#2
August 1991 coup d'etat attempt in USSR still fuels disputes
By Tamara Zamyatina

MOSCOW, August 17. /TASS/. Twenty-four years after a coup d'etat attempt in the former USSR on August 19-21, 1991, the independent pollster Levada Center has found that over 50% of respondents view this event as a tragedy for the country.

Another 32% consider the coup d'etat as an episode in the struggle for power in the country's leadership and only 10% as the victory of democracy over the Communist Party of the Soviet Union (CPSU). Experts polled by TASS who eye-witnessed the putsch assess this event from the opposite points of view.

The Soviet central TV channels showed Tchaikovsky's Swan Lake ballet in the morning of August 19, 1991 instead of the usual news programs. People thought that someone had died in the country's leadership. But soon a report came that Soviet President Mikhail Gorbachev could not run the country for health reasons and the power would pass to the State Committee on the Emergency Situation (GKChP). This self-proclaimed body suspended the activity of political parties and some newspapers, imposed censorship and banned rallies and strikes.

The team of Russia's first President Boris Yeltsin refused to obey the GKChP's decrees. Thousands of Muscovites blocked approaches to the building of the Russian parliament where Yeltsin and his close associates had stayed during all the days of the putsch. GKChP members were demoralized and decided against storming the Supreme Soviet of Russia to avoid casualties.

On August 21, 1991, former Vice-President of Russia Alexander Rutskoi flew to Crimea where Gorbachev had stayed on vacation. The Soviet president returned to Moscow that night but his fate and the fate of the entire Soviet Union were predetermined. The former Soviet republics proclaimed their independence one after another and the Soviet Union ceased to exist in December 1991.

According to Head of the Center for Military and Political Studies at the Moscow State Institute of International Relations (MGIMO University) Alexey Podberezkin, he was an adviser to Vice-President Rutskoi in August 1991 and stayed in the building of Russia's Supreme Soviet.

"Owing to my official duties, I held contacts both with the Yeltsin team and GKChP representatives in the Kremlin and in the CPSU Central Committee, i.e. I witnessed the situation from both sides," Podberezkin told TASS.

"There was no coup d'etat those days. The establishment of the GKChP was a constitutional act prepared with the participation of Mikhail Gorbachev already six months before those events with the aim to preserve the Soviet Union. Thousands of support telegrams were sent to the GKChP," the expert said.

"The situation changed when radical democrats set up barricades around the Supreme Soviet and urged citizens to defend the Yeltsin team. They were ready to arm "human ring" participants and it took me great efforts to store and hide arms held in the Supreme Soviet's building behind boxes and gas masks to avoid bloodshed," Podberezkin said.

"GKChP members felt at a loss and were afraid of displaying the political imitative. The events of those days became a tragedy for the country because the persons who had taken power for several days acted indecisively and were unable to accomplish their task, the expert said.

Academician Yury Ryzhov was one of the founders of the interregional deputy group in the USSR Supreme Soviet in 1991. This group eventually brought Yeltsin to power.

"In the morning of August 19, 1991, I arrived in the building of the Russian parliament, called Yeltsin's countryside residence and suggested dictating the text of the appeal to Russian citizens prepared by him because Yeltsin might be detained on his way to Moscow. But Yeltsin managed to arrive in the Supreme Soviet. I stayed next to him during all the three days that the GKChP was in power," Yury Ryzhov told TASS.

"Of course, all of us, the defenders of the Supreme Soviet and the Yeltsin team, were gripped with euphoria those days. We thought that a great victory over the GKChP would come and a bright democratic future along with it. But everything turned out to be quite different," the academician said.

Russia's democratic forces defeated the CPSU in August 1991, Head of the Center for International Security at the Russian Academy of Sciences Alexey Arbatov said.

"An attempt of the forceful retention of the Communist nomenclature's power was prevented. Actually a coup d'йtat took place," Academician Arbatov told TASS.

"The GKChP inflicted the last blow on the USSR. Yeltsin made an abrupt move and liquidated the Soviet Union instead of carrying out long and hard work for creating the Union of sovereign states in place of the Soviet empire," the expert said.

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 #3
www.rt.com
August 17, 2015
Russians see 1991 coup as national tragedy, but like subsequent developments

According to a new opinion poll, 41 percent of Russians consider the events of 1991 that ended in the breakup of the Soviet Union as tragic and perilous, but 34 percent hold that since then the nation chose the right path of development.

While the share of those who hold that the 1991 coup was a tragedy remains approximately the same as in previous years, the proportion of those who think that the subsequent developments were to Russia's benefit reached the maximum since 2003. The number of those who would prefer the nation's course of development take the opposite direction fell from 47 percent in 2014 to 37 percent this year.

The share of those who consider the events of 1991 just an episode of a complex power struggle in the upper echelons of governance hit a historical minimum of 32 percent.

At the same time, the share of respondents who described the failure of the coup as a victory for the democratic revolution was only 10 percent this year and 9 percent in 2014.

The research was conducted by the independent Russian agency Levada Center in late July and its results were made public on Monday.

Deputy head of the agency Aleksey Grazhdankin said in comments to business daily Vedomosti that the shift of moods could be explained by the current crisis in Ukraine.

"A large percentage of Russians hold that the roots of the Ukrainian events lie in the breakup of the USSR and the events of 1991 when everything went wrong. This is why more people see the failed coup as a tragedy," the researcher told reporters.

Former Soviet President Mikhail Gorbachev, who lost his post because of the 1991 coup expressed a similar opinion in March this year.

"The deep-rooted reason for the turmoil is in the deliberate failure of Perestroika, in irresponsible decisions that were made by the heads of Russia, Ukraine and Belarus in the Belovezha Forest," Gorbachev wrote in a newspaper column. He noted in his article that in just a few years after 1991, Western nations had started dragging former Soviet republics into the Euro-Atlantic community, openly ignoring the interests of the Russian Federation. Gorbachev stated that all sides lost as a result of these actions because they created the threat of a new Cold War, or even a real war.

August 1991 saw the events that are usually referred to in Russian mass media as the 'failed Soviet coup' or 'Putsch'. Back then several members of the Soviet leadership, including the defense minister and the KGB chief, tried to disrupt the signing of a new union treaty between the country's constituent republics. They isolated then-President Mikhail Gorbachev in his residence in Crimea and created the State Emergency Committee (GKChP). The coup failed after three days of resistance organized by the leadership of the main republic, Russia, headed by then-President of the Russian Federative Republic Boris Yeltsin.

On August 23, the Communist Party was banned from operating on Russian territory. The Russian Federation took over the institutions of the union state, as the USSR broke into independent republics under a treaty signed by the leaders of Russia, Ukraine and Belarus, but none of the other 12 constituent republics.

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 #4
Irrussianality
https://irrussianality.wordpress.com
August 17, 2015
STRAIGHT SHOOTING FROM THE UK
By Paul Robinson
Paul Robinson is a professor in the Graduate School of Public and International Affairs at the University of Ottawa. Paul Robinson holds an MA in Russian and Eastern European Studies from the University of Toronto and a D. Phil. in Modern History from the University of Oxford. Prior to his graduate studies, he served as a regular officer in the British Army Intelligence Corps from 1989 to 1994, and as a reserve officer in the Canadian Forces from 1994 to 1996. He also worked as a media research executive in Moscow in 1995. Having published six books, he has also written widely for the international press on political issues. His research focuses generally on military affairs. In recent years, he has worked on Russian history, military history, defence policy, and military ethics.

The Bow Group, 'the United Kingdom's oldest conservative think tank', is as 'Establishment' an institution as one could hope to find. Its board includes prominent former Conservative cabinet ministers such as Norman Tebbit and Geoffrey Howe as well as right-wing academics like philosopher Roger Scruton. I was intrigued, therefore, to hear its chairman, Ben Harris-Quinney, announce last week that, 'the theory of neo-liberal interventionism is bankrupt.'

The context of Harris-Quinney's remarks was the publication of a new Bow Group report entitled 'The Sanctions on Russia'. [http://www.bowgroup.org/policy/russian-sanctions-could-cost-west-over-700bn-say-analysts-ukrainian-crisis-must-now-be-used] In the report's introduction, editor Adriel Kasonta declares:

"Given that many people in Ukraine actually consider themselves to be Russian, and that the justifications for sanctions may have shifted, it appears necessary to revise our approach to what could be considered one of the greatest challenges of the 21st century. We might do worse than explore for [sic] a peaceful solution to this crisis, engaging EU member states and Russia in a meaningful and inclusive dialogue."

The title 'The Sanctions on Russia' is actually misleading as only the first of the report's three parts directly covers the sanctions imposed on Russia by Western countries. The report's second part digresses into a discussion of the 'Russian soul', and the third focuses not on Russia but on Ukraine and what that country has to do to solve its problems.

In the section of the report dealing with sanctions, Elina Kyselchuk of the Ukrainian Business Centre in London shows that the sanctions have had a negative impact on the Russian economy but have not altered Russian behaviour in Ukraine. Given that the latter was their intention, the sanctions have failed. Kyselchuk concludes that:

"There must be reached a diplomatic compromise, which will allow Russia to remain an influential political player in Eastern Europe, while letting Ukraine choose its own internal political regime and foreign policy orientation. A diplomatic solution will require all sides to find middle ground and to focus on their fundamental economic needs, which will perhaps not mean the best possible outcomes or absolute victory. Finding such a compromise will not be easy. However, it is vital for the West and Russia to work together towards reconciliation and building a stable, prosperous Ukraine."

The report's economic analysis is easy to follow. The same could not be said of its dissection of the 'Russian soul'. Think tanks are meant to speak to policy makers rather than to academics. But in his chapter on 'Russian Christian thought as a key to understanding Russian politics', Artur Mrowczynski-Van Allen of the International Center for the Study of the Christian Orient makes little concession to those not well versed in theology, as he explains the thinking of philosophers such as Pavel Florensky, Nikolai Berdyaev, and Vladimir Solovyov. For instance, he writes:

"It is very easy to see that 'Vernunft [reason]' accompanies 'Adam:' philosophy and theology (and, ultimately, all spheres of life, culture, politics, economy, etc.) form a unit. A unit that is revealed in metaphysics, anthropology, and historiosophy-historiosophy intimately tied to ecclesiology. It is not just a theoretical question, but rather a real and rational way of thinking and living that can be defined as an eschatological pragmatism."

I am man enough to admit that I haven't the slightest clue what the author is talking about here, and I suspect that most readers will shake their heads in befuddlement and skip this part of the report after reading just a few lines. But Mrowczynski-Van Allen's final words are at least relatively clear:

"Rather than imposing our own paradigms of interpretation, we must at least listen to others, be attentive to their counterdiscourses, come closer to the ontology, anthropology, and historiosophy that beat in the heart of a people and make it live, that make it live in a particular, unique way, whether in the case of Russia or of so many other peoples and cultures that are resisting modern colonization by the dominant and prevailing discourse of secular modernity."

In simpler words, we should respect cultural differences. Liberal interventionists will not like this conclusion, as it suggests that Western liberalism does not embody universal values which must be spread to the rest of the world. They will probably also dislike the contribution to the third part of the report by Nikolai Petro of the University of Rhode Island, which again warns against the imposition of artificial cultural unity.

'Stable democracy does not result from having homogeneous political or cultural attitudes,' writes Petro, 'but from society's ability to develop institutions that not only manage these conflicting elements within a culture, but also preserve a balance among them.' The way out of Ukraine's crisis, he continues, is 'to develop a unifying civic culture that encompasses both its Russian and Ukrainian speaking communities.' This will be impossible, 'if Ukrainian elites persist in trying to promote national unity by imposing highly divisive national symbols, rallying around an "eternal enemy" (Russia), and insisting on a new national identity as a litmus test of loyalty. ... Ukraine will thrive only if its bicultural and bilingual identity is seen as a source of strength, rather than as a weakness to be eradicated.' Western analysts, Petrio concludes, should:

"First, stop talking about Ukrainian identity as if it were a monolithic concept, rather than two closely related, but distinct, cultural heritages.

"Second, oppose attempts to ignore or minimize the importance of the Russian cultural component of Ukrainian national identity. Historically such efforts have always resulted in bloodshed.

"Third, stop trying to force Ukrainians to choose between Europe and Russia. Instead, adopt a broader view of European identity that accepts both Russia and Ukraine as quintessential parts of Europe.

"Finally, recognize that all actors share a common interest in resolving this crisis through a direct dialogue of the conflicting parties."

This is all excellent advice. I know from my own experience that conservative think tanks in the UK are not always open to ideas which challenge the hegemony of liberal interventionist ideas. It is encouraging, therefore, to see the Bow Group offering an alternative point of view.

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 #5
Moscow Times
August 18, 2015
Head of Russia's Mighty Rail Monopoly Looks Set to Step Down
By Ivan Nechepurenko

Vladimir Yakunin, one of Russia's most powerful executives and a close ally of President Vladimir Putin, was nominated as a senator for the upper chamber of the Russian parliament Monday, a position that would oblige him to step down as head of the state rail monopoly Russian Railways (RZD).

Nikolai Tsukanov, the acting governor of the Kaliningrad region, named Yakunin, 67, as one of his three candidates for the region's representative in the Federation Council, a statement on the local electoral commission's website said.

Such a step could only be taken on the Kremlin's instructions, meaning it has sanctioned Yakunin's departure from RZD, analysts told The Moscow Times on Monday.

Yakunin, who is widely seen as one of the leading conservatives in the Russian elite, has known Putin since the early 1990s. Together with other people who now occupy senior positions in the Russian government, they founded the Ozero dacha community outside St. Petersburg in 1996.

If Tsukanov, who is backed by the ruling United Russia party, wins September's election, he will be able to appoint Yakunin to the post, which has largely symbolic powers.

"I asked him about becoming our representative in the Federation Council back at the start of the election campaign. I am glad Yakunin agreed," Tsukanov told RIA Novosti news agency on Monday.

