, to meet with certain representatives of the opposition. The chief of the internal policy administration was less inhibited in this respect. And when Volodin instructed me to do so,  I met with Nemtsov, with Gudkov, and with Ponomarev. The lengthy conversations that I had with them sometimes brought me into a state of shock. Gennadiy Gudkov distinguished himself particularly in this respect. For example, he was able to declare to me: "Be ready in a month's time to remove your belongings from this office! Other people will be sitting here! We will be in command here!" I replied to him: "Gena, what country are you living in, are you in your right mind?" And he replied to me: "No, we will come and sweep you all away!" Surely this is not a battle for democracy? It resembles far more a banal battle for power for the sake of power itself.

[Rostovskiy] But are not our leaders overzealous when it comes to "preserving and strengthening a strong central authority in the country?" Was it not this very circumstance that led to the mass outbreak of social discontent after the Duma elections of December 2011?

[Morozov] Are you asking me about the deep-seated causes of [the] Bolotnaya [Ploshchad protests]? I am willing to answer you absolutely frankly - but without naming specific names: Bolotnaya was the result of a whole range of mistakes that were committed in Russia's political sphere in the course of X number of years before 2011. The chief of these mistakes was the following: They attempted to replace politics with a simulacrum thereof. They attempted to invent politics. They tried to play at politics. But politics cannot be played at. Politics is a thing that grabs you by the throat in an iron grip, and if you do not treat this seriously, it can strangle you.

At the crossroads of 2011-2, Putin saw that the previous political system, which was founded on the principles that I described above, was going off the rails, that it was not working. And Putin drew conclusions. Putin carried out serious political reforms. You can smile sceptically as much as you like at these words of mine. But you cannot deny the most important thing: The "Bolotnaya phantom" vanished like smoke. Three-and-a-half years ago, it was fashionable to state: Power is lying around on the Bolotnaya roadstead for anyone to pick up... So then, as has become clear, it was by no means lying around!

[Rostovskiy] Okay, let us talk about the political reforms carried out by the authorities, the essence of which fits into this same formula of Volodin's: "If there is no Putin, there is no Russia." Surely it is not possible to deny that Russia existed for many centuries before Putin, and, I hope, will exist for many centuries after him?

[Morozov] Of course it is not possible to deny this. I do not see any grounds for doubts here at all. Volodin's words are a metaphor that reflects very accurately the peculiar features of the current Russian political moment. But even the most accurate metaphor should not be interpreted literally. A metaphor should be treated as a metaphor - and in no other way. There is, for example, the famous utterance of the great German military strategist, Carl von Clausewitz: "War is the continuation of politics by other means." If you assess this statement as a metaphor, it is impossible not to recognize it as absolutely brilliant. But try to interpret this utterance literally and you will immediately run into a logical impasse.

Exactly the same goes for Volodin's remark. Before the interview, you asked me: Does it not follow from Volodin's formula that those people inside the country who do not like Putin do not have the right to regard themselves as "real Russians"? No, it does not follow. Volodin is responsible for internal policy. He knows perfectly well that there are people in the country who do not like Putin. One of his tasks is to work with the opposition. And he performs this task on the basis of the principle that there is a red line that no opposition figure may cross. This red line is: Do I, as an opposition figure, serve my country, or do I not? Nemtsov, whom I knew very well for many years, was an opposition figure who did serve his country. Yes, he did and said a great many things. He even went to Ukraine to work as adviser to [former Ukrainian President Viktor] Yushchenko, while understanding that the latter was a Banderovite [ultra-nationalist]. But he did not cross this boundary. But Kasparov now, from my point of view, has crossed this boundary. And Khodorkovskiy has crossed it too.

[Rostovskiy] I am forced, nevertheless, to repeat my question. Surely it is possible to be a Russian patriot and, at the same time, to have a sharply negative view of Putin?

[Morozov] No doubt, it is possible. But do you know what the trouble is? It is that politics is not a supermarket in which you can choose from 40 different kinds of cheese the one that suits you in all nuances and taste sensations. Politics is above all a tough and difficult choice. I wish to remind you of a nowadays semi-forgotten episode of world history. During the Arab-Israeli war of 1967, Israeli tanks stood very close to Cairo and could easily have taken it: the Egyptian Army had fled. But at this point, one leader of a great country - Leonid Brezhnev - phoned another leader of a great country - US President Lyndon Johnson - and threatened to send strategic aviation into the air. What happened after this? The Israeli tanks returned to their bases.

A few years after the events described, it is true, Egypt shafted the USSR and went over to the side of the United States. But it is not this that is important in the case in question. What is important is that our country was able to demonstrate its national interest to the world. But Gorbachev and Yeltsin were too weak to do this. They were leaders who brought the country to a historic defeat. As a result, people began to treat us as a state that could be presented with a fait accompli. The main thrust of Putin's activity is that he is changing this situation: He is returning to Russia the political weight that belongs to it by right. Therefore, whether you like Putin or you do not like him is your right. But remember that today it is precisely Putin who represents Russia's national interest in the world arena. Remember - and draw your conclusions from this.

[Rostovskiy] And you are sure that it was Gorbachev and Yeltsin who brought the country to a historic defeat? Surely they had to take the rap for what Brezhnev and Chernenko had wrought? Did not many things fall apart in our country even before Gorbachev?

[Morozov] I agree with you in part. But I partly disagree. Was it Brezhnev who forced Shevardnadze to hand over the shelf of the Barents Sea to the Americans in 1990? Why did Shevardnadze do this? When Gorbachev was promised that NATO would not draw nearer to our borders even by a millimetre, this promise was broken almost on the next morning. In Gorbachev's place, I would have got up and said: "Since this accord has not been fulfilled, all other accords are annulled." Why did Gorbachev not do this?

We withdrew troops from East Germany, abandoning everything, but the West did not keep its promises. And we did not manage to counter this in any way. Real politicians do not act like this. The point is not only that Gorbachev and Yeltsin possessed limited resources. A no less important factor in politics is one's mindset. Gorbachev and Yeltsin were psychologically attuned to defeat. They did not believe in their country and they infected their own population, and the rest of the world as a whole, with this lack of faith of theirs. You recall what the mood of Russian society was in the decade before last. No one believed in our country's prospects. Everyone expected that a few years would pass, and Russia would be no more, that it would be gobbled up!

And if Russians themselves did not believe in Russia, how could foreigners have believed in it? Everyone wiped their feet on us, including Zimbabwe - may that great country forgive me - because we ourselves created all the conditions for this. It is precisely because of this same factor that the recovery of Russia's international positions is proceeding so painfully today. When you firmly exclude someone from the reckoning, you are not ready to resign yourself to his return right away. This is what has happened with us. We were excluded from the reckoning. And now we are proving that it was wrong to do this.

[Rostovskiy] An atmosphere of mutual hatred is increasingly gathering among the politically active part of Russian society. Who is to blame for this, from your point of view?

[Morozov] I would dispute the word "currently" [Rostovskiy did not actually use this word]. In 2011-2, I sensed this atmosphere of hatred far more keenly - both as a person, and as a politician. I felt it myself, at first hand. We discussed this topic in a narrow circle. We talked about the fact that there were the techniques of the Maydan [Ukrainian-style public protest], the techniques of physically removing inconvenient politicians. I had an element of fear - not for myself, of course, but for my family and dear ones. If it suddenly began, would this steamroller not run them over too? I was very relaxed as to the fact it would roll over me. I am a politician, I have a thick skin, I am accustomed to this life. That was the kind of fear I had. Today, I no longer have this fear.

[Rostovskiy] You do not have fear, but our mutual friend Nemtsov is already dead. How can this be?

[Morozov] I do not even know what to say about the Nemtsov affair. I feel terribly sorry for Boris. He and I were in contact very shortly before his death; he came to see me and asked me to help him to resolve a certain problem. I helped him, and I still have his text message with the words "Thank you" to this day.

Boris was a person with whom I had a normal, open dialogue. What happened? Why was he chosen as the target of the hatred that dwells in certain people? I have no explanation. An enormous number of people do not switch their disagreement with someone or other into hate mode. Are there few people with whom I disagree? I disagree with a very large number of people in politics... It is necessary to find the murderers and to take care to ensure that no more such people possessed by hatred are found among us.

[Rostovskiy] Many people, including [Boris Nemtsov's daughter] Zhanna Nemtsova, believe that this murder indicates that it is no longer possible to engage in legal opposition activity in Russia safely. What is your comment?

[Morozov] I knew Boris very well. And I think that Boris would not subscribe to these words. Boris engaged in legal opposition activity, he was a deputy of the Yaroslavl legislative assembly, he wrote books, he spoke publicly, and he was a participant in an enormous number of rallies. I did not even take seriously his well-known words: "Mom, I am afraid that they are going to kill me." I do not think that Boris seriously thought that such a thing could happen to him. I acknowledge Zhanna's grief with respect. But I do not think that Boris, as a politician, would agree with her.

[Rostovskiy] Why are the Duma elections being moved forward from December to September? Is this not a sign that the authorities are afraid of putting off a real competitive election battle?

[Morozov] The phrase "the authorities are afraid of a real competitive election battle" appears to me to be absolutely inappropriate in the current political conditions. How could the authorities be afraid of elections given these poll numbers of Putin's? As for the reason for moving the elections from December to September, it is as follows. It is absolutely improper when the previous parliament adopts a budget for which the next Duma convocation has to answer. For me, as a parliamentarian of 18 years' standing, this was the whole problem. The previous convocation of the Duma adopts the budget. A new Duma comes along and states: We do not like this budget. We want to change this and that in it. The government replies to them: Sorry, the federal law on the budget has already been adopted. And in the framework of this law, we can no longer rectify anything. We had to wait a whole year to tell the government: Come here, you cannot slip away from us so easily now. The budget should be adopted by the people who will be responsible for its implementation.

[Rostovskiy] Surely it is not possible to seriously hold an election campaign during the summer, when people's thoughts are entirely devoted to vacations and relaxation?

[Morozov] I have been through four campaigns in a Duma single-seat district and three list-based election campaigns. And I have not discerned any difference from what time of year the election is held. If you know how to conduct an election campaign, you will hold it in the winter, in the summer, in the autumn, during the morning, or even at night. And if you do not know how to do so, then sorry, nothing will help you.

[Rostovskiy] During your time in the Presidential Staff, you promised that the country would have exclusively fair and transparent elections.. The election in Balashikha, after which a monitor had to have his spleen removed - is that a "transparent, fair election"...?

[Morozov] An election after which a monitor loses his spleen cannot be fair and transparent by definition. The battle for transparent, fair elections is, unfortunately, a lengthy and painful process. But the country is proceeding along this path. The Presidential Staff gives absolutely rigid guidelines: No one is to be removed on trumped-up pretexts, elections are to be honest and transparent, and there must be no stuffing of ballot boxes or falsifications. If anyone is caught, the election is to be cancelled and held again. The guidelines are rigid and firm, and are here to stay. A criminal investigation is being held into the case of the attack on the monitor in Balashikha. If a link between this incident and the election is confirmed, measures, I am confident, will be adopted. I do not currently work in the Presidential Staff. But I am 100-per-cent convinced of this.

[Rostovskiy] Do you not think that the real election battle in a region ends the moment when this or that figure is appointed by the president to the post of acting governor?

[Morozov] As the chief of a Presidential Staff administration, I took personal control of the election campaign of a certain young gubernatorial candidate. He won. But before this, he and I met every week and sat and made changes to his election programme. We did so because we saw that the election campaign was going badly. The candidate, who had been nominated in order to spite him, had chances of "pulling a number" on him.

In some places, the candidate is so obvious and clear to the voter that no questions arise there. But in at least three territories, personal control had to be taken of the governors' election campaigns from Moscow. There were doubts that everything would turn out well. Three governors of those proposed by the president had real chances of losing.

[Rostovskiy] But they did not lose, after all.

[Morozov] They did not lose because expert political strategists actively joined the election campaign and helped the official candidate to win. What is so rotten about this? The nomination by the president of someone as acting governor is preceded by a very serious procedure, a very real audition process, and a whole system of checks.

[Rostovskiy] So real elections in our country take place with one voter [Putin], the rest are a formality?

[Morozov] Elections in our country are always real. It is possible to commit a mistake and lose out of the blue. Although, of course, the president always nominates a candidate who should win. Answer me the question: Why should the president nominate a candidate who will lose?

#6
http://readrussia.com
July 17, 2015
Putinism Starts to Eat Its Own Children
By Mark Adomanis

I've long been of the opinion that the best way to understand Putinism, at least in the economic realm, is as the apotheosis of pragmatism. In economic matters, it's genuinely hard to distinguish much of a consistent ideology. Yes Putin has always expressed a belief in a robust role for the state (this is Russia, after all) but the size, nature, and mechanisms through which this role is manifested have been, and are, constantly in flux.

It can be tired ground over which to trod, but Putin started off the first term of his presidency with a range of liberalizing economic reforms, including huge tax cuts and significant changes to economic regulation. These reforms never went as far as many hoped, but Putin has never undone those tax cutting and red-tape-trimming reforms, much less the far more significant liberalizing reforms that were ushered in during the chaotic reign of Boris Yeltsin.

Even today, as political and economic regression has advanced to the point that it can no longer be denied, prices for Russian consumer goods are set in the free market, not by state bureaucrats in a ministry in Moscow, investment decisions are taken primarily by private actors, and Russia has a fully convertible (if depreciating) currency.

It is possible to get lost in the details, to focus on a particular sector (like natural gas), a particularly nasty bit of expropriation (like Yukos) or a particularly poorly-run company (like Rosoboronexport), but at a high level what really seemed to distinguish Putinist economics was the modesty of its goals.

The Kremlin would try to influence particular outcomes, yes, but it seemed to have resigned itself to a world in which Russian companies did significant business abroad, raised capital on stock exchanges in New York and London, and borrowed money from banks like JP Morgan and Citibank. There were always noises about "economic independence," but there weren't any actions to back it up. The powers that be gave the distinct impression that there was no use in fighting back against the overall tide of globalization, and so they didn't really try or, if they did, at least not in any substantive fashion. Russia's 2012 entry into the WTO seemed to represent the culmination of a decade's long process in which the country had, through fits and starts, gradually became integrated into the broader global economy.

This process of fitful integration, unfortunately, has been moving in reverse for much of the past year. If anything, the regression seems to be accelerating quite dramatically.

A recent article in the New York Times, while putatively about the travails of civil society groups amidst a renewed attempt to target "foreign agents," actually shows that the Russian state has, once again, grown far more ambitious in its aspirations. Even more alarmingly, the article suggests that this is no longer mere idle chitchat, and that after years of idly bloviating the Kremlin is finally putting its money where its mouth is.

The NYT article referenced above describes how Dynasty, a NGO which helped fund the notoriously cash-strapped Russian scientific research industry, was labeled a "foreign agent" after allegedly giving money a liberal political organization. Now Dynasty's is not some creation of the State Department of DFID: its founder and benefactor is actually a well-known Russian billionaire. The money was labeled as "foreign" because it came from offshore banks, though if we're being honest with ourselves funneling money through offshore banks is now as quintessentially Russian as pelmenis or black tea. Dynasty's actual involvement in politics was minimal, and if anything its activities (basically, subsidizing the salaries of Russian scientists so that they didn't feel the need to emigrate in order to have a decent life) actually helped the Kremlin. For many years Putinism was comfortable with these kinds of deals, allowing groups a limited amount of freedom so long as their actions were broadly supportive of the country and its international position. The benefits of having more scientists, in other words, were worth the cost in giving up direct control.

That spirit of nose-holding pragmatism, however, is increasingly lacking. The article notes that not only did the Russian government hound Dynasty until its board voted to shut down, but that Russian lawmakers have recently released a preliminary list of 12 additional NGOs that would be banned under a "patriotic" list. Many of these organizations, several of whom like the MacArthur Foundation have not only been active in Russia for decades but have no obvious political connection, quite obviously benefit Russia in that they provide various kinds of opportunities for Russians in Russia that would otherwise not exist.

It might not be much consolation, but the path of economic, social, and scientific autarky on which Russia now appears to be heading, symbolized so eloquently by the demise of Dynasty, is a dead end. We've read this script before, and we know what happens. Russia can either choose to be part of the modern world or it can choose to live in a fantasy of its own creation. No, this doesn't mean that Russia has to suddenly cave in to every Western demand, but it does mean that eventually the people in the Kremlin will snap back to reality and realize that in the world we inhabit the country simply cannot afford so many own-goals.

My only hope is that this process of re-adjusting to reality happens sooner rather than later, but I have little confidence this will be the case.
 

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 #7
Moscow Times
July 15, 2015
Poverty Hits 'Critical' Level - Government

Poverty in Russia has reached "critical" levels, a deputy prime minister said, after government data showed a sharp increase in the number of people living below the poverty line.

"Unfortunately, predictions are coming true: According to official statistics, the number of poor people has reached 22 million. This is critical," Deputy Prime Minister Olga Golodets told news channel Rossia-24 Monday night, Interfax reported. Golodets is responsible for overseeing the government's social policy.

Earlier, a report by state statistics service Rosstat said that the number of people living below the poverty line reached 22.9 million in the first quarter of this year, compared with 19.8 million in the same period in 2014. Russia had a population of 143.75 million people at the end of 2014, Rosstat said.

Rising poverty levels have been driven in part by inflation, which hit a 13-year high of 16.9 percent earlier this year. Price increases were fueled by an embargo on food imports from countries that sanctioned Moscow over its role in the Ukraine crisis and a steep fall in the value of the ruble, which raised the cost of imported goods and services.

Inflation eased to 15.3 percent year-on-year in June, according to Rosstat. Real wages, meanwhile, were down 7.3 percent in May compared to the same period last year.

While the official unemployment rate was a relatively low 5.6 percent in May, according to Rosstat, partial unemployment is rising fast. The number of part-time workers rocketed up 8 percent in the first week of June, Labor Minister Maxim Topilin said earlier this month, with more than 331,00 people officially working part time.

Russia's economy is expected to shrink by 3 percent this year as Western sanctions and a steep fall in the price of oil, Russia's top export, strangle investment.

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 #8
Moscow Times
July 20, 2015
Russian Government Failing to Stem Rising Poverty
By Anna Dolgov

The government is failing to protect Russians who are falling into poverty at the fastest rate for nearly two decades, an economist said in an interview published Monday.

The soaring inflation that followed Western sanctions against Moscow for its annexation of Crimea and meddling in eastern Ukraine is eroding the value of Russian's wages, while the country's economy is in recession.

When adjusted for inflation, wages were in worth 14 percent less in May this year than in the same month in 2014, the head of the income and living standards analysis center at Moscow's Higher School of Economics, Liliya Ovcharova, said in an interview published on the website of Kommersant, a business daily, on Monday.

"We had not seen such a decline for 17 years prior to that, since 1998," she was quoted as as saying. Official data published Friday showed that the pace of the fall slowed to 7.2 percent in June.

Slipping wages are causing poverty, which fell rapidly in the decade and a half after Russia's economic meltdown in 1998, to start climbing. The number of people below the poverty line reached 22.9 million in the first quarter of this year, compared with 19.8 million in the same period in 2014, according to state statistics service Rosstat.

Russia avoided a significant increase in poverty during its previous economic crisis in 2008. That shock came after a period of rapid economic growth, allowing the government to raise the minimum wage and social benefit payments to help the nation weather the turmoil, Ovcharova said.

"This time we have real wages falling for seven months straight, but the government so far has not taken any measures to support the poor," she was quoted as saying in the interview with the Kommersant publishing house's Ogonyok magazine.

Russians' real wages began to decline last year, when they shed 10 percent of their value compared to 2013, according to official data.

Total household incomes have fallen more slowly. In the first three months of this year they declined by less than 3 percent, because Russians were selling their foreign currency savings, and official statistics count those sales as income, Ovcharova was quoted as saying.

But household real incomes also began to slide in April, and went into a "dramatic" decline in May, losing 8 percent of their value compared to the same period in 2014, she said in the interview.

The savings that Russian families hold in foreign currencies are likely to run out in "five to six months," Ovcharova said, estimating that household incomes in July would likely fall 8-10 percent below their levels in the same period last year, and the decline would further gain pace in August.

The largest numbers of people falling below the poverty line are among those who work in "low paying sectors of the economy," such as retail, restaurants, agriculture and construction, "and, of course, people who have lost their jobs," Ovcharova was quoted as saying.

State sector employees have also been hit thanks to below-inflation pay rises, she added.

The official unemployment rate was a relatively low 5.6 percent in May, according to Rosstat, but partial unemployment is rising fast.

"A particular feature of the current crisis is that poverty is growing even in large cities," Ovcharova said, Kommersant reported.

Russian pensioners have not so far been affected as badly by the crisis as they could have been, because the government increased pensions by 11.2 percent early this year - a raise that partly made up for inflation, which has not fallen below 15 percent since the start of 2015, said, Kommersant reported.

Other types of social benefit payments were raised by 5.5 percent, Ovcharova said.

Inflation hit a 13-year high of 16.9 percent earlier this year, driven by a ban imposed by Moscow on certain food imports from countries that sanctioned it for interfering in Ukraine and the weakening of the ruble. Inflation stood at 15.3 percent in June.

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 #9
Wall Street Journal
July 15, 2015
How Russia Could Become a Food Superpower
By Ariel Cohen
Ariel Cohen (@Dr_Ariel_Cohen) is director of the Center for Energy Natural Resources and Geopolitics at the Institute for the Analysis of Global Security and principal at International Market Analysis, a political risk advisory firm in Washington, D.C.
[Chart here http://blogs.wsj.com/experts/2015/07/15/how-russia-could-become-a-food-superpower/]

Russia could be a food superpower, given its vast soil and water resources. It still may become one, but the question is whether the food will be Western or Chinese.

Since the beginning of the Ukrainian conflict, the Russian economy has been experiencing the negative effects of international sanctions and Russian counter-sanctions, including Moscow's ban on the import of some Western foods, including cheeses, meats and wine.

The effect on Russian agriculture has been deleterious, as the "import-substitution," promised by the Kremlin, failed to materialize. Herein lie great opportunities for American and other international agricultural and food companies.

The potential is huge. The Russian Empire was a major exporter of grains and eggs to Europe in the late 19th-early 20th century. However, after agricultural collectivization, including starvation of the peasantry under Stalin, the U.S.S.R. became a major importer of grains.

The introduction of market economics in the 1990s brought new hope to the sector as yields rose.

However, Russia's vast reserves of land and water did not ensure the prosperity for the new generation of the country's farmers as food quality remained lacking and productivity lagged behind.

The reasons for Russia's underperformance include opaque property rights, corruption, the lack of rural agricultural training extensions, weak agricultural financing, and inadequate infrastructure.

Things improved somewhat in the Russian food industry in the last 25 years. The introduction of Western technologies and management, as well as investments of Western capital have helped the Russians to forget the queues at grocery stores-a common sight in Soviet times. However, consumers are now grumbling over the Moscow-imposed "counter-sanctions", including bans on imported meat, fish, fruit, vegetables and milk products from the U.S., the European Union, Norway, Canada and Australia.

There are signs that Russia is looking East for agricultural solutions. Recently, a subsidiary of the Chinese investment firm Huae Sinban announced plans to lease more than 280,000 acres of land in the Russian Far East. Russian officials say the deal could be worth up to $448 million over 49 years.

An alternative strategy would be to invite U.S. and other foreign companies to set up industrial agriculture in the "Black Earth" breadbasket, in Siberia, in the South (such as the Stavropol and Kuban region), and in the Volga basin. Some Western companies are already operating in Russia, making brisk business in the food processing sectors, including dairy, meat and confectionary. Wholly-owned Russian subsidiaries and non-U.S.-based companies could turn Russia back into the agricultural superpower it was over 100 years ago-but the Kremlin would have to liberalize market entry to make that happen.

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#10
Business New Europe
www.bne.eu
July 17, 2015
Weak ruble is the 'new norm'
Chris Weafer of Macro-Advisory

It is axiomatic that every major sporting event has a distinctive theme tune and every financial crisis has at least one unique descriptive slogan or buzzword. In Russia today the competition for that catchphrase is between "localisation" and "the new norm". A great deal has already been written about localisation, aka "import substitution", but what exactly does "new norm" mean and how may it affect businesses and investment returns in the future?

The one point we can be sure of is that it will not involve a return to the old macro or growth model. Between 2000 and 2012 the Russian growth model was founded on an almost unprecedented consumer boom, which was fuelled by $3 trillion of trickle down oil and gas tax revenues and the start of the credit industry. That led to a dozen years of strong double-digit growth in the retail and other consumer sectors which, in turn, was the main driver of headline GDP growth.

That phase is now over and while the consumer and retail sectors are still capable of growing at rates above those of developed economies, the sector has matured relative to the end of the nineties and is no longer capable of driving strong headline growth alone. Russia needs a new growth driver and that has to be based on a big and sustainable increase in investment spending.

This is something that President Putin acknowledged publicly for the first time in his annual Federal Assembly Address in December 2013. Recall that growth in 2013 slipped to only 1.3%, from almost 4.5% two years earlier, and that despite oil averaging $110 per barrel and against a backdrop of global recovery. The message about the need for change could not have been clearer.

So, if we know that Russia cannot return to the old macro model, what new conditions can be created which will constitute the new norm?

It is fair to say that this is work in progress and while some revised policy priorities have become clear, there is still a lot more which is still unclear. Russia is at a crossroads and must decide on which road to take. This is unlike the 2009 recession when it was okay to simply sit it out and wait for the oil price to recover. This is one of those times when it really is different.

Of course the Kremlin could make the conscious decision to try to pursue a muddle-through strategy, i.e. a sort of cross your fingers, hope for the best and keep telling people that it will be fine tomorrow. That's a sort of Brezhnev option and would more likely lead to borderline stagnation and poor investment returns. Eventually a long period of poor economic performance could create conditions for a colour revolution. It seems that many in the Kremlin are aware of this, and fear it, so that a do nothing option is most unlikely.