Under the law on the status of senators and State Duma deputies, members of the Federation Council cannot be involved in any entrepreneurial activity or do any other paid work.

Yakunin gave written consent to becoming a senator, Interfax reported Monday, citing an unidentified source. Other media outlets, including Gazeta.ru news website and Dozhd television channel, cited unidentified sources as saying he would resign from RZD.

Russian Railways had not commented on the reports by the time of publication.

The government is already discussing who is going to replace Yakunin, Dozhd reported, with RZD's first deputy president Alexander Misharin, Deputy Prime Minister Arkady Dvorkovich, presidential aide and former transport minister Igor Levitin and Uralvagonzavod machine building factory director Oleg Siyenko among the likely candidates.

Sanctioned for Loyalty

A staunch supporter of Putin, Yakunin has authored a number of monographs arguing for Russia's closer integration with Central Asian countries and China. He has also repeatedly criticized the United States, accusing it of trying to dominate the world.

In 2014, the U.S. imposed sanctions on Yakunin over the Ukraine crisis, calling him "a close confidant of Putin."

According to Alexei Makarkin, deputy head of the Center for Political Technologies, a Moscow-based think tank, Yakunin did not step down earlier to avoid creating the appearance that the Kremlin is willing to surrender sanctioned individuals.

"It was clear that Yakunin would resign at one stage or another. The idea was considered a year ago, but at the time - in the context of the Ukraine crisis and recently imposed sanctions - it was decided that it was more important to demonstrate that the political system is consolidated," Makarkin said in a phone interview.

Railways Tsar

As head of Russian Railways, Yakunin manages over 835,000 employees who work along the 86,000 kilometers of railway track, according to the company's latest annual report. On its website, the company says it is one of the top three railway companies in the world.

Over more than a decade at the helm of RZD, Yakunin has overseen a number of significant reforms, including the liberalization of the freight car market, but in recent years was criticized for not moving these reforms further.

In particular, Yakunin resisted the calls to liberalize the locomotive market.

"He wanted to keep RZD's monopoly on locomotives," Andrei Rozhkov, a transport analyst at Metropol investment company, told The Moscow Times.

"In addition, many companies would acquire significant contracts with RZD due to their connections with Yakunin," Rozhkov said in a phone interview.

'Lame Duck'

In addition to his activities at RZD, Yakunin has developed a distinctive public image, frequently commenting on Russia's foreign policy and the country's economy.

In 2010, he became head of the state policy department at the political sciences faculty of Moscow State University.

A devout Orthodox believer, Yakunin also serves as chairman of the board of trustees of the Saint Andrew's Foundation that has brought a number of Orthodox Christian relics from Greece for public veneration in Russia.

Russia's anti-corruption crusader Alexei Navalny has repeatedly exposed Yakunin's lavish lifestyle, including his Moscow region mansion that included a custom-designed storage facility for fur coats, among other amenities. Yakunin himself has repeatedly refused to reveal how much he earns at RZD, despite a government drive for state officials to declare their earnings.

In 2013, Russian news agencies received a statement on government letterhead saying that Yakunin was resigning from his post. The claim was quickly denounced by government representatives as a fake sent out by hackers.

Mikhail Vinogradov, head of the Petersburg Politics think tank, said that Yakunin had been perceived as a "lame duck" for at least the last two years.

"It will be very interesting to see who will replace him. It is difficult to imagine anybody in Russia with greater political weight than Yakunin," said Vinogradov in a phone interview.

 #6
www.rt.com
August 18, 2015
Russian railroad boss intends to resign, poised to join upper house

Longtime head of Russian Railways Corporation Vladimir Yakunin has confirmed he wants to leave his post in about one month in order to join for Federation Council as a senator representing the western Russian exclave of Kaliningrad.

Vladimir Yakunin told RIA Novosti that he would resign in accordance with the rules after the next single election day, which falls on September 13. He also forwarded his written consent to become a candidate for the upper house seat.

"He has received a proposal from the country's leaders and he accepted it. He confirmed that he wants to leave the company for the Federation Council as standard procedure after the elections," a Russian Railways spokesman told TASS.

The press secretary of the Kaliningrad Regional elections commission told the press that Yakunin's name was on the list of three candidates for senate submitted by acting Kaliningrad Governor Nikolay Tsukanov, who is running for the next term. If he wins the elections in September, he would decide which of the three candidates he'd prefer to delegate to the upper house.

Tsukanov elaborated on the subject in an interview with TASS, saying he proposed the senator's post to Yakunin after one of the three candidates with whom he had previously agreed asked to remove him from the list for family reasons. He also said that the regional authorities had a long and successful history of cooperation with Russian Railways and its chief.

Yakunin has headed Russian Railways Corporation since 2005. Prior to that he assumed various positions in the Transport Ministry and the presidential control department. In Soviet times, Yakunin worked in USSR's Permanent Representative in the United Nations.

Over the past few years, the mass media have circulated rumors that Yakunin was a career intelligence officer. He never officially confirmed this, but allowed hints that this was possible, for example in 2013 in an interview with Kommersant daily he dropped the phrase that he had worked in intelligence for 22 years.

The current head of the Russian Railways is also known as a favorite target of the Russian anti-corruption activists. In 2013, famous blogger and politician Aleksey Navalny accused Yakunin of running a complex system of offshore firms, noted his exceptionally lush lifestyle and great personal wealth, and questioned the sources of his income.

Yakunin always dismissed all such accusations and blamed them on political intrigue and reporters' sensationalism. In March this year, a Russian Court upheld Yakunin's lawsuit against the New York Times newspaper, recognizing the article as false information with claims that the head of Russian Railways was paying large sums in cash to President Vladimir Putin.

At the same time he had refused to disclose his income declaration until it became mandatory for senior executives of state corporations in 2014. After this he also refused to talk to mass media, saying that the information about his income was personal and its disclosure could put his family in danger. In May this year, Yakunin eventually gave in to public pressure and said in a public statement that his monthly salary was about 4 million rubles (about $65,000).

In March 2014, the United States and Australia put Yakunin on its sanctions list over his alleged role in the reunification of the Crimean Republic with the Russian Federation. The Russian Railways' press service called this step "an inappropriate reaction of the US administration to the expression of a personal opinion on the issue that causes large-scale public resonance in Russia."

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 #7
No big surprises expected from upcoming regional elections in Russia
By Lyudmila Alexandrova

MOSCOW, August 17. /TASS/. The regional elections due in Russia on September 13 will hardly bring any surprises, as the rating of the ruling party, propped up by a high rating of the president, is rather high, experts say. The main intrigue of the elections is not in participation of non-systemic opposition and not in how many votes the ruling party will secure, but in the quality of the election process, experts believe.

Canvassing has started in Russia on Monday. On September 13, "the single voting day," many Russian regions will be electing governors (in ten regular and 14 early elections), deputies to regional parliaments and municipalities. All in all, 10,700 elections will take place in 83 Russian regions. Fifty-five of 74 parties that have the right, are planning to take part in elections of different level.

In covering the election campaign, most media put emphasis on participation of non-systemic opposition, first of all the Democratic Coalition on the basis of RPR-Parnas Party. In mid-April, Parnas of Mikhail Kasyanov and Ilya Yashin agreed with Alexei Navalny's Party of Progress about single candidates' lists in elections due in the coming two years. Three more groups joined the coalition - Democratic Choice, Party of December 5 and Libertarian Party of Russia. As Parnas is the only party having registration, nomination proceeded only on its party lists. The Yabloko Party has as usual opted for an independent participation in the elections.

Parnas that had been trying to register for elections to four regional parliaments was allowed to participate only in elections in the Kostroma region. Defective subscription lists prevented it from taking part in the other elections. Many experts said that Parnas's failure was logical as its political activity in the province was weak. Other experts accused the federal authorities of seeking to remove the non-systemic opposition from the elections. They, for their part, officially dismissed the accusations, advising the opposition to collect signatures more accurately.

Anyway, in any case experts see election chances of non-systemic opposition as not very high. "A limited group of people is ready to vote for the democrats," the director general of the Centre for Political Technologies, Igor Bunin, told the Nezavisimaya Gazeta daily. "People don't believe that the opposition has something to offer," he said.

"The regional authorities and election commissions have done all to avoid surprises at the elections," the first vice president of the Centre for Political Technologies, Boris Makarenko, has said. "At the moment, all opinion polls suggest that growing crisis phenomena in the economy and a decline in people's incomes so far have failed to affect attitude of Russian nationals to the authorities," he said.

As long as the rating of United Russia remains that high, any fifth party (apart from the parties in parliament - United Russia, Communist Party, A Just Russia Party and Liberal Democratic Party) will find it difficult to qualify for regional parliaments, the expert noted. "This can happen in some places, but as isolated occurrences," he added.

"On the whole, perhaps the main intrigue of the elections is not in how successful positions of United Russia across the country will be - its ratings are fairly good, - but in how legitimate the election campaign will be in perception of political, federal and regional classes, and the population in the long run," the president of the National Strategy Institute, Mikhail Remizov, told Tass.

"Will the regionals manage not to overdo with using the notorious administrative resource, and how will the federal center, the judicial system, react to this. The main stake in this case is not top places, but the efficiency and quality of the election process," he said.

Surprises do happen at practically any elections, but in this case they will hardly be big, the expert believes. "On the whole, the authorities now have a leeway given a high rating of the president, which indirectly helps keep confidence in the regime," he said.

Debuts or advance of some bright party forces are highly unlikely, the political analyst added.

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 #8
Vedomosti
August 9, 2015
Experts note drop in competition in upcoming Russian regional elections - paper
Yelena Mukhametshina and Olga Churakova report: Patchy competition: Competitiveness of elections decreases, say independent experts - Civil Initiatives Committee and Golos assess progress of regional campaigns

The greatest number of party lists have been submitted in regions where the Democratic Coalition based around Parnas planned to run, according to two reports on the results of the nomination of candidates for the regional elections compiled by Aleksey Kudrin's Committee for Civil Initiatives [KGI] and the Golos movement. In 2014 no region had more than 15 lists, but this year 20 parties have submitted lists in Kostroma Region, 18 in Kaluga Region and 15 in Novosibirsk Region, experts from Golos say. Overall, the competitiveness of elections is decreasing and it has only been achieved in regions where the Democratic Coalition was operating, explains KGI expert Aleksandr Kynev. Moreover, the KGI points out that, as a result of the tightening of election legislation, the decline in the number of parties running in the elections continues - this year only 38 parties put forward lists in the most significant elections, while 25 parties did not nominate a single candidate.

Experts also report a fall in the number of independent candidates in parliamentary elections - while in 2014 on average there were two running for each seat, this year the figure is just 0.8, the Golos report says. The system is being set up to make it logistically more difficult for independent candidates to stand in elections than party nominees, Golos expert Vitaliy Kovin explains. In addition, the number of signatures they have to provide has been increased to 3 per cent, while parties need 0.5 per cent: "But in municipal elections, people with not a lot of experience or funding run as independent candidates. Furthermore people see that municipal deputies do not have power and influence."

Both reports note negative trends in the use of the municipal filter [the requirement to gather signatures of local deputies and municipal heads in support of candidates] in governor elections, with the experts considering the filter to be set too high. There is a lack of real competition, with the vote starting to resemble a referendum on an unopposed candidate, the KGI report says. The organized collection of municipal deputies' signatures in support of current governors and their "sparring partners" is still occurring. Last year many candidates with high approval ratings tried to run in elections and were blocked almost everywhere, but this year such "heavyweights" have not even tried to register, Kynev says: "As a result we are seeing complete shams, where candidates support the governor or even withdraw themselves, there is some semblance of competition in just two regions - Irkutsk and Omsk regions."

Nikolay Bulayev, deputy chair of the One Russia faction in the State Duma, thinks that the municipal filter has not been in place long enough to draw conclusions yet, but at present it is rare to have fewer than four people competing for a seat: "It is a different matter who is being nominated by the parties. The standard of nominees is not very high, but that is the fault of the parties, not the legislation." The democrats want to "generate hype about an alleged desire to keep them out of the elections", the deputy believes: "Not a single opinion poll gives them a favourable prediction, and this means that it is more advantageous to them to pull out of the elections and blame this on those who allegedly do not allow them to run." Bulayev does not know the statistics regarding independent candidates, but "intuitively would not say that there are fewer of them": "The number of independent candidates does not determine the nature of the elections - there are many times more party nominees."

It is easier to run for a party because one is part of a team and the party takes care of the collection of signatures, says Vadim Solovyev  from the Communist Party (CPRF), agreeing with the findings about the decrease in independent candidates. The municipal filter should be abolished, and it should not apply to parliamentary parties - presidential elections take place with a filter, yet there is a filter for governor elections, the Communist says indignantly: "A minimum filter needs to be kept for parties not represented in the State Duma, but not one using the signatures of deputies who are reliant on the administration and the ruling party and therefore do not allow undesirables through. Only the CPRF can, with difficulty, collect these signatures itself - the filter creates an unfair advantage for the ruling party." Thanks to the "involvement" of the liberal electorate, the election campaign is really more lively, says Solovyev: "But they have problems - first, they simply cannot agree among themselves; second, they frequently try to collect signatures by offering money and this attracts scammers."

Governor candidates from the CPRF have been able to rely upon the support of party deputies only in Amur, Irkutsk and Kostroma regions and the Jewish Autonomous Area, but there they also had to turn to One Russia members for help, KGI experts note.

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 #9
www.opendemocracy.net
Russian press digest (17 August 2015)
EDITORS OF OPENDEMOCRACY RUSSIA

This Monday, the Russian press reports on the import ban on foreign medicines, Rosneft's taxes, and an attack by Orthodox activists on a Moscow sculpture exhibition.

Kommersant opens with an article on new plans to ban imports of a range of medical products. Several large NGOs, including Vera and Podari zhizn, involved in medical care have written a letter asking the government not to extend the list of medicines banned for state agencies.

Representatives of these organisations have asked the government to create a working group to investigate additions to the sanctions list with the needs of patients in mind. Meanwhile, some analysts are concerned that the healthcare market will shrink as a result of these sanctions, which could lead to the closure of several private producers.

Kommersant follows with a piece about the difficulties over the Ministry of Natural Resources' plans to curtail the moratorium on additional payments for packaging. Starting in October this year, the ministry plans to introduce payment for 85 kinds of goods. This news has already left industry unions nervous, and their representatives consider the ministry's plans a violation of the promises made to business previously.

Kommersant also reports on new turns in the investigation into the murder of opposition leader Boris Nemtsov. According to a source from Chechnya's law enforcement agencies, Nikolai Tutevich, head of the group working on the case, has requested the file on Askhab Murtazaliev, who disappeared in February 2013 after going to see a friend.

According to witnesses, unidentified men in camouflage bundled Murtazaliev into a car and took him away. Murtazaliev is yet to be found. (The police told his family that they wouldn't help: Askhab was a 'Wahhabist'.) The newspaper is yet to figure out why exactly Tutevich needs this file, and which suspect might be connected to it.

RBK continues to follow the travails of state oil monopoly Rosneft, which has taken a beating of late. In 2012, head of Rosneft Igor Sechin declared that his company had overtaken Gazprom in terms of the amount paid in tax, but now, following a weak price for crude and a misguided expansion programme, the tides have turned. Apparently, the company may pay 27% less taxes for 2015, or 800 billion roubles (£7.8 billion) less into the Russian state budget, leaving Gazprom the coveted title of 'Russia's largest tax payer'.

RBK also reports on the emerging difficulties between regional administrations and the Interior Ministry. For more than a year, the regions have been trying to come to an agreement with the ministry on the Administrative Code-the police are prepared to work only for additional payments from the federal budget. Following reforms in 2011, regional administrative codes became a federal structure, and thus financed from the federal budget.

Finally, the press has also turned its gaze to the scandal caused by Orthodox activists at Moscow's Manezh exhibition hall on Friday. Led by Dmitry Enteo, activists from the group Bozh'ya volya (God's Will) burst into the exhibition hall, shouting slogans and pushed several sculptures by Vadim Sidur onto the floor. In an editorial for Moskovsky komsomolets, Mikhail Rostovsky suggests that the conflict between religious activists and artists is far from random: rather, it is the logical result of the state's inability to regulate relations between art and religion.

'After all, if the Russian state avoids this problem, then there will be a whole series of ones just like it around the corner. If the demonstrative dismissal of judicial process is left unpunished, this will create a sense that "everything is permitted" in society.'

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 #10
Russia Beyond the Headlines
www.rbth.ru
August 17, 2015
Dagestan: Living on the front line of Russia's fight against terror
For several years already, Russia's southernmost republic Dagestan has been the epicenter of terrorist activity in the country, with state law-enforcement agencies and special services engaged in a continuous struggle to identify and neutralize terror cells. However, as RBTH reports, these anti-terrorist units do not always use the most humane methods, which inevitably complicates the lives of local residents.
Badma Byurchiyev, special to RBTH
 
We are in Gimry, a mountain village in Dagestan's Untsukulsky District. This is the birthplace of two legendary imams, Shamil and Gazimagomed, local chieftains who put up fierce resistance to the Russian Empire in the 19th century and have become a symbol of national pride for the people living here.

Since the 1990s, this area has become a stomping ground for various illegal armed groups and the scene of frequent counterterrorist operations - operations that are rarely greeted with understanding and support from the local population.

The most recent special operation here took place in June, with federal forces killing two militants. On this occasion, however, locals were impressed by how the military conducted the operation.

"They acted quite professionally. They must have had reliable information," said Sagid, a native of Gimry, who until recently was a public activist. Sagid himself had to change his place of residence in order to stay alive.

"This special operation, of course, cannot be compared to what happened in Vremennoye (a settlement in the same district - RBTH). There things got very scary," said Sagid.
 
Local residents or terrorists?

On October 18, 2014, Vremennoye was declared the subject of a counterterrorist operation (KTO). The special operation lasted for more than two months, during which security and military forces killed seven suspected militants. In the process, 16 private houses were blown up and the foundations of several residential blocks were badly damaged as security forces searched for terrorist bunkers. As a result, cracks appeared in three apartment blocks, which now stand empty. The remaining seven were damaged too, but people continue to live in them, repairing the damage themselves.

"Why did they do this to us? Before the KTO was introduced, there had not even been a single exchange of fire here. They made us suffer for two and a half months. And now nothing is being done to restore the houses, the settlement," complained a female resident of Vremennoye, who asked not to be named.

The woman recalled how the settlement was fenced with barbed wire and all the local residents over 14 - civilians, who had not been charged with anything - were given a number. They also had their fingerprints and DNA taken and were told to walk in front of the camera, to have their gait captured on film.

The numbered local residents, the woman continues, were used as human shields, and were sent out to enter empty apartments suspected of being used by terrorists. Other locals have similarly emotional tales to share. However, local residents are angered most of all by the rough conduct of the military and security personnel, who damaged their property, threw their furniture out into the street, left graffiti on the walls and knife scratches on the doors.

Locals complained against the actions of the military and even wrote a letter to Russian President Vladimir Putin asking him to look into the matter. A source in the Dagestani prosecutor's office told RBTH that this complaint from the local residents is being considered but no decisions on it have yet been taken.

As regards the destruction of houses, investigators are inclined to support the military. The militants killed were hiding in fortified underground bunkers where "a large number of improvised explosive devices (IEDs), components for them, firearms and ammunition" were found.

"Since there was a danger of their spontaneous detonation," the IEDs were destroyed on the spot, "as a result damaging the residential buildings in which they were found as well as nearby buildings," RBTH was told at the prosecutor's office.

However, not all local residents and activists accept these explanations of why residential buildings were destroyed.

"Security forces as a rule justify their actions by saying that explosive devices were detected and had to be destroyed on the spot for safety reasons.

However, in some cases there are grounds to doubt that this was indeed the case," said Varvara Pakhomenko, a consultant with the International Crisis Group.
"When people return to their homes and see offensive inscriptions on the walls, it all looks like a punitive operation rather than like a fight against the militant underground."

Pakhomenko added that law-enforcement agencies are stepping up checks and detentions of devout Muslims, especially Salafis.

"They are detained in public places; there are even raids on private homes. People are taken to police stations, where they are fingerprinted and photographed. It happens on a regular basis. A database is being compiled, which is popularly known as 'the Wahhabi register'," she said. Unsurprisingly, this situation often causes irritation and misunderstanding among local residents.
 
Incidents falling... as ISIS rises

Two years ago, Vladimir Putin signed a law whereby losses resulting from a terrorist attack are reimbursed "at the expense of the perpetrator and their immediate family and other individuals whose life, health and wellbeing the perpetrator cares about for personal reasons."

It is so far hard to assess the effect these measures have had. Primarily because there are considerable discrepancies in statistics. For instance, just recently, in July, the head of Dagestan, Ramazan Abdulatipov, said that in 2014, only 12 terrorist crimes were recorded in the republic, compared with some 300 two years previously.

However, slightly earlier, in March, the republic's interior minister, Abdurashid Magomedov, announced that in the same period of time "20 acts of sabotage and terrorism involving the use of explosive devices were prevented and 161 bandits were killed while putting up armed resistance."

According to official statistics from the Russian Prosecutor-General's Office, the number of terrorist crimes in Dagestan is steadily on the rise: 220 in 2011, 295 in 2012, 365 in 2013, 472 in 2014, and 307 in the first five months of 2015.

At the same time, the Kavkazsky Uzel online publication, which keeps its own statistics, says that "in 2014 the number of victims of the armed conflict in Dagestan fell by more than 50 percent": 208 people were killed and 85 injured, while in 2013, the figures were 341 and 301, respectively.

Experts attribute discrepancies in the figures to amendments in Russia's anti-terror legislation. Last year, the list of crimes falling under the definition of "terrorism" was expanded to include political assassinations, preparations for and organization of mass unrest, etc. The new definitions make it possible to press criminal charges, among other things, for "inciting, recruiting or otherwise engaging a person" in terrorist activity.

Suffice it to note that 15 out of the 46 people on last year's list of political prisoners compiled by the Memorial human rights center are either civil activists from the North Caucasus or members of Islamic organizations banned in Russia. By way of reference, ethnic groups that are considered Muslim make up about 10 percent of the population of Russia, while practicing Muslims make up just 6-7 percent.

At the same time, it should be noted that all experts agree that terrorist activity in the North Caucasus has decreased in recent years. They attribute this to the success of Russian law enforcers in cracking down on the militant underground ahead of the Sochi Olympics and to the emergence of new terrorist organizations outside Russia - specifically the so-called Islamic State (ISIS) group, which recruits Islamic extremists of all hues into its ranks.

According to various estimates, there are already from 2,000-5,000 Russian nationals fighting for ISIS - a problem that is rapidly becoming a threat of an altogether different scale.

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 #11
Forbes.com
August 17, 2015
Russian Inflation Might Have Peaked, But It's Still Pretty Bad
By Mark Adomanis
[Charts here http://www.forbes.com/sites/markadomanis/2015/08/17/russian-inflation-might-have-peaked-but-its-still-pretty-bad/]

Whatever we want Russians to care about, the simple reality is that the issue which they identify as their country's most serious problem is not corruption, democracy, or human rights, but inflation. Price increases aren't popular anywhere, there's a reason central banks in the developed world target 2% annual inflation, but polls consistently show that Russians are particularly sensitive to fluctuations in consumer prices.

When you consider the legacy of 1990's hyperinflation, virtually the entire middle class' life savings were wiped out overnight, as well as age structure of the Russian population, this seeming strange fixation on inflation makes a lot more sense. The number of pensioners (i.e. people living on a fixed income) is huge and growing and Russians have recent personal experience in the ruinous impacts of runaway price growth. When you add to that the rather modest nature of Russian pensions (which on average are now worth about $2500 a year) you have a recipe for a population that really hates inflation.

Historically, the Kremlin has done an OK job of tamping down price growth. From 2000-2013, absent a temporary spike around the global financial crisis, the annual increase in prices went from around 20% to 6.5%. It wasn't the most impressive track record in the history of central banking, but there was sustained, real progress in getting inflation under control.

Over the past two years, however, virtually all of that progress has been undone. Spurred by a the ruble's late-year swoon, consumer prices increased by a full 11.4% in 2014. 2015 obviously isn't over yet, but performance through the middle of August has been exceedingly ugly: throughout the first 8 months of the year, prices grew at an annualized rate of about 19%, which would be the worst performance since 2000.

Looking at the most recent data from Rosstat, it appears that inflation might have peaked: from August 1st through August 10th, prices were essentially flat. There was even some (very modest!) deflation in a couple of staple items like apples, potatoes, fish, and carrots.

But as I hope the graph above demonstrates, a lot of damage has already been done. Even if prices "only" grow by 14-15% this year, it would still be worse than at any time since Putin's first few years in power. It will take years for the Central Bank to get back to the roughly 6.5% level it achieved in 2012-13, and that's assuming that Western sanctions and the Kremlin's moronic self-sanctions both expire expeditiously.

No, Russia isn't on the brink of financial apocalypse, at least yet. But the Kremlin has managed to dramatically under-perform on an issue that is of paramount importance to Russian voters. Sooner or later, that's going to be a problem.

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 #12
Russia Direct
www.russia-direct.org
August 17, 2015
Why Russia is having flashbacks to its nightmare 1998 default
On August 17, 1998, Russia announced a default and devalued the ruble. Fast-forward nearly two decades, and there are rising concerns that Russia could be facing a similar type of economic scenario.
By Stanislav Tkachenko
Stanislav Tkachenko is Associate professor in the International Relations Department of St. Petersburg State University (Russia) and a visiting professor at Bologna University (Italy). He currently serves as the president of the Post-Communist States in International Relations Department at the International Studies Association (ISA). Stanislav holds a doctoral degree in economics and has written seven books on political economy and Russian economics, as well as more than 200 articles.

The rapid weakening of the Russian ruble, which began in September 2014 before coming to a halt in the period from February-June 2015, resumed again in July 2015 and has continued for more than one and a half months. There is growing concern in Russia's financial markets and society in general that the country is staring at a second round of devaluation, similar to the one it experienced in August 1998 and then again in September-December 2014.

But how real are the prospects of another default and devaluation? And does the current situation really resemble summer 1998, when the result was a short-term default and the start of a new page in Russia's economic history?

The second round of major ruble depreciation is real, so the only question is how far it will go. The answer only partly depends on the Russian market and non-state actors; foreign sanctions against Russia are also a factor.

The keys to controlling the exchange rate of the ruble lie with the Russian presidential administration, the government and the Bank of Russia. So far, these structures have not made any obvious mistakes in macroeconomic policy that could trigger a landslide devaluation. But neither have they taken any steps to help the Russian economy adapt to the new realities of the global market, which stands on the brink of economic crisis.

The country's financial market is essentially determined by the conflicting strengths and weaknesses of the Russian economic authorities.

There are several reasons to expect the worst:

- Since February 2015, the Bank of Russia has eased its monetary policy after hiking the refinancing rate in December 2014. In August 2015, the refinancing rate of Russia's Central Bank was lower than the current level of inflation in the country, which points the way to a decline in the ruble exchange rate.
- The reform of the Russian economy was halted in 2003, and since that time, the government and parliament have carried out merely cosmetic measures to adapt the national economy to the realities of the era of globalization. The increase in the public sector, the rise in budget spending, slow productivity growth and stubborn corruption inside executive and judicial bodies are also undermining confidence in the stability of the ruble.
- The aggravation of the conflict in Ukraine in August shows that the United States and Russia cannot reach a compromise. The market is factoring in a future build-up in the confrontation between Russia and the West, which is pushing down the exchange rate of the ruble.
- The fall in world oil prices in July crossed some psychologically important frontiers for the Russian economy. The government feels comfortable at a price of $55-60 per barrel.