Those with a Russia phobia warn of a turn towards increased nationalism and isolationism, i.e. a sort of blame the West option as a possible distraction strategy. There is zero evidence that this is a plausible option being considered. On the contrary, there is plenty of evidence from the past 18 months which shows that despite the tough geopolitical rhetoric and threats, in the end the Kremlin has been careful not to push away Western companies and has been trying to limit the damage to longer-term recovery prospects. In any event a colour revolution would surely come much sooner down that particular road.

Instead the evidence suggests that Putin's government is more interested in changing the model and creating conditions that can lead to a higher level of growth over the longer-term. Certainly for now the priority is maintaining stability and riding out the financial storm and almost all of the resources available to the government are being set aside to ensure that remains the case. Only when banks and industrial companies are again able to access international debt markets may we see a clear shift from planning and optimistic government rhetoric to specific actions.

180-degree change

But one part of the long-term recovery strategy has already been put into effect and that is the 180-degree change in the ruble policy. Ever since the 1998 default and ruble collapse the government has prioritised a strong and stable ruble policy.

There were several good reasons for that. The first being that the country was performing very nicely on the back of rising hydrocarbon wealth and had little need to create diversification or to boost such sectors as manufacturing. Russia could afford to import what it needed and people were very happy to spend the strong ruble on foreign holidays.

The second reason was because of the legacy of the 1990s during which there were several currency and bank crises. To some extent the ruble had become the bellwether of overall wellbeing in the country and so long as the ruble was stable and the state banks expanding there was no reason to worry about much else.

The third reason, which was especially evident in 2008 and 2009, was because so many of Russia's industrial companies and banks had borrowed so much in low interest bearing foreign currencies on the assumption that there was no exchange rate risk. The 2008 oil price collapse forced the Central Bank to burn through around $200bn of its reserves to try to defend the ruble while Russian companies scrambled to convert their external loans into ruble debt. That situation has also changed completely and the risk mis-match is much less dangerous today.

Over the past six months the policy started to change. First there was no public panic when the ruble collapsed in December. For sure there were queues at ATMs but only to extract cash in order to buy durable goods that could have become scarce or more expensive in the months ahead. People no longer equated a ruble collapse with a broader economic threat in the same way they used to a decade or more earlier.

The key message that a weaker ruble is better than a strong ruble started to be better understood when the first quarter macro report showed a significant gain in some parts of domestic manufacturing as a result of the competitiveness boost from the ruble weakness in late 2014. Suddenly people were looking for cheaper domestic alternatives. We also now hear government officials linking the more "competitive" currency with the import-substitution strategy. The same can be said for the plan to try to boost exports in sectors outside of extractive industries. "Competitive Russia" may also become one of those slogans to be associated with this crisis.  

The other epiphany we hear, and have seen in action, is the understanding that it actually matters much less where the oil price trades so long as the ruble is allowed to be flexible to compensate. This is one of the reasons cited by the finance minister for his concern about the strong ruble recovery in the three months to early May. He can more easily balance the budget with a weaker or flexible ruble.

It is early days yet and we should not expect any major new initiatives from the government until there is more confidence about financial sector sanctions ending and, perhaps, until the election process is completed. But what we do know with certainty is that the economy has survived the crisis and will pull out of recession in Q4 this year or early in 2016.

But just surviving is not good enough beyond the short term and, thankfully, it seems those with the power to make changes seem to understand that. There needs to be many changes in the years ahead, not least of which is the need to improve the business climate and boost competitiveness. But the shift in the ruble policy shows there is an underlying pragmatism. For businesses and investors looking past the current crisis that alone should offer a reason for optimism.

 

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 #11
Russia Direct
www.russia-direct.org
July 14, 2015
To innovate, Russia needs to unchain itself from state control
Dominique Fache, the administrator of Sophia Antipolis Foundation, a prominent French technological park, talked to Russia Direct about Western sanctions on Russia and the Kremlin's struggle to modernize and diversify its economy.
By Pavel Koshkin

Dominique Fache, the administrator of Sophia Antipolis Foundation, a prominent French technological park, is well aware of how to do business in Russia as well as the unique aspects of the Russian mentality. Fache has been doing business in Russia more than 20 years, focusing on investment in innovation, science, education and energy.

Fache has also been one of the most influential foreign experts in Russia's energy sector over the last 15 years, based on his executive and management experience at Schlumberger, SUEK (Russia's largest coal producing company) and Enel (the Russian power generation company).

Fache talked to Russia Direct about Western sanctions, Russia's struggle to modernize its economy, challenges facing Russia's energy sector, and ways that Russia can improve its image for Western investors.

Russia Direct: Last month the EU prolonged its sanctions on Russia. From your point of view, what are the implications for Russian and European businesses?

Dominique Fache: I think that the sanctions are not the appropriate way to manage the situation for several reasons. The first reason is a simple psychological reason, because sanctions are perceived by many Russians as not appropriate, not the right ones.

Russians prefer to be very emotional on this issue and I think you should put sanctions in another way, which would be to increase cooperation and open doors, especially, for the young people. And the real "sanction" [for the Kremlin] would be to get the door more open for Russian young people, so that they could understand what is really democracy, what is really freedom, what is really a possibility to start a business. So, we are really on the wrong path.
And the second reason is that the sanctions are impacting ourselves, we are probably [affecting] our own businesses. Again, it is a sort of backlash on European business. And it is not good at all. The metaphor I usually use is the example of the bridge: It is easy and very quick-it takes two seconds-to blow up a bridge, but it will take two years to build it again.   

RD: What are the chances of Russia to innovate its economy during a period of economic isolation from the West's leading countries, the extended sanctions and the plight of its sciences (underfunding, little global exposure, brain drain)?

D.F.: Basically, if you remember what Albert Einstein said, innovation is invented by getting out of the usual world: "We cannot solve a problem by using the same kind of thinking we used when we created them." So, usually people, who are inventing, they are people who have different approaches to the existing society. And it is very difficult for Russian society, which is based on vertical and very strong power to go for innovation, because innovation needs what Russia's former President Dmitry Medvedev described as raskreposchenie ["emancipation" in English].

There is no modernization, no innovation without raskreposchenie. And this is not really present in Russian society. The Russian economy is based on big companies, which are really not ready for innovation, because innovation is appearing in the world, where the rules of the game are different. If you take the Red October center, it is a good example: It is not innovation coming from the government. That's the reason why the Skolkovo project is not very effective.

RD: Regarding Skolkovo, 54 million rubles were allocated for Skolkovo's three short promotional videos with time frames of 60 seconds, 30 seconds and 10 seconds. Some raised eyebrows at such expenditures because the market price of the videos is no more than 5 million rubles.  So, is it worthwhile to waste the government coffers and taxpayers money to fund this project, given a lot of controversies around it and accusations of inefficiency (if not worse)?

D.F.: In the beginning I was involved in the Skolkovo project. I invited Anatoly Chubais [the head of Rusnano Corporation, which deals with nanotechnology projects] to visit Sophia Antipolis to show how things are done in technoparks, because it is better to show than to talk. And I was a member of the Kremlin's famous presidential commission for the Skolkovo project. In a few months I resigned, because it looked rather like a Potemkin village [The Potemkin village is derived from an anecdotal episode in Russian history and is primarily used to describe a fake portable village, built only to impress. - Editor's note].

My position was the following one. First, there had been too much money in Moscow already. Second, you have to go to the regions, because you have the possibility to develop them and development of the regions should neither be centralized, nor controlled by the state. I can give the examples of Kazan, Kaluga, Novosibirsk or Tomsk and you should use the potential of these regions. And, finally, you should ask yourselves what you are going to do afterwards.    
And after Crimea's incorporation in Russia, I asked the same question what you are going to do with Crimea. Actually, there is the potential of Crimea to introduce innovation. So, I have been not in favor of Skolkovo.

RD: You offered to develop high-tech in Crimea because you saw there a lot of potential, but given the fact that on June 19 the EU imposed investment and trade sanctions on Crimea, do you think it is the best strategy to invest in this region today?

D.F.: I introduced this idea at the very beginning, about a year ago.Crimea today is like the Côte d'Azur 50 years ago [Côte d'Azur is the Mediterranean coastline of the southeast corner of France, the place where Sophia Antipolis Foundation is located-Editor's note]. Unfortunately, the initial planning of Crimea is about establishing a casino zone. But it is the wrong priority and wrong direction.

I am not going to discuss the problem who is right, who is wrong in the Ukrainian crisis. I just mean that Crimea has potential: beautiful climate, beautiful landscape and a huge potential in tourism. But the potential can be implemented only in the future and it has to take a lot of time.

RD: Russia is struggling to improve its image abroad and investment climate, but most of its domestic and foreign initiatives hamper these attempts-as former Finance Minister Alexei Kudrin said at the St. Petersburg International Economic Forum-"We are in the situation when one hand does one thing, the other does the opposite."  So, how can Russia improve its worsening image amidst withering criticism from the West?

D.F.:  The problem is there is no marketing of Russia. Nobody is selling Russia. Yes, Russia has potential, but you have to market it. If you look at the world, you will see, for example, in France, Ireland or in Bavaria, Catalonia, in California, there is a professional marketing of the region. And even in the time of crisis right now, that's the right time to prepare the tools to do that.

This is one of the ideas, which I introduced during the St. Petersburg International Economic Forum. Who is marketing Russia? Is there any agency that is doing the job well? This is what Russia needs right now when the things are bad, when the crisis is long. So, you have to prepare these tools to invigorate the potential of marketing Russia.
RD: Sanctions have produced a sort of chilling effect on American and European business and brought about hesitation among many entrepreneurs. Some think about leaving the country. How do you assess the current state of investment climate in Russia and what would you recommend to those investors who are going to leave Russia?      

D.F.: There is a famous joke about the guy who wanted to sell shoes in Africa. The pessimistic guy told him that there is no market, because all the people are going barefoot.  The optimistic one told that there is a huge market because they are barefoot.

So, in my opinion, the paradox is that one goes to Russia in a crisis moment because of the Russian mentality: a Russian guy would be full of respect for you if you were with him in bad moments. And I think that it is the right moment to prepare good deals. Normal business takes place despite the sanctions. For example, Total, a French energy company, is making deals with Rosneft.

RD: What is your assessment of energy sanctions on Russia? Do you agree that they are effective and reached their goal?

D.F.: The key issue is technology. Only investment in science and innovation will help Russia to get rid of technologies coming from the West and will be helpful for the Arctic exploration of the oil and gas, new shale gas and oil in some fields. It requires new technologies, which are basically controlled by the Western companies. This is the first point.

The second point is the price and transportation. At the end of the day, there is double dependence. On the one hand, Western customers are depending on Gazprom, Russia's largest gas company. On the other hand, Gazprom also depends on sources coming from the West, from the level of price that I pay in France for the gas.

So, this is the double dependence. And we, basically, have to cut a deal and say: I am not trying to blackmail you, I am not trying to cut the gas supply, but we have to come up with a compromise. And it is a part of the solution of the Ukraine story [Russia-Ukraine gas wars in 2005-2006, when Russia cut gas to Ukraine, which affected the gas supply to Europe - Editor's note].

The situation is very dangerous in Europe, because the consumption was bigger in Ukraine than in Germany during the first gas crisis between Russia and Ukraine. And today it is very difficult to bypass gas flow for Ukraine 100 percent. People have to reduce their consumption and have to come back to normal control of energy intensity. You have to regulate your own balance and this is also the problem for Russia.

RD: In one of your interviews, you said that energy won't be cheap anymore. What does it mean for Russia?

D.F.: We are in the middle of the maelstrom. We are basically coming from the century of cheap energy in the world, including Russia [It was started in 1920, when the State Commission for Electrification of Russia (GOELRO) prepared a plan for the fundamental reconstruction of the national economy based on electrification - Editor's note]. Actually, there has been a huge industrial development in Russia based on cheap energy. But that's over. And that's doubly over for Russia. The Soviet model is dead.

And everybody understands that it is necessary to move to another model. But the problem is that the country's infrastructure is not ready to accept this model. This control, the vertical [power] coming from the Soviet Union, which is still in place in Russia, is not exactly fitting the potential model of the global development of the new economy.

Today we are moving to the second-more democratic and decentralized- model and we are in the middle of the river now. We don't know now what is going on exactly right now. But we know exactly what the problem is: central power and big companies. And the next step we have to do is to try to think what is going to be the future, what I am going to do in 50 years.

RD: What are the major characteristics of this second model you are talking about?

D.F.: If you look at the map of energy generating in Denmark, we are on the eve of major changes of the business model that will have an impact on our lives, energy and lead to decentralization. And this implies the reduction of electricity power, if you look at the map of Denmark 30 years ago, you will see probably 20 units, if you look at the map today, you will see 3,000 units. So, there is some kind of decentralization.

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#12
Politkom.ru
July 13, 2015
Russian commentator sees big business consolidating around Putin
Konstantin Yemelyanov, The Patience of Big Business

On 6 July [business magnate] Vladimir Potanin gave a big interview to the TASS news agency. In it he stated that Putin has a "formidable" mandate of trust from the population of Russia, which is a commonplace in significant interviews given by businessmen and politicians. The interview was pointedly politically correct. The audience was particularly interested in what Potanin had to say about the country's development, political questions, and economic policy.

Sensitive subjects was also broached, such as Mikhail Khodorkovskiy's future, for instance. Potanin expressed profound regret in connection with the 10 years that the former head of Yukos spent in prison. "This affected the reputation of all businessmen and the business climate in Russia... I also see what happened to Khodorkovskiy as a profound personal tragedy for the man, who spent probably the best years of his life the devil knows where," Potanin said.

Talking about the relationship between the authorities and the business world, the head of Norilsk Nickel called on people to find "a threshold where business does not lose incentives for development, and the distribution of the output obtained is carried out in the interests of society, in accordance with its needs." In the 1990s the balance was upset in favour of the interests of the "oligarchs," but in the 2000s "there was a rebound in the opposite direction." "Now entrepreneurs have been banished and are being snubbed," he observed. Moreover, according to Potanin, dialogue between the business world and the president is important: But in our case there is no place for discussion, and at meetings with the head of state, members of the Russian Union of Industrialists and Entrepreneurs [RUIE] merely inform Putin about their position. A certain distance from the state, and a recognition of the priority of the state and political interests of the authorities ahead of the priorities of the business world could be perceived in Potanin's words.

The interview also focused on the current geopolitical crisis. Potanin admitted that sanctions have tangibly made access to capital more difficult for companies, and this situation cannot but be worrying. "Obviously, at meetings with the president my colleagues try to make the top state official aware of their concerns. However, here too I do not see a subject for discussion. What is there to dispute? Whether Crimea is ours or not? The decision has already been made," Potanin said. Potanin then went on to express an emotional, negative attitude to the West's sanctions policy, pointing out that in the future Western politicians may regret the way they are now talking about Russia. "I do not like it when they say bad things about Russia. The Americans have an expression on this subject: My country may not be right, but it's my country. In other words, go fly a kite..." Potanin is convinced that the sanctions are of a temporary nature and  "the fuss will die down" after a while." "They will not get away from us," he said, not convinced by the scenario of long-term confrontation between Russia and the West.

At the same time, in his assessment of the situation surrounding the inclusion of the Dynasty Foundation among the "foreign agents," Potanin tangibly diverged from the stance of the siloviki. "As far as Dmitriy Zimin [Dynasty founder], whom I have known well for a long time, is concerned... He is a very decent man, a real Russian patriot," the businessman said, indicating that if the law does not work right, it needs to be changed regarding the definition of the term "foreign agent." These words were uttered as the news of the closure of the foundation came out. [Putin's Press Secretary] Dmitriy Peskov expressed regret in this connection, emphasizing that the inclusion of the foundation among "foreign agents" did not signify its closure. This stance merely indicates that the authorities do not intend  to negotiate on this subject. However, big business looks at this sort of thing with alarm, judging by what Potanin said.

All in all, the recognition of the special role of a strong personality in the Russian state stood out very clearly in the interview. This idea has been contained in many significant interviews recently. For example, in an interview with Moskovskiy Komsomolets, Oleg Morozov, former head of the domestic policy administration, also talked about the fateful nature of the figure of Putin for the country. "We have a leader who is a pivot for the country. There is a rating of confidence in the authorities that guarantees domestic political stability in the state," Morozov said. Earlier in an interview with Kseniya Sobchak on Slon, [businessman] Oleg Deripaska also said that Putin currently has a level of support of over 80 per cent, "which means that all his actions are justified by the majority. And we understand that this is not simply some sort of sudden rise because of an event, like when the bear [mascot] shed a tear at the Olympics, but society's frame of mind as a whole. Whether we like it or not, we live in this society." "People like him (Putin); Russians like strong leaders," Potanin also said.

What Potanin said about his conflict with Oleg Deripaska was also interesting. According to him, it was Valentin Yumashev, former head of Boris Yeltsin's presidential staff, who played a key role in resolving it. "An external catalyst, the fresh, unbiased view of a person able to express sound judgments on the situation that had formed, was needed. Valentin Yumashev played this role. He had our respect and helped us to reestablish trust," Potanin said, noting that [magnate] Roman Abramovich got involved later. Potanin asserted that as of today the conflict is completely over. "Issues are being resolved in an increasingly sophisticated way. Oleg Vladimirovich [Deripaska], Roman Arkadyevich [Abramovich], and I do not have to meet for trivial reasons, we talk more about strategy, and discuss global subjects," he said.

Vladimir Potanin's interview can be assessed as an expression of the public stance of part of big business in the new geopolitical and domestic political conditions. A notable part of this stance is the readiness to consolidate around the figure of President Vladimir Putin, a recognition de facto of the role of the personality factor in the functioning of the Russian state in the long term. However, on the other hand, political consolidation around the leader is also accompanied by a rise in concern at the quality of law enforcement practice (the question of foreign agents), the negative consequences of the sanctions policy, and disappointment in the growing confrontation between Russia and the West. The accumulation of negative emotions is notable, although so far these have been directed at the West and have no outlet within the country. However, it is important to note that while the Kremlin is preparing for a long-term period of "cold war," the business world is still hoping (or is even convinced) that this period will come to an end soon. What is turning out for the authorities to be a long-term steady trend looks to the business world like a short-term backdrop, which may in the future create a greater lack of understanding between the authorities and big business.

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 #13
Australian Financial Review
www.afr.com
July 20, 2015
How Russia proved to be the best BRICS bet in 2015
Even the most bullish investors still aren't discounting the potential risks of investing in Russia amid President Vladimir Putin's continued standoff with Western powers over Ukraine and the pressure on oil prices.
By Maria Levitov

Which country would you invest in: a fast- growing economic powerhouse with a world-beating stock market or a tottering former superpower embroiled in a proxy war and heading for a recession?

If at the start of 2015 you had chosen the second, Russia, you would be walking away with risk-adjusted returns surpassing that of the first, China, and also every other BRICS country, according to data compiled by Bloomberg.

While that looked counter-intuitive at the time, as plunging oil prices and a currency slump weighed on Moscow's $458 billion market, the tables have turned in these seven months. Crude's rebound from a six-year low boosted the appeal of Russian assets, while concern about pricey stocks led to a $4 trillion rout in China. Russia has the lowest valuation among its peers and can extend gains if political risks ease further, investors from GAM U.K. Ltd. to Prosperity Capital Management say.

"Our models are telling us to buy Russia," Tim Love, a London-based investment manager at GAM, which oversees $130 billion of assets, said by phone on July 15. "There is a very strong turnaround potential. It's an increasingly difficult call to get right because of politics. I'd be happy to pull the trigger in the next two to three months."

In nominal terms, Russia's benchmark Micex Index has advanced 18 percent this year, 4 percentage points lower than the Shanghai Composite Index. Still, a record drop in Russian volatility, combined with an increase in Chinese price swings, left returns adjusted for such fluctuations superior for Moscow by a factor of 1 to China's 0.6, according to the data. That was also the best gain in the BRICS universe that includes the two countries, and Brazil, India and South Africa.

Russia's surge in fortunes presents a contrast with the events of December, when stocks tumbled almost 9 percent and the ruble sank to a record, prompting the central bank to raise interest rates to the highest in more than a decade. That marked the peak of turmoil that had begun with Russia's annexation of Crimea in March and crude oil's 48 percent annual plunge.

Since then, investors have calmed down about the country. Oil has stabilized above $55 a barrel and a cease-fire is holding, by and large, in eastern Ukraine since Valentine's Day. A measure of expected price swings, as signaled by options prices, has more than halved to 28 percent, the steepest drop since at least 2006, the earliest date records go back to.

Russia continued to beat China in July. Shanghai has sunk to the bottom of the riskless-returns table and stayed there even after government intervention drove a rebound. Russia's volatility gauge dropped to a one-year low.

CHEAPEST MARKET

Even after the first-half rally, Russian stocks are valued at less than half of their BRICS peers. The Micex trades at 5.9 times the projected earnings of its members, compared with the second cheapest gauge, Brazil's Ibovespa, at 12.6. China, India and South Africa enjoy multiples of above 15.

"Most Russian stocks are fundamentally undervalued," Mattias Westman, the London-based founder of Prosperity Capital Management, which oversees about $2 billion in assets from former Soviet republics including Russia, said by phone Monday. "There is potential for further recovery."

Russia's economy, set to contract this year for the first time since 2009, may rebound 0.5 percent in 2016, a Bloomberg survey shows. European economic sanctions are also likely to be relaxed, as it won't be "easy to convince everyone to prolong them" next year, Westman said.

LINGERING RISKS

Still, even the most bullish investors aren't discounting the potential risks of investing in Russia amid President Vladimir Putin's continued standoff with Western powers over Ukraine and the pressure on oil prices from the imminent return of Iranian output to the oversupplied global market.

GAM's Love, who plans to increase his 3.5 percent Russia exposure by buying stocks dependent on consumer demand, is waiting to do so for want of clarity on how the Ukraine conflict will be resolved. Others are holding back for signs foreign investors are returning to the market.

"The easy gains are over," Anastasia Levashova, who helps manage about $350 million at Blackfriars Asset Management Ltd. in London, said by e-mail. "The volatility of the Russian market is low because its investor base and trading volumes have shrunk dramatically."

The competition from the rest of BRICS is intensifying. While China has unleashed $483 billion of stock-buying power to prop up its market, India has seen foreign investors turn net buyers for the first time since April. So, cheaper valuations remain the key argument in favor of Russia for now, with Love calling the market "a spring."

"You've got to continue pressing on the spring to keep the valuation low," Love said. "It's not where Russia should be."

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 #14
Russia Beyond the Headlines
www.rbth.ru
July 14, 2015
Controversial new law on 'right to be forgotten' stirs debate in Russia
Russia has adopted a law on the so-called "right to be forgotten," which will require internet search engines to remove links to personal information at the request of citizens. Although State Duma deputies claim the legislation mirrors that of the European Union, industry players strongly oppose the law, predicting a series of lawsuits, while lawyers say that such a right is unconstitutional and express concern that the law will be used by prominent individuals to selectively edit their past.
Yekaterina Sinelschikova, RBTH
 
Russian President Vladimir Putin has signed into law a controversial bill that allows citizens to demand that internet search engines remove links to personal information deemed "false" and "irrelevant," as well as to that distributed in violation of the law.

The law on the so-called "right to be forgotten," signed by Putin on July 14, also stipulates that in case of a clear refusal of the search engine to stop providing the links within 10 days of receiving a request to remove them, a citizen has the right to go to court. The law is due to come into force on Jan. 1, 2016.

Representatives of Russia's lower house of parliament, the State Duma, told RBTH that "people have long been talking about it" [the need for such a law] and claim that it "absolutely" corresponds to European practice, though critics of the legislation disagree and accuse the authorities of being disingenuous.

A similar law has indeed existed in the EU since 1995 but is currently in the process of being partly redrafted after being surrounded by controversy since its introduction. The UK publishing organization Index on Censorship compared the EU directive to "marching into a library and forcing it to pulp books" and said it "opens the door to anyone who wants to whitewash their personal history," while British newspaper The Daily Telegraph wrote in 2014 that Wikipedia co-founder Jimmy Wales "described the EU's Right to be Forgotten as deeply immoral."

However, one of the authors of the Russian law, First Deputy Chairman of the Duma Committee on Information Policy, Information Technology and Communications, Vadim Dengin, said that the initiative has the interests of ordinary Russians at heart.

"These are the desires of citizens, not the authorities. They want to remove [information] about themselves that annoys and frustrates them and spoils their reputation," he said.

According to him, a person can contact the resource directly in order to remove information about themselves, but if the resource is outside the jurisdiction of the Russian Federation, removal of personal content is possible only through an appeal to the search engine.

"The law is aimed at fighting against those citizens who sit and defame people from abroad. They are well aware that if they write this using Russian servers, they will be easy to catch," said Dengin.
 
New functions

State Duma deputies were not solely responsible for drafting the new law - an advisory council was created to this end, which included, among others, lawyers and internet industry representatives.

Thanks to this, "substantial changes" have been made to the third edition of the law, according to Matvei Alexeyev, external communications director of Russian media portal Rambler.ru. However, the key questions remain the same.

"How will a search operator determine if the information is relevant or not anymore? If it is of public importance or not? What is irrelevant to me can be meaningful for other people," said Alexeyev, pointing out that the law does not provide any criteria to rate information as bereft of relevance or public importance.

He is not alone in having misgivings about the new legislation, with Russia's largest search engine Yandex also expressing concern about the practical and ethical implications of the new law.

"Yandex and other internet companies have criticized the bill since we learned about it," the press service of Yandex told RBTH.

In fact, search engine operators are entrusted with the functions of the courts and law enforcement agencies that they cannot execute, the company notes. At the same time, Yandex "does not find effective" this kind of approach, where the information remains on primary source websites, and only links from search engines are removed.

Earlier, Yandex released its own assessment of the bill, in which it noted that the law contained "obvious contradictions with the current legislation," including the Russian constitution.

"In fact," read the statement by Yandex, the law "gives an opportunity to limit searches and access to information about any event that occurred in the past, which directly contradicts the constitutional right to seek and receive information."
 
Law is 'in conflict with constitution'

Galina Arapova, head of the Center for Media Rights and a member of the International Media Lawyers Association (IMLA) at Oxford University, also believes that the law is in conflict with the constitution, telling RBTH in an interview that it is also incompatible with the international standards established by the European Convention on Human Rights.

In addition, she believes, Russian legislators are engaged in "substitution of notions." "How is the 'right to be forgotten' being promoted in Russia? We are told that it corresponds to progressive tendencies in Europe, while the whole of Europe screams about its reactionary character and seriously criticizes it," said Arapova.

As a lawyer, Arapova notes that "irrelevant information" is a very vague wording. "A year later, the situation will change, and it may become relevant again. A person who did not want to go into politics will suddenly decide to go there, and then all that was in his life will become more than relevant," she cites as an example.

In her opinion, thanks to the law, the authorities have now additional levers of pressure on journalists, bloggers and people who are active on the internet.

State Duma deputies, however, dismiss accusations that the law contradicts existing legislation as "total nonsense."

"It [the new law] does not contradict anything. The stir is being created deliberately," said Vadim Dengin, and recalls that, for example, it will not be possible to clean up one's criminal record with the "right to be forgotten."

Firstly, the document forbids removing information "about the events containing elements of criminal offenses," for which the statute of limitations has not expired, as well as information about "a crime committed by a citizen, for which a conviction has not been lifted or removed."

Secondly, a decision will be taken by the court in any case, and this "does not necessarily mean that it will permit the removal of this information," said Dengin.

However, the representatives of the industry that spoke to RBTH are already anticipating that the main burden on the proceedings will fall on the search engines, since the law encourages people to turn not to the websites that violated the rights of users, but, as Yandex made clear, to the search engine, "even if search engines do not spread any information and bear no responsibility for its publication."

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 #15
Moscow Times
July 14, 2015
Russia Can't Be Managed With Western Rules
By Pyotr Romanov
Pyotr Romanov is a journalist and historian.

The claim critics constantly repeat that President Vladimir Putin is guilty of all mortal sins has already become a tiresome and hackneyed cliche. There is a weightier question: Is Putin running Russia or is Russia running Putin? Even in tsarist and Soviet times, leaders rarely managed to fully subjugate the country and impose their will.

Peter the Great managed it, but the people retaliated by calling him the Antichrist. Former Soviet leader Josef Stalin also succeeded, but only with the help of the gulag, mass executions and terror. Even Vladimir Lenin was unable to do whatever he wanted with Russia. The Kronstadt rebellion forced him to abandon his surplus appropriation system in favor of a tax in kind, and to replace his military communism with the New Economic Policy (NEP) that at least temporarily brought back the free market that the Bolsheviks so hated.

Few people think about the fact that, beginning with Catherine the Great, mostly Western managers sat on the Russian throne. It was the foreign specialists invited to help those on the throne who ended up assuming the throne themselves. In fact, all the Russian emperors - given their heritage, foreign education, strong kinship to and business ties with other European courts and their habit of relying on foreign experts - can themselves be considered the main foreign managers of the Russian Empire.

Foreign management turned out to be an integral part of the Russian tsarist government. That being the case, many of the criticisms that the West routinely levels at Russians are rightly directed at Europe itself since it supplied Russia with managers over such a lengthy period. For example, during the reign of Tsar Nicholas I, the German Karl Robert von Nesselrode - a fan of the Austrian Prince Metternich - ran Russia's foreign policy for a full 40 years, and without bothering to learn a single word of Russian the entire time.

And yet, their Western education and foreign blood did not make those rulers "national traitors." Russians remember Catherine II, a German, as Catherine the Great because she took into account the Russian mentality and national traditions, and she conducted policy that reflected Russia's interests. As she herself wrote: "I understand the minds of the people, and according to that I conclude what actions my decree should produce."

When Alexander I was compelled to sign the Treaty of Tilsit with Napoleon in 1807, he knew it would not remain in force for long - and not because he was dissatisfied with the terms, but because he knew they did not suit Russia as a whole. Merchants, who were accustomed to conducting trade with Britain, expressed their outrage with a continental blockade. The army thirsted for revenge and the ordinary citizenry, in whom every church had instilled the belief that Napoleon was "devil spawn," felt bitter disbelief when they saw their sovereign embrace that "devil incarnate."

Many people are familiar with the words of Madame de Stael: "The method of government in Russia is autocracy, limited by the noose." Actually, historians note that later generations inserted the reference to a noose. I would add one more reference - to the merciless Russian revolt. The writer Dmitry Merezhkovsky said that it sometimes seems as if all of Russian history consists of a string of uprisings. By the way, those two factors, the "noose" and uprisings, probably carry a greater inherent danger than the risk of losing the next election.

Westerners several times stood at the helm of the Russian ship of state in later periods as well. The communist ministers who took charge after the end of tsarist rule were also Westerners: they only prayed to a different God - the Russophobe Karl Marx. The reformers of the 1990s also showed no signs of adoring all things Slavic.

In other words, to govern Russia according to Western thinking and against the will of the people is fraught with risk. That has always been true, and it remains so today. The Bolsheviks' attempt to instill Marxism in Russian life ended in failure, as did attempts by reformers in the 1990s to move Russia toward Western paradigms against the popular will. As the great reformer Tsar Alexander II said: "Managing Russia is easy, but ultimately futile." In each case, leaders tried to swim against the tide of the national mind-set. That is why nobody showed interest in the democracy of the Bolsheviks or of the liberals in the 1990s. Both were replaced with sham prostheses of democracy - artificial limbs on which Russia continues to hobble along. Critics of the current president should keep in mind that Putin is the main legacy of former Russian President Boris Yeltsin.

Just the same, Putin is smarter than his predecessor and tailors his policy to the moods of the people - and in some part helps form those sentiments. That is natural. If sovereignty is so dear to the majority of the Russian people, and if they are willing to pay any price to maintain or expand it, then Putin stands firmly for sovereignty. If Russians one day choose to return Crimea, he will hand it over. If the masses dislike the policy coming out of Washington, then the Kremlin also opposes it. Of course, Russians are not in love with many things that Putin does, but on the whole they are in agreement with him. That explains his unprecedented popularity.

So, those who blame Putin alone have missed the mark. Putin simply serves what he believes are the wishes of the Russian people - as he is able to understand them. It is another question as to whether the Russian people are right or wrong in their thinking - and the answer to that is far from straightforward.

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 #16
Moscow Times
July 17, 2015
Russian Military Struggling to Modernize
By Anna Dolgov

The Russian military is failing to meet its plans for this year on re-equipping its armed forces with modernized weapons because of Western sanctions over the conflict in Ukraine and a decline of domestic industries, a deputy defense minister told President Vladimir Putin.

Government defense contracts that have fallen behind schedule include production of Navy guard ships, Beriyev Be-200 amphibious aircraft, Vikhr anti-tank missiles, remote control and radio monitoring equipment for Igla surface-to-air missiles, and weapon launch systems for Tupolev-160 strategic bomber planes, Deputy Defense Minister Yuri Borisov told the president during a video conference, according to a transcript released by the Kremlin on Thursday.

"The objective reasons for the failure to meet state defense procurement orders include restrictions on the supply of imported parts and materials in connection with sanctions, discontinuation of production and the loss of an array of technologies, insufficient production facilities," Borisov said.

But he maintained that Russia's defense industries were adjusting to the setbacks, and that so far, 38 percent of the government's defense purchases planned for this year have been completed.

"On the whole, one could say that an absolute majority of enterprises have acquired the necessary production pace, are fulfilling their obligations to the Defense Ministry," Borisov said.

Defense industries had been the focus of the Soviet economy, and as the Russian economy has taken a downturn amid Western sanctions, Putin said that work on military contracts was key to economic and technological development, and to providing employment.

"I will especially emphasize that those who are delaying production and supplies of military technologies, who are letting down related industries, must within a short term ... correct the situation," Putin said.

"And if that does not happen, the appropriate conclusions need to be made, including, if necessary, technological, organizational and personnel [changes]," he said.

Reshaping the Russian military into a modern, effective force has been one of Putin's most ambitious projects, and one that has seen some successes.

The government was planning to spend an estimated 20 trillion rubles ($351 billion at the current rate) on a military re-equipment program that was designed to run from 2011 to 2020, with nearly 80 percent of the funds intended for hi-tech weapons, according to figures cited by the Lenta.ru news portal earlier this year.

Putin proclaimed during his marathon call-in show this spring that despite some setbacks, "without a doubt, this program will be fulfilled."

"Our goal is to make sure that by that time, by 2020, the amount of new weapons and military technologies in our armed forces reached no less than 70 percent," he said.

The share of modern weapons currently in service in the Russian military ranges, depending on the branch of the armed forces, from 30.5 percent to nearly 78 percent, according to military figures Putin quoted during this week's video conference.

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 #17
Moscow Times
July 17, 2015
The Public's Top Picks for the Pedestal on Lubyanka Square
By Maria Naum

On Aug. 22, 1991 at the peak of euphoria over the failure of the coup against Mikhail Gorbachev, the statue of Felix Dzerzhinsky, founder of the Soviet secret police, was pulled from its pedestal on Lubyanka Square. Since then, the square has remained empty as the public and authorities discuss - or rather argue - about who or what should be put in place of Iron Felix.

Lately the debates have been heating up, with a number of prominent political, historical and religious figures proposed for the pedestal. If you want to take part in the around-the-water-cooler discussions but don't know much about the candidates, here's a Lubyanka Square cheat sheet.

Felix Dzerzhinsky
Yes, that's right. One proposal is to bring Iron Felix back to the place he held on the square for so many years, surrounded by the buildings of the organization he founded. Another point in favor of his candidacy, according to supporters, is that he would once again face the Detsky Mir (Children's World) department store, a symbol of his care for orphans in the early years of the Soviet Union. As for the Red Terror and thousands killed - better not to ask at the water cooler.

Andrei Sakharov
This candidate is the anti-Felix. The distinguished physicist, inventor of the hydrogen bomb, and the country's most prominent dissident, leader of the opposition to Soviet power, and a founder of the new Russian state might seem like a fine candidate for a major monument in a prominent location. But he's probably not the top choice of the boys in the buildings on the square.

Yevgeny Primakov
Prominent political figure and former Prime Minister, recently deceased. Best known for turning back his airplane en route to Washington when he received news of the start of NATO operations in Serbia in 1999. Pundits say this famous U-turn over the Atlantic became Moscow's "turn to a multi-vector foreign policy." In discussions with supporters, do not suggest this was just a habit of doing U-turns in Moscow traffic.

Pyotr Stolypin
Prime minister and minister of internal affairs under the last tsar, Stolypin was both a hardliner and a reformer, famous for getting the nation more or less under control after the first revolution of 1905-07. He is the only political figure whose element of dress has gone down in history, although not in a nice way: "Stolypin's necktie" referred to the executioner's noose. Supporters say he deserves a statue for his famous saying: You need upheavals, we need a great Russia.

Vladimir the Great
No, the other one: the 10th century Grand Prince of Kiev who was baptized into the faith and brought Christianity to his people. Proposed largely because the city government doesn't know what to do with the enormous statue of Vladimir they originally wanted to put on Vorobyovy Gory (Sparrow Hills). One problem: the 24-meter (80 feet) high statue might overpower the square. Second problem: The constitution says Russia is a secular state.

President Vladimir Putin
The other Vladimir the Great, certainly the most popular candidate with the Russian public. In favor of this candidate, supporters point out that he headed the Federal Security Service, so he'd be at home across from his old workplace. Only problem: Monuments of living people are not put up. So perhaps the square will remain empty for another couple of decades.

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 #18
Christian Science Monitor
July 15, 2015
Amid Kremlin-NATO tensions, what mood in Russia's European 'spearhead'?
The Baltic enclave of Kaliningrad is home to a major naval base that weighs heavily in both Russian and Western military thinking.
By Fred Weir, Correspondent

BALTIYSK, RUSSIA - If the tensions between Russia and the West should escalate into full-fledged confrontation, it is this former Prussian town - home to a huge military base in the heart of NATO country - that is going to be right at the center of things.

Here, at the westernmost point of the Connecticut-sized enclave of Kaliningrad, the port bristles with warships, the streets are filled with uniforms, and there is a constant stream of naval vessels in the channel, heading out to sea to conduct patrols or war games.

Even now, unseen just over the horizon, the Russian navy is conducting  major anti-submarine exercises in the Baltic Sea, the latest in a year-long series of war games designed to display Russia's defiance in the face of Western sanctions and political pressure, as well as its military readiness if worst comes to worst.

But while the growing crisis may be focusing minds in Moscow, Brussels, and Washington, people on the streets of Baltiysk seem almost oblivious to it.

Locals seem relaxed and say they worry more about inflation and the region's falling living standards than they do about the threat of war. Remarkably, for anyone who remembers the official paranoia of Soviet times, even a foreigner snapping pictures of warships in Baltiysk's military harbor doesn't seem to attract police attention.

"We see in the mass media that NATO's actions in our neighborhood are growing, and of course this causes concern," says Nikolai Plyugin, acting head of the district government in Baltiysk. "But it hasn't changed our lives. Things are normal, stable, people are just getting on with their daily affairs."

The front line

Outside of military planners, few people in the West seem to give much thought to, or even know about, Russia's odd Baltic enclave.

This region was German East Prussia until the USSR annexed it after World War II, deported its population, and replaced them with Russians. Kaliningrad was a closed military zone during the entire cold war, and even Soviet citizens who wanted to visit Baltiysk needed to obtain a special permit.

That has certainly changed. Now a trickle of tourists come each year, mainly Germans who want to visit ancient cemeteries, admire the old Prussian architecture - a good deal of which survives in towns like Baltiysk - or ramble along the seacoast, which is still dotted with Nazi-era coastal installations, pillboxes, and artillery emplacements. Baltiysk itself, then called Pillau, was a U-boat base during the war.

That history caused few voices, amid all the acrimony over the Kremlin's annexation of Crimea last year, to rhetorically argue that if Moscow could cite historical links to seize a territory, then why shouldn't Germany reclaim its former East Prussian lands?

But 90 percent of Kaliningrad's population today are ethnic Russians, and opinion polls suggest they are in step with other Russians in their strong support for Vladimir Putin. "The majority of our population identifies itself with 'mainland' Russia," says Mr. Plyugin. "Other ideas are not accepted here."

Still, the region's residents remain mostly unmoved by the current East-West tensions swirling around Kaliningrad, which some Russian military experts say that they are right to be.

"I think this is a virtual panic, that exists mostly in people's heads," says Vladimir Dvorkin, an expert with the Center for International Security at the official Institute of World Economy and International Relations in Moscow. "There is no script in which Kaliningrad could actually be threatened by NATO. What's going on is just gunboat diplomacy, without any shooting."

'A burden and an asset'

But if the crisis grows worse, things could change again. And Kaliningrad, by strategic necessity, would be center stage.

Over the past several months, NATO has been shifting troops and hardware eastward into the neighboring former Soviet Baltic states and Poland, which completely surround Kaliningrad, and holding its own massive military maneuvers on the very doorstep of the tiny Russian enclave.

For NATO, the buildup is seen as necessary to counter what it sees as Russia's newly aggressive posture in Ukraine, and to reassure nervous east European allies who themselves escaped from Moscow's control barely a quarter century ago. A leading NATO official warned recently that Russia could occupy the Baltic states of Lithuania, Latvia and Estonia "within two days" by striking out from its stronghold in Kaliningrad.

In response, the Kremlin is threatening to counter NATO's forward deployments  by bolstering its own forces, especially in Kaliningrad. The entire post-cold war balance could be upended if Moscow follows through on oft-repeated warnings that it might station nuclear-capable, short-range Iskander-M missiles in the enclave, from where they could easily strike Berlin, Warsaw, or Copenhagen.

Russian strategists are reportedly pondering the problem of how to resupply Kaliningrad if Western sanctions escalate to the point of completely cutting it off. At present, land access to the enclave from "mainland" Russia must pass through NATO-allied Lithuania or Poland. The only other way is a roundabout sea journey from Russia's other Baltic port of St. Petersburg.

In strategic terms, Kaliningrad "is both a burden and an asset, though primarily an asset," says Dmitry Gorenburg, a Russian military expert at the Center for Naval Analysis in Arlington, Virginia.

"It's like a forward operating base, but without the expense and complications of maintaining troops on foreign soil. The burden is if NATO actually wanted to attack it, it's even less defensible for Russia than the Baltic States are for NATO. But since it's pretty clear that NATO states have no desire to annex a piece of Russian territory, that burden isn't really felt."

A closing 'window'?

Though Kaliningraders are no strangers to militarization, they have gotten used to some of the benefits of their proximity to Europe, which include a project that allows them visa-free travel to neighboring Poland. Hopeful efforts to make the region Russia's new "window on Europe" has brought a bit of foreign investment, tourism, and cheaper access to Western consumer goods than 'mainland' Russians enjoy.

Some locals fear that escalating tensions could bring an end to all that.

"There's a big risk that Kaliningrad could revert to being a closed military zone again, as it was in Soviet times," says Mikhail Berendeyev, a professor at Baltic Federal University in Kaliningrad. "Nobody here would like to see this happen. But the way things are going, it's a growing possibility."

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 #19
Sputnik
July 19, 2015
US Media Dreams About 'Siberian Nationalism' Breaking Up Russia

A recent article published in the US business magazine Quartz argues that an "uptick of nationalism" in Siberia threatens to break up the Russian Federation.

In his article, republished by Quartz from online news and opinion magazine Muftah, independent journalist Bradley Jardine says that Siberia's history of non-conformism has led its "inhabitants, including its ethnic Russian population, [to develop] a very distinctive identity -a sort of swash-buckling frontier spirit akin to American pioneers." The journalist argues that this "sense of nationalism," which had its origins in the 19th century, has recently intensified.

Jardine cites Siberians' apparent anger over the federal government's unfair distribution of tax revenues, along with the old news item of "Vladimir Putin's centralizing reforms," which he says have "inflam[ed] hostility toward Moscow." It's worth pointing out here that Russia returned to a system of direct elections for its regional governors back in 2012, and that the tax revenues issue is literally older than the Russian state itself, first emerging back in the Soviet period.

It is in this apparent Siberian hostility to Moscow that Jardine sees a "potent national movement" growing up "in larger Siberian intellectual centers like Novosibirsk, Tomsk, Omsk, and Irkutsk," citing the example of a 2011 protest rally in Novosibirsk, where demonstrators gathered to chant the slogan "Stop Feeding Moscow!" and demanded that Siberia receive a larger share of the revenues from hydrocarbons.

Noting that "the movement was unsuccessful," Jardine argued that the protest (which, incidentally, gathered only 50-70 people) "seriously ruffled Moscow's feathers," adding that a similar proposed 'March for the Federalization of Siberia', was banned by "central authorities," who arrested organizers and imposed a "widespread media blackout on the region." In actuality, it was the local mayor's office that banned the march, which had planned to attract about 350 people in the city of 1.5 million. Local media freely reported that the march was prohibited because organizers hadn't bothered to fill out the paperwork to hold it.

After making a mountain out of a couple molehills, Jardine concludes his analysis by noting that "if the status quo continues -and Siberians continue to feel exploited by the central government -the Russian Federation may be faced with a serious political crisis."

Jardine's commentary echoed that of Wilson Quarterly contributor Elizabeth Peet, who stated in an eerily similar article published earlier this month that "Vladimir Putin's ever-more-centralized regime" has "contributed to a resurgence of regional pride across Siberia, as demonstrated in the popularity of the 'I'm Siberian' brand [of t-shirts] among Siberia's younger generations."

The headache-inducing semantics of calling the small movement of ethnic Russian Siberian autonomy supporters "Siberian nationalists" aside, at least Jardine's article had the courtesy to make note of the fact that the autonomy movement is based mainly "among the region's ethnic Russian population." As for the region's indigenous groups, who are presumably unaware or un-interested in the movement, Jardine explained that the groups are "more rooted and connected to local towns and villages."

While a report from the US think tank Stratfor envisions Russia collapsing within the next 10 years, many experts find this idea laughable and note that it may even a mask for the US's true intentions.

Still, there isn't really anything surprising about in the histrionic tone of Jardine and Peet's articles. Earlier this year, Texas-based intelligence group Stratfor (whose work Jardine cites in his article) presented its 'Decade Forecast: 2015-2025', a report which predicted the enduring power of the United States and Russia's imminent demise. The report explained that fluctuations in energy prices would reduce "Moscow's ability to support the national infrastructure," resulting in the fraying of "economic ties binding the Russian periphery" and causing Siberia to "move independently" toward "links with China, Japan and the US." And if a respected and influential think tank like Stratfor can dream big about resource-rich Siberia breaking off from Russia and becoming an independent state, what's wrong with a couple of analysts writing articles about the very same thing?

There is something to be said about discontent among the resource-rich Russian regions stemming from the perceived unfair distribution of tax revenues, which local nationalists and political demagogues have played upon since the late Soviet period, claiming that 'their national republic/region/autonomous zone subsidizes everyone else, and that everyone would be richer and better off by separating'. But while the argument continues to be used by a sprinkling of Russian nationalists and liberals, most recently in a 2011 campaign demanding that Moscow 'Stop Feeding the Russian Caucasus', it is highly unlikely that the issue of taxation could lead to the formation of a serious movement for autonomy or independence, especially in Siberia, where the majority is ethnically Russian. In any case, a recent study by Russian news and analysis weekly Argumenti i fakti found that in 2014, only about a dozen regions made due without federal financial aid to complement local budgets, with most of the country's regions, including those in Siberia, receiving subsidies as part of the government's effort to equalize spending.

Idea of 'Siberian Nationalism' Gets a Laugh From Russian Readers

Jardine's article, which has since been translated into Russian and published on RT's InoTV, became a source of amusement for its Siberian readers, who commented on the absurdity of the ideas it contains, and argued that journalists shouldn't write about issues they know nothing about.

A user named Dmitri from the city of Tomsk sarcastically commented that having "lived in Siberia for 30 years, this is the first time I have heard about the 'Siberian National Movement; same goes for the 'March for the Federalization of Siberia' and the apparent 'mood in Siberia favoring separating from the federal center'. The author has truly opened my eyes to what's really going on in my native land."

Another user, called Yana, echoed Dmitri's irony, noting that she "has always found it amazing how people who cannot find Siberia on a map know more about our lives than we do. From Siberia with Love!" Sergei added that "as a Siberian, I am getting a huge kick out of this article. Author: time to leave the parallel world you're living in!"

Pavel wrote, "there is no 'Siberian nationalism', and I say this as a Siberian. Even if there are a few radicals, their percentage is negligible. The absolute majority of people here feel that they are Russian, and do not amuse themselves with such silly ideas."

Verba, hailing from Novosibirsk, noted that "this is the first time I'm reading about the 'big rally' of 2011...As for the ludicrous 'March for Federalization' of our already federal (!) region, it was not forbidden. The organizers simply 'forgot' to file the paperwork. Boy have they made a lot of noise about it afterwards though."

Stanislav joked that "the rich mineral wealth of Siberia does not give these foreigners any peace. I have heard these fairy tales [about Siberia breaking off from Russia] since the 90s." Alex added that the "the idea here is clear -to create a false nation to oppose Russia and to gather the fruits from the conflict which results." Martin capped off the commentary, urging everyone not to worry and noting that "we Siberians would be a tough nut to crack. We live in a calm, measured way, and do not give in to propaganda...Siberians will not tolerate any turmoil."

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#20
Moscow Times
July 15, 2015
Russia Is Not the Threat the West Thinks It Is
By Mark Galeotti
Mark Galeotti is professor of global affairs at New York University.

Suddenly, it seems, America has decided that Russia is a threat, even an existential one. Really?

Air Force Secretary Deborah James said: "I do consider Russia to be the biggest threat." Nonetheless, she comes across as positively dovish alongside with House Armed Services Committee Chairman Mac Thornberry, who feels Russia is the "one country that clearly poses an existential threat" to the United States.

Politicians are expected to say striking things, though. It is even more noteworthy when it becomes part of the military narrative, too. Speaking at his confirmation hearing to be the next chairman of the Joint Chiefs of Staff, Marine Corps General Joseph Dunford unequivocally affirmed that "Russia presents the greatest threat to our national security."

Still, a sufficiently senior general, especially when he's looking for confirmation of his appointment, is a politician as much as a soldier, so should this be written off as mere rhetoric?

To an extent, probably. Given that at the same time it is planning to cut 40,000 troops, Washington doesn't appear to see a threat looming. Secretary of State Kerry, the White House's propitiator-in-chief, hurriedly walked Dunford's words back.

However, language matters. Words form narratives, narratives shape political imaginations, and policies are the product of those imaginations. Just as Moscow risks getting caught in a net of its own rhetorical hyperbole (the hunt for "foreign agents," Putin's warning to the West not to "mess with us," and the like), so too can Washington.

How, after all, does Russia pose a threat - an existential one, at that - to the United States? In theory, its nuclear arsenal means it could devastate the country, but the essence of threat assessment is capability plus intent. Otherwise Washington could just as easily consider nuclear powers Britain or France "existential threats."

Does Moscow have the desire to go to war with the United States? There seems no evidence that this is in the slightest degree true. Frankly, the best of Russia's forces are already pretty much operating at capacity in Ukraine: there may be "only" 10,000-12,000 troops at any one time, but as units rotate through, they then need to rest, rearm, regroup and make up their casualties. The rest of the military, heavy on conscripts, short on experience and discipline, is much less than meets the eye. In a war with a richer, more populous and more militarily advanced NATO - even excluding the United States and Canada, NATO has almost three times as many active duty personnel - Russia would not prosper.

While some suggest that Moscow's great power pretensions and Vladimir Putin's need to maintain his image as a strong nationalist leader might make the world stumble into crisis, as it did in World War I, even this seems far-fetched. There are robust diplomatic structures in place; the Kremlin's control over its conventional and nuclear forces is beyond doubt; and neither Putin nor those in his immediate circle are imbeciles or the kind of zealots who would put their comfortable lives at risk.

After all, this is a regime interested in retaining power and asserting its status and sovereignty rather than imposing an ideology abroad or even some dream of expansion. Putin is hardly looking to reconstitute the Soviet Union or the Russian Empire.

Nonetheless, Russia really is a challenge to the West, just a rather different challenge from that which the Dunfords and Thornberrys may suggest.