The budget provides for a drop in the oil price down to $50, although that would increase the budget deficit and spending of gold and foreign currency reserves. However, a fall in the price of a barrel of oil below the psychologically important mark of $50 would cause all market players to expect the worst, in which a situation of "abandoning the ruble for the dollar" would be a quite natural response.

The situation in the Russian economy today is fundamentally different from 1998, so parallels are inappropriate. The trouble in both cases stemmed from falling oil prices. But in 1998, the price of oil dropped below $10 per barrel, i.e. below the base cost of production and transportation.

Back then, Russian oil companies mostly operated at a loss. Today the price does not promise fabulous profits, but is relatively comfortable for the oil and gas business.

Over the past 17 years Russia's economy has grown several-fold: it has become market-based with the appropriate infrastructure (banks; investment and venture companies; large, medium and small industrial enterprises; a high-performance agricultural sector). It is able to contract and expand quickly, yet robust enough not to disappear at the first mention of negative news.

Russia's economic dependence on the EU market, which is fluctuating between depression and stagnation, is substantially lower, and substitutes for European partners have appeared in the shape of BRICS (Brazil, Russia, India, China, South Africa) companies.

As for foreign relations, the situation no doubt looks very bad for Russia when compared with 1998. Then-Russian President Boris Yeltsin was reelected for a second term with help from the global community, and effectively received carte blanche from the West to carry out any measures in the country.

Today relations between Russia and the West leave much to be desired. Sanctions have not produced any significant political results, having only exacerbated the situation. The upshot is a rise in anti-Americanism in Russia, closer ties between Russia and China, and a speed-up of the integration processes in the CIS, which represents the core of the Eurasian Economic Union.

A repeat of the 1998 financial meltdown with a tumbling exchange rate and sovereign debt default is out of the question. But we can expect a significant short-term decline in the exchange rate due to the above reasons. They are compounded by the clear onset in August of a period of currency wars and competitive devaluations among the world's leading currencies.

Many experts regarded the Bank of Russia's actions in the fall of 2014, namely the competitive devaluation of the ruble, as "Russia's step" in the global currency wars. Now China has gone down the same path. Through their policy of quantitative easing, the U.S. Federal Reserve and the European Central Bank are suspected of waging a currency war. If the actions of the major players in the global currency market are successful, it will be Russia's turn to carry through a substantial devaluation of the ruble.

The crux of the matter is that today the exchange rate of the ruble is almost completely controlled by the Russian authorities. Therefore, foreign companies working in Russia whose earnings depend on the ruble exchange rate are advised to keep a close eye on the rhetoric and concrete actions of the head of the Russian Central Bank, Elvira Nabiullina, and her deputies.

As long as they adhere to their present conservative approach to monetary strategy, Russia remains attractive for foreign partners and markets. Now the market is in a zone of turbulence. But the experience of the 1998 and 2008 crises shows that the Russian economy is able to rebound from the depths of crisis and reopen for business in next to no time. However, in a climate of geopolitical instability and uncertainty, the chances of rebounding are lower.

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 #13
Wall Street Journal
August 18, 2015
Russians Seek to Soften Impact of Ruble Depreciation
Businesses look for new ways to hedge against further currency volatility
By ANDREY OSTROUKH

MOSCOW-When the Russian currency first began hitting record lows late last year, 35-year-old entrepreneur Sergei from Moscow began fixing the price for the imported Venetian blinds he sells in U.S. dollars.

"We had to rewrite and resend price lists two or three times a week," said Sergei. "Switching to dollars solved the problem."

Sergei asked that his last name not be used, as the practice is illegal: Russia banned setting prices in currencies other than rubles in 2006. But as the currency continues to depreciate, Russian businesses are looking for other ways to hedge against further ruble volatility.

Under Russian President Vladimir Putin currency volatility once seemed consigned to the past. Before Russia's annexation of Crimea last year, the ruble had for several years on average ranged between 25 and 35 to the dollar. Now the exchange rate hovers near 66 to the dollar. Earlier this month, Mr. Putin stepped in personally to calm fears, saying the Russian central bank had the situation in hand.

"The central bank is doing a lot to make the national currency stronger, at least, to make it steady as our financial system in general," Mr. Putin said.

Ruble depreciation is linked in large part to a slide in the price of oil, Russia's key export. The political crisis in Ukraine has shaken confidence in Russia's economy, amid sanctions imposed by the West.

Economic forecasts have also increased pessimism about the Russian currency. Economic contraction deepened in the second quarter to 4.6% from 2.2% in the first quarter. Meanwhile, sales of new cars fell by more than 27% against the previous year in July, indicating that the economy's key driver-consumer demand-has kept losing steam.

While Russian authorities have dismissed concerns about the country's battered currency, Russian businesses have years of experience dealing with currency volatility and are taking a range of steps to soften the blow.

Travel agencies, for instance, have been hit particularly hard by the currency crisis. As the ruble dropped against other currencies, Russians scaled back summer travel plans. Hipway, a Moscow-based travel agency, now shows prices in dollars and euros for trips to Europe and Asia, but clients get a ruble-denominated price list when picking exact dates for the trip.

Other companies say they are trying to shield customers from currency devaluation by using hedging tools. Dmitry Romanov, head of corporate communications at Panasonic Russia, said prices at which the company ships goods to retail chains have risen by 30% to 40% since late 2014. But Mr. Romanov said Panasonic customers haven't felt the recent round of ruble weakening, because the company has tried to offset rate fluctuations by hedging currency risks through fixing a currency rate for a particular period.

A spokeswoman for M. Video, Russia's largest consumer electronic retail chain, said the company doesn't plan to lift prices until it has sold its current inventory. In the future, prices will depend on the ruble rate as well as on suppliers' prices, she added.

The Russian government has taken other steps to contain the ruble's slide. On Aug 10, the central bank said that a rapid drop in the ruble looked unlikely, even though banks and companies will have to increase payments on their foreign debt by the end of the year.

As Brent oil prices fell below $48.50 per barrel on Tuesday, the ruble eased further to 65.9 versus the dollar in Moscow, its weakest level since February 12. The ruble is now some 13.5% weaker than the dollar compared with a month ago and worth 45% less than one year ago.

But so far, Russia has seen no sign of a recurrence of the panic that happened in December, when Russians stood in lines to ditch their rubles for hard currencies as the dollar shot above 80 rubles. And some confidence has returned. According to the latest poll by Russia's state-run opinion research center, the share of Russians who think that the worst of the economic crisis is ahead fell to 40% in July from 50% in January.

However, some small businesses are bracing for lower profits. Andrei Alexeyev, who runs Dzen Tea & Coffee Shop outside central Moscow, said he wasn't planning to boost the price of a latte coffee, even though his wholesale costs recently went up by 15% in the span of just two days.

"Most likely, I won't raise my prices, but I'll reduce my margin from around 300% at the moment," Mr. Alexeyev said.

Asen, who runs a small bar in central Moscow called MyBar, said the price of a round of drinks recently rose not only because of the ruble drop but also because of higher excise taxes. But instead of raising prices, he said he'd fight for better offers from suppliers.

"We're 100% dependent on imports and my margin went down since the ruble fell last year," said Asen, who only gave his first name. "But our money is our clients, our guests. Now it is time to be loyal to them."

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 #14
www.rt.com
August 18, 2015
National System of Payment Cards: More independence
By Dr Alexander Yakovenko, Russian Ambassador to the United Kingdom of Great Britain and Northern Ireland, Deputy foreign minister (2005-2011).

Today's geopolitical environment has made the task of creating a national payment system in Russia extremely urgent.

The issue leapt to the top of the national agenda last year when US sanctions forced Visa and MasterCard to stop servicing some Russian banks. Such cutoffs obviously present a national security threat.

It is necessary to stress that previously we allowed our western partners in the field of electronic payments to provide services to more than 90 percent of all cardholders in Russia, under the expectation that the economy is kept out of politics. However, it turned out that this was not the case.

The economy has been submerged in politics and is being used as an instrument of political struggle and pressure. Given this fact, we drew our own conclusions, prompting the Russian leadership to call for the creation of a national system of payment cards that would fence Russia off from the risks of service "blackouts" in the future.

In May 2014, President Putin signed into law legislation establishing a national payment system that was called the National System of Payment Cards (NSPC) and was designed to ensure the smooth operation of electronic payments across Russia and beyond. Its introduction decreases Russian users' dependency on foreign analogues and provide a viable alternative.

The new act stipulates that payment system operators and service operators, in addition to participants of the payment system, are not entitled to unilaterally abandon the provision of services necessary for the successful execution of any transfers in Russia. Thus, international payment operators Visa and MasterCard have had to fully transfer their transactions to take place inside Russia so that they can be processed in the National System of Payment Cards instead of being routed through data centers in other countries. The system currently processes 12-14 million transactions a day and operates without any disruptions.

As we can now see it was the forced choice but surely the right one: Switching to a National System of Payment Cards was done in the interests of all users inside Russia and is intended for implementation of the operations within the international payment systems regardless of external factors.

The NSPC project also stipulates that a national payment card be established, which would appear in Russia by new year 2016 and will operate both inside the country and abroad. Its acceptance coverage will be very close to that of other major payment systems by the end of next year.

Russia's new national payment card has been given the name "Mir", a word translating into English as both "Peace" and "World". This term is also associated in our country with the "Mir" space station, the planet's first modular space station constructed by Russia, which was assembled in orbit between 1986 and 1996 and which operated until 2001. The brand name was selected via a nationwide online vote on the card's design entries submitted by companies and individuals across Russia.

According to the National System of Payment Cards' department of the Russian Central Bank, we will be able to begin switching to the new payment cards later this year. It is planned that 100 million cards will be issued over the next two years, some of them co-badged with Visa, MasterCard, JCB, American Express, UnionPay and perhaps other systems.

The establishment of the Russian national payment system and payment card is designed to foster investors' trust and Russian citizens' confidence in the country's financial stability and sovereignty. The idea is not to become fully independent from MasterCard, Visa or American Express but to secure a proper and reliable way for using them on Russian territory for the benefit of all interested parties.

We are trying to make our business environment more attractive for all the participants and therefore welcome mutually beneficial co-operation with other payment systems.

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 #15
Russia Insider
www.russia-insider.com
August 18, 2015
Russia's Second Quarter Contraction Is No Big Deal
Data in July points to an improving economy - contradicting scaremongering stories based on an entirely predictable - and predicted - contraction in the second quarter
By Alexander Mercouris
Alexander Mercoruis is a writer on international affairs with a special interest in Russia and law.  He has written extensively on the legal aspects of NSA spying and events in Ukraine in terms of human rights, constitutionality and international law.  He worked for 12 years in the Royal Courts of Justice in London as a lawyer, specializing in human rights and constitutional law. His family has been prominent in Greek politics for several generations.  He is a frequent commentator on television and speaker at conferences.  He resides in London.

Confirmation from Rosstat - the Russian government's statistical agency - of a 4.6% contraction in GDP in the second quarter, has led - predictably enough - to a resurgence of some of the apocalyptic predictions of the last year.

There is no justification for this.

All recessions have their peculiar features. However he classic pattern of a recession in a market economy is that a fall in demand - usually caused by the bursting of a credit bubble - leads to a cut in production and investment, with producers preferring to draw down their existing inventories rather than buy in new products.  

In time demand recovers, production rises as demand has to be met and as depleted inventories have to be replenished, and the recession ends.

This is the pattern the Russian economy is following.

The fall in demand that struck Russia in the early months of 2015 was not caused by the bursting of a credit bubble. The Russian authorities have a horror of bubbles, and whenever there has been any sign of such a bubble - as in the early months of 2012 - they have always acted decisively to stop it.

Rather what caused demand to fall at the start of this recession was the combination of the inflation and the high interest rates caused by last year's devaluation of the rouble. That devaluation of the rouble was in turn caused by last year's collapse of oil prices, energy products being for historic reasons Russia's main export product.

In the early weeks of 2015 food price inflation in Russia was running at over 20%. By some estimates real incomes fell by as much as 9%.  

The inevitable result was a fall in demand, causing a recession.

I saw evidence of this when I visited Moscow in February, as did Dr. Gilbert Doctorow when he visited Russia a few weeks later.  It was apparent that the inflation spike was hurting badly, especially those with low and fixed incomes.

As well as the inflation spike, the very high interest rates - caused by the Central Bank's need to damp down inflation and to support the rouble - increased the cost of borrowing, cutting demand for expensive items such as cars that are usually bought on credit, and hitting investment.

With producers responding to the fall in demand as one would expect by cutting inventories, production inevitably fell.  

Since it takes time for information to be passed down from consumers to producers down the supply chain, the major cutbacks in production and spending took place in the second quarter rather than the first, as decisions made in the first quarter were fully implemented in the second. This is why with a GDP contraction of 4.6% in the second quarter, the recession appeared deeper in the second quarter than the first, even as sentiment in the economy actually began to improve.

This is the picture that the statistics have been reflecting. As I have pointed out on several occasions, given what happened at the end of last year it could not have been otherwise.

The point is that as the inflation spike burns its way through and as interest rates fall, demand will first stabilise and then recover.  

According to Rosstat prices stopped growing in the second half of July and weekly price inflation has now been zero for several weeks.

This is usually the case in Russia in the summer months. However the fact that it is happening this year so soon after the inflation spike of the winter shows how quickly the situation is returning to normal.

At the same time as inflation has fallen, interest rates have been cut.

With both prices and interest rates falling, early indications are that demand has stabilised and stopped falling at its previous speed in July - and may even have increased that month.    