Russia is clearly a danger to its weaker neighbors, as both Georgia and Ukraine discovered. But by its capability and willingness to intervene in sovereign countries, outside the bounds of international law, it also challenges a global order the West created and which so benefits the West.

Secondly, Russia is a threat not in terms of tanks on the border and missiles in the sky, but its capacity to obstruct and disrupt. From the Iranian nuclear talks and the struggle against the Islamic State, to resupplying the International Space Station and fighting the global drug trade, Moscow can be a useful partner - but also a problematic spoiler should it so choose.

Thirdly, the more the West puts pressure on Russia through sanctions and isolation, the more it bolsters the regime in the short term, but builds up pressures in the long term. This could see the Kremlin adopting a more conciliatory policy in the future, but it could also play to ultra-nationalists of the sort who'd make Putin look like Pussy Riot. This may be a geopolitical gamble worth taking, but it is a gamble nonetheless.

Finally, the confrontation poses an internal, political challenge for a West already divided. Not every government is as committed to the struggle to contain Putin's Russia, let alone every population. To Italy, the real European security challenge comes from the south. In Spain, 50 percent youth unemployment is a more serious issue. In Germany, the people fail to be as enthused as Angela Merkel about facing down Putin. And so it goes.

The current rift between Moscow and the West is wide, deep and treacherous enough. While inflammatory language - from either side - may win a round of applause from a core political base, it only opens that rift wider. And from the West's point of view, the more it focuses on an imaginary "existential threat," the more it loses focus on the other, more real challenges ahead.

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 #21
The Nation
July 14, 2015
Is Russia Really 'the Greatest Threat' to US National Security?
Ashton Carter, Victoria Nuland, and Gen. Joseph Dunford want us to think so.
By James Carden
James W. Carden is a contributing writer at The Nation and the executive editor for the American Committee for East-West Accord's EastWestAccord.com.

The war party is growing restive.

Reports of a deadly shootout between neofascist Right Sector volunteers and Ukrainian police in government-controlled western Ukraine was quickly followed by news that the international community reached a historic deal with Iran over its nuclear program.

As news of these developments began to ricochet through the corridors of Capitol Hill, the frustration and alarm of some of the leading members of Washington's war party increased markedly.

With legions of allies in the Congress, in the administration, and in the military, the faction led by Senator John McCain (R-AZ), Defense Secretary Ashton Carter, Assistant Secretary of State Victoria Nuland, and NATO Supreme Allied Commander Philip Breedlove has, to date, successfully pushed the president towards taking a more hawkish line towards Russia, with NATO stationing, for the first time, tanks, troops and ordnance on Russia's western frontier. In addition, on Monday, Lt. Gen. Ben Hodges, commander of US Army forces in Europe, told reporters at the Pentagon that he is planning to train Ukrainian army troops beginning in November. This would come on the heels of the US Army's current program of training Ukrainian Interior Ministry forces.

The hysteria over Russia's alleged provocations in Ukraine has reached such a point that at a Senate Armed Services Committee hearing last week, President Obama's nominee to succeed Gen. Martin Dempsey as Chairman of the Joint Chiefs of Staff, Gen. Joseph Dunford, testified that he believed Russia posed "the greatest threat" to US national security. The hearing, chaired by none other than Senator John McCain, was less a confirmation hearing than a forum for the War Party to vent its copious frustrations with what it sees as President Obama's dangerously naive foreign policy.

To no one's surprise, the committee asked Dunford about the advisability of sending weapons to Ukraine, a policy the president has so far opposed. Dunford noted, "Frankly...without that kind of support, they [the US-backed government in Kiev] are not going to be able to defend themselves against Russian aggression." To Dunford, arming Kiev seems "reasonable."  Yet far from being reasonable, arming the government in Kiev will make a wider conflagration all the more possible, increase civilian casualties, upend the Minsk Accords, and possibly provoke further Russian operations in the eastern part of the country.

This morning, the Armed Services Committee reconvened in order to lend its imprimatur to Gen. Paul J. Selva, President Obama's nominee for vice chairman of the Joint Chiefs of Staff. And yet again, the hearing served as yet another opportunity for the leading members of the congressional war party to indulge in alarmist and, frankly, militaristic, rhetoric designed at scaring the public and intimidating its opponents.

Sen. John McCain began by lamenting that, in his view, sequestration spending "puts American lives at risk." He quickly got to Russia, naming it, alongside ISIS and Iran as the top threats facing the United States. McCain then turned his attention to Selva, wishing to get the General's opinion of Dunford's view that Russia poses "the greatest" threat to US national security.

In response, Selva actually went one better than Dunford, naming Russia, China, Iran, North Korea and the threats posed by violent Islamist jihadists as the greatest threats to US national security "in that order." What is more, according to Selva, Russia, unlike ISIS, poses an "existential threat" due to its possession of both conventional and nuclear forces.

Worryingly, the testimony of Generals Dunford and Selva points to something of a pattern with President Obama's appointees. As Yale's David Bromwich recently noted in Harper's Magazine, "When Obama entered the White House it was imperative for him to rid the system of the people who would work against him." Yet far from doing so, the president has promoted and appointed military men like Philip Breedlove, along with bureaucrats like Victoria Nuland, who do just that.

While the war party has a stranglehold on Congress, it is beginning to meet some resistance within the administration. The recent success of Secretary of State John Kerry and Secretary of Energy Ernest Moniz in Vienna may boost the fortunes of the diplomacy party. Meanwhile, Kerry is showing little desire to collude with his erstwhile Senate colleagues in their push toward all-out confrontation with the Russians.

Kerry, a creature of Washington for many decades and no fool, surely knows that the demonization of Russia is, at bottom, a longstanding project of Washington's armchair warrior caste, dating back to early years of the George W. Bush administration. As such, State Department spokesman Mark Toner told reports on Friday, "The Secretary doesn't agree with the assessment that Russia is an existential threat to the United States.... Certainly we have disagreements with Russia...but we don't view it as an existential threat."

Nevertheless, for now anyway, it is the war party that remains ascendent in the corridors of power, and this, because it is bringing us only one or two steps from war with Russia, is to the absolute detriment of US national security.   

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 #22
Moscow Times
July 20, 2015
Obama and Putin Are Tied to Each Other
By Vladimir Frolov
Vladimir Frolov is president of LEFF Group, a government relations and PR company.

The Kremlin will milk for what it is worth U.S. President Barack Obama's "encouragement" with Moscow's "cooperative compartmentalization" on the Iran nuclear deal and Putin's interest in joint efforts to combat ISIS in Syria.

Moscow views the renewed Putin-Obama telephone diplomacy as reinforcing its strategic narrative of U.S.-Russian geopolitical parity where both countries share "unique responsibility" for global security and should unite efforts in combatting "big threats" like ISIS, while ignoring "minor disagreements" over "small issues" like Ukraine.

The Kremlin is emulating Iran's strategy of locking Washington into negotiating on one critical issue while ignoring the negotiating partner's egregious behavior in other areas. The hope is to repeat the 2013 scenario when U.S.-Russia cooperation on destroying Syria's chemical weapons crowded out other disagreements. Re-engaging Obama on ISIS and Syria is seen as a way to eventually trade away the U.S. sanctions on Russia over eastern Ukraine and Crimea.

Obama seems open to exploring Putin's usefulness in ending the civil war in Syria and defeating ISIS in Syria and Iraq. He revealed that Moscow fears Assad's days are numbered and is finally getting serious about negotiating, according to U.S. Deputy Secretary of State Tony Blinken, "to transition Assad out."

Yet Moscow envisions Assad's departure only after Washington recognizes him as an ally in combating ISIS and helps him re-establish control over Syria as part of the war on terror. This is a way to escalate the sectarian fighting, not end it, as Assad's brutality feeds the support for ISIS among Syrian Sunnis.

Obama knows Assad's fate will be decided in Tehran, not in Moscow. "In order for us to resolve [the Syrian civil war], there's going to have to be agreement among the major powers that are interested in Syria that this is not going to be won on the battlefield," he said last week. "Iran is one of those players, and I think it's important for them to be a part of that conversation."

Still, Obama may hope that granting Putin the right optics of "geopolitical parity" with the U.S. on Syria could moderate Putin's behavior in Ukraine and make him a responsible stakeholder in the very world order Russia is now challenging. It's a possibility that Putin cares more about the appearance of being Obama's equal than about what happens in Ukraine.

It's a possibility worth exploring.

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 #23
Moscow Times
July 13, 2015
Europe and Russia Must Start Building Bridges
By Pascal Lorot and Arnaud Dubien
Pascal Lorot is president of the Institut Choiseul for International Politics and Geoeconomics, and Arnaud Dubien is director of the Franco-Russian analytical center Observatoire.

More than a year after it started, the Ukrainian crisis seems stalled and has produced only losers - especially Ukraine. Having lost Crimea and part of its eastern provinces, it is paying a high price for the repercussions of the Euromaidan protests.

Despite Western aid, its economy is collapsing amid a political climate marked by radicalization in Kiev, as evidenced by the recent "historical memory" laws and sometimes tragic fates of former politicians or experts who were not in line with the new authorities. Prospects for integration into the EU and NATO are more distant than ever.

Another loser is Russia. Even though its economy is not "in tatters," - as U.S. President Barack Obama unwisely claimed last fall - and it is not isolated on the international stage, its situation is not much brighter. The Kremlin is "playing it by ear," without any strategy, and is encouraging a conservative groundswell that is clearly going against the country's modernization. Perceptions of Russia in the West are at their lowest in decades.

The third victim of the crisis in Ukraine is the European Union. After having raised disproportionate expectations by launching the Eastern Partnership in 2009, the EU is pitifully beating retreat without taking full responsibility for it, as was evident at the recent summit in Riga.

The political price of this inconsistency will be heavy. In Kiev, people are already feeling like they have been let down, while the Kremlin sees the move as a harbinger of its geopolitical victory. The European Union is also suffering economic losses. Western sanctions and Russian counter-sanctions favor the establishment of new trading alliances, mostly for the benefit of the BRICS and countries such as Turkey and South Korea.

The causes of this great pan-European misunderstanding abound. Future historians will consider with astonishment the missed opportunities to reunify the continent in the early 1990s, after Sept. 11, 2001 or during the Dmitry Medvedev presidency in Russia from 2009-2010. In Western Europe, including France, the elites lost interest in Russia. It was generally perceived as a residual power, which was threatening first because of its weakness, then because of what was perceived as displaced ambitions.

A strange country - European in appearance but refusing more and more openly the practices and rules of the Western game. The often sensationalized way Russia is covered by many Western media has shaped the public opinion for a long time, and the loss of historic and strategic memory among many senior officials and political leaders did the rest.

Russia - and Putin in particular - also bears a heavy responsibility in what some observers call - rather hastily, hopefully - the Russian-Western schism. Criticism from Moscow on double standards, Western inconsistency in the Middle East or the revival of right-wing currents in Eastern Europe would be more audible if the Kremlin was faultless.

Some will say, rightly, that this is not the first major crisis between Russia and the rest of Europe. More or less sustainable reconciliation phases have always succeeded confrontation periods. However, it would be hazardous to rely on this single pendulum effect. The Ukrainian crisis comes at a very particular geopolitical moment: the shifting of the world's center of gravity toward the Asia-Pacific region.

Careful observers of the Moscow scene notice further tectonic movements, primarily in the minds of many Russians: Western Europe is not the central reference anymore, whether in terms of economic development, societal evolutions or international behavior. Faced with this reality, two attitudes arise.

The first is to make do with the existing fractures, considering that the real frontier of Europe is between Ukraine and Russia. This vision, firmly anchored in European political thinking for centuries and dominant in the U.S., aims to confine Russia as far as possible in the northeast of the continent.

The other approach is to consider that Russia, despite the crises and the vagaries of history, is also "of Europe." The geopolitical configuration of the continent for the upcoming decades depends on the outcome of this titanic battle of ideas, which goes "two ways." (Western hawkish factions and Russian Eurasists mutually reinforcing themselves).

In this context, Germany and France have a particular responsibility. The first, Germany, because of its economic weight and its special relationship with Moscow born of World War II and the reunification. The second, France, because it is the only permanent member of the UN Security Council seen as credible by both the Ukrainians and the Russians and it knows - because of its history - the dangers of post-imperial seizures.

Paris and Berlin should act in five directions. First, by working with other EU states to preserve unity on Ukraine. Second, by pursuing a firm and realistic dialogue with Russia. Third, by putting pressure on Ukraine, which is dragging its feet on implementing the political component (in particular points on decentralization) of the Minsk II agreement.

Fourth, by keeping offside those - many within NATO and the U.S. Congress - who advocate arms deliveries to Ukraine. Finally - and this is perhaps most important in the long term - by encouraging Warsaw and Moscow to overcome historical wounds and recent disputes, because the continent's stability is unthinkable without a Russian-Polish reconciliation. For sure, there will be obstacles, but several factors point to a glimmer of optimism. The main one being that perhaps neither Russia nor the EU have an interest in letting Ukraine become a "black hole" at their borders.

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 #24
Russia Direct
www.russia-direct.org
July 16, 2015
Iranian nuclear deal for Russia: victory or failure?
Russia Direct interviewed experts to shed light on the implications of the Iranian nuclear deal for Russia-Iran relations and the situation in the Middle East.

On July 14 Iran and the P5+1 reached a comprehensive agreement in Vienna on Tehran's nuclear program, imposing significant restrictions on its development in exchange for lifting the long-standing sanctions regime.

Russia Direct interviewed experts about what the Vienna agreement means for Russia, how Russia-Iran relations will change as a consequence, and whether the balance of power in the Middle East will shift when sanctions on Iran are lifted.

Anton Khlopkov, director of the Center for Energy and Security Studies (CENESS):

There are two important points that some media have not properly interpreted. First, Iran and the P5+1 countries have concluded not a classical agreement or treaty, but Joint Comprehensive Plan of Action (JCPOA), which should ensure that Iran's nuclear program will be exclusively peaceful. Second, JCPOA is not subject to being signed or ratified by the parties to the negotiation process.

At the same time every party of the talks has it part of the work to do. The main task now is for the Vienna arrangements to be executed smoothly and synchronously by all parties. Ever since the Joint Plan of Action (JPOA) approved in Geneva in November 2013, Tehran has duly and punctually performed its obligations. Iran seems to be just as keen to implement the package of arrangements reached in Vienna, since it understands that sanctions could be readily reimposed and everything could turn full circle.

Russia undertook to remove excess of low-enriched uranium from Iran, and to assist in converting the Fordow uranium enrichment plant into a nuclear, physics and technology center, which will focus among other things on the medical application of nuclear technologies. It is important to note that stable isotopes are widely used in industry and medicine, including in the diagnosis of cardiovascular and cancerous diseases.

Russia will offer its experience in conversion of the Fordow facility within the framework of the deal. For Russia, as the Nuclear Non-Proliferation Treaty (NPT) depositary, the fact that one of the most serious crises in the area of nuclear non-proliferation was resolved through international efforts is key. It creates a positive background for strengthening the non-proliferation regime and for new attempts to resolve other crises in the sphere of non-proliferation and security, particularly on the Korean peninsula.

Diplomacy was instrumental in securing the deal on Iran's nuclear program. At the turn of 2011-2012, following the publication in November 2011 of a report of the International Atomic Energy Agency (IAEA) on Iran, heavily based on intelligence provided by Western countries, mostly by the U.S., the crisis was close to evolving from a political and diplomatic into a military one. There were fears that an incident at sea between the Iranian navy and a Western navy could inadvertently escalate the crisis into a full-scale military operation.

That was not in Russia's interests, given the proximity of Iran's borders and the general chaos in the Middle East. The deal on Iran is a measure of how political and diplomatic tools can be effective in resolving non-proliferation crises.

Andrei Baklitsky, director of the Nuclear Nonproliferation and Russia program at the PIR Center for Policy Studies:

Iran is a member of OPEC and the Organization of Islamic Cooperation, but not a member of a large regional body. Following this final agreement on Iran's nuclear program and the lifting of sanctions this summer, nothing can prevent its membership in the Shanghai Cooperation Organization (SCO).

Iran could even join the SCO earlier than India and Pakistan, since unlike them it has no conflict with any existing members. Unlike the Arab monarchies, with which Tehran has thorny relations, the country has well-established political and economic ties with its eastern neighbors and no conflicts.

Like other SCO members, Iran borders the Caspian Sea. China's "One Belt One Road" project geographically touches Iran too, hence the country's interest in strengthening relations with its neighbors and membership of the SCO. Participation in regional organizations will allow Tehran to discuss and resolve with its neighbors the issues of security, counter-terrorism, drug trafficking and the situation in Afghanistan-all of which can safeguard the country's eastern borders.

Through SCO membership China and India are looking to keep hold of Iran. The lifting of sanctions will open up the Iranian market, whereupon Tehran will be able to do business with Europe and the United States. To keep Iran in the orbit of China, Russia and India and actively involve it in Central Asian affairs, it is logical to accept it into the SCO. If the course adopted by President Hassan Rouhani continues, the country will be less in conflict with its neighbors, and the next SCO summit could see Tehran become a member of the organization.

Yuri Fedorov, international security expert:

The Vienna arrangements with respect to Iran are the first step in reformatting the entire system of international relations in the Middle East, especially in the Persian Gulf and adjacent regions.

It is perhaps the result of the major changes taking place in the Iranian political class, a kind of "Iranian perestroika." Iran's new course departs from the extreme ideological foreign policy of the past in favor of partnerings with the West, primarily the United States.

It is not ruled out that in the coming years Iran-U.S. relations could start to resemble those during the reign of the last shah, Mohammad Reza Pahlavi.

For Moscow, the Vienna accords are a foreign policy defeat. In no time at all, Iran will become an international supplier of oil and gas, comparable to Russia. This will naturally undermine Russia's positions in the global energy markets.

Iran possesses the world's largest proven reserves of gas and the fourth largest of oil, ahead of Russia on both indicators. Hydrocarbon development and production in Iran will require less capital and less complex technology than in Russia. If the nuclear agreement is not derailed, capital investments will begin to flow, green and brown fields will come on stream, and a gas pipeline through Turkey to Europe and liquefied natural gas plants on the coast of the Persian Gulf will be built.

In light of this, the impact of the agreement on the dynamics of oil prices in the coming months will be less about the arrival of several hundred thousand barrels a day of new Iranian oil on the world market, and more about the political and psychological factors. In other words, oil prices will take into account the general trend toward further diversification of oil and gas sources.

Acting in unison, Tehran and Washington could be a key factor in the development of events in the Middle East, at least to the east of the Suez Canal. This informal alliance could one day be joined by Israel. But the main point is that one of the arguments long used to scare the West into maintaining cooperation with the Kremlin, despite its war in Georgia and aggression in Ukraine, is no longer on the international agenda.

Stanislav Pritchin, expert at the Center for Central Asian and Caucasian Studies, Institute of Oriental Studies, Russian Academy of Sciences:

The Vienna arrangements are unlikely to seriously alter Iran's stance in the negotiations on the status of the Caspian Sea. Although it is worth noting that under President Hassan Rouhani, Tehran has become more flexible and more attuned to the constructive resolution of conflicting views.

But the overall abatement of tension over Iran will remove some of the constraints that have hindered cooperation between the Caspian countries. Sanctions have prevented non-cash payments between Iran and its neighbors, despite numerous joint projects and the desire to cooperate, and that in turn has impeded the positive dynamics of mutual trade.

When sanctions on Iran are lifted, we will see an increase in trade and the implementation of many joint projects in the Caspian region that were mothballed due to restrictions.

Yulia Sveshnikova, policy analyst at the Islamic Renaissance Front in Malaysia:

Iran has done all it can to make the talks as "nail-biting" as possible and to present the deal itself as the event of the century. Indeed, despite abandoning its "red lines," Iran undoubtedly emerges as the winner, although perhaps only in the short term.

Now the talk will be of unfreezing the arms embargo and the possibility still of keeping a nuclear program. Iran received a kind of recognition, and that is what matters most - the recognition of its right to peaceful enrichment of uranium, and also the opportunity to improve its global image, important for ordinary Iranians, and restore national dignity, which will be measured in elementary things such as the lifting of heavy restrictions on visas, employment and bank accounts. It is a victory for the team of negotiators and for the moderate government led by Rouhani.

However, Iran is home not only to moderates, but also spiritual leaders and institutions that oppose the deal and its possible consequences for the unaligned image of the regime. This leaves a window open to speculation about whether the deal really does mark an historical event.

Potential dissent from the Majlis, Iran's parliament, will not be a major issue. One problematic scenario is if opponents of the deal inside the political elite decide to stretch their nuclear ambitions slightly more than the agreement provides for, having naturally taken all necessary precautions in advance.

Or, if no one inside Iran has the stomach for such adventurism, we could well see provocation from outside with a view to accusing Iran of violating the agreement and to wrecking the deal. There are plenty of potential saboteurs, starting with Israel and the Gulf states, headed by Saudi Arabia. On July 14, 2015, the world made a contribution not to preserving nuclear non-proliferation, but to changing the geopolitical balance in the Middle East, greatly vexing the major losers, Riyadh and Tel Aviv, in the process.

All this creates the impression that if the deal does not collapse in the early stages of approval by the legislative bodies of Iran and the United States (which is unlikely), the subsequent course of events could lead some to consider the "hottest" of all the options that were on the table during negotiating process. Immediately after the joint statement by Mohammed Javad Zarif and Federica Mogherini, President Rouhani solemnly declared that the deal was just the beginning. Indeed it is, but of what? In my opinion, it is the beginning of a very troubled period, every stage of which will be fraught with provocation and disruption.

For Russia, meanwhile, alongside the ups (expanded military-technical cooperation) and downs (greater competition in the oil and gas sector, and potential rapprochement between Iran and the West), the resolution of the conflict represents a diplomatic triumph. In fact, it was the "Lavrov Plan"-based on the principles of incrementalism and reciprocity, and formally rejected by the United States-that ended up being the basis of the negotiations. Overall Russia showed itself to be a strong and independent player, perhaps with the exception of the tactful cancellation of S-300 deliveries to Iran against the backdrop of the Russian-U.S. "reset."

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 #25
The National Interest
July 17, 2015
A Russian Role in Central Asia That America Can Live With
By Evan Gottesman
Evans Gottesman is a research assistant at The National Interest.

The ongoing war in Eastern Ukraine casts a long shadow over areas of shared American and Russian interest, making the Obama administration's 2009 "reset" in relations appear a distant memory. However perceptions have shifted in the intervening six years, common concerns still exist between Washington and Moscow; chief among them: terrorism. For this reason, U.S. officials can look with (quiet) approval to Russia's pursuit of a more robust security presence in Central Asia.

In April, the commander of Russia's Tajikistan-based 201st Motorized Division indicated that Moscow would increase its deployments in the Central Asian republic from 5,900 troops to 9,000 by 2020.

The announcement proved timely. Just two months later, Tajikistan made international headlines. Colonel Gulmurod Khalimov, a senior officer in the country's national police force left for Syria and defected to the Islamic State (ISIS) in a highly publicized video produced by the extremist group.

Then, on July 16, Kyrgyzstan's GKNB security services killed six gunmen in two shootout incidents in the capital Bishkek. Kyrgyz police captured seven others in the aftermath. GKNB officials say the militants were ISIS members and believe they were planning attacks in Bishkek's central square and at the Russian Air Force base in Kant. The impact of Khalimov's defection and possible Islamic State activity in the region should not be exaggerated. Still, the Central Asian republics, Russia, and the United States should be prepared to contain ISIS before more episodes occur.

It is tempting to view Moscow's heightened presence in Central Asia in the context of the Russia-West divide and the Ukraine crisis. However, Russia's security interests in the region are longstanding. Kazakhstan, Kyrgyzstan, and Tajikistan have close relationships with Russia and are all members of the Moscow-led Collective Security Treaty Organization (CSTO). Russia's ties to these states can allow it to play a constructive role in stemming militant activity.

By boosting its military profile in Tajikistan, Russia is aiming to resolve a persistent issue in its post-Soviet security doctrine. For the Kremlin, the border between Afghanistan and the Central Asian republics is a gateway to Russia, even though these countries left Moscow's control in 1991 and four of them do not even share a direct land border with Russia. This position is not without merit. After all, the Russia-Kazakhstan border was designed as an internal administrative boundary, not an international frontier.

Tajikistan represents a particularly problematic case for Moscow. One million migrant workers from the Central Asian republic live in Russia, according to the Russian Federal Migration Service. Only 10 percent of foreign laborers in Russia are working legally, meaning the number of Tajiks in the country may be even higher. Remittances from these workers totaled $4 billion USD in 2013, or 52 percent of Tajikistan's GDP. Thus, for Dushanbe, what happens in Russia does not stay in Russia. Likewise, events in Tajikistan can roil the Russian Federation via the large migrant worker community there.

In that regard, it is notable that in his June video recorded by ISIS, Colonel Khalimov spoke in Russian. This is quite telling. The erstwhile security chief targeted his remarks at the regime of Tajik President Emomali Rahmon, even though many citizens (especially those born after the Soviet collapse) have at best a loose grasp of the Russian language. But most Tajiks fighting for ISIS are not lifelong residents of the Central Asian republic. Rather, they are migrant workers who have spent time in Russia. Exposed to poor working conditions and pressure from xenophobic elements, these workers become prime targets for recruitment by Islamic fundamentalist causes. In Russia, Central Asian laborers often find themselves involved with North Caucasus-based militant groups or with extremist organizations like Hizb ut-Tahrir.

If instability in Afghanistan spreads to neighboring Tajikistan, Russia will undoubtedly feel the impact. Such an eventuality is hardly unprecedented. From 1992-1997, the Islamist Tajik opposition, backed by Afghan militants, fought a bloody civil war against President Rahmon's Russian-supported Popular Front. Already home to so many Tajik workers, Russia could make a convenient destination for refugees should violent unrest visit the Central Asian republic once more. Moscow therefore has an interest in containing violence south of the former Soviet frontier.

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 #26
The National Interest
July 17, 2015
Georgia's Aspiration: Living with, but Not in, Russia
"Loudly attacking Russia at every turn may be good politics for some, but it is bad and dangerous policy for Georgia."
By Tedo Japaridze
Tedo Japaridze is chairman of the Foreign Relations Committee of Georgia. He was Georgia's ambassador to the United States. He was also national security adviser to Georgian President Eduard Shevardnadze and was Mikhail Saakashvili's first Foreign Minister. The views expressed in this article do not necessarily correspond to those of the Georgian government.