As always the process takes a little time to work itself through, so that while the fall in industrial output appears to have slowed in July, manufacturing continued to contract.  However as demand recovers and as it becomes necessary to replenish inventories, industrial output will rise, bringing the recession finally to an end.

As I have said previously, the Economics Ministry is predicting the end of the recession in the final quarter, and this remains its opinion and the general consensus.

This recession - as all recessions do - has exposed weaknesses in the Russian economy. Of these the most important is not that Russia's major export is energy products. This a grossly overhyped issue that wildly overestimates the importance of foreign trade to a continental sized economy which the World Bank estimates on a purchasing power parity basis is now the fifth biggest economy in the world.  

The economy's vulnerability to movements in oil prices is anyway now largely mitigated by the floating exchange rate (see for example the opinions of Aleksey Ulyukaev - Russia's Economics Minister - given at the beginning of July when the oil price appeared to have recovered - about why Russia would not be worried by a $40 a barrel oil price).  

As I have also previously said, further downward movements in oil prices and the rouble are now unlikely to change the underlying inflation position or affect Russia's recovery.

The Russian economy's key weakness is not the fact that it exports mainly energy products, but the weakness of its financial system - a fact recently acknowledged by the Central Bank, which described Russia's financial system as "shallow".  

For an economy of Russia's size the financial system is too small, which is why Russian banks and companies have until recently looked outside Russia to western Europe for part of their finance.

It is because the financial system is too small that the rouble is so volatile and the government is unwilling to run a budget or trade deficit, even at times such as these when oil prices are low and when the recession could be smoothed by the government running a bigger deficit.  

By contrast Saudi Arabia, with an economy far less diversified than Russia's, is able to maintain a currency peg with the dollar and cover a budget deficit estimated at 20% of GDP by borrowing from its banks, which are much more liquid than Russia's.

The weakness of Russia's financial system is a reflection of its youth. It has only been functioning properly for about 10 years. It would be asking a great deal to expect a financial system this young to achieve levels of depth and sophistication comparable to those of Western financial institutions in such a short time.   

The weakness and small size of Russia's financial system is not however something written in stone.  

A country as large and wealthy as Russia can certainly develop a financial system big enough to fund the needs of its economy.  

As Russia Insider has discussed previously, the great benefit for Russia of the sanctions is precisely that it is obliging Russia to make reorganisation of its financial system a priority.

Thus we are finally seeing steps to create a new interbank payment system alongside SWIFT, a new credit rating agency, and a new bank card independent of MasterCard and Visa, at the same time as the Central Bank has been busy withdrawing licences from unstable banks.

Above all it is reflected in the Central Bank's and the government's single-minded focus on reducing inflation to an annualised level of 4%. As the Russian authorities understand well, the Russian financial system cannot fully expand and modernise whilst inflation remains as high as it has historically been in Russia.

With younger people - some of whom have experience working in Western financial institutions - now joining Russia's banks in increasing numbers, what these steps mean is that the modernisation and expansion of Russia's financial system to the point when it finally becomes fit for purpose is now only a question of time.

In the meantime, if the recession has exposed weaknesses in Russia's economy, it has also highlighted its strengths.

Despite the fact that the country is in recession - and despite the very high interest rates at the start of the year - there have been no mass redundancies (unemployment has barely risen), no mass plant closures, no flood of bankruptcies or of home repossessions or of farm foreclosures.  So far this has been almost entirely an output recession.

This reflects the low level of debt in the economy.  

This low level of debt is partly a reflection of a lack of investment in the economy caused by the weakness of the financial system.

It is however also a reflection of the authorities' deep aversion to credit bubbles and the steps they have repeatedly taken to prevent them.

The result is that in Russia - as in the West until the 1980s - demand has risen on the back of higher wages, not through credit growth.

This explains the country's resilience in the face of recession.  It is why the country can absorb the inflation and high interest rates of the start of the year, and the temporary drop in output they caused, without this affecting the country's underlying stability

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#16
Moscow Times
August 18, 2015
No End in Sight to the Ruble's Downward Slide
By Chris Weafer
Chris Weafer is a senior partner with Macro Advisory, a consultancy advising macro hedge funds and foreign companies looking at investment opportunities in Russia.

That Russian GDP contracted by 4.6 percent in the second quarter comes as no surprise. That is a preliminary estimate and may well end up closer to a 5 percent decline when the second reading is published. It will also not be a surprise if the decline in this current quarter is equally poor. But even with that worsening backdrop the full year decline should still be close to 3.5 percent rather than anything significantly worse. That is because the fourth quarter drop will be smaller and likely closer to the 2.2 percent decline recorded in the first quarter.

That, however, is not to be taken as evidence of optimism that Russia will be pulling out of the slump by year end and resuming growth; it is simply the mathematical result of the base-effect, as the economy was already in significant decline toward the end of last year.

The main factor which will determine whether the consensus is correct or overly optimistic is the ruble exchange rate. More than anything else the ruble is very much like the single bolt which holds a hang-glider together. If it breaks then the glider will fall to earth and the pilot very likely killed.

The reason why the ruble has that critical role is because, on the one side the ruble exchange rate is the end result of several other elements, such as the oil price, global currency trends and the actions of the Central Bank. On the other side are the many consequences of where the ruble trades and that list includes inflation, interest rates, the competitiveness of domestic industry and, most important, end consumer and industry owner confidence.

That the rally in the oil price, which brought Brent up to $68 p/bbl in mid-May, was unsustainable was evident. It was a speculative move prompted by optimism that the weakness of late 2014 would force U.S. shale producers to close some wells and would lead to a supply cut from OPEC. In reality nether was ever likely as U.S. producers are working on a marginal cost while Saudi Arabia has made it very clear that, for them and their core allies inside OPEC, this is a battle about longer-term market share.

The International Energy Agency (IEA) has recently cut back its growth forecast for U.S. oil output but is still expected a gain from 11.9 million barrels per day (mln bbl/d) in 2014 to an average of 12.7 mln bbl/d this year and rising to 13 mln bbl/d for 2016.

Saudi Arabia has recently cut back slightly from the near record high of 10.6 mln bbl/d in produced in June but is still well ahead of the 9.6 mln bbl/d it averaged last year. On top of that, almost all other producers are pumping near maximum, including Russia which has so far been unaffected by sanctions and is pumping at a post-Soviet high.

To that we have to add some extra Iranian output. It will take many years and billions of dollars of investment to build up the country's output to potential but it can relatively quickly add an extra 500,000 mln bbl/d. For a market which is already over-supplied by 1.5 mln bbl/d the consequences are obvious.

The other factor which is likely to hurt the oil price in the coming months is the expected rate rise by the U.S. Federal Reserve Bank. The evidence is that this is a question of when rather than if. When that happens we can expect some further strengthening of the U.S. dollar and that, historically, is always a negative for the oil price.

How far the oil price may slide is always a difficult question. Traders will keep in mind the 2009 support price of $42 p/bbl while other speculators may be tempted into the market in the mid-$40's p/bbl, as they were earlier this year, because of the risk of output disruptions from large producing nations, such as Venezuela, which are now facing severe financial problems, or as a result of an expansion of the various conflicts across the Middle East.

A voluntary cut in output by either U.S. shale producers or by Saudi Arabia seems most unlikely while any cut from Russia is impossible.

So, faced with either further weakness in the oil price or, at minimum, an extended period of low oil, what may we expect to see as a response from the Central Bank? In previous years we would have expected the Central Bank to use a period of oil stability to try and rally the ruble with interventions. Those days have gone.

Over the past six months we can see that government policy towards the ruble has shifted 180 degrees. Today the policy preference is for a weak ruble.

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.

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. A more "competitive Russia" may also become one of those slogans to be associated with this crisis.

One of the reasons why the second-quarter macro performance was weaker than in the first quarter is because the ruble strengthened too quickly over the first four months of the year. It meant that there was less of the positive import-substitution impact seen in the previous quarter. The current ruble weakness should help at least partially address that in the coming months.

The second reason why a weak ruble is now preferred is because it makes the Finance Ministry's job of trying to keep the budget deficit low a lot easier.

So what is the ideal exchange rate? We know from comments made by both the economic development and finance ministers that they are happier with an exchange rate at 55.0 against the dollar rather than below 50. The Central Bank also supports that and announced that it would rebuild FX reserves (to a target of $500 billion) in periods where the ruble strengthened too far. At the other end of the scale an exchange rate at 65, or worse, against the dollar will start to ring inflation and confidence alarm bells.

In many ways the ruble equation is a lot less complicated than it used be. We no longer have to worry too much about speculative actions or even the contagion from Beijing's actions, i.e. other than in so far as this may further strengthen the U.S. dollar or weaken the oil price. Today the ruble equation is a straightforward balance between where the oil price trades and what the Central Bank does in response.

The optimistic view is that, at best, both the ruble and oil will hold near current levels into the autumn. There really is no basis for assuming a meaningful rally in either over the medium term. The greater likelihood is that the price of Brent crude will drift further down in the coming weeks and that would then push the ruble into the high 60's against the dollar.

In that event, apart from some ad-hoc interventions to prevent a steep decline or a return of volatility, there is no reason to assume the Central Bank will take any meaningful, i.e. expensive, actions to prevent the ruble sliding toward the 70 mark.

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 #17
New York Times
August 18, 2015
Russians Feel Ruble's Fall, but Putin Remains Mostly Unscathed
By SABRINA TAVERNISE

RAMENSKOYE, Russia - A basic barometer of economic activity in this tidy town south of Moscow is the pirozhok, a small pie filled with cabbage and meat that is a staple of the Russian diet.

In good times they sell briskly, snapped up by hungry commuters at Arina's Hangout, a tiny shop near the train station. But sales are down by almost half, a gloomy reflection of Russia's economic slump.

"There were just physically fewer people," said Irina A. Safonova, the owner of the shop, which on a recent weekday was serving pies to a slow trickle of customers. "We used to have lines. Now look at it."

Russians are experiencing the first sustained decline in living standards in the 15 years since President Vladimir V. Putin came to power. The ruble has fallen by half against the dollar, driven by the plunging price of oil, the lifeblood of Russia's economy. As a result, prices of imported goods have shot up, making tea, instant coffee, children's clothes and back-to-school backpacks suddenly, jarringly expensive.

Making matters worse are the retaliatory bans that Russia placed on food imports after the United States and the European Union imposed sanctions for its actions in Ukraine, a policy that took a turn for the weird this month when the government destroyed thousands of tons of what it said were illegally imported foodstuffs including cheese and peaches.

The reduced supply means that what remains costs more, even if it is locally produced. Russians are paying a third more for sunflower oil, a fifth more for yogurt and three-quarters more for carrots compared with a year ago, according to government statistics. (The Western sanctions, for their part, have driven up the cost of borrowing for Russian companies, but they have not had a direct role in the inflation that is raiding Russian pocketbooks.)

Inflation has reduced the purchasing power of Russian wages by more than 8 percent in the second quarter, compared with the same period last year, according to figures published by Russia's Central Bank at the end of July. And in a sign that the worst is far from over, the economy contracted by a steep 4.6 percent in the second quarter, compared with last year, and officially entered its first recession since 2009.

"It's horrible," said Elena Shcherbakova, a 47-year-old shoe saleswoman whose income, based in part on commissions, has fallen nearly a third since last year. She says she now shops at discount supermarkets, buys the cheapest kind of sausage and carefully counts containers of yogurt instead of throwing them into her cart by the handful the way she used to.

It is not clear what, if anything, this means for Mr. Putin. The trouble pales in comparison with the turbulent 1990s, when people's wages went down by nearly half. Russians have an immense capacity for stoicism, and ubiquitous home gardens make budgets more flexible. Mr. Putin's popularity ratings have remained high since last year's annexation of Crimea, which was wildly popular among Russians.

Still, the math is proving tricky. In a new draft budget released in July, the Ministry of Finance proposed halting the practice of raising pensions to keep up with inflation, a politically controversial move that would deliver a blow to Mr. Putin's most loyal base. Investment, food for a hungry economy, has collapsed since the Western sanctions, which also blocked Russia's ability to borrow on global markets.

"They have no way out," said Sergei Guriev, a professor of economics at Sciences Po in Paris. "Unless oil prices go up, they are really looking at a dead end." Without further spending cuts and if oil prices remain around current levels, the government will use up its reserve fund, created when the price of oil was high, in about a year, he added.

Mr. Putin's opponents argue that the shrill nationalist talk washing over Russia is being projected by his government to distract attention from the fragile economic situation. They describe it as a battle in every Russian home between the television (the source of government propaganda) and the refrigerator (whose shrinking contents could eventually prompt discontent).

In Moscow, some in the educated upper classes agree.

"All that Ukrainian noise covers up our internal problems," said Maria Novychkova, a manager in a textile company who was walking a foot scooter in a park last month. Her company has put employees on four-day workweeks. She cannot afford to vacation abroad because of the weak ruble. "He says we are an ideal country, but we are not," she said, referring to Mr. Putin.

The crisis in Ramenskoye is like a car crash in slow motion, gradual but destructive. The town has tried to modernize in recent years, with an airport for private jets and a PepsiCo juice factory. It is also a bedroom community for Moscow. Commuters are Arina's main customers.

Ms. Safonova, the owner of the pie shop, first noticed a drop in business last fall. There were fewer commuters, and those who remained spent less freely. Once-packed minibuses emptied out. The checkout clerks at the nearby Kopeika supermarket had their wages cut. Then in March, PepsiCo announced that the juice factory in town was closing, citing the bad economy.

Prices began jumping. Nescafé went to 389 rubles (about $5.96) from 220 ($3.35) and Ahmad Tea to 319 rubles from 191. Ms. Safonova knew about the sanctions, and that the falling ruble made imports more expensive, but sometimes the logic eluded her. A spike in the price of mushrooms this spring was particularly puzzling.

"I said, 'Why, why?' These are grown near Moscow, right here, not in Europe!"