Georgia's foreign and security policy is frequently talked about in "planetary terms." For example, the statement that Georgia might enter "Russia's orbit" like a "satellite" is a common expression; as a comet, Georgia is expected to follow a western trajectory. If so, Georgia-like a meteor-may find itself on "a collision course" with Moscow. In a recent article published by the Washington Post, the fear of entering Russia's orbit was expressed. Speaking in cosmological terms, Georgia's people, institutions and governments are expected to enthusiastically proclaim allegiance to the West and-with a single breath-denounce Russia.

Most recently, a National Democratic Institute opinion poll indicated that 26 percent of Georgians prefer the Eurasian Union over the EU. Out of context, there was one more "Russian orbit" interpretation, but this poll wonderfully captured the false choice that is being presented to Georgia from the outside. Georgia is not a celestial body. Grounded in the South Caucasus, Georgia has specific neighbors, political, economic, financial and military limitations. Thousands of Georgians receive remittances from Russia and trade in Russia. For generations, the mark of the elite was how "hallo" was pronounced when picking up the phone, which gave away how much time one had spent in Moscow.

Still, in May, the European Bank for Reconstruction and Development released its 2015 growth forecasts for Moldova, Georgia and Ukraine. The region very much suffers from Russia's economic crisis, perhaps as much as the Finnish economy suffered in the early 1990s-and for similar reasons. Georgia's growth projections halved: Our GDP is expected to grow by merely 2.3 percent this year. That is still better than Moldova, which is expected to see a 2-percent recession this year, not to mention Ukraine's war economy. This is because Georgia's economy (and society) is increasingly decoupled from its "post-Soviet" framework

Historically, it is simply wrong to assume that Georgia's western choice is an anti-Russian statement. Georgia joined the Partnership for Peace (PfP) program in March 1994; Russia followed in June 1994. Russia signed a Partnership and Cooperation Agreement (PCA) with the EU in 1996; Russia had preceded Georgia signing a PCA agreement in June 1994. In sum, Georgia followed a course of institution-building, capacity-building, economic development, and in many respects, nation-building typical for a post-communist state. It is Russia that did not stay the course, not Georgia.

Furthermore, coming to an understanding with Moscow has been consistently sought in Tbilisi and confidently advised by the West. The Saakashvili government came to power in 2004 seeking an understanding with Russia; the Georgian Dream authorities came to power in 2012 with the similar hope of reinvigorating relations with Moscow. When the U.S. Secretary of State, Hillary Clinton presented Russian Foreign Minister Sergei Lavrov with a reset button in 2009, there were many among us who wanted to be a bridge in relations, rather than stand in the way.

To this day, NATO has not relinquished the 1997 NATO-Russia Founding Act, which forbids placing permanent bases in the Baltic States and Eastern Europe. Successive exercises ensure that at any one point in time, a sizable force is stationed in the region, but the West stays true to its commitment. NATO allies have been willing to heed Russia's trauma, including Moscow's security concerns in a region the Kremlin keeps calling the "Near Abroad."

The term was initially benign, employed by Russia's Foreign Minister Kozyrev, a man sincere in his intention to reach out to Europe. However, as early as 1993, I was warned by an advisor to President Vaclav Havel that once you recognize a "near abroad," there may come a day you deal with notions of "middle" or "farther abroad." This day has come. Georgia and Ukraine were invaded. Farther away, Montenegro is being considered for NATO membership. Nonetheless, an article published on Monday in the Wall Street Journal suggests that Russia is an inhibiting factor. Even farther abroad, Finland and Sweden see the violation of their airspace, territorial waters and cyberspace as a signal that their neutrality does not deter aggression. And Baltic States fear that Russia may be willing to test Article V.

Moscow's "near-middle-farther-abroad" concept is tested in each NATO Summit, the next stop being Warsaw in July 2016. It is now clear that we need to move beyond the appeasement-deterrence pendulum. In considering what is the way forward, the status quo may be telling. Between article V "blanket security" and various "coalitions of the willing" tested in successive regional exercises collective security can be reimagined, restarted, assertively but not aggressively affirmed. The issue is not one "of principle" but of effect. Georgia never wished to scare or provoke Russia. Loudly attacking Russia at every turn may be good politics for some, but it is bad and dangerous policy for Georgia. We are near Russia, but not of Russia. We want to live with Russia but not in Russia.

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#27
The Unz Review
www.unz.com
July 18, 2015
The Meaning of the US Saber-Rattling at the Borders of Russia
By The Saker

Hardly a day ever passes without the western corporate media reporting that USN warships have entered the Black Sea, the US Army is sending instructors to train the Ukrainian military, US joint task forces are organizing maneuvers in the Baltic or US Army units are making highly publicized movements from the Baltic states to Poland. And every time this happens, Russian diplomats and officials make protests and declare that such actions are only making matters worse and contributing to the destabilization of an already very tense situation. Russian officials also like to remind everybody that NATO is roughly 4 times bigger than the Russian military and that the US has bases all around Russia. So are we to conclude that the Pentagon is preparing to attack Russia or to intervene militarily in the Ukraine?

I believe that such a conclusion would be premature. Here is why:

The first thing to keep in mind is there is absolutely no need for the USA to forward deploy anything to attack Russia. I would even argue that forward deploying units or systems close to Russia put them at risk and make them a much easier target for Russia to strike. This is especially true of any USN ship entering the Black Sea which is completely "covered" by Russian coastal defense missiles. One Russian expert declared that Russia could destroy any ship anywhere in the Black Sea is 20min or less. This is probably an accurate figure. If the Pentagon was preparing to attack Russia it would pull US units and systems *away* form the Russian border, not closer. The US has plenty of very effective long range strike capabilities including ballistic and cruise missiles.

The second undeniable fact is that under any conceivable scenario Russia does have the means to basically completely destroy the USA as a country in about 30min (the USA, of course, can do the same to Russia). Any US war planner would have to consider the escalatory potential of any military action against Russia. It is theoretically possible that in the future the USA might have a means to protect itself from such a retaliatory attack by using a combination of its future Prompt Global Strike system, the forward deployed Active Layered Theater Ballistic Missile Defence system and the US National Missile Defense programs. Personally, I don't believe that such a system would ever protect anybody against a Russian counter-attack, but even if it does, this will be far away in the future. Currently these systems are not operational and will not be so for the foreseeable future.

The entire notion of sending lethal aid to the Ukraine or instructors to train the Ukrainian military is utter nonsense. The Ukraine used to be in the Soviet second strategic echelon and it is absolutely full of weapons of all kind, and there are plenty of experts capable of using them. The problem of the Ukrainian military is neither a lack of weapons nor a lack of experts, but a lack of motivation by the vast majority of Ukrainian soldiers to go and fight in the Donbass against highly-motivated and very skilled Novorussian forces. Furthermore, it is abundantly clear for everybody (including the Ukrainians, of course) that should the Novorussian defenses crumble then Russia would have to intervene militarily to protect the Donbass. . The Ukrainians can claim that they are already fighting hordes of Russian solider and tanks (up to 200,000 according to a recent interview of Poroshenko), but everybody in the Ukraine fully understands that it would take the Russians no more than 24 hours to completely wipe out the entire Ukrainian military.

Some would argue that what the US is doing is setting up a "tripwire force", just small enough to be attacked, but one whose destruction would warrant a full-scale US counter-attack. There are two problems with that theory. First, these deployments are happening in NATO member states whose areas are already protected by the "political tripwire" of Article 5 of the Washington Treaty. There is simply no need for any kind of tripwire force in a NATO member state. Furthermore, nobody in his right mind would seriously believe that Russia might attack any European country. Sure, the EU and US politicians will try to terrify the Europeans with images of Russian hordes invading the Baltics, Poland or even Germany, but they all know that this is utter nonsense. For one thing, the Russian military is simply not configured to execute such a mission as it does not have the required power projection capability. And there is no political force in Russia even suggesting such a move. And why would Russia do that anyway? I cannot think of a single reason for such a crazy move.

In reality, what the US military is doing is called "showing the flag". This is purely a political statement and not, in itself, a preparation for an attack. In fact, I would argue that deploying US units in the Baltic states would be just about the worst possible way to prepare for an attack.

That does not mean that a war cannot happen. It very much can. First, there is the obvious risk of mistake and miscalculation. Then, it is really dangerous to see the kind of completely irresponsible statements regularly made by top US officials ranging from Obama's idiotic claim that Russia is somewhere between ISIS and the Ebola virus in the list of major threats to the world or the more recent declaration of a JCS Nominee General Joseph Dunford who seriously declared that "Russia presents the greatest threat to our national security". This kind of reckless fear-mongering can become a self-fulfilling prophecy and result in an actual war, if only because of the confrontational atmosphere it creates.

So why are the Russians so upset about this saber-rattling if it really presents no real risk for Russia?

The main reason is that these highly inflammatory actions and statements create a sense of crisis which contribute to isolate Russia from the rest of Europe - a key US foreign policy objective. This was also the main goal for all the US attempts at drawing Russian into the conflict in the Ukraine: to create a huge crisis and re-ignite a Cold War II in all of Europe. After all, the Europeans who are now busy with the Greek crisis, the tanking economy, social issues such as immigration and crime would rapidly turn to other issues if the main topic on all news shows became the "Russian threat to Europe". The politics of fear are well-know: obedience, passive acceptance of the dismemberment of social, human, political and civil rights, the creation of a scapegoat on which any crisis could be blamed, etc. Having failed to re-ignite a Cold War II by means of a Russian "invasion" of the Donbass, the US now has fallen back on the option of acting as if such a military move did happen and that the rest of the Ukraine, the Baltics and Poland "are next". Hence the need to "protect" them by such public display of the US military presence.

Russia is walking a tight line here: she needs to avoid looking weak or frightened while also avoiding contributing to the further degradation of the situation. Hence the apparent Russian policy of "one step forward, one step backward" towards the US/NATO/EU.

The US will probably only achieve a moderate degree of success in its desperate campaign to present Russia as a threat to the world. After all, there are only so many gullible doubleplusgoodthinkers out there willing to buy this silly notion. The problem is that regardless of the real feelings of most Europeans, the EU's comprador ruling class will continue to act as if the threat was real. The same goes for the Empire's propaganda machine (aka "corporate media").

The current saber-rattling is therefore likely to continue as long as the EU is run by US-puppets.

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#28
CNN.com
July 16, 2015
Isolated Russia has little left to lose
By Matthew Rojansky and Michael Kofman
Matthew Rojansky is director of the Kennan Institute at the Woodrow Wilson Center. Michael Kofman is a public policy fellow at the Woodrow Wilson Center.

(CNN)The one-year anniversary of the tragic shooting down of Flight MH17 over Ukraine is an opportunity to take stock of the costs of Europe's latest, biggest, and apparently most intractable security crisis.

Twelve months after Russia-backed separatists were first accused of shooting down the Malaysia Airlines passenger jet, Europe's relations with Russia -- having advanced by leaps and bounds over nearly three decades since the fall of the Iron Curtain -- have again descended into deep distrust and hostility.

European leaders, initially knocked off balance by Russia's annexation of Crimea and cascading outbreaks of violence in eastern Ukraine, found new resolve when nearly 300 passengers, many of them EU citizens, became victims of the conflict. This tragedy, for which Europeans held Russia morally and politically responsible, became the rallying cry and the trigger for imposition of tough, coordinated sanctions by the U.S. and the EU. And while the impact and legacy of the sanctions themselves are mixed, there can be no doubt that the era of partnership in Russia's relations with Europe and the West is now fully over, and that a new period characterized by mutual isolation and deterrence has begun.

EU and U.S. sanctions have targeted prominent individual Russian officials and business leaders, as well as Russia's state corporations, its banking sector, and its ability to refinance corporate debt. Stacked on top of a sharp decline in oil prices and an economic recession that began early in 2014, the sanctions have added painful layers to Moscow's larger financial woes. So far they are projected to have cost at least $40 billion and accelerated capital flight -- hundreds of billions in hard currency that the Russian economy can ill afford to lose.

But although the sanctions were intended as a long-term instrument of leverage, they have thus far proven more punitive than coercive. Since their imposition, Ukraine has seen two major Russian-backed military offensives, further loss of territory, and no substantial change in Moscow's unwillingness to implement key terms of either the September 2014 or February 2015 Minsk agreements.

Debris from Malaysia Airlines Flight 17 sits in a field at the crash site in Hrabove, Ukraine, on Tuesday, September 9. The Boeing 777 is believed to have been shot down July 17 in an area of eastern Ukraine controlled by pro-Russian rebels.

For its part, the Kremlin acknowledges the economic damage from sanctions, but has also used cycles of sanctions and countersanctions to shore up its domestic political standing. In early and mid-2014, the Ukraine crisis was seen by Russians largely through the lens of Ukraine's internal dysfunction, but it is now cast exclusively in terms of a larger battle between Russia (good) and the West (evil), in which an appeal to fundamental Russian patriotism necessitates support for President Vladimir Putin and his policies.

Still, the downing of MH17 forged a collective European response from what had previously been a fractious and divided EU, where some member states were prepared to write off Ukraine and the whole "Eastern Neighborhood" in the interests of preserving lucrative economic ties with Moscow.

As a result, it also deflated the Kremlin's expectation that it could block collective EU action by maintaining strong bilateral trading relationships with European states and undertaking selective intervention into European domestic politics and media discourse. Even one year later, European solidarity has held fast, with the sanctions renewed by consensus through January 2016.

So MH17 was a turning point, after which many European leaders abandoned their previously held view that Russia could be successfully integrated into Western-led economic, political, or security frameworks.

This revolution in thinking about Russia has been most significant in Germany, which was the keystone of Russia's political and economic relations with the EU. While there is still open debate in Berlin on the path forward -- a new version of "Ostpolitik" or a return to the Cold War? -- and while Chancellor Angela Merkel is still the intermediary of choice between Russia and the West, it is clear that the relationship that both Germany and Russia once characterized as a "strategic partnership" has come to an end.

Instead, Russia's war in Ukraine has plunged Russia and the West into a new phase in their relations, effectively ending the post-Cold War period. But while Russia has taken a strategic bite out of Ukraine, it has done so at a cost that was once inconceivably high: the end of the Russian-European economic and political partnership and the emergence of a situation where NATO and Russia once again see direct confrontation as a real possibility.

Meanwhile, Ukraine's future remains no less uncertain today than it was a year ago. The country marches fitfully down the road of economic and political reforms, but its citizens and international creditors are growing impatient. Crimea appears lost for all practical purposes, and there is no end in sight to the conflict in Donbas. Both in Ukraine's domestic political and economic agenda and in the simmering Donbas conflict, Russia could intervene at any time to dramatically raise the costs for Ukraine and its Western supporters.

Ultimately, Europe and the U.S. may be disappointed by the limited success of sanctions in changing Russia's behavior or improving the situation in Ukraine.

But this is now about more than Ukraine. The MH17 tragedy and subsequent sanctions likely mark a revolution in European thinking about Russia, one that includes the dismantling of basic trade, financial and political relationships at all levels.

And all this raises a worrying question for the future: What can we expect from a Russia that has been so isolated from the West it has very little left to lose?

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 #29
RFE/RL
July 16, 2015
The Day Putin Became A Pariah
by Brian Whitmore

It was the day Moscow's dreams of empire cost European lives. It was the day the Kremlin lost its last vestiges of credibility. It was the day when it became impossible to continue even pretending that Vladimir Putin's regime was anything close to respectable.

It was the day the mask came off. July 17, 2014 was the day Russia became a rogue state.

It wasn't just that the downing of Flight MH17 killed 298 people from 10 countries and four continents. It wasn't just that 80 of the victims were children. It wasn't just that the Netherlands alone lost 193 people, the largest Dutch loss of life since World War II.

And it wasn't even that Russia made this all possible by, according to all credible accounts, providing pro-Moscow separatists with a sophisticated BUK surface-to-air missile system capable of shooting down a civilian airliner flying at an altitude of 10,000 meters.

That was all bad enough. But it was what came after that really sealed it.

There was the disrespect the pro-Moscow rebels showed to the victims' remains -- the images of separatist fighters, smiling with cigarettes dangling from their lips, rifling through and looting the belongings of the dead.

And as the evidence poured in -- audio recordings, satellite images, and forensic data -- showing that the aircraft was almost certainly shot down by a surface-to-air missile fired from rebel-held territory, there was the obfuscation.

There was the Kremlin's formidable disinformation machine adding insult to injury by cranking out a dizzying barrage of crackpot theories about who really shot down the plane. And with this there was the realization that not only was Moscow responsible for a terrible tragedy, it was mocking the world -- and the victims -- in its aftermath.

MH17, of course, did not change everything. Russia's war on Ukraine continues. Crimea remains annexed. Pro-Moscow separatists and Russian troops are still in Donbas. And nobody has been held accountable for killing nearly 300 people.

But MH17 did change a lot. European leaders, most notably German Chancellor Angela Merkel, who had been inclined to work with Putin and give him the benefit of the doubt, turned into harsh critics.

Russia was transformed from a troublesome -- and often tiresome -- partner you could do do business with into a potentially lethal problem that needed to be addressed.

According to the Pew Research Center, attitudes toward Russia in the European Union -- which were positive in 2013 -- tanked in 2014 and 2015.

Russia is now not viewed favorably by more than one-third of the population in any single NATO country, according to Pew.

These trends did not start on July 17, 2014, they commenced in earnest months earlier when Russia annexed Crimea. But they accelerated as a result of that day and its aftermath.

After MH17, it became a lot harder to be a Putin apologist. And a lot easier to be a critic.

And one year after that ill-fated flight crashed into the sunflower fields of Donetsk Oblast, Russia is coming under renewed pressure over the tragedy.

An investigation by Dutch authorities that has been distributed for review by agencies in numerous countries will pin the blame for the tragedy squarely on pro-Moscow separatists in eastern Ukraine, CNN reported, citing officials who have seen the text.

And Malaysia, which lost 43 citizens on MH17, has drafted and circulated a UN Security Council resolution that calls for an international tribunal.
This puts Russia in a difficult spot.

Vetoing the resolution, as Russia has vowed to do, would be tantamount to an admission of guilt. Putin's protestations in a telephone call with Dutch Prime Minister Mark Rutte that a tribunal would be "premature and counterproductive" don't really have a lot of traction.

And in the unlikely event that Moscow pulls an about-face, supports the resolution, and allows the tribunal to proceed?

Well that opens the door to some very uncomfortable questions being asked in open court. Not just about the pro-Moscow separatists, but about who in the Kremlin leadership approved giving them a surface-to-air missile system.

MH17 is already a watershed. And it could well turn out to be Vladimir Putin's Lockerbie moment.

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 #30
New York Times
July 20, 2015
Russia's Coming Regime Change
By ANDREI V. KOZYREV
Andrei V. Kozyrev was the foreign minister of Russia from 1990 to 1996.

Asked about Russia's intervention in Ukraine at the St. Petersburg International Economic Forum last month, President Vladimir V. Putin spoke bitterly of America and Europe. "They have pushed us back to the line beyond which we can't retreat," he said.

This was more than a political blame game. His answer revealed both a concerted anti-Western strategy, in which the West is seen as the enemy, and also a policy of brinkmanship. The implicit message was that if the West acted in a manner not to the Kremlin's liking, that could prompt an ultimate response, maybe even a nuclear one.

In April, after speaking to people close to Mr. Putin, Graham Allison, director of the Harvard Kennedy School's Belfer Center for Science and International Affairs, and Dimitri K. Simes, president of the Center for the National Interest, warned of a growing risk of nuclear war. But they offered a contrasting explanation.

"When the Soviet Union collapsed in 1991, Russia was on its knees," they wrote. "But since Vladimir Putin took over in 1999, he has led a recovery of Russia's sense of itself as a great power."

These two strands of the Kremlin narrative - recovery on one hand; encirclement on the other - have been fashioned to appeal to the Russian people and used to justify more than 15 years of authoritarian rule. But both strands are suspect. In the early 1990s, Russians rose up against Soviet authoritarianism. The first - and last - popularly and fairly elected president, Boris N. Yeltsin, had a mandate to pursue the true national interest of catching up with the advanced, democratic West.

The situation in Ukraine now, after a popular uprising against a corrupt, authoritarian regime, resembles Russia then. However painful the transition to freedom might be, it would be weird to say that the people who are undertaking it are "on their knees." Was America on its knees under King George III's rule in the run-up to the war for independence?

Tragically for Russia, from the mid-'90s an oligarchic bureaucracy monopolized oil and gas exports and has used the profits to purchase luxuries and homes in the West. The general population, meanwhile, has remained under the custody of a K.G.B.-style state security and propaganda apparatus.

The ailing Mr. Yeltsin allowed this regression. But Mr. Putin rides on it. For a decade, the rising price of oil provided soaring growth and veiled the inherent deficiency of the regime. In reality, Russia's government is simply incompatible with the reforms needed for sustainable economic development, which demands liberalization and competitiveness.

When the petrodollar windfall dried up, that reality reasserted itself. Today, the nation is truly on its knees - beneath a leader who cannot be changed, and as hostage to the capricious price of oil and a gluttonous military-security complex. The fratricidal war in Ukraine, the impudence of the Chechen strongman Ramzan A. Kadyrov, a renewed isolation from the West and the Kremlin's dependence on China as financier of last resort are all jabs to national pride and security.

At the same forum where Mr. Putin spoke of the last line of defense, his friend and Russia's former finance minister, Aleksei L. Kudrin, proposed an early presidential election to provide a mandate for much-needed economic reforms. This voice from the ruling elite is only an echo of mounting dissent within. Sooner or later, economic hardship will awaken the people, too.

This year alone, Russians have suffered a 3 percent loss in real disposable income (6.4 percent year on year). In the 12 months to April, exports - vital for providing foreign currency - fell 33.9 percent, and imports shrank 40.8 percent. The outlook is very poor.

Like their Soviet predecessors, the Kremlin's present rulers see the example of the democratic West, above all the United States, as a threat. Instead of preaching a Communist-style supremacy, most realize that their regime will be uncompetitive in the long run. Yet the oligarchs cling to power as long as possible through intimidation and disinformation, seeking to undermine Western norms, from human rights to business transparency and international law.

America's vice president, Joseph R. Biden Jr., rightly said that the conflict over Ukraine was "a test for the West." If it fails that test, the West will stimulate further aggression, both in Ukraine and elsewhere. A slow, feeble reaction from both Kiev and the West to Russia's seizure of Crimea encouraged intervention in eastern Ukraine.

In today's Russian political culture, "if one shows some weakness," wrote Julia Ioffe in The Washington Post in March, "then one is all weakness - and therefore prey." Things may even come to nuclear blackmail, as has been hinted.

Yet the potential of American soft power and leadership, together with a strong response from European countries and Ukraine, is far from exhausted. Economic sanctions have bitten, magnifying the regime's inefficiency.

The firmness of the West in protecting the sovereignty of Ukraine and restoring its territorial integrity is a prerequisite not only to rein in the Kremlin's aggressive impulses, but also to engage Russia in a constructive dialogue on a broad agenda. This could extend to arms control and confidence-building measures to reduce the risk of war. Of course, any negotiations must start from the position that nuclear threats are unacceptable and counterproductive.

Regime change in Russia is inevitable, maybe imminent. But the West should not bet on that eventuality or make it a policy goal. The Russian people will rise up again, but the path to a sustainable democracy and stable economy will be challenging. The West should be ready to help then.

What the Western democracies must do now, for Russia and for themselves, is prove that they will defend their values and international law.

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#31
Carnegie Council for Ethics in International Affairs
www.carnegiecouncil.org
July 13, 2015
Eighteen Months on: Post-Maidan Ukraine
NICOLAI N. PETRO, DAVID C. SPEEDIE  

DAVID SPEEDIE: I'm David Speedie, director of the program on U.S. Global Engagement at the Carnegie Council for Ethics in International Affairs. This is another in our regular series of Ethics in Security Bulletins.

Our guest today is Dr. Nicolai Petro. Dr. Petro is a professor of political science at the University of Rhode Island, specializing in Russia and its neighboring states. He has previously served in the Office of Soviet Union Affairs in the U.S. Department of State and at the U.S. Embassy in Moscow and has held fellowships at the Council on Foreign Relations, the Foreign Policy Research Institute, the Hoover Institution at Stanford University, and the Woodrow Wilson Center for International Scholars. He is the author of several books on Russian democratic development and foreign policy, and has published in The American Interest, The New York Times, The Nation, The National Interest, The Wilson Quarterly, and elsewhere.

Last year, Dr. Petro was a Fulbright Scholar in Odessa, Ukraine, and we spoke to him on several occasions there during that tumultuous period in Ukraine. He is now back in Odessa.

Nicolai, welcome back once again to the Carnegie Council.

NICOLAI PETRO: Nice to be back.

DAVID SPEEDIE: The first, I guess, most obvious question, Nicolai, is, given the fact that you are back after almost a year away, what has changed in the parts of Ukraine where you have been; what has changed over that period, for better or for worse?

NICOLAI PETRO: Speaking of the region of Odessa, where we lived last year and have now returned, the economic situation here, as in most of the rest of the country, is worse. The currency has fallen significantly with respect to Western currencies. There is a general decline in the standard of living. And there is not a lot of economic activity going on right now, as most foreign investors, and even domestic investors, are not quite sure which direction the country is headed, whether it will be toward stability or whether the political and-well, the political situation will continue to deteriorate and, as a result, also the economic situation.

DAVID SPEEDIE: In that regard, Nicolai, obviously one of the things that has just been festering over since the crisis of Maidan and beyond is the question of foreign investment, of propping up the Ukrainian economy, the significant amount needed to do that. Is this a question of confidence? Is this just something that is lingering and not liable to be resolved in the near future?

NICOLAI PETRO: My sense is that Western investors-and not just Western investors but also their Russian counterparts, their Chinese counterparts, and many Ukrainian businessmen-have little confidence in the ability of the government in power now today to be able to come up with a packet of reforms that can be pursued consistently. As a result, they feel that the economic situation in the country, both legally and in terms of the stability of the banking system and of the currency, is unpredictable.

Despite Western assistance through loan guarantees and through credits, the amount that would be needed to revitalize, not just stabilize-sort of to put it on life support, but to really revitalize-the Ukrainian economy is much greater than what has been offered by the combined packages of the Western countries supporting the current government.

What is really needed is a massive amount of investment in the country, and that is not something that Western governments can guarantee. There needs to be a revitalization of confidence of business investors in the country.

One of the things that has really gone against that is the government's illogical stance to sever commercial links with Russia, which even today, more than a year after the Maidan and after a number of specific measures taken to cut off Ukrainian economic ties with Russia, Russia still, I recently read, remains the country's largest trading partner. Everything that the current Ukrainian government is doing is aimed at undermining that relationship, with nothing coming forth from the West comparable to that.

DAVID SPEEDIE: It sounds like a self-defeating, quixotic proposition.

NICOLAI PETRO: Yes. It's really an irrational economic policy. But it is driven by an ideological perspective of the current government that seeks to distance or remove Russian influence, including economic influence, in the country, when Russian economic influence remains all-pervasive. And there is nowhere Ukraine is going geographically; it will always be Russia's neighbor and Russia will always be very significant in its life.

DAVID SPEEDIE: You mentioned before we came on the air that President Poroshenko is in Odessa today [Editor's note: This podcast was recorded on July 8, 2015.] for a meeting of regional governors. Is this some sort of a crisis meeting or is this routine?

NICOLAI PETRO: Well, it wasn't announced before that, but I would say that this week the Ukrainian government has been in crisis mode because there was an unexpected populist vote that led to a split within the government coalition. There was an attempt to pass a law that allowed investors to repay loans taken from banks when the local currency was at a rate of 5:1, whereas today it is closer to 23:1, to the dollar. That particular vote, which the president and the government urged parliamentarians to vote against, actually passed in the parliament because the majority of the president's own party voted in favor of it.

Now, everyone understands that Ukraine cannot possibly afford to do that, to repay loans taken by private citizens in banks at a rate that no longer exists. But, in a populist move, the parliamentarians voted for it.

As a result, there was supposed to be a meeting again of the parliament and a revote to rescind the prior vote. But they apparently do not have the votes in parliament, so they have delayed that vote.

The majority whip in the parliament for President Poroshenko's party has resigned. Now, he is being asked to reconsider his resignation. There have been, in addition to that, several ministerial resignations. Basically, I would say that every minister's portfolio currently in the government looks shaky.

And this is all taking place on the eve of crucial negotiations with the IMF [International Monetary Fund] over the status of creditors that need to be repaid this year.

DAVID SPEEDIE: Hardly encouraging.

Let me move to a question concerning Odessa. One of the more, at least on the face of things, bizarre moves of late was the appointment of former Georgian president Mikheil Saakashvili as governor of the Odessa region. You wrote at the time in an article, an opinion piece, "What to Expect from Saakashvili in Odessa," that "his appointment to the governorship of the Odessa region is primarily a domestic reshuffling of cadres in anticipation of further infighting among the various clans in Ukraine, rather than a policy decision aimed at Russia." This just seems to add to the fairly chaotic scenario that you have been describing.

NICOLAI PETRO: Yes. Sadly, there does seem to be a lot more infighting. Although it's hard to tell, because we're sort of watching this theater from a distance, the average citizen can't really know what's happening behind the scenes, but Saakashvili's support comes directly from the president. So President Poroshenko is going out of his way again to indicate that he is supporting Saakashvili's initiatives in this region for reform by holding a regional governors' meeting. But his policies here over the course of the past months have met with considerable, I would say, unease. Saakashvili has summarily fired or shed heads of districts. He has fired local prosecutors. He basically has made a great show on television of coming to meetings yelling at local officials and then summarily sacking them.

DAVID SPEEDIE: It sounds very Soviet, doesn't it?

NICOLAI PETRO: It is not quite clear what happens next. In other words, there is no one yet to replace the individuals who have been fired. Yet, presumably, government must continue to function somehow.

So what we're left with is a sense of increasing chaos, rather than increasing order, coming from uncertainty.

DAVID SPEEDIE: Yes. And, you know, this sort of begs the whole question of Saakashvili's record. I think you mentioned this in the article, that his record as president in terms of economic performance in Georgia was hardly stellar, was it?

NICOLAI PETRO: It was mixed. He has been and is credited with making inroads against corruption in a very demonstrable way. But the problem is that that corruption wasn't eradicated; it simply moved into another sphere, sort of up the food chain, to groups closer to the top of power and closer to Saakashvili.

What is happening now in Odessa seems to be that, having dismissed local political figures, he is in fact replacing them with people that he knows from Georgia. As a result, he is now establishing a network of people that he is familiar with. Whether that will suffice-that new network that he is creating of people loyal to himself, of Georgians loyal to himself locally-whether that will suffice to overcome the established older Odessan and south Ukrainian networks is, I think, a very big question mark, as is, especially, the time that he has, or wishes, to commit to transforming the region.

In my article, I suggested that for Saakashvili, even as he was appointed, he was suggesting that this particular appointment was little more than a launching pad for getting into Georgian politics, and it was just the right time for him to make this move in Ukrainian politics to burnish his credentials as a reformer because the party that he had led in Georgia had suffered from a very serious series of defections, which basically crippled his power base in Georgia.

So that's what we're left with here, is an uncertainty as to how long he is actually-what his commitment is to transforming Odessa, or whether this is simply a staging round for a return to Georgian politics.

DAVID SPEEDIE: You've written another recent piece-essentially, the title is something along the lines of "bringing Ukraine back into focus." In it you really highlight again one of those issues that had been pretty much consistent since the original uprising of, I guess, some 18 months ago now, but the fundamental issue of two Ukraines, of, as I think you put it, divergent narratives, that neither the east, the pro-Russian forces in the east, and Kiev on the other hand-neither is willing to either give up their identity or to contemplate dividing the state.

Is this two Ukraines a sort of thing that we have to live with permanently? Put another way, can there be a modern Ukrainian unified state?

NICOLAI PETRO: Well, let me start by saying that I think Ukraine has always been multilingual and multicultural, and that this characteristic is best reflected in the large presence of Russian culture in Ukraine. People who see themselves as part of Russian culture in Ukraine don't think of themselves as pro-Russian; they are simply Ukrainians who are expressing their cultural heritage as loyal Ukrainians. They have never been anything but Ukrainians in their own minds. That was true before the Soviet Union collapsed and after the Soviet Union collapsed.

So it's not really accurate, and quite misleading, when news reports talk about pro-Russian separatists as if they were not Ukrainians, because they are simply Ukrainians who wish to have a bicultural Ukraine, as opposed to those Ukrainians who wish to have a monocultural Ukraine.

The former bicultural Ukrainians really are advocating for equality of both identities in a single country, whereas the monocultural Ukrainians are arguing for the supremacy of one version of Ukrainian identity, and then anyone who doesn't agree with that would essentially be tolerated as a minority.

So what people in Eastern Ukraine, and to some extent what the issue in Crimea was about, was would those people be willing to tolerate being not equal in status to Ukrainians but, rather, a minority within the country? They basically are resisting that.

The Minsk accords, at least the protocols which were signed in February as a roadmap, really highlight the fact that there is an attempt in Eastern Ukraine to establish a process for being recognized within Ukraine as having a special valued status-not just as a people who would then be a minority in the country, but as having equal status in Ukraine. They are arguing for a vision of that as something that can be applied not only in Eastern Ukraine, but if the constitutional reform were to go through as indicated in the Minsk accords signed in February, then this would be an option for the country as a whole.

So we are still talking about really a crisis that seeks to define what actually-who has the right to define who is a Ukrainian.

DAVID SPEEDIE: At the end of this article on essentially bringing Ukraine back into focus, to your credit, you don't just diagnose the problem, you propose a two-part solution that basically speaks of constitutional reform and economic investment, and indeed economic reforms. In the context of all you've been saying, it seems that this is perhaps a bridge too far at this point. What do you see as the prospects for this agenda for a solution to the current situation?

NICOLAI PETRO: It might seem fantastic right now to talk about a civic culture coming about in Ukraine, but without it I don't see the country-and so, the only alternative to promoting a civic culture through a constitutional reform that enshrines the diversity of Ukraine and that makes that diversity of cultures inclusive, rather than focusing, as it currently does, on distinctiveness of the cultural identities within Ukraine-without that, we will simply be returning to the core issues that have led to the current conflict.

People argue that this current crisis was inspired by Russian intervention. But that overlooks the long history of tensions, which many political leaders have ignored or brushed aside, but which, when the current Maidan movement in 2014 took on a very nationalistic flavor, was seen by many in the east and south of the country as a potential threat to their civil rights. When that threat was not reduced but became in fact the theme of the Maidan and the theme of the new course of government, it's not at all surprising to me that they took up arms to defend against what they saw as the potential threat to their status.

So if they don't address that status in the context of the constitution-and decentralization is one possible way to do it, a more sensible and logical way historically and in many countries has been some form of federalism-but the current government in Ukraine has an allergy to that word, so they prefer the term "decentralization." But nevertheless, the contents of that decentralization, as indicated in the Minsk accords, needs to be to grant local autonomy and the ability to determine their cultural identity and their religious identity and their language uses based on local preferences. Without that, there is little hope of ending this conflict anytime soon.

DAVID SPEEDIE: And once again, these issues of language rights and the federalism/decentralization-devolution might be another term to use, I suppose-

NICHOLAI PETRO: Yes.

DAVID SPEEDIE: -these are all things that have been there ab initio, from the very beginning, so it seems.

And by the way, on the Minsk accords, I am sure you're aware that the sort of glib response in the Western press is that Russian perfidy in setting up problems in the east make the Minsk accords sort of dead on arrival. Is this just something that the Kiev administration is using as an excuse not to implement them?

NICHOLAI PETRO: I think there are definitely external actors involved in the Ukrainian Civil War. I can't think of a civil war where that has not been the case. Russia has certainly tremendous interests at stake, so it's not surprising that it would be involved in some way.

But I don't believe that this involvement in this conflict is the core issue and that if Ukraine could somehow be taken away and could be somehow moved geographically and create an island maybe in the South Pacific several thousand miles away from Russia, we would still be left with the key issue, the core issues, which is the lack of understanding-or let's say the conflict-between two distinct views of Ukrainian identity.

On the Minsk accords, let me say something that in addition is very important. The presumptive basis of the accords, particularly the ones signed in February, which provided a roadmap for the political resolution of this crisis, was that Kiev would negotiate directly with the rebels about their status. That's why there needed to be a ceasefire, that's why there needed to be a process of decentralization, and why there needs to be constitutional broad reforms.

Now, Poroshenko agreed to all of this in the accords. But his government and the parliamentary majority have disagreed with him and have thwarted, therefore, the implementation of key points of the February accords on direct negotiations regarding local elections, on the status of territories, on constitutional decentralization and special status for the territories, on amnesty, and on restoring banking services.

And then, in addition, about two weeks ago, they added fuel to the fire by blockading the rebel-held territories, including even humanitarian assistance coming from Ukraine itself, whereas the Minsk accords specified that the exact opposite should happen.

So as long as what locally people are calling "the party of war" holds the upper hand in the parliament, little is going to happen with respect to these accords being implemented.

I've been listening to some Ukrainian political analysts that argue that what is needed now is an imperative external mandate-in other words, a third party, the UN or the United States or someone, coming in, putting down peacekeepers, and forcing the government and the rebels to negotiate, to reach a settlement. Others, however, argue that Europe needs to put pressure on Kiev.

As long as the parties want to hold the upper hand in Kiev, it's not likely that the accords will be realized. How to get around this conflict within the Ukrainian political elite-some people I know, political analysts here, have argued that there needs to be an imperative external mandate, maybe a UN force, something that comes in and establishes not only a ceasefire but actually coerces the parties so that they come to some agreement.

Others feel that that's not necessary; all that's really necessary is for Europe to put pressure on Kiev. They suggest that Germany appears willing to do so, but that the United States is not.

DAVID SPEEDIE: Let me finish with a couple of questions about Ukraine in the world, so to speak, not just the domestic situation.

Clearly, Ukraine is somewhat off the radar-certainly in the United States, and I think in the Western press, things like the ISIL [Islamic State or Iraq and the Levant] crisis in the greater Middle East, the Iran negotiations in Geneva [and Vienna]. Is this diversion of attention sensed in Ukraine? Is there some concern that "we are the sort of forgotten issue"?

NICOLAI PETRO: Well, of course, the civil war here is front and center, as it is in the news, not just in Ukraine but also in Russia. So they, of course, in Ukraine have a very strong interest in making sure that the West keeps its eye on Ukraine and have a strong interest also in making Russia the target in order to divert, to get at least some more potential assistance out of that for the Ukrainian economy.

It doesn't seem to me like a long-term strategy. It seems like a makeshift strategy. One of the things that one hears increasingly now is: What is going to happen after the presumptive local elections in October here in Ukraine; and whether or not there will be new parliamentary elections, and what sort of parliament that might yield, because the party of Yatsenyuk, the prime minister, which actually won the last parliamentary elections, has plummeted in popularity. It is quite possible that a new parliament will be less willing to conduct a military campaign in the east and more willing to negotiate.

But it is not at all in the interests of the current parliamentary majority to yield power to that sort of parliament because many of the people now in power see themselves as true believers in the cause of the Maidan and the further Ukrainian transformation of society and as committed to a radical transformation, which may include-indeed, for many does include-seeing this war through in the east to a victorious conclusion.

DAVID SPEEDIE: A similar question in terms of Ukraine's sense of itself at this point, or at least Kiev's sense of itself: Even as we speak, there is this meeting of the Shanghai Cooperation Organization going on in Ufa in Russia.

Speaking of competing narratives, even as the Russians and the Chinese are apparently in some sort of concert to some extent in taking on the American role and influence in Asia, there are two narratives here: with Russia, the Eurasian Economic Union of course, and China having a different plan of some sort of "Silk Route" that extends down into South East Asia.

Clearly, there are a lot of moving parts here in terms of the future of the whole Eurasian land mass. Is this somewhere where Ukraine will simply be left behind? Do they have any interest in being somehow involved in this unfolding drama, as it were?

NICOLAI PETRO: Well, not under the current government. But I think again we come back to those two very distinctive and to some extent mutually exclusive narratives about Ukrainian identity. The monocultural Ukrainian identity, which is currently being imposed, sees itself as creating a Ukraine against Russia, against Russian influence, and its source of support will therefore be a Europe which is also counterpoised to Russia.

Now, in a Ukraine which is bicultural or multicultural, Russian culture would be valued as would the possibility of having economic, cultural, political interactions with Russia-and not just with Russia, but with all of the former Soviet states, several of which are now included in the Eurasian Union and, beyond that, in the Shanghai Cooperation Organization, and through both of those in the BRICS [Brazil, Russia, India, China, South Africa].

So if there were to be a multicultural or a bicultural Ukraine, one could easily see a shift in the political orientation of Ukraine. But not under the current government.

DAVID SPEEDIE: Well, that's a very, very skillful and convincing way of tying the domestic situation with the broader picture of the developments in Eurasia.

Once again, Nicolai, thank you so very much. It has been wonderful to speak with you. I hope to be back in touch again during your time in Odessa.

Nicolai Petro, thank you so much.

NICOLAI PETRO: Thank you.

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 #32
Ukraine Today
http://uatoday.tv
July 17, 2015
Poroshenko warns of imminent Russian invasion

Russia's Donbas army consists of around 80,000 troops including 50,00 regular army soldiers

Ukrainian President Petro Poroshenko says military intelligence officials have confirmed that Russia could rapidly launch a fresh invasion of Ukraine at any moment, with a high probablity of an attack within days.

Ukraine's National Security and Defense Council of Ukraine has warned that Russia had completed its preperations to launch a massive new invasion in three different directions along the contact line of forces in the Donbas.

The warning came as Russia massed a record number of Russian troops along the border with Ukraine and continued military drills along Ukraine border.

National Security and Defense Council head Oleksandr Turchynov said ( July 13) that there were presently 20 tactical groups of the Russian Armed Forces in eastern Ukraine and another 56 tactical groups located on Russia's border with Ukraine.

Earlier in July Ukrainian army officials said more than 50,000 Russian troops and over 30,000 militants were concentrated along the Ukrainian border.

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 #33
Kiev pulls to front line 70,000 soldiers - DPR head

MOSCOW, July 18. /TASS/. Kiev has pulled up to the front line a group of 70,000 soldiers, head of the self-proclaimed Donetsk People's Republic (DPR) Alexander Zakharchenko said on Saturday.

"As of now, over 70,000 Ukrainian military are along the line of engagement, and every day the number is growing," he said.

Since Kiev is not ready for any steps to demilitarise Donbass, the expanding of the military presence cannot at all prove Kiev's aspirations for a peaceful settlement of the conflict.

He also said the parties to talks in Minsk had not included in the Minsk agreement withdrawal of weapons under 100 millimetres as Ukraine was not inclined to demilitarise the line of engagement. "At the last meeting in Minsk we discussed withdrawal of weapons. Ukraine rejected the agreement saying tanks and mortars should remain there," the Donetsk News Agency quoted him.

A peace deal struck on February 12 in Minsk, Belarus, by the leaders of Russia, Ukraine, Germany and France envisaged a ceasefire between Ukrainian forces and people's militias starting from February 15, followed by withdrawal of heavy weapons from the line of military engagement and prisoner release. The package of measures envisages the pullback of all heavy weapons by both parties to locations equidistant from the disengagement line in order to create a security zone at least 50 kilometres wide for artillery systems with a calibre of 100 mm or more, a zone of security 70 kilometres wide for multiple rocket launchers and a zone 140 kilometres wide for multiple rocket launchers Tornado-S, Uragan and Smerch and the tactical rocket systems Tochka-U. The final document says that the Ukrainian troops are to be pulled back away from the current line of engagement and the militias of the Donetsk and Lugansk regions, from the engagement line set by the Minsk Memorandum of September 19, 2014.

The DPR completed the withdrawal of its heavy weapons by March 1. Nevertheless, in recent days populated localities in the Donetsk People's Republic have come under intensive shelling from the positions of the Ukraine army, which is using heavy artillery and multiple rocket launcher systems.

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 #34
The Independent (UK)
July 17, 2015
Vladimir Putin wants to 'eliminate Ukraine - I have no doubt', claims Ukrainian PM
By LIZZIE DEARDEN  

The Prime Minister of Ukraine has claimed that Vladimir Putin is trying to "eliminate Ukraine" as conflict continues between government troops and rebels.

Russia has persistently denied supporting separatist fighters in eastern Ukraine with money and weaponry but Arseniy Yatsenyuk said there was irrefutable evidence of the presence of Russian fighters and equipment.

Speaking to The Times yesterday, on the eve of the one-year anniversary of the downing of Malaysia Airlines flight MH17, he claimed "tens of thousands" of soldiers and guerrillas were in Donetsk and Luhansk with Russian-supplied tanks and missiles.

"Putin's aim is to kill the Ukrainian project, just to eliminate Ukraine - I have no doubt," he said, "For Putin, Ukraine is the battlefield against the free world."

Mr Yatsenyuk, who rose to his post after the ousting of President Viktor Yanukovych in February last year, said he was "absolutely sure" that MH17 was shot down by "Russian-led terrorists", possibly with the help of Russian soldiers.

Ukraine is among countries including the Netherlands, Australia, Belgium and Malaysia calling for an international tribunal on the disaster that killed 298 people a year ago today.

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#35
AFP
July 20, 2015
Eyeing Russia, US leads fresh military drills in Ukraine
By Dmytro Gorshkov

Ukrainian and US troops launched fresh drills Monday near the war-torn country's Polish border in a bid to show unity and resolve in the face of an increasingly resurgent Kremlin.

The annual Rapid Trident exercises involve 1,800 soldiers from 18 countries and last for just under two weeks.

Their immediate aim is to build resolve and cohesion within the ex-Soviet state's outdated and woefully underfunded armed forces -- caught in a 15-month east Ukrainian quagmire against pro-Russia militias that has claimed more than 6,500 lives.

But they also deliver a transparent message to the Kremlin about Washington and its allies' determination to thwart any expansionist ambitions Russian President Vladimir Putin may have.

"These joint manoeuvres... display a broad support for Ukraine in its struggle for freedom and sovereignty," Ukrainian forces commander Oleksandr Syvak told the festive flag-raising ceremony.

His US counterpart Alfred Renzi said the participating countries -- most of them NATO members but also such former Soviet nations as Moldova and Azerbaijan -- "will prove an ability to cooperate as one unified force for stability".

Russia's counter-strike

Putin has always denied charges of orchestrating Ukraine's separatist revolt to unsettle the pro-Western leadership that rose to power in the wake of last year's ouster of a Moscow-backed president.

But the veteran Russian leader -- immensely popular at home for his patriotic fervour and increasingly isolated abroad -- has done little to hide that he sees much of eastern Europe as part of Moscow's traditional sphere of influence.

Russia set nerves jangling across Europe by sending its fighter jets shooting toward the skies of Baltic and Nordic nations with increasing regularity in recent months.

Washington and NATO have denounced such steps as both hostile and dangerous to civilian aircraft.

The Kremlin counters that it is only doing what the United States has been for decades -- flexing its military muscle in far-off countries to build a "unipolar world".

The launch of Rapid Trident was quickly followed by the Russian navy's announcement that one of its warships stationed off Ukraine's Kremlin-annexed Crimean peninsula would conduct live rocket fire drills Sunday.

"After a long interruption and in order to demonstrate the navy's combat capabilities, the Ladny frigate will attack a dummy target from an anti-submarine system," Black Sea Fleet spokesman Vyacheslav Trukhachyov told Moscow's news agencies.

Russia marks its annual navy day Sunday and such activities are planned well in advance.

But the scale of Russia's celebration this year has been grander than most.

Trukhachyov said that more than 30 naval vessels and another 30 jets and military helicopters would show off their capabilities near their tsarist-era base in the Crimean port of Sevastopol.

The ships will be accompanied by Su-27 interceptor and Su-25 ground attack jets.

It was not immediately clear if any senior Russian officials intended to oversee the festivities.

Both Putin and Prime Minister Dmitry Medvedev have stirred outrage in Kiev by visiting Crimea in the past year.

Yet the Western drills in Yavoriv -- a village lying just 15 kilometres (about 10 miles) east of Poland -- are upsetting to Moscow as well.

Russia accuses the United States of funding and arming the nationalist forces that spearheaded the pro-European protests in Kiev last year.

Much of Moscow's state media now portrays the West's military involvement in Ukraine as an effort to intimidate Russia and deny its legitimate geopolitical interests.

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 #36
Interfax
July 19, 2015
LNR, DNR regard Poroshenko's latest comments on Donbass as imitation of fulfillment of Minsk accords

The special status of Donbass should lie at the core of the peaceful dialogue. By renouncing it Kiev once again imitates the negotiating process on its own part, envoy of the self-proclaimed Lugansk People's Republic (LNR) to the Minsk talks Vladislav Deinego told Interfax on Sunday.

"In compliance with the Complex of Measures the special status of Donbass is placed at the core of the peaceful dialogue. By openly saying that the amendments made in the constitution do not imply a special status for Donbass [Ukrainian President Petro] Poroshenko only confirms that Kiev is imitating the negotiating process instead of truly striving to develop a peaceful dialogue," Deinego said.

LPR is perplexed by Kiev's declarations on the need to transfer control over a section of the Ukrainian-Russian border before the introduction of the special procedure of local self-government in Donbass.

"Kiev is again trying to place the cart in front of the horse. The Complex of Measures clearly states that the transition of control over the section of the state border completes the implementation of all the measures stipulated by the document instead of preceding it," Deinego said.

"At the present time the effects of the law on the special procedure of local self-government are actually blocked by the amendments to it," he said.

He said LPR is also sharply opposed to the increase in the Ukraine's defense spending planned for next year. "We are categorically opposed to money from the Ukrainian budget being used for the escalation of the conflict, to an increase in spending on the war," Deinego said.

The envoy of the self-proclaimed Donetsk People's Republic in the contact group, Denis Pushilin, shares the opinion of his colleague from LPR.

"Unfortunately, by such statements Petro Poroshenko once again demonstrates his incompetence and misleads the people of Ukraine. I would advise him to read the Complex of Measures to implement the Minsk agreements once again and make corresponding statements only after that," the Donetsk news agency quoted Pushilin as saying on Sunday.

He reminded Poroshenko about the roadmap to peace in Donbass that spells out the order of steps on the road to the peaceful settlement of the conflict.

"The first political planks of the Complex of Measures prescribe that Ukraine's Verkhovna Rada adopt amendments to the fundamental law for the Minsk process to come into force - the law on the special status of Donbass is in question. That is followed by provisions on the amnesty, the release of prisoners, the constitutional reform and local elections under a law agreed upon with representatives of DPR and LPR. Only after the fulfillment of all these provisions the Minsk Agreement stipulates the border issues," Pushilin stressed.

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 #37
Kiev merely imitating adherence to Minsk agreements
By Lyudmila Alexandrova

MOSCOW, July 17. / TASS/. In comments on approval by Verkhovna Rada [parliament] under the first reading of draft amendments to the Constitution concerning a special status of Donbas, Russian political analysts note that in essence the Kiev authorities seek to cut themselves off from the self-proclaimed Donetsk and Luhansk People's Republics, but Americans demand that they at least pretend to be adhering to the agreements in order to raise counterclaims to the republics and Russia.

On Thursday, deputies of Verkhovna Rada passed under the first reading the draft of presidential amendments to the Constitution of Ukraine concerning decentralization of power and the order of local self-government.

They fix in the Constitution a reference to the law On the Special Order of Local Self-Government in Certain Areas of the Donetsk and Luhansk Regions.

President Poroshenko himself said in Rada that the amendments would not affect the unitary status of Ukraine and were not giving a special status to Donbas, but just admitted the possibility of "a specific order of local self-rule in its certain areas" which, as he maintained, was in full compliance with the Minsk agreements.