By summer, the pie shop's sales had dropped by nearly half, and Ms. Safonova had to lay off four of her eight employees. She now works 18-hour days to compensate. She gave up her big kitchen and now mixes dough five times a day instead of 10.

Across Russia, the crisis has prompted a collapse in consumption. International airline travel has fallen almost a fifth since last year, and car sales are down 36 percent in the first half of this year. The production of train cars fell by a third, said Natalia Zubarevich, a researcher at the Higher School of Economics, because fewer goods needed to be transported. In another measure of economic distress, household ruble debt in arrears is up 43 percent since last July, according to the Central Bank.

"The cost of the crisis is being borne by everyone, spread around like butter on bread," said Vladimir Gimpelson, the director of the Center for Labor Market Studies at the Higher School of Economics.

As business shrivels across the country, Moscow remains an economic beacon.

Alexandra Vasilieva, the cashier at Arina's Hangout, is from the province of Smolensk in western Russia, where work had dried up so completely that her husband, a window installer, was making just a small fraction of his previous salary. So they came to Ramenskoye and now he commutes more than two hours each way to Moscow for mediocre money. Her son, an auto service worker in Smolensk, lost almost a third of his salary because fewer cars were being brought in for repairs and servicing.

"In the provinces, the wages are too small to live on," she said. Her monthly salary in Ramenskoye - 20,000 rubles - is sinking in value, worth just $305, down from $416 in May.

As for Crimea, if she thinks about it at all, it is through the lens of economics.

"I'm sick of Crimea," Ms. Vasilieva said. "I'm sad for people," she said, referring to Ukrainian refugees, "but why are they getting all this government assistance?"

Further pinching Russians' pocketbooks are trims the government is making to benefits doled out when times were flush. Pensioners in the Moscow region can no longer ride free on the Moscow Metro, a change that affects more than a million people in one of the most densely populated regions in the country. Apartment owners across Russia must now pay a repairs fee every month, which has prompted protests in some regions.

Lyudmila Grigorievna, 68, a retired accountant, said it was no longer worth it for her husband, an artist who works as a designer on housing projects, to commute into the city to supplement his pension - $153 a month.

"If all you have is a pension, you can't afford to buy shoes," she said, sitting on a park bench next to her grandson, who was eating a tall white puff of cotton candy.

Still, the discontent seems to bypass Mr. Putin.

"Honestly, we are so proud he is our president," said Vyacheslav Alexeevich, 75, a retired factory manager, who was steering a mostly empty grocery cart through a Kopeika supermarket here last week. "Thanks to him, we have all of this," he said, gesturing toward a glass display case of beet and potato salads, fried eggplant and pieces of chicken.

Then he called his wife to tell her that they were out of the cheapest hot dogs.

Alexandra Odynova contributed reporting from Moscow

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 #18
Russia will soon suspend spending of funds from National Wealth Fund - Kremlin aide

VLADIMIR, August 17. /TASS/. Spending of funds from the National Wealth Fund should be suspended in the near future, Presidential Aide Andrey Belousov said on Monday.

"Today it's not that we've approached but we're close to the moment when we should stop," he said, adding that he himself earlier subscribed to the view that funds from the National Wealth Fund should be spent on big projects.

Currently, half of those funds are "blocked" in non-liquid forms, Belousov said, adding that the remaining two trillion (roughly $30 billion) should not be spent. "That two trillion is a relatively low level and of course we need to try to maintain it as a safety cushion," he said.

He also said that one trillion from the fund (worth 4 trillion rubles or  $61 bln) has already been spent on structural projects, including those providing logistics in Russia's Far East.

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 #19
Business New Europe
www.bne.eu
August 18, 2015
Russia's surprisingly stingy sovereign wealth fund
As disputes over budget spending intensify, the stability of NWF suggests fiscal conservatives in government can still fight their corner.
By Alex Nice
Alex Nice is an analyst at The Economist Intelligence Unit
[Charts here http://www.bne.eu/content/story/insiders-russias-surprisingly-stingy-sovereign-wealth-fund]

Since the EU and US imposed sanctions on Russia's banking, defence and energy sectors in mid-2014, there has been speculation that the Russian government would use its sovereign reserves to provide cheap financing to companies effectively shut out of international credit markets. Yet despite strong lobbying from powerful state-owned companies, the government has to date been reluctant to commit assets from its National Wealth Fund (NWF, a sovereign wealth fund) to large investment projects in Russia. As disputes over future budget spending intensify, the stability of the NWF suggests that fiscal conservatives in the government can still fight their corner.

As of August 1, the NWF held the equivalent of just under $75bn (RUB4.4tn) in assets, accumulated from surplus energy revenues during Russia's boom years. Under government rules, up to 40% of NWF assets can be invested in infrastructure projects in Russia, with a further 10% assigned respectively to both the Russian Direct Investment Fund and the nuclear holding Rosatom.

The official purpose of the NWF is to provide sustainable support to the pension system. Its assets are, therefore, intended to be placed in secure long-term investments that offer a good rate of return. Yet the government has in the recent past ignored these rules for the sake of short-term goals. Most notably, in December 2013 it loaned $3bn from the Fund to the government of former Ukrainian president Viktor Yanukovych, despite Ukraine's low credit rating. Had Yanukovych not been overthrown in February 2014, Russia would have increased the loan to a massive $15bn.

Autarky bandwagon

Following the imposition of sectoral sanctions by the West, expectations were high that the Russian government would raid the NWF to bail out companies and provide short-term support to those no longer able to tap financial markets. Russia's standoff with the West has consolidated protectionist attitudes within the leadership. From agriculture to medicine, Russian companies have leapt on the autarky bandwagon to lobby for state support and intervention for their particular sectors.

Companies quickly lined up to petition the government for support from the Fund. As early as August 2014, the massive state oil producer Rosneft floated the possibility that the NWF could buy RUB1.5tn of its bonds - coincidentally or not, almost exactly the value of its external debt stock. By October, Rosneft's wish list had risen to RUB2.4tn, despite the fact that the company's total investment programme for the year was just RUB730bn. Applications followed in subsequent months from private sector gas producer Novatek, Russian Railways, the so-called Independent Oil and Gas company, the power operator Rosseti, and the Gazprom subsidiary Neftekhim Salavat. The combined value of the applications exceeded the total size of the NWF. Capturing the free-for-all atmosphere, Lukoil's vice president Leonid Fedun told reporters that, "if everyone else is going to be applying, then we will too."

But the Russian government has proved reluctant to hand out blank cheques from the NWF to sanctioned companies. As the chart below shows, the bulk of NWF assets remain in foreign currency held on account at the central bank. As of August 1, 69% of assets were held in foreign currency, compared with 77% in January 1, 2014 (applying August 2015 exchange rates in both cases). Around $5.7bn has been invested in domestic infrastructure projects, but several of these, such as the Baikal-Amur Railway and the new Moscow Ring Road, were approved before the imposition of sectoral sanctions. Of the funds allocated since mid-2014, a large share of these (RUB280bn) has gone to recapitalise systemic banks through the acquisition of privileged shares.

Rosneft, the most prominent supplicant for NWF funding, has received short shrift. In February this year, President Vladimir Putin gave a public dressing down to Rosneft boss Igor Sechin for seeking state support for a proposed refinery in the Far East. Of 28 projects put forward by Rosneft by the end of 2014, only five were considered by the government. And in early August, Vedomosti reported that Putin had rejected all but one of these proposals, leaving only an application of RUB89bn to support the construction of a shipbuilding facility on the table.

Overall, the government has so far refused to raise the 60% cap on domestic investments for the Fund, and has broadly stuck to the principle that assets should be used to support high-value infrastructure projects, not as soft loans to cover general operations for struggling state companies.

The government's approach to managing NWF assets has wider implications for the likely trajectory of budgetary policy over the next few years. It suggests that those in the "economic bloc" advocating fiscal prudence continue to be heeded. While economic policy has taken a dirigiste turn over the past year, the government has so far balanced the demands of industrial lobbies for short-term support against the need to maintain good macroeconomic fundamentals and maintain external buffers.

However, the struggle for state resources is only beginning to heat up. With commodity prices likely to stay low over the next few years, Russia's elite will be riven by deep disagreements over the fiscal policy and the division of public funds. The finance ministry's ambitious plans to reduce the deficit to under 1% of GDP by 2018 will come into conflict with spiralling defence commitments and political pressures to boost spending as the next electoral cycle approaches.

The story of the NWF is an encouraging sign of how these conflicts will be managed, but it is early days.

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 #20
Washington Post
August 18, 2015
Russia used to have a powerful weapon in its energy sector. Not anymore.
By Michael Birnbaum
Michael Birnbaum is The Post's Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.

MOSCOW - For years, Russia's ability to choke off energy shipments any time tensions spiked with the West was a potent threat, one that could force much of Europe to shiver during the wintertime. But with energy prices swooning, the Kremlin's pipeline politics are looking a lot less threatening.

Russian energy giant Gazprom, which has long been accused of working as the Kremlin's bludgeon, has seen demand for its natural gas drop to the lowest level in its post-Soviet history. Nations that were once fully dependent on its gas now have other options. And the company must decide by next month whether to contest an antitrust case brought by the European Union that could force it to give up its hardball tactics in Europe for good.

Gazprom's new weakness has empowered the West to push Russia hard for its role in stoking conflict in Ukraine without fretting about the consequences of a vengeful gas cutoff in return. With the Iran nuclear deal likely to send a wave of Persian oil and gas to Europe, Gazprom may soon lose even more leverage. It is a stark reversal for a company that twice cut winter gas flows to Europe in the past decade during moments of political disputes with Ukraine. Eastern Europe took the collateral damage and had to turn down thermostats for days because of dwindling supplies of crucial natural gas for heating that normally flow through Ukraine's pthirdipelines.

"Gazprom is in a very precarious position," said Mikhail Krutikhin, an energy analyst at the Moscow-based RusEnergy consulting firm. The company is flailing for cash - and it no longer has a captive market to fill its coffers.

By now, Gazprom was supposed to have been the biggest publicly traded company in the world. That was what Chairman Alexey Miller boasted to a French news agency in 2008, when he said that it would be worth $1 trillion by the middle of this decade. Instead, it has shriveled to a seventh of its 2008 market valuation. In Western Europe, it has even been surpassed as a supplier by Norway, a Nordic rival with a far less expansionist agenda.

The newly sour prospects are yet another consequence of a sharp decline in energy prices that has upended alliances and assumptions from Caracas to Tokyo. But a host of challenges have conspired against Gazprom all at once.

Even during the Soviet era, Europe bought much of its natural gas from its energy-rich neighbor to the east. The Soviet Union collapsed, but the old arteries of its energy network remained, keeping Eastern Europe deeply dependent on Russia for the crucial fuel. Balkan countries are almost completely dependent on Russia for natural gas, as are Hungary and the Baltics. Overall, Russia still supplies Europe with about a third of its natural gas.

But after Russian cutoffs in 2006 and 2009 that coincided with moments of geopolitical tension, Europe became increasingly skeptical of the old model - particularly since Gazprom's high prices made even expensive alternatives attractive. Frightened by the constant threat to its energy supply, Europe sparked a boom of construction to make it easier to get gas from other suppliers and to ship gas from one European nation to another.

"The Russians have reaped what they sowed," said Dieter Helm, who teaches energy policy at Oxford University. "If they want to make supplies unstable, you can't expect the customer to take it in a lying-down form."

At the same time, vast new stores of natural gas were unlocked in the United States as part of the shale gas boom, further increasing global supplies. Europe's own economic challenges have idled factories and slackened its appetite for energy. Ukraine, long an important Russian customer, has tried to make steep cuts to its gas consumption so that it is less dependent on a neighbor that annexed the Crimean Peninsula and then helped fuel a bitter war in the eastern part of the country.

Even the weather conspired against Gazprom. The last two winters have been unusually warm, idling radiators and furnaces.

"We suddenly find that we have a cornucopia of gas supplies," Helm said.

'In a denial mode'

Now there are signs of conciliation from Gazprom's leaders, an unusual development at a company that has more often been a fount of bristling defiance. Miller, the chairman, said in June that Russian President Vladimir Putin had asked him to hold talks to keep pumping gas to Europe through Ukraine, a tacit recognition that attempts to find other routes were unrealistic for now.

Gas supplies to Ukraine itself remain a contentious issue. Last winter, Ukraine narrowly squeezed by despite a Russian cutoff for many of the coldest months. The two sides continue to negotiate ahead of this coming winter.

Gazprom leaders have also said they want to find a compromise with the E.U. in the antitrust case. That move came after they initially said they were not subject to European jurisdiction because they were effectively an arm of the Russian government.

"Gazprom was in a denial mode for a very, very long time," said Ildar Davletshin, a Moscow-based energy analyst at Renaissance Capital. "It's clear that the golden years when everyone was competing for Gazprom's gas are over, and Gazprom is quietly adjusting."

The antitrust case has the power to force Gazprom to adopt significantly different business practices in Europe, with prices tied closer to the cost of shipping and production rather than the vulnerability of the customer. The E.U. has leverage in the clash because Gazprom needs Europe's cash more than Europe needs the gas, analysts say. Gazprom must provide a formal response to Europe by the middle of September.

"Oil prices are currently moving down, as we all know," said Andrei Zotov, a deputy department head at Gazprom's export division, in a conference call with investors last week, explaining whyrevenue was waning. Last month, Russia's Economy Ministry forecast that Gazprom's output could fall as much as 7­ percent this year, a record low for the company.

But it has cushions that soften the blows. One major factor is the ruble, which has lost more than half its value against the dollar since the beginning of 2014. That means that even though Gazprom's profit was down in dollar terms, when converted into rubles, it was actually up 71 percent in the first quarter of 2015. Sales to Europe may also pick up in the coming months, as countries that have put off purchases because of dropping energy prices prepare for winter.

Gazprom has tried to turn eastward to lessen its reliance on European customers, signing a major deal last year to supply China with gas. But the project will take years to complete, and China's slowing economy is reducing demand. U.S. sanctions imposed this month against a major eastern gas field will also complicate its expansion efforts.

A few years ago, "Russia looked like it was in a pretty strong position," said Edward Chow, an energy policy analyst at the Center for Strategic and International Studies. "But some countries and companies have prepared themselves much better for yet another gas cutoff."

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 #21
Interfax
August 18, 2015
Russia continues to increase investments in U.S. Treasuries

Russia increased its investments in U.S. Treasury bonds in June by $1.4 billion, just as it did in May, according to data from the U.S. Treasury and the Federal Reserve System, published on Aug. 18.

At the end of June, the volume of Russian-owned U.S. Treasury bonds stood at $72 billion. Russia is currently 19th on the list of the United States' 20 largest creditors.

In June, China was again the largest holder of U.S. Treasury bonds, increasing its lead over Japan. Compared to May, China increased investments in June by $1 billion - up to $1.271 trillion. Japan, meanwhile, has reduced investment in U.S. securities by $17.8 billion to $ 1.197 trillion.

The total volume of investments of nonresidents in U.S. Treasury bonds rose last month by $40.4 billion to $6.175 trillion. Of this amount, $4.164 trillion belonged to the governments or central banks of foreign countries.

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 #22
Moscow Times
August 18, 2015
U.S.-Russian Paper Startup Sees Massive Success Despite Political Tensions
By Matthew Bodner

One of the largest office supply retailers in the United States has offered a group of young Russian and American entrepreneurs an exclusive distribution deal for a new sticky note developed by the team after raising almost $250,000 on crowd-funding site Kickstarter.

Founded in January by two Russian cousins and their American business partner, Tesla Amazing has grown fast. The company is marketing a product they call Magnetic - a digital age take on the classic sticky note that clings to any dry surface without messy adhesives.

Available in a variety of sizes, Magnetic sticks to surfaces using a patented static film developed by Dmitry Samoylovskikh and his cousin Alexei Bragin in Moscow. Not content with simply being a Russian start up company, they invited their American friend Elizabeth Bagot in to work as their international marketing chief and launched a Kickstarter campaign in January.

"One of the main reasons for us to go global was the circumstances that we faced when we were ready to launch. When everything around you tells you that it's not the best time for the ruble, you should use it as a challenge rather than be afraid of it," said Samoylovskikh, the company's CEO.

Bagot told The Moscow Times that Tesla Amazing set out on their crowd funding drive with a modest goal to raise $12,000 to finance production of Magnetic, and by the end of March had raised $240,000 in funding.

"The beauty of Magnetic is that it is a product literally everyone can use. We've had interest from teachers, artists, facilitators, agile developers, programmers and anyone else who visualizes their ideas on paper," Bagot said.

Small Team

Tesla Amazing prides itself on being a small team that has turned an idea into an internationally marketed product in less than a year.

"A lot of companies have 100 or more employees, but less than 10 percent of them actually do the work and add value, while the rest just pretend to work. It's different with us. There are just six people on our team, and they do an enormous amount of work," said co-founder Bragin.

Since launching their Kickstarter campaign in January, Tesla Amazing has signed deals with about 20 distributors on five continents and delivered Magnetic products to their 6,000 Kickstarter backers and customers in 85 countries, and has won international recognition at trade shows in Japan and the U.S.

This recognition is now turning into commercial success. Tesla Amazing boasts at least $100,000 a month in revenue from sales via the company's website and deals signed with distributors around the world.

After visiting an innovation convention organized by major U.S. office supplies firm Staples to show off their product, Tesla Amazing has received an exclusive distribution offer from the company.

"The idea of exclusivity was brought up by Staples just last week, but nothing has been signed yet," Bagot said. Staples is testing the product in two stores during the seasonal back-to-school shopping spree in mid-September.

"The original idea was that if it goes well, they'll consider boosting us to more stores. But then, last week, they told us they were so bowled over by the product that they may want to sign an exclusivity contract with us soon," Bagot said.

Russian Roots

Amid the crisis in Ukraine, which as seen relations between Russia and the West fall to a post-Cold War low, Tesla Amazing has been forced to navigate a complicated business environment by expanding from its Russian roots to becoming an international company.

"We registered in Estonia in order to avoid skepticism from Western distributors," Bagot said. "One Australian prospect asked us if we were registered in Russia, because he was afraid to sign with us in light of the sanctions."

Tesla Amazing has overcome this initial skepticism by spreading their efforts to Finland and Ukraine as well. The company's web developer, Slava Kornienko, is based in Ukraine and production of the Magnetic sticky notes takes place in Finland.

"And we don't even have an office. We often work together while spread across different countries," said co-founder Bragin.

Though the team has run into trouble crossing borders to work together, they found that political tensions have had little impact on developing their business beyond skepticism from Russia-weary distributors.

"When we arrived at the Staples Innovation Council Event in July, we were nervous about potential backlash for our Russian origins. But we were relieved and thrilled to find that nobody cared," Bagot said.

"The Staples executives only cared about our awesome product - Magnetic. In fact, when they learned that two of our team members were Russian, they got excited and welcomed us to the U.S. It seemed that our Russian roots were a point of pride - we traveled all the way from Russia to visit Staples!"

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 #23
Newsweek.com
August 9, 2015
Russian Startups Are Coming to the U.S.
BY ALEKSANDR GORBACHEV

In a modest two-story house on Turk Street in San Francisco, a bunch of Russians, all in their 20s, live and work together to build an app they hope will change the way you choose a restaurant for dinner and, ultimately, the way customer service works.

The spacious living room of the house serves as an office; a whiteboard with a set of goals for the day stands beside the wall; laptops are often left unguarded on the table when members of team retire to their bedrooms to get some sleep. Up to 10 people live in the house, and most of them work at Luka, a startup building an app that recommends restaurants. The idea is that instead of sifting through ratings, professional reviews and other people's recommendations, like on Yelp or Foursquare, you can have a nice chat with a robot who presumably knows everything about good food and good fun, and learns more about you as you type. Another guy, the founder of Stampsy, a publishing platform for "visual thinkers," moved into the house recently.

All the residents came to the U.S. from Russia. And as it turns out, they are not that exceptional. In recent years, more and more young creative entrepreneurs from Russia have decided to pursue their dreams outside the country and launch their projects abroad-mostly in the U.S., but also in other Western countries, such as England. The extent of this migration is hard to quantify, since not everybody gets the right visas right away, but it's telling that the amount of two particular types of nonimmigrant visas granted by the U.S. embassy in Russia (L1, for employees, and O1, for "outstanding aliens") has been steadily growing over the last five years, with the amount of L1 visas doubling from 2009 to 2014.

"More and more Russian entrepreneurs are looking into relocating to the West or opening a branch outside Russia, and I actually think it's a positive a thing. I always urge people to think global," says Alon Lifshitz, managing director of Blumberg Capital, a venture capital firm with headquarters in San Francisco. "They are leaving the Russian market because there is a lack of liquidity, and the local stock exchange market is very unstable, because of everything that's going on. And Russian developers are actually very smart and capable, even though sometimes they lack in marketing and commercial abilities."

"Russian startups are very good on the tech side, but sometimes not that good on the product side," says Masha Drokova, a former prominent member of a Russian pro-government youth movement called Nashi. After falling out with the government's values, she says, she started doing social media campaigns, gradually was lured into the tech industry and is now running her own PR studio helping Russian and international startups to get the word out in the U.S. and globally. Drokova says every day she gets three or four e-mails from Russian companies asking her to help them with PR in the U.S. "After the economic crisis happened, it became very clear that there isn't simply a big enough tech market in Russia," she added.

Among the projects created by Russian millennials who have decided to compete in the overcrowded American and European markets instead of staying in their home country are Flёve Partners, a brand and design consulting agency, based in New York; Future London Academy, a project that organizes one-week inspirational and educational workshops in design, based in England; Hopes and Fears, an English-language digital media firm focused on "life and culture through a global lens," based in New York; San Jose-based Trucker Path, an app that connects drivers with clients, and which has been called "Uber for trucks" and just raised $20 million in Series A funding; Readymag, a Web publishing platform, based in New York; and so on.

The most well-known Russian digital runaway is arguably Pavel Durov, a co-founder and former CEO of the biggest Russian social network, VK.com. A Steve Jobs wannabe, a radical libertarian and a controversial Internet prodigy famous for such publicity stunts as throwing 5,000 ruble notes, worth about $150, out of his office window to show that "money is overrated," Durov was pushed out of VK by his stockholders in 2014 and forced to resign. He now lives abroad (he never says where exactly, but is often seen in New York) and runs Telegram, a popular instant messenger focused on the security of users' correspondence. In multiple interviews with the Western media, Durov has implied that the takeover of VK was orchestrated by the Kremlin. According to Durov, he repeatedly refused law enforcement's requests to block opposition and pro-Ukrainian groups and surrender their members' credentials. Citing other media obligations, Durov declined to comment for this article.

Considering the news that has been coming out of Russia in recent years, one might suspect the reasons for young professionals leaving the country is obvious. However, it's more subtle than that. The reasons appear to be not so much political as economic-and even existential. In five interviews conducted for this article, the name "Putin" was not mentioned once. It's not exactly about oppression, censorship and war; it's more about the consequences of those things. Russia, it seems, is just bad for business.

"We knew from the beginning that America is our primary market, and if you want to work there, you have to be there. It was just more convenient for us to enter an existing market instead of starting from ground zero," said Diana Novichikhina, a co-founder of ReadyMag, which boasts having The Guardian, BBDO and Airbnb among its 45,000 customers. She also said political concerns haven't influenced the startup's strategy.

"We like it in Moscow, but there just aren't so many good professionals there, so they crowd together, and it gets cramped," said Vit Abrams, who together with Holga Balina created Flёve Partners., an agency that works with clients like BP and won multiple design awards. "It's easy to get noticed in Moscow, because it's a plain field: if you stand out, you get noticed immediately. But there's no real ecosystem. Here, it's tougher, but you actually have a chance to become big and global."

For Ekaterina Solomeina, a co-founder of Future London Academy who worked with the best known Moscow design agencies before moving to London, creating an ecosystem in Moscow was actually one of the goals she had in mind when starting her project. "The Russian design industry is so young, there isn't much to be inspired by," she told Newsweek. "In London, you're surrounded by the best people, and you can learn from them and grow. And I want people to come here and then come back and share what they learned."

The Future London Academy was initially created to provide educational experiences and workshops to Russian designers, but now caters to audience from all over the world. Essentially, the participants of various programs organized by the Academy (for example, "Design Management: Creative Booster") pay to come to the British capital for a week to get introduced to the representatives of top British design firms and learn and get inspiration from them. The fee is usually somewhere in between 1,500 and 2,000 pounds ($2,300-$3,100) and includes accommodation in London.

"I didn't leave Moscow because I didn't like it," Solomeina said. "I was too young to have any real problems in Russia, and Moscow is almost a country in itself anyway. I just liked London more."

According to Roman Mazurenko, a founder of Stampsy who, as a Moscow cultural entrepreneur, helped the Russian hipster generation to evolve and find its identity in the mid-2000s, the spirit of the Russian capital nowadays just doesn't fit people who want to keep up with the rest of the world and be on the cutting edge.

"In 2007, Moscow wasn't really up-to-date either, but there was a dream," he told Newsweek. "Now the dream is gone. Nowadays, moving around the world isn't about geography, it's about time travel. Some countries still live in the '80s, others are going back there quickly; I am from Belorussia and I already saw everything that's now going on in Russia happening there. The U.S., however, is a very progressive country. And it's very important for a startup to live in the future."

Not unlike Russian music bands that try to break into America, Russian digital entrepreneurs don't specifically present themselves as Russian. Vasily Esmanov, the founder of Hopes & Fears who created the prominent independent media company Look At Me in Russia before expanding to New York, declined to be interviewed on the subject. "Our projects are good regardless of the fact where we're from," he said.

Indeed, there have been notable successes. Last year, Luka became the first Russian startup to be accepted into Y Combinator, which landed first place in aForbes survey of American startup incubators in 2012. That allowed Luka's team to relocate to California, where now they are closing Series A funding.

Luka founder Eugenia Kuyda, who was a well-known food writer in Moscow before getting an MBA at London Business School and becoming a digital entrepreneur, explained her reasons for moving like this: "I feel like it makes sense to do politics in Russia nowadays, or charity work. Digital startups, though, feel kind of out of place.... When you're young, you want to dream big, to imagine where you will be in 10 years, and in Russia only insane people can seriously do that."

"It's just weird to think long-term if in a month the ruble can lose half of its value, in two months banks can close, and at any point somebody can come and just take over your company."

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 #24
The Hollywood Reporter
August 17, 2015
Movie Attendance Hits Five-Year High in Russia
The impressive performance of 'Minions' significantly contributed to the high numbers.
by Vladimir Kozlov

Movie theater attendance in Russia hit a five-year high in July, largely thanks to the remarkable performance of the top grossing movie Minions.

Just under 22 million admissions were registered in July, which is 36.7 percent more than in June, 20.4 percent more than in July 2014 and the highest number over the last five years, said the research company Movie Research.

The impressive numbers were largely explained by the successful theatrical run of Minions, which became the year's highest grossing movie and second highest grossing film of all time, outperformed only by Avatar.

The spinoff of Despicable Me generated 7.67 million admissions in July, followed by Terminator: Genisys with 4.3 million admissions.

Cybernatural, produced by Timur Bekmambetov's Bazelevs, attracted 464,400 admissions, which was the highest number among Russian movies.

July's total box office reached 5.21 billion rubles ($80 million), according to Movie Research, a 34.9 percent increase over June and 19.9 percent up from July 2014.

Meanwhile, local movies did poorly, accounting for only 3.6 percent of the total box office.

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 #25
Moscow Times
August 18, 2015
Organizations Host Special Sporting Events for Kids with Special Needs
By Alexandra Tyan

On Saturday, the organization Sports Dream and Gorky Park hosted a special table-tennis training session for kids with Down syndrome and their families. From 11:00 a.m. until 6:00 p.m., 10 children with Down syndrome and their families had an opportunity to attend one-on-one training sessions with professional table-tennis coaches.

Organizer Pavel Kuryshkin said this was the second time his group had hosted an event like this. "One of the main objectives of the project is to provide grounds for communication and integration. The coaches that work with us - all of them are genuinely enthusiastic about what they do, they can find a personal approach to anyone, be it an old lady, a professional sportsman or a child with special needs," Kuryshkin said. On Saturday, Galina Georginova, an experienced coach and Master of Sport in table tennis, was teaching, with the help of her assistant and best friend Elena Yakovleva.

Georginova and Elena were instrumental in getting the event off the ground. "This is a unique method of teaching that I started practicing when I was living in Austria," Georginova said. "It involves a combination of different techniques. I designed it specially for children with Down Syndrome. I also managed to attract Reebok; they provided gifts for all the little participants."

While Sports Dream provided the trainers, Gorky Park offered the training space as well as free ice cream and lemonade for kids and staff.

Yana, 14, came from St. Petersburg to participate in the event. Said her mother, Tatiana, "Yana has been doing swimming close to professional level for a while now, but it's more of a competitive sport. We are trying to bring her to events like this, where children have the opportunity to engage with each other and work in teams, rather than compete against each other."

Kuryshkin agreed that teaching people to work together was one of the goals of the event. "Every activity develops a certain skill, for instance, shyness can be overcome by dance lessons, whereas team sports help children like Yana adapt to social environment," Kuryshkin said.

Kuryshkin said he was inspired to start Sports Dream by his experience as a skier. His coach, who gave him unconditional support and always encouraged him to follow his dreams, was a huge influence in his life. Later, he decided to help others make their sporting dreams come true by founding his organization, which connects people with dreams of competing in sports with trainers to help them achieve their goals. For children with special needs, like Yana, the project has become a crucial space for adaptation and integration.

Sports Dream is already planning a ski event for the winter in Neskuchny Sad.

For more information about Sports Dream, visit sportsdream.ru.

Sports Dream isn't the only organization supporting families with children who have Down syndrome. Next weekend, charity DownsideUp will host its 20th annual Charity Bike Ride in Moscow. On Sunday, Aug. 23, participants will ride 23 km along the most picturesque cityscapes of the capital, starting at VDNKh. Famous Russian actors and singers, including Serebro, Dmitry Nagiev and Anna Sedokova, have already pledged to participate. To support the charity and join them at the starting line, purchase a part of the road online. Anyone over 14 with a bike and a helmet can participate. Gifts, competitions and a big concert, featuring Russian music stars will be waiting for finishers at the end of the ride.

For more details on the event, visit sportvoblago.ru.

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 #26
Russia Direct
www.russia-direct.org
August 17, 2015
Kerry in Havana, Russian orthodoxy outrage and Tianjin explosion
Russia Direct presents the latest roundup of the most discussed events by Russian media during last week.
By Anastasia Borik

During the past week, the Russian media focused on the improved diplomatic relations between Cuba and the U.S. as well as the nature state censorship in China after the explosions in Tianjin. In addition, the Russian media focused on several domestic news stories, including an attack by Orthodox activists on an art exhibition in the center of Moscow.

Kerry's visit to Havana

The Russian press actively discussed the restoration of diplomatic relations between Havana and Washington. On August 12, U.S. Secretary of State John Kerry visited the Cuban capital of Havana for the first time in 70 years. This event aroused great interest among Russian journalists.
 
The business publication Kommersant explained the role that third parties played in the normalization of relations, noting in particular the role of the Vatican. Moreover, the publication also emphasized the continuing conflict between the two governments, while noting Russia's confidence in the continuation of "special relations" with this island nation.

At the same time, the opposition Novaya Gazeta pointed to the fact that the restoration of diplomatic relations is a special achievement of the administration of President Barack Obama, who embarked on a course of engaging Cuba in dialogue starting at the end of 2014.

Meanwhile, the pro-government Rossiyskaya Gazeta noted that, despite the apparent rapprochement between the U.S. and Cuba, many contradictions remain, including on the issue of Cuban dissidents who are sponsored by the United States, as well as on the issue of mutual financial claims.

The Manezh attack by Orthodox activists

Last week, activists of the Orthodox organization "God's Will," known in Russia for their radically conservative views, caused serious damage to exhibits being displayed in the Manezh Exhibition Center as part of "The Sculptures We Do Not See" exhibition.

The exhibition presents a collection of works of three major Soviet sculptors of the 20th century - Vadim Sidur, Nikolai Silis and Vladimir Lemport.

Activists from "God's Will" rushed into the exhibition and carried out a real pogrom, damaging several works by Vadim Sidur, which they considered as blasphemy and an insult to the feelings of believers.

The Russian media has condemned the actions of this organization.

Thus, the opposition Novaya Gazeta directly calls this action vandalism and considers the activists themselves as blasphemers, who are not willing to even attempt to understand the Christian origins of the sculptor's works.

The website of the Echo of Moscow radio station calls the activists "pathetic" and expressed horror at the lack of adequate response from the security services of the Manezh, considering that for Dmitry Enteo, the leader of the organization, this is one more attempt at energetically promoting himself.

The business publication Vedomosti expressed hope that the authorities would impose penalties against the activists for violations of the public order and the destruction of cultural property.

The publication quoted Mikhail Fedotov, head of the Presidential Council on Human Rights, indicating the potentially criminal actions of Enteo's activists, and saying that their activities were similar to the barbaric behavior of militants of the Islamic State of Iraq and the Greater Syria (ISIS), an organization that is banned in Russia.

Incident with the sister of Russian model Natalia Vodianova

Another scandal that arose last week was a conflict involving the sister of well-known Russian supermodel Natalia Vodianova. The 27-year-old Oksana Vodianova suffers from autism and cerebral palsy, and needs to be under constant supervision by her mother or an attendant.

During one of her walks with her attendant, the young woman went into the Flamingo Café in Nizhny Novgorod for a short rest. The café's staff rudely asked that she leave the premises because her presence "scared off customers due to her unhealthy external appearance and behavior."

It was quite likely that this conflict would have remained at the level of mutual accusations and litigation between the family and the café, had not such a well-known personality as model Natalia Vodianova been involved.

The media in Russia simply exploded with articles and comments in support of the suffering young woman, stimulating discussions about tolerance in Russia as a whole.

The business publication Vedomosti, although condemning the actions of the owners of the café, expressed bewilderment over the reaction of the Russian authorities.

These authorities have called on the Investigative Committee to look into the event. The Investigative Committee has already filed charges under Article 282 of the Criminal Code of Russia (violations of human dignity). The publication considers this as a disproportionate measure, stressing that it is impossible to achieve justice through knowingly unjust decisions.

The pro-government Channel One also expressed indignation at the behavior of employees of the café, noting that this case can serve as an example for many families that have members suffering from discrimination. These families should now be able to fight for their rights.

The newspaper Moskovsky Komsomolets presented the opposite point of view on this issue. Unexpectedly and suddenly coming to the defense of the café was the well-known writer and politician Eduard Limonov, who points to the disproportionate punishment that the café owner is being threatened with (5 years in prison). Moreover, Limonov believes that Russia should create separate institutions for people with disabilities, as they are "unpleasant to look at."

Explosion in a production plant in China

On August 12, and industrial area of Tianjin, China was shook by a series of powerful explosions that killed over 100 people and injured more than 700. The Chinese authorities announced a large-scale evacuation, making every effort to deal with this accident.

The business publication Vedomosti attempted to tabulate the losses this disaster caused. After all, Tianjin is a major center of the automobile industry, and this accident caused serious damage to already built cars parked in the production yards. The publication noted that this was a severe blow to the entire industrial zone of Tianjin, which, in addition to having direct production facilities, is also a major logistics hub.

To emphasize the scale of this tragedy, in another article, Vedomosti noted that Tianjin is the fourth-largest port in the world, and in terms of total cargo turnover, it handles the same volume of goods as almost all Russian ports combined.

The newspaper also drew attention to the censorship imposed by the Chinese authorities on numerous publications, which had disclosed the details and wrote about the consequences of the explosion.

"The Chinese cyberspace administration closed 18 websites and suspended the work of another 32, accusing them of spreading panic," according to Vedomosti.
The website of the Echo of Moscow radio station also reported on the censorship imposed by the Chinese authorities, who are blocking entry onto the Internet of any unofficial information that is discovered, including by blocking accounts on Facebook.

Meanwhile, the pro-government Channel One TV network reported on the numerous victims and missing persons, as well as Russia's readiness to provide, upon request, the necessary assistance needed for disaster management. Channel One noted that there is a real danger that these and surrounding areas will suffer from chemical contamination.

North Korea threatens US and South Korea

The annual military exercises held jointly by the United States and the Republic of Korea, which are to start this week, have triggered an aggressive response from the leadership of North Korea (DPRK). Pyongyang announced that the country is ready to stand up for itself, including by means of "defensive and offensive weapons, unknown to the world."

Russian media doubts that the DPRK has such weapons, while at the same time believing that a provocation from North Korea cannot be avoided.

The business publication Kommersant commented on the series of recent mutual provocations on the border between the two countries, quoting a specialist on this region, Konstantin Asmolov, who claims that the Republic of Korea has also assumed an unconstructive position, constantly blaming its neighbor for everything, with often unproven accusations.

The website of the Echo of Moscow radio station indicates that Pyongyang has several reasons to feel irritated - in addition to the military exercises, the North Korean regime is dissatisfied that sanctions against it remain in place, and are even being made tougher, which greatly contributes to increased tensions on the peninsula.

The pro-government Rossiyskaya Gazeta asks its readers not to discount the allegations being made by North Korea, pointing out that this country not only possess nuclear weapons, but also the means for their delivery. According to the newspaper, this could involve a modification of the KN-08 ballistic missile, which North Korea first announced to the world in 2012.

Quotes of the week:

Alexander Stepunin, press attaché of the Russian Embassy in Cuba: "Restoration of relations [with the U.S.] is a victory for Cuba. The country has fought a long time for the United States to adopt a fair attitude towards it."

John Kerry: "[Washington and Havana] have made a courageous decision to stop being prisoners of history."

Dmitry Enteo on the controversial exhibition in the Manezh Exhibition Center: "We want this exhibition to be closed, so that the law on the protection of religious feelings is actually adhered to, so that the main exhibition center in the country does not display such a dirty and crude mockery of Jesus Christ and of the saints."

Mikhail Fedotov, Head of the Presidential Council on Human Rights, in a response to Enteo about the destroyed exhibition: "No one is allowed to destroy cultural valuables. This is a criminal offense. These actions are criminal acts, and we are not talking here about one, but about the violations of several articles of the Criminal Code. Please don't act like the ISIS barbarians do."

Statement by the State Defense Committee of North Korea, "The army and people of the DPRK are not the same as they were in the past, when we had to resist U.S. nuclear power with a machine gun in hand... North Korea is an invincible force, which has the latest offensive and defensive weapons, not yet known to the world."

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 #27
Valdai Discussion Club
http://valdaiclub.com
August 17, 2015
Russia's Naval Doctrine: New Priorities and Benchmarks
By Ruslan Pukhov
Ruslan Pukhov is Director of the Center for Analysis of Strategies and Technologies (CAST), Member of the Public Council under the Russian Defense Ministry.

President Vladimir Putin recently approved a revised version of Russia's Naval Doctrine. Changes to the Naval Doctrine stirred interest both in Russia and abroad.

This interest is not accidental, since Russia's Naval Doctrine represents a systemic document that underlies the national maritime policy and constitutes an integral part of the Russian leadership's strategic planning.

The Russian Naval Doctrine to 2020 was first approved in 2001, but remained largely unnoticed for a long time, being viewed more as a formal non-binding document. The effort to draft the Naval Doctrine was led by the Russian Navy. However, defense budgetary restrictions, which remained in place for an extended period of time, made implementing its provisions hardly attainable and even rendered them somewhat abstract. The Navy was in a state of decline following the collapse of the Soviet Union and, debilitated by a lack of proper resources, was unable to play the role of bulwark assigned to it by the Naval Doctrine.

The situation has turned around over the past few years. A process of retrofitting of the Navy began to unfold, and the activities of the Russian Navy in the oceans increased sharply. The number of naval exercises that we've seen over the past few years was unheard of even in the Soviet Navy's heyday when it was led by Admiral Sergei Gorshkov. This instantly boosted Russia's positions as a naval power.

However, the resumed build-up of the Navy revealed numerous problems in the sphere of naval shipbuilding and developing of new naval weapons. As a result, the naval segment is holding back the 2011-2020 State Armaments Program, and the effort to actually shore up the Navy's combat potential is being delayed.

The international situation has changed significantly recently, which directly affected Russia's positions on the sea. Primarily, this involves the reunification of Crimea and Sevastopol with Russia in 2014 and also the need to take measures for speedy economic, political and military integration of Crimea and Sevastopol. Based on this reunification, plans are in place to restore the presence of the Russian Navy in the Mediterranean. At the same time, the negative reaction of Western countries to this reunification and the general increase of Russia's potential have led to an aggravation of the military-political situation on Russia's western borders and "Western" seas.

Therefore, a revision of the Naval Doctrine is in order. It must be amended to include provisions that are consistent with the current state of affairs. Clearly, the government made the revisions quickly, which is indicative of a greater focus on the Navy and the fact that the Naval Doctrine is now viewed as an effective guiding document of the government strategy.

Russia's Naval Doctrine covers four functional areas and six regional areas. The four functional