The approved amendments don't envisage a paragraph on a special status of Donbas included in the Constitution itself - it will just mention the special law on a special order of local self-government in certain areas of the Donetsk and Luhansk regions, the head of the PENTA Centre for Applied Political Studies Vladimir Fesenko explained to the Kommersant daily. In addition, this special law can be changed by a simple majority of deputy votes. "Poroshenko cannot say directly that the Minsk agreements won't be implemented, that is why he makes diplomatic moves," he said.

However, president's critics in Ukraine have accused him of concessions to the self-proclaimed republics under the pressure of United States Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland arriving in Ukraine. The authorities of the DPR and LPR have also rejected the initiative of Kiev, labelling it "imitation" and demanding to include into the Constitution an explicit wording of their special status, previously coordinating it with Donetsk and Luhansk.

Political analyst Alexey Chesnakov, quoted by the Vedomisti daily, believes that Kiev has decided to use a trick without changing anything in essence. This is not what can suit the parties signing the Minsk protocol. "Donbass needs a material and long-term status fixed in the Constitution," he said.

"The Ukrainian authorities are yet to cover a certain path to understand that they will have to respect the interests of Donbas in the long run," the president of the Center of System Analysis and Forecasting Rostislav Ishchenko is quoted by the Free Press news portal. "Otherwise, we can get a lukewarm civil war that will be exhausting both Donbas and Ukraine, and also Russia to a certain extent".

The deputy director of the CIS States Institute, Vladimir Zharikhin, echoes by saying this means an imitation of adherence to the Minsk agreements. "In my opinion, it is an ideal option for Americans, and thus for Ukrainians," he told Tass. "At the same time, they will shift the whole blame on Russia, saying 'Look, Kiev complies with the agreements, while Moscow does not'. In essence, they are squeezing the DPR and LPR from the political and economic space of Ukraine, making them unrecognized republics, a sort of Transdniestria. Their aim is to make the rest of Ukraine anti-Russian and pro-American, because if the DPR and LPR joined the political and economic space of Ukraine, the country would be neither purely pro-American nor purely anti-Russian".

The approved amendments to the Constitution of Ukraine came under criticism from both sides, the vice -president of the Centre for Political Technologies, Alexey Makarkin, told Tass. "The Ukrainian politicians speak about too big concessions to the DPR and LPR, and even direct participation of Americans, the arrival of Victoria Nuland, was needed to convince the deputies to vote for them. Meanwhile, these amendments are absolutely insufficient for the DPR and LPP. But what is most important is a general context: amendments were passed in conditions when nobody trusts anybody, and a wide compromise of some kind looks unlikely. Most of the population on both sides would like to see this end as soon as possible, but both sides have active groups that were engaged in a war, and for them this compromise looks absolutely unacceptable".

Kiev is not interested at all in having the DPR and LPR part of Ukraine, preferring in essence to cut itself off from them, the expert believes. "Under these circumstances, the option of making the self-proclaimed republics a kind of Transdniestria looks most probable," he said.

Americans would want to see Kiev take steps that the world would recognize as implementation of the agreements. "After amendments had been approved, Americans said they were quite satisfied with this, and thus Ukraine had fulfilled its part of the commitments, and now they would demand from the DPR and LPR as well as Russia return moves," the expert said.

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 #38
Russia Insider
www.russia-insider.com
July 20, 2015
Eastern Ukraine - A Frozen War
While full-scale fighting has not returned, neither side accepts the status quo or wants to put the conflict aside
It's rather the negotiated path to peace that has been put aside, particularly by Kiev
By Alexander Mercouris

Contrary to my expectations - and those of most other observers - the situation in eastern Ukraine has not so far spiraled into renewed war.

The reason for this is the deteriorating financial situation in Ukraine itself.

Despite pressure from the IMF talks between Ukraine and its private creditors remain deadlocked.  This has led some of the ratings agencies to predict that Ukraine will fall into formal default this month.

The IMF's indication that it would maintain its support for Ukraine has simply triggered a demand from the Russians that the next $5 billion tranche of IMF funding Ukraine should be used to repay the $3 billion Ukraine owes Russia, which is due for repayment this year.

It seems that the IMF's staff is now increasingly leaning to the Russian view that this debt is indeed public debt. If so, then unless the IMF Board is willing to overrule the opinion of its own staff - which would be extremely controversial and might have serious legal consequences, Ukraine may shortly find itself cut off from private lending and in receipt of only limited funding from the IMF.

As for other alternative sources of Western funding, the EU's commitment to provide Greece with a third 86 billion euro bailout further reduces the funds available for Ukraine.

It is nonetheless likely that it has been the need to bring the negotiations with the IMF and with Ukraine's private creditors to a successful conclusion that has been the key factor in deterring Ukraine from resuming the offensive in eastern Ukraine. Back in the winter the IMF warned that any program to support Ukraine would fail in case of a renewal of the war, which all but confirmed that the IMF would halt its programme if the war resumed. With Ukraine becoming increasingly dependent on the IMF as alternative sources of external funding are closed off, this has become a major obstacle to a renewal of the war.

None of this however is to be taken to mean that the situation in eastern Ukraine is stable.

As predicted, the Ukrainian government has reneged on the commitments it made in Minsk.

It refuses to negotiate with the leaders of the Donetsk and Lugansk People's Republics, whom it continues to call terrorists. It has maintained the economic blockade.

There has been no negotiated law granting special status, no elections held in accordance with such a law and no discussions for a new constitution. On all these questions Kiev has purported to legislate unilaterally, imposing on the Donbass its own conceptions, which continue to reflect its unitary ideology.

Though there has been no general offensive, there is also no peace. Shelling of the Donbass towns continues at various levels of intensity and fighting between the Ukrainian army and militia units repeatedly takes place.

Meanwhile, much as he did before the resumption of the fighting in January this year, Poroshenko has again been bragging about the revival of the Ukrainian army, with claims that the number of Ukrainian troops on the front line has once again been brought up to 60,000 - which was roughly their number at the start of the offensive on 30th June 2014.

These claims, understandably enough, cause great alarm and are scarcely compatible with a sincere desire for peace. They are in fact as likely to be untrue as were the identical claims Poroshenko made before the resumption of the fighting in January. The reported mutiny of an entire Ukrainian tank battalion is almost certain to be a better reflection of the true state of the Ukrainian army than Poroshenko's boasts are.

The current situation is best described therefore not as a frozen conflict but as a frozen war.

A frozen conflict requires some degree of acceptance - however grudging - of the status quo.

In Ukraine that acceptance does not exist - on either side.

In the absence of the negotiations envisaged by the deal done in Minsk the Donetsk and Lugansk People's Republics exist in limbo - under blockade, facing current shelling, without a proper legal status and without full control of the territory they claim.     

The Ukrainian government for its part cannot bring itself to recognize or accept the separate identities of the Donetsk and Lugansk People's Republics, but lacks the means to suppress them.

The situation is extremely unstable and very dangerous.

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 #39
Business New Europe
www.bne.eu
July 14, 2015
Number of Ukrainians in food poverty increases sixfold in two years
Henry Kirby in London

The number of Ukrainians who consider themselves to be in food poverty has increased sixfold in the last two years, according to a study by international polling firm TNS Global.

The survey asked 5,000 Ukrainians if they considered themselves wealthy enough to buy certain goods, ranging from televisions and large household appliances to basic necessities such as clothes and food.

In April 2013, only 1% of respondents said they did not have enough money to buy sufficient quantities of food - a figure that increased to 6% when the survey was conducted in January this year.

The ongoing conflict in Ukraine's Donbas region, soaring energy prices and a sharp drop in industrial production has caused Ukraine to suffer double-digit inflation for well over a year, peaking at a year-on-year figure of 60.9% in April, which has slashed the purchasing power of most Ukrainians.

As the bne:Chart shows, the proportion of respondents who claim to largely be able to afford what they want has remained at a similar level, dropping only one percentage point in the last two years, from 3% to 2%, which would suggest that the economic hardships in Ukraine are only really hurting the poorest in the country.

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#40
Ukraine's average monthly pension stands at $72.5 - pension fund head

KIEV, July 20. /TASS/. Ukraine's average monthly pension equals 1,601 hryvnia (about $72.5), Ukrainian Pension Fund Head Alexei Zarudny said on Monday.
"As of July 1, the average pension equaled 1,601 hryvnia. This is just 42 hryvnia [$1.9] more than as of the same date a year ago," Zarudny said at a board meeting of the Social Policy Ministry.

"Considering the increase in the subsistence level in December this year, the average pension should grow by another 100 hryvnia [$4.5]," he added.

The rates of the Ukrainian population's impoverishment have accelerated sharply this year but the government is doing nothing to remedy the situation, leader of the Ukrainian Choice public movement Viktor Medvedchuk wrote in an article posted on the movement's website.

According to data released by the Ukrainian State Statistics Agency, real household incomes in the country fell by 23.5% in the first quarter of 2015 from the same period last year.

Specifically, Ukraine's average real wage in January 2015 equaled 82.7% of the level registered in January 2014 and this figure was observed to decline with each passing month to fall to 76.5% in May, Medvedchuk said.

Both the internal and external sources of household incomes are declining in Ukraine.

According to data released by the Ukrainian National Bank, private money transfers to Ukraine shrank by $513 million in the first quarter of 2015 to $1.053 billion or 33% less than in the same period last year.

Meanwhile, the Ukrainian government says there is no money in the state coffers for wage and pension increases and even the pay increase promised from December this year is thrown into question.

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 #41
RIA Novosti
July 15, 2015
Almost a million Ukrainian refugees want to stay in Russia - migration service

About 900,000 Ukrainians have contacted Russia's Federal Migration Service since the start of the conflict in southeast Ukraine requesting status allowing them to reside there permanently, RIA Novosti (part of the state-owned International News Agency Rossiya Segodnya) reported on 15 July.

According to the FMS, just over a million citizens of southeast Ukraine have arrived in Russia since April 2014. It said 20,980 people are in 369 temporary refugee reception centres including 6,777 children, while 552,000 refugees are housed in the private sector.

Two empty tented refugee camps are ready for more refugees in the Matveyevo-Kuganskiy district in Rostov Region and the city of Novoshakhtinsk if necessary, the FMS said, privately-owned Interfax news agency reported.

"Taking into account the experience of last year, when thousands of Ukrainian citizens came to us every day, we understand that there must be somewhere to house, feed and keep people warm and so on," Rostov Region Deputy Governor Sergey Bondarev told the media, Interfax said.

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#42
AFP
July 19, 2015
Controversial Russian politician named deputy in Ukraine

Kiev (AFP) - The nomination of a Russian politician to a top post in Odessa has caused a flurry of controversy in the tense political atmosphere of the violent Ukraine conflict.

Maria Gaidar, daughter of former Russian prime minister Yegor Gaidar, was nominated Friday as deputy to pro-Western former Georgian president Mikheil Saakashvili -- who was recently named governor of the southwest Ukraine region of Odessa.

Gaidar, who is a vocal opponent of Vladimir Putin's regime, has faced plenty of backlash following her nomination -- mostly because she has previously said that Crimea, the contested peninsula in the Black Sea, belongs to Russia.

Following the announcement of her nomination, Ukrainian journalists uncovered an interview with Gaidar where she says that "Crimea de facto belongs to us... and it is impossible to return it," to Ukraine.

She has also been reluctant to denounce Russian intervention in east Ukraine, in which Moscow denies it is playing a military role. Fighting in the region continues despite numerous calls for a ceasefire.

"She needs to choose. If Maria Gaidar wants to get Ukrainian citizenship and an important state position, she can't flee the questions," surrounding the conflict in the East, said Mykola Kniajitski, a Ukranian media figure.

Responding to critics, Gaidar wrote on her blog Saturday that she has always "supported the territorial integrity of Ukraine", and that she opposed "the annexation of Crimea and the war in east Ukraine".

Gaidar's nomination has also brought criticism from Russia. Nikita Belykh, governor of Kirov region east of Moscow, where Gaidar was once deputy, said that she had "made a mistake".

"Working with people of which Russia has a very bad opinion is perceived not only as a defiance against power, but also against all Russians," Belykh wrote Saturday on his blog.

Ukrainian President Petro Poroshenko shocked many by appointing Saakashvili -- the former president of ex-Soviet Georgia who waged a 2008 war with Russia and is still despised by Moscow -- as the region's governor in May.

However Saakashvili has soared to the top of Ukraine's public approval ratings by publicly castigating and sacking security and customs officials who had long been under suspicion of accepting monumental bribes.

His no-holds-barred approach appears to be spreading beyond Odessa and taking ever more direct aim at Moscow. Russia was outraged last week by the expulsion of Moscow's top envoy to Odessa.

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 #43
Business New Europe
www.bne.eu
July 17, 2015
KYIV BLOG: Black cash still oils Ukrainian politics
Graham Stack in Kyiv

In his first interview since being fired as head of Ukraine's state security service on June 16, Valentyn Nalivaichenko alleged that Ukraine's leading political parties are behind huge flows of secret funds moving to and fro from offshore jurisdictions. He is only the highest ranking among a clutch of disillusioned insiders who claim that black financial flows remain intrinsic to Ukrainian politics.

"Officials on the highest level have not stepped back from business ties, but it not just business, not just accountants, who are using these [offshore] schemes, but also the 'enforcers' [informal parliamentary party whips] who run $500,000 through offshores each week. A simple question - where is this money going to?" Nalivaichenko asked. "The answer: to pay off MPs, government officials, law enforcement."

"People who for many years have run not the most transparent businesses (..) have taken now power together with their corrupt offshore schemes and set up a cynical system. They take a cut in the sale of [government] posts, and at night send the profits to offshores," claimed Nalivaichenko, who headed the SBU immediately after the pro-Western February 2014 revolution, after having previously run the service between 2005-2010.

Nalivaichenko also accused financial regulators of turning a blind eye to such schemes. "I have not yet seen a single offshore closed," he said. It was when the SBU started asking questions about the movement of party-linked slush funds that he was fired, says Nalivaichenko.

Although he named no names, there is little doubt that Nalivaichenko had the pro-presidential Bloc Petro Poroshenko in his sights - the largest parliamentary group, and the party that initiated his sacking.

While Nalivaichenko was speaking of funny money moving to and fro from secret offshore accounts, other disillusioned insiders are talking about the onshore corollary: briefcases of black cash being circulated among political players. According to a number of observers, the entrance tickets to parliament for many of the 450 MPs elected in October 2014 were briefcases of dollars, handed to their respective parties in return for a place on the party electoral list.

Czech investor Tomas Fiala, founder of Kyiv largest brokerage Dragon Capital and head of the European Business Association told media that while the pro-Western parties all have some competent professionals in their ranks to write laws and face the TV cameras, the bulk of backbenchers paid to be there, and did so for business reasons. "They [pro-Western parties] were selling seats on the party lists (...) they filled up the back of the list for $3mn-$10mn contributions [per seat] to finance the campaign," Fiala told Kyiv Post in a recent interview. "Having these people with very questionable reputations, who were very much tied to the old Ukraine, being re-elected is now haunting them and hurting their political capital," he added.

The circulation of black cash in parliament and government may also be indispensable to the system's functioning, as Ukraine's former health minister Oleksandr Kvitashvili, one of the so-called Georgian reformers, confirmed after his resignation in July.

According to Kvitashvili, government ministries such as the health ministry pay staff off-the-books dollar cash to boost their tiny official salaries. "I don't know where this money came from," he told lb.ua in an interview. When he tried to break with the practice, employees fled the ministry, paralysing its work and prompting Bloc Petro Poroshenko, the party that had appointed him, to fire him six months later for "losing control of his ministry".

Black cash in brief cases is the onshore collorary of secret funds held by offshore companies - and a banking black market specialises in converting one to the other - so that, for example, a briefcase of dollars handed to a party enforcer by a prospective MP gets paid through to a hidden offshore account, and then is later drawn down again as cash - all of this off the radar screen of regulators.

Black cash swamp

This black market payment system is a longstanding fixture at the very heart of Ukraine's politics. Investigators discovered that during the presidency of Viktor Yushchenko between 2005-2010, payments from Yushchenko's presidential secretariat, for instance for lease of a private jet and of a Swiss chalet - were made via such a black market platform, in the form of a New Zealand shell company with a Latvian bank account.

There are no signs that this has changed, despite the hopes of the February 2014 revolution. Thus bne IntelliNews has seen evidence of how in August 2014, freshly appointed first deputy prosecutor general Mykola Gerasymiuk paid his daughter's university tuition fees at UK's Durham University via what appears to be such a black market transaction platform - the fees were paid by UK shell company Smartus Business, via a bank account at Ukraine-owned Latvian bank. Ironically, the tuition fees paid via the platform were for a Masters in 'Islamic Finance'.

Gerasymiuk, who is believed to have left the country since losing his job in February 2015, could not be reached for comment.

A police source familiar with the Smartus accounts identified it as a black market platform: since the firm's incorporation in late 2012, thousands of transactions have passed through the accounts totalling tens of millions of dollars: mostly transfers to and from other offshore shell companies, documented for instance as interest-free loans. "If the nation's top law enforcers are private clients of the black market system, it may not be likely to break soon," says the source.

Given that such black market schemes are often operated via Baltic banks, it is not surprising for the Rada and government to have a direct proximity to such services. As bne IntelliNews reported, previously a key Latvian agent for Baltic banks had its main Kyiv office in the neighbouring yard to parliament and goverment buildings.

Today Baltic banks are directly represented within the Rada walls. Thus banker Ivan Fursin, owner of a 33% stake in one of Latvia's leading offshore banks, Trasta Komercbanka - through which journalists allege the Russian mob laundered $20bn - is chairman of Ukraine's anti-money laundering and financial monitoring parliamentary committee.  

Another banker with strong historic Baltic links, Ruslan Demchak, about whom bne IntelliNews wrote in 2013, is deputy head of the parliamentary bank committee.

Both men emphasise that as MPs they are no longer involved in running any businesses, and have always rejected any links to money laundering.

One way to drain the ruinous black cash swamp at the heart of the Ukrainian state may be state funding of political parties, says journalist-turned-MP Serhiy Leshchenko, who is also one of a cross-party group of MPs developing legislation to this effect. "This would at least eliminate the problem of political parties opening the doors of parliament to the worst people to have there," he told bne IntelliNews. "At best it could transform our political culture, and separate it from the shadow economy."

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 #44
Fort Russ
http://fortruss.blogspot.com
July 19, 2015
Mukachevo: Maidan Hawks, Maidan Doves, and the Prophets of a New Revolution
http://rian.com.ua/columnist/20150717/370694663.html
By Andrey Vadzhra
Translated from Russian by J.Hawk

Ukraine is tracking Mukachevo-related developments with bated breath. Social media are full of bets on how the unexpected conflict in Transcarpathia will end. The uncertainty over which side will prevail, the Right Sector or the law enforcement, has continued for over a week. Some are betting on Poroshenko, others on Yarosh. Moderate pessimists believe that the conflict will end with a compromise.

There are many competing explanations of the causes and nature of Mukachevo events. One of them posits that the Right Sector is controlled by the Kremlin which is trying to destabilize Ukraine. Another holds that Poroshenko is controlled by the Kremlin which is trying to take down Ukraine's patriots. Yet another argues that the Right Sector came to Transcarpathia to interdict smuggling and punish local corrupt officials but fell into a bandit ambush organized by "uniformed werewolves." And, finally, according to the fourth version the Mukachevo incident is the Right Sector's unsuccessful attempt to muscle in on the local smuggling operations.

While Ukraine is entertaining itself with the search for the causes of Mukachevo shootings, in actuality the causes are less important than the political consequences. After all, nearly every event in that country has political consequences. Those who tend to analyze the situation superficially are assuming that the consequences may take one of three forms: the overthrow of Poroshenko by the Right Sector, the annihilation of the Right Sector by the UAF, or some compromise which restores the status quo ante. In my view, they are all equally unlikely scenarios. Let me explain why. First of all, the Right Sector is too weak to overthrow Poroshenko. The structure may be well organized and armed, but it has limited human, material, and military resources necessary for an armed overthrow. In any clash with the UAF the Right Sector wouldn't merely lose--it would perish. Secondly, the Ukrainian authorities are incapable of defeating the Right Sector through a military operations. Simply because the Right Sector will not engage in open warfare against the UAF. It's a different scale of operations. Once conflict begins, Right Sector Ukrainian Volunteer Corps will use guerrilla tactics of "hit and run" and urban guerrilla terror tactics. It's also doubtful Petro Poroshenko will engage in open warfare against the Right Sector. That would be suicide. It's more likely Kiev will try to force the RS to disband and become part of the UAF and the MVD. But even that couldn't be considered as the annihilation of the RS. The RS is, essentially, people. People motivated not only by material factors (i.e., loot), but also ideological ones (i.e., the political worldview). Therefore changing patches on their uniforms doesn't change anything of essence. The Right Sector might simply go underground and plant its roots in UAF and MVD units. Its members, with their extremely negative attitude toward the current Kiev regime, won't go anywhere except into hiding.

A compromise between the two is also impossible. A compromise implies mutual concessions which lead to conflict resolution with the preservation of the existing state of affairs. But the RS has nothing left to concede. Yarosh has nothing to offer Poroshenko in return for Poroshenko's concessions. Only one thing is being demanded of the RS: to disappear. Ideally without making trouble. Yarosh is cornered and he has no trump cards to play. Poroshenko, in turn, is not interested in preserving the Right Sector status quo and can't afford to make concessions to Yarosh. If he were to do that, he'd demonstrate that his status as President is equivalent to Yarosh's status as RS leader, with the RS being a state within the state. Moreover, analyzing Mukachevo events leaves the impression that they were planned by the law enforcement in order to give the Ukrainian authorities an opportunity to eliminate the uncontrollable Right Sector. Which indicates that Poroshenko has no plans to compromise.

In view of the above, one can assume that in the event of an escalation the Ukrainian law enforcement will attempt to arrest the Right Sector top leadership (using the MVD Tornado battalion example) or even kill it (as was done to RS Western Ukraine coordinator Aleksandr Muzychko). That wouldn't solve the problem but would create the appearance of a solution.

However, in my view, it doesn't matter how the conflict between the authorities and the RS will end. It only matters that the conflict has raised the chronic and unofficial stand-off between the authorities and the "volunteer battalions" to the level of official and open military confrontation. One also must keep in mind that in the process the Right Sector is gradually becoming a symbol of the struggle by Ukraine's patriots against the authorities which betrayed the Maidan. We're looking at the classic scenario of the perennial Ukrainian conflict between the "hetmans" and the "cossacks" represented by the volunteer battalions and other low-ranking activists. That conflict cannot be resolved merely by eliminating this or that volunteer battalion. That conflict is not caused by personalities or groups but by the incompatibility of the interests of the two above-named segments of Ukraine's society which have entirely different worldviews and values.

The Right Sector and its fate are of little importance to Ukraine but the organization, even after being destroyed, might just be the stone which causes a military and political avalanche destroying everything in its path. It might be that the Right Sector militants in Mukachevo are the prophets of a new Ukrainian revolution.

J.Hawk's Comment: Vadzhra is one of the most astute observers of Ukraine's politics, and I think that article just about hits the nail on the head. The "hetmans vs. cossacks" aspect of Ukraine's politics is likewise a problem of feudal governance. In order to maintain the loyalty of the cossacks, the hetmans must provide sources of spoils to the cossacks. If the hetman can't deliver, the cossacks will elect themselves a new hetman. The cossacks, not the peasants.  The Right Sector and the volunteer battalions are clearly aspiring to that role. Therefore, in a way, Ukraine is the micro example of the problem the US is suffering from on a macro scale. The loss of Crimea and the Donbass made that problem worse by depriving Kiev hetmans of two very lucrative sources of cossacks' spoils. There are substitutes in the form of smuggling and other similar activities, but the collapse of Ukraine's legal economy can't help but affect the underground economy as well which means that what we might be observing in Ukraine right now is an organized crime version of "musical chairs."

The Right Sector made the bid for Transcarpathia smuggling for a reason, and that reason was likely the drying up of revenue from other sources. And as the sources of loot are shrinking, so does the number of loyal cossacks that can be maintained. But the last thing a cossack would accept was the relegation to the status of a peasant (in other words, a member of the UAF...).

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 #45
New York Times
July 18, 2015
In Bleak Ukraine City, a Duo's Odd Experiments Win a Niche Online
In Luhansk, two men leverage YouTube fame to shed light on and report about the realities of life in Ukraine's conflict-torn East.
By ANDREW ROTH
[Video here http://www.nytimes.com/2015/07/18/world/europe/in-bleak-ukraine-city-a-duos-odd-experiments-win-a-niche-online.html]

LUHANSK, Ukraine - THE microwave was a loaner, left for repairs by a family that fled last year's shelling and never came back. With a few tweaks and the judicious use of a soup can, it had been weaponized, shooting microwave rays capable of blowing up a boombox.

Or, say, fry two eggs on a plate in a backyard experiment. That was what Kreosan, the do-it-yourself science duo with a cult following on YouTube, planned to do one chilly morning this spring. When the time came to flip the switch to power up the magnetron, Pavel Pavlov, 21, urged a reporter to step back.

"Whatever this does to the eggs, it can do to your eyes," he said, and turned the dial of the disemboweled microwave to the max.

Mr. Pavlov and his partner, Aleksandr Kryukov, 32, are natives of Luhansk, a sprawling, industrial city of Soviet-era apartment blocks and coal-heated cottages that was seized by separatists and shelled last summer in the war between the Ukrainian Army and the rebel Luhansk People's Republic. Then came months of blackout and economic blockade, and now a bleak future as a pariah state, cut off from Ukraine but not a part of Russia.

The situation was bad enough that last July, when Mr. Kryukov and Mr. Pavlov published the first video of the magnetron experiment, which went on to rack up 2.5 million views online, the audience's initial reaction was to treat it as proof of life.

"The guys from the YouTube channel Kreosan are still alive!" read the announcement on the Russian-language science website d3.ru.

As Luhansk's prospects looked ever bleaker, Mr. Pavlov and Mr. Kryukov emerged as quirky but candid guides to an unfamiliar war zone, an Internet voice for locals who drop their Russian g's in homegrown accents and were stunned by the sudden outbreak of violence in their sleepy, rust-belt backwater.

Millions in Ukraine and Russia clicked to watch the two men film a grab-bag of homemade science experiments, wartime life hacks and answer other burning questions: Have pensions been paid yet? How can you charge your telephone from ordinary railroad tracks? And what happens when a lightning bolt hits a television set?

The conflict has cost Mr. Kryukov and Mr. Pavlov dearly: Their friends have fled, and they have had to scrounge for cash and search for medicine for ailing relatives. Their video archives from the last year are filled with the buzzing of fighter jets and the glow of house fires from nighttime shelling.

But their Internet profile has soared, allowing them to quit their traditional jobs as an appliance repairman and utilities worker. They have since been invited to Internet expos in both Kiev and Moscow, destinations the eccentric pair reach almost exclusively by hitchhiking through a still-smoldering war zone.

For Mr. Kryukov, inspiration came last summer during the blackout, when the magnetron video gained one million views in a single day. "I realized that it was time to cut back on TV repair and spend more time on YouTube," he said in an interview in his childhood bedroom at his grandmother's house.

Mr. Pavlov cut in - it was 900,000 views, and at first they thought there must be some mistake.

After all, this is low-tech country science. Their digital camera is equipped with homemade Styrofoam airbags. Instead of a selfie stick, they use a tree branch. Many of the experiments are held in Mr. Kryukov's grandmother's backyard. During one experiment, their only audience was a deaf man in an adjacent lot who stopped planting potatoes to peer over the fence. His wife shooed him inside.

An evening interview at Mr. Kryukov's grandmother's house had to be discreet. "Quiet," Mr. Pavlov said, welcoming his guest. "Sasha's got a mean grandmother."

The two men, graduates of technical schools in Luhansk, plot their next moves in Mr. Kryukov's bedroom, a shrine to his hobby of electromagnetic experimentation, where a matchbox chest of drawers holds transistors and other bits.

"I just want to keep doing our experiments," Mr. Pavlov said in an interview there. "Before, they were dreams. Now, if we get going, they will become plans."

LIKE all good buddy shows, there is a schtick: The video editing is choppy, Mr. Kryukov dresses in button-down shirts with loud patterns and both exhibit a devil-may-care approach to safety. (In one video wisely not made public, the two inspect an unexploded shell.)

Perhaps most unusual about the pair is that in a war that has deeply divided Ukraine, where no one is indifferent, the two say they are neutral. Rather, the conflict is part of a landscape that emerges in rare moments, like the distant reports of artillery fire at the end of one video.

That neutrality is not a calculated stance to avoid offending viewers. It is one of faith.

"The lord Jesus Christ does not take sides, and we must strive to act in his image," Mr. Kryukov said. "We study the Bible, and our members, we call them brothers and sisters, live in Russia and Ukraine. If we picked a side, we would become an enemy to someone. And we don't want to be enemies with our brothers and sisters."

The two men are Jehovah's Witnesses, a faith that grew quickly here after the fall of the Soviet Union but that existed in secrecy for years before then. Mr. Pavlov's father, Ivan, converted after a chance encounter at a Luhansk train station in the early 1990s. He was later thrown out of the church, but not before his wife and son also converted. Mr. Pavlov's father left home. The family remained Jehovah's Witnesses.

Off camera and at home, where he lives with his mother, Mr. Pavlov professes the more distinctive tenets of his faith, like a prohibition on celebrating birthdays. On camera, he avoids those topics. The two men now spend half their time in a village in Russia, where there is easy access to the Internet, A.T.M.s and electricity, but where Jehovah's Witnesses are considered religious deviants. The group's official website is banned in Russia and some have been prosecuted as extremists under the same laws used against neo-Nazis.

"People look at us suspiciously" in Russia, Mr. Kryukov explained. "There is propaganda on TV that Jehovah's Witnesses are dangerous."

There were 20,000 Jehovah's Witnesses in the Luhansk region before the war, though many have since fled. Militarized Orthodox groups like Cossacks, whose tanks bear a flag with an image of Christ, have attacked or seized churches belonging to Baptists and other religious groups they consider sects, including Jehovah's Witnesses. Mr. Pavlov and Mr. Kryukov said that they had not been targeted for their faith since the start of the war.

THE two met after church four years ago, drawn together by Mr. Kryukov's interest in electricity and Mr. Pavlov's interest in bikes. Together, they decided to make an electric bike. Then came exploding pots, quests for ball lightning, Wi-Fi antennas, and homemade generators. "I have a lot of ideas, but I'm not good at acting on them," Mr. Kryukov said. "I saw that Sasha is more proactive. He's passionate. He takes initiative."

For now, the pair have modest goals: to transform their Internet celebrity into a steady income and, perhaps along the way, buy a new digital camera and scrape together enough money for their next experiment. But there are more ideas for the future. A scientific expedition to Chernobyl, the site of the 1986 nuclear meltdown, is one plan. So is a ride in a hot-air balloon, a pipe dream so long as antiaircraft guns jealously guard the skies of eastern Ukraine.

"We have so many ideas," Mr. Pavlov said. "When you lay down to sleep, something interesting pops into your head. The most important thing is not to forget them before morning."

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 #46
Interfax
July 17, 2015
MH17 investigators have yet to establish type of missile - Dutch prosecutors

An international group of investigators probing the crash of the Malaysian Boeing in eastern Ukraine have yet to find out whether the plane was shot down from the ground or from the air, according to the Dutch prosecutor general's office.

"We are investigating the scenario of the ground-to-air missile that downed MH17 and the other scenario is an air-to-air-missile," Dutch Public Prosecutor spokesman Wim de Bruin told Interfax.

He said investigators have yet to identify the individuals responsible for the crash; the effort continues.

Interim results of the international criminal inquiry into the crash could be released as early as before the end of 2015, but the final results are only expected next year, the spokesman said.

A Boeing 777 airliner owned by Malaysian Airlines was on an MH17 flightpath from Amsterdam to Kuala Lumpur when in crashed in a militia-controlled area of Donbas in south-eastern Ukraine on July 17, 2014. All 298 people on board, including 283 passengers and 15 crew members, were killed.

The crash inquiry is being led by the Netherlands. The international inquiry group includes experts from Russia, Malaysia, the United States, the United Kingdom, Australia and the Netherlands.

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 #47
www.rt.com
July 19, 2015
Key points of Russian position on flight MH17
By Alexander Yakovenko
Dr Alexander Yakovenko, Russian Ambassador to the United Kingdom of Great Britain and Northern Ireland, Deputy foreign minister (2005-2011).

We express our deepest condolences to the relatives of all 283 passengers and 15 crewmembers - victims of the dreadful tragedy, the downing of MH17 one year ago.

We condemn the destruction of the Malaysia Airlines Flight MH17 by unidentified individuals and confirm our position in favor of the inevitability of punishment for having committed this criminal act once the investigation is completed.

We consider the issue of establishing an international tribunal concerning the MH17 catastrophe to be premature and counterproductive. We are convinced that UNSC Resolution 2166 remains the only basis - acceptable to all - for international cooperation in the interests of an independent and transparent investigation of downing the Malaysian airliner. We call for a return to the legal framework of this resolution and for the full implementation of the investigation mechanisms provided for in this document.

Russia is interested in a thorough and objective international investigation of the catastrophe of Malaysia Airlines flight MH17. We do not see this happening at the moment. This is due in part to the fact that Russia has been barred from any substantive participation in the investigation (the involvement of the Russian representative has been purely nominal and has not resulted in his opinion, and the data presented by Russia, being taken into account). Russia has been intentionally excluded from required objective standards of 'transparency' by those who conducted the investigation - for example, Russian specialists were essentially denied full and equitable access to the materials which were in the possession of the Joint Investigation Team. The Ukrainian side has refused, up to this moment, to make public the recording of the air-traffic controllers' radio exchange with the pilots of flight MH17.

Russia has been insisting on making the investigation transparent to the fullest possible degree, first of all, with respect to the UN Security Council. We have proposed discussing the course of the investigation in the Council, so as to find answers to the most obvious questions (a list of such questions was distributed by Russia to the council in 2014). There has been no reaction to these proposals from members of the council.

We are forced to conclude that UNSC Resolution 2166, which set out clear and professionally-founded requirements for investigating the MH17 catastrophe, has not been implemented.

There are many serious questions concerning the organization and conduct of the investigation. Russia's numerous calls for making use of the UN Security Council to monitor the implementation of UNSC Resolution 2166 have been consistently ignored. The investigation is being conducted without due observance of international aviation standards and without recognition of the key role of ICAO in such matters.

We are surprised by the fact that the members of the Joint Investigation Team have not undertaken preparatory work on the basis of UNSC Resolution 2166 and have not discussed with the council their plan of further actions. Instead, they have tabled a far-reaching draft resolution under Chapter VII of the UN Charter. UNSC Resolution 2166 does not qualify the downing of the plane as a threat to international peace and security. The tragedy, though horrifying and tragic, was an isolated act of a criminal nature. Thus a trial could be organized on the basis of national, international or mixed law. In any case, this matter does not fall within the Security Council's purview.

Russia is surprised by the proposal of adopting - literally within a number of days - such a fundamental decision, without even discussing any other possible options.

Despite the provisions of UNSC Resolution 2166, the UN secretary-general has not identified and submitted to the council possible options for United Nations support to the investigation.

Since the day of the disaster we have been witnessing a powerful information attack on our country in international media and fora (including the UNSC). It has been groundlessly claimed that Russia or "separatists controlled by Russia" were responsible for the downing of flight MH17. Such irresponsible and unproven statements are being issued up to this moment. Their aim is to negatively influence the media background surrounding the investigation. We consider such statements and unfounded accusations as an attempt to dissimulate the true facts concerning the catastrophe and to cover up the identities of the true perpetrators of the crime.

UNSC practice shows that the mere principle of establishing international judicial mechanisms by a decision of the Council has become a subject of serious and robust criticism by many countries and the international legal expert community. The practice of the existing international tribunals - the ICTY (former Yugoslavia) and ICTR (Rwanda) - confirm the validity of such skepticism. The activities of these two judicial organs are costly, inefficient and slow. Their decisions are highly politicized. They have not been able to finish their work - for over two decades - with acceptable results.

Up to this moment there has been no precedent in creating an international tribunal for bringing to justice those who were accused of perpetrating an act of violence against a civilian airliner: not when a Russian airliner belonging to the Sibir air company was shot down in 2001 by Ukrainian armed forces over the Black Sea; not when the American Navy destroyed Iran Air flight IR655 over the Persian Gulf on July 3, 1988; not after Pan American flight PA103 was blown up as a result of a terrorist act over Lockerbie in 1988, or Cubana de Aviacion flight CU455 over Barbados in 1976; not after Libyan Arab Airlines flight LN114 was shot down as a result of Israeli Air Force action in 1973. No international tribunals were created in other similar circumstances.

The haste in pushing the adoption of a resolution and its extended scope of reference seem to indicate that the UN Security Council is being used to find a pretext for using the MH17 tragedy to organize a 'trial' over Russia on the Ukrainian dossier.

In view of the above, Russia will not engage in textual work on the draft resolution on the establishment of an international tribunal or its proposed draft charter. At the same time we hope that our partners will understand our position and support completion of the investigation in a transparent manner which would provide a solid basis for a subsequent identification of a suitable trial formula.

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 #48
Russia Direct
www.russia-direct.org
July 20, 2015
The MH17 tragedy has become a geopolitical game
The call for an international tribunal to investigate the MH17 tragedy is yet another attempt by the West to sway public opinion about Russia.
By Dmitry Polikanov
Dmitry Polikanov is Vice President of The Russian Center for Policy Studies (PIR-Center) and Chairman of Trialogue International Club. Author of more than 100 publications on conflict management, peacekeeping, arms control, international relations and foreign policy. Member of the International Institute for Strategic Studies, the International Sociological Association, the All-Russian Public Opinion Research Center Research Council.

The anniversary of the MH17 tragedy is one of the hot topics of the summer. In the lack of other rational accusations against Russia, the community of hawks in the West is using the MH17 tragedy for political purposes - as a last resort to bring Moscow to "international justice."

It's no wonder that the shortage of war news from Ukraine has provoked a new line of discussion about the culprits in the MH17 tragedy in July 2014. Random exchanges of fire at the Minsk truce line is not convincing enough and does not contribute to the image of an "aggressive Russia" in the midst of another land grab - after all, the conflict is more or less frozen, and the humanitarian catastrophe in Donbas where thousands of people are starving due to the Ukrainian blockade is of less concern to the international community.

On the contrary, the crash is a winning cause whoever is guilty. There is no need to explain it to European public opinion, which has always been quite sensitive to any civilian casualties, let alone nearly 300 people dead in the middle of the continent. There is no need for a thorough investigation, as the lack of collected evidence can always be accounted for by the intense hostilities in the zone of the accident.

There is no need to provide additional arguments, since the story of the South Korean Boeing shot in the early 1980s by the "Evil Empire" still lives in the memories of the older generation. Besides, it is a perfect chance to condemn the rebels - regardless of whether they used Russian weaponry or a seized Ukrainian missile system - since nobody will ever do the fact-checking in the situation of turmoil in the southeast of Ukraine.

Moreover, the idea of the international tribunal fits quite well into this logic. Some Russian analysts were predicting such a turn of events about a year ago. There is a need to keep Moscow in tension without provoking a hot conflict - and this can only be done with the help of political means and permanent maintenance of a "dark image" in the media.

The real goals can be ambivalent, depending on which side the observer is - to bring Russia back to the high moral standards in international relations and remind Moscow of the unacceptability of "game-changer" practices; or to undermine and overthrow the Putin regime. It does not matter - the tribunal is an ideal tool to achieve both objectives: one may remember the tribunals for Rwanda and the former Yugoslavia.

At the same time, the resistance of Moscow - vetoing the UN Security Council resolution - is also a plus for the authors of the idea, as it indicates the "malignant intentions" of the Russian regime and demonstrates once again the weakness of the Security Council, giving more arguments for circumventing it next time when real action is needed. The tribunal will be perfect to show the "barbarian" and "unpredictable" regime, which does not only "violate" territorial integrity in its "secessionist greed," but does not stop in committing "war crimes" against innocent people flying over. Of course, there can be no "business as usual" with such a mad and bloody dictatorship, according to such thinking.

The only effective Russian strategy would be to start a counter-fire, i.e. to demand actively for the tribunal on war crimes in Ukraine. If Russia had enough soft power instruments at hand, it could easily launch a campaign together with various NGOs to broadcast to Europe the information about dozens of civilians killed every day due to the artillery shelling, about the human rights violations, about the Ukrainian war economy, and so on. However, Russia lacks such resources at the time when they are badly in need - despite much talking in the recent years, the soft power infrastructure has not been prepared for such missions.

Thus, the Boeing accident coverage is so good because it is a never-ending story. Its major benefit is its infinite timeline. The preliminary results of the investigation should allegedly be complete by October, i.e. more than one year after the crash. The final report, which will probably be as vague as some of the leaks in the media, should appear only next year.All this time the uproar about the tragedy will continue to work for political ends and it will be no surprise if the announcement of the international report will be delayed even further. The saddest thing is that the 300 people who died aboard the flight and their relatives are becoming pawns in this geopolitical game.

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 #49
Russia Insider
www.russia-insider.com
July 18, 2015
The Debate Over MH17 Has Been An Embarrassment to The West (and Russia)
No, you do not know what happened to MH17. Neither do you. Or you. Or you over there.
By Danielle Ryan
Danielle Ryan is an Irish journalist and blogger. She has a degree in Business and German from Trinity College Dublin and studied political reporting at the Washington Center for Politics and Journalism in Washington, DC. Special interests: American politics and foreign policy, US-Russia relations and media bias. Her blog can be found at journalitico.com.

Today, one year on from the tragic downing of flight MH17 over Eastern Ukraine, the debate over what really happened has become an embarrassment to both the West and Russia - and their respective media - and has produced the most idiotic crop of couch investigators that the internet has ever known.

There, I said it.

No, you do not know what happened to MH17. Neither do you. Or you. Or you over there.

The sheer stupidity that's been witnessed over this tragedy has crossed all boundaries. Peak internet stupidity may finally have been reached. I have very rarely written anything about MH17, and for one reason: I have no real opinion on who was responsible and nor do I personally care. That might sound insensitive, but let me explain.

The same 298 people are still dead. There is still a war raging in Ukraine. And the investigation and debate around MH17 have become so politicized that it's unlikely we will ever really know the full truth of what happened on that day.

Quite frankly, even if I had been personally affected by the tragedy, at this point I would not be placing much weight on various pieces of "evidence" produced by either the West or Russia.

If you know you'll likely never really be able to feel justice or take comfort in knowing the full truth, what is the point?

Couch Investigators

Along with the official investigation into the tragedy, led by a coalition of countries that could currently not be any more hostile to Russia if they tried - The Netherlands, Australia, Belgium and Ukraine - we have also been subjected to an onslaught of "open source" information and "evidence" produced by couch investigators like Eliot Higgins of the Bellingcat "investigative" team.

Higgins, who sits at home on his laptop in England, has somehow managed to convince the Western world that he knows what happened that day in the skies over Donetsk.

And, always quick to believe anything which paints Russia in the worst light possible, Western media has lapped up his various reports and distributed their contents without question.

It has been depressing and frankly shocking to see how willing our media is to gobble up anything a self-proclaimed non-expert - in either aircraft disasters or military equipment - has had to say about both MH17 and the war in Ukraine in general.

Even when Germany's Der Spiegel was forced to apologize for taking Higgins at his word - after consulting with real investigators - Western media continued to spew out reports and profiles on this man like he was the Messiah.

But it's not just Higgins. There's a whole host of idiots like him on Twitter who spend all day long tweeting about the "evidence" from one quarter or another. And I don't discriminate when I say that.

I have seen equally stupid nonsense from those who believe Ukraine was at fault and that Russia's hands are clean.

The worst thing about most of these people is actually that they don't care about justice for the victims. They care about personal vindication for their own political arguments and they'll seize on any piece of dreck or conspiracy theory in an attempt to 'prove' their various points.

There are people who would deny Russia's involvement if I video emerged of Vladimir Putin himself firing a rocket at the cockpit. And there are people who would deny Ukrainian involvement if the same video emerged of Petro Poroshenko. That is how pathetic - and how much of a charade - this entire debate has become.

Regardless of what kind of evidence is produced, the other side will shout "conspiracy theory!" until their last breath.

As for journalists, domestic Russian media has been happy to throw out any claim implicating Ukraine, and Western media has been happy to parrot anything that implicated the rebels. A useless back and forth that, a year later, has gotten us no closer to the truth - and no closer to justice for the families of those killed.

In desperate attempts claim victory, both sides have even published entirely fake, semi-fabricated or otherwise dodgy claims.

When it comes to the 'real' evidence - and I would classify 'real' evidence as that which has not been produced by Higgins or random people on Twitter - there are various competing theories, all of which deserve attention from the media and none of which I will delve into here.

Sadly however, there are scripts to be adhered to - and the script is always more important than giving each side a fair shake.

Equally stupid

If it's not already clear that both sides here are acting in an almost equally pathetic manner, let me try again to explain.

One of the most constant criticisms of Russia's stance on MH17 is that, well, it has had more than one. Indeed, the reason for Russia's changing theories may very well be that if you want to deny and distract from something, it helps to confuse matters by throwing curve balls into a story to throw people off the scent.

If the rebels shot down this plane and Russian authorities know that (or strongly suspect it), it is a very distinct possibility that this is why the Russian version of events changed over time.

However - and this is a big however - it also has struck me as odd that this has been the overriding criticism from the West.

It seems strange to me that Western journalists would use the fact that Russia put forth more than one possible explanation as some ultimate proof of their culpability - particularly given the fact that Russia did produce quite a bit of worthwhile information in the aftermath, at a time when the US State Department seemed to still be relying on 'social media' evidence.

Is it not fair to say, the the West's own split-second decision to blame the rebels and Russia before the dust had even settled, is also quite a black mark on their professionalism in dealing with the aftermath of this tragedy?

Is it not fair to say that the very reason the West made that split-second decision to blame Russia - and hasn't deviated from that decision since - is not in fact because there is irrefutable evidence to that effect, but because they too have a stake in the outcome of this and they had backed their horse from day one?

Russia may have (or may not have) aimed to muddy the waters by throwing up various possibilities, but the West was never open to hearing any evidence that did not tally with their preconceived notions of what had happened.

Two approaches. Same aim.

Hypocrisy

There have been calls for Russia to 'own up to its role', direct or indirect, in the downing of the flight. The argument goes, that great world powers don't diminish, but rather strengthen their power, by admitting their own failings and shortcomings.

Not doing so can demote a country to the "second division" of the global system, according to one recent article. In that case, the "first division" of countries must be a fairly lonely place.

But it is indeed true that speaking honestly about one's own failings is a sign of strength, not weakness - and it would be a pleasant break from the norm if all parties to this conflict, direct or indirect, took some responsibility for the disaster - including the United States and Ukraine.

In that spirit, the US might also find it in their hearts to apologize for the 1988 intentional shootdown of Iran Air 665 passenger jet by the USS Vincennes as it unlawfully traversed Iranian territorial waters, killing all 290 innocent people on board.

Washington might also reconsider the wisdom of awarding the men who shot that plane down with military medals for "exceptionally meritorious conduct".

Until that happens, it would be wise for both Washington and journalists of all stripes to drop the act, let the real investigators do their work, and then promptly move away from using such a horrific tragedy to promote their own political agendas.

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 #50
The Times (UK)
July 18, 2015
US ready to switch off cash supply to Putin
The US proposals mark a dramatic escalation in financial sanctions against Moscow
Roger Boyes, David Taylor

The United States is ready to starve Russia of access to western credit if President Putin fails to meet demands for peace in Ukraine.

The punitive measures against Mr Putin's inner circle of oligarchs and their extensive business interests would mark a dramatic escalation in financial sanctions against Moscow.

Proposals drawn up in Washington include an attempt to close off western credit markets for Russia, according to senior US officials. "Let's see what Putin's friends make of that," said one.

The threat comes amid mounting concern in the West that Russia is failing to fulfil its promises to end the fighting in eastern Ukraine. Arseniy Yatsenyuk, the Ukrainian prime minister, told The Times this week that Russia was flagrantly violating the Minsk ceasefire deal signed this year.

In response to Russian aggression in Ukraine, the US is constructing the most comprehensive package of evidence yet mustered on how Mr Putin and his inner circle made fortunes from contacts and dealings that date back to St Petersburg in the early 1990s.

The takeover of Crimea and conflict in the Donbas region, where a Malaysia Airlines flight was shot down a year ago, killing all 298 people on board, has made Mr Putin's cronies the leading target of a team of financially savvy intelligence officials given the task of finding his vulnerabilities.

"It has completely eclipsed other matters as the national security issue for the Treasury," one US official said. "It was a massive ramp-up to go from very limited knowledge and expertise and having to transform the focus of our priorities."

For years, successive American presidents largely overlooked claims of corruption in Russia as they sought to "reset" relations with the Kremlin. US intelligence analysts have over the past year been moved off Iran and on to Russia, according to officials. Several agencies, including the CIA and the National Security Agency, are involved in the financial investigations. "At the moment, with Putin and his cronies, we are locked on an inevitable and destructive path to escalation," one US source said.

America's focus on tightening the noose on the Putin clique highlights a gap with Europe.

EU leaders have extended their sanctions against Russia, but only after a serious wobble. The sanctions have largely targeted senior military and government officials and can only be renewed on the basis of unanimity. Mr Putin has been furiously trying to break European resolve with an attempt to peel away Italy, which he visited last month. Alexis Tsipras, the Greek prime minister, has visited Moscow and St Petersburg in recent months and signed a big gas deal with Russia.

Under the present American sanctions, Putin cronies have had any assets they hold in the US frozen. Some Russian companies can borrow for a maximum of 30 days compared with normal loan deals that would last several years. Under the new plans, that could be restricted even further.

"We could be talking seven days' debt maturity, not 30 days," said one US official. That would mean sanctioned businesses and individuals having to renew credit deals every week, destroying all hope of Russia securing long-term funding on western markets.

The plans could be introduced if Mr Putin fails to live up to the Minsk agreement, signed in February. Its terms require an end to fighting; the withdrawal of all Russian soldiers and weaponry from Ukraine; a buffer zone along the front line between Ukrainian forces and separatist rebels; eventual Ukrainian control of its side of the border with Russia; and support for a lasting ceasefire. Mr Yatsenyuk said this week that Russia had stationed "tens of thousands of soldiers and Russian-led guerrillas" in Donetsk and Luhansk and was still supplying heavy weaponry, including surface-to-air missiles.

The US measures would give a very sharp edge to restrictions that already include asset freezes and visa bans on more than 130 individuals and 28 companies. Those on the sanctions blacklist include Mr Putin's associates from his days in St Petersburg, many of whom have become billionaires during his presidency. They include Yuri Kovalchuk, head of the executive council of the sanctioned Bank Rossiya and described by the US as Mr Putin's "cashier"; Igor Sechin, head of the state oil giant Rosneft; Vladimir Yakunin, head of the state-owned Russian Railways; Gennady Timchenko, a billionaire oil trader; and the businessmen brothers Arkady and Boris Rotenberg.

Any money held by the men in US bank accounts has been frozen. Mr Timchenko has been unable to use his Gulfstream Aerospace private jet because the American company had stopped providing technical support for it. The Italian authorities seized luxury properties worth about £24 million belonging to Arkady Rotenberg when his name was added to EU sanctions.

The fortunes of the 21 richest people in Russia declined by $61 billion last year, a quarter of their combined wealth, according to the Bloomberg Billionaires Index. The US is calculating that threats of further sanctions will pile pressure on the Kremlin to step back in Ukraine.

So far the US has held back from what Philip Hammond, the foreign secretary, described as the "nuclear" option: cutting Russia off from the SWIFT inter-bank clearing system, which would seriously impede trade.

"If the West imposes new sanctions on Russia it would not help Ukraine, but it would lead to Russia's distancing from the West in politics and the economy," warned Alexei Pushkov, the influential head of the Russian parliament's foreign relations committee.

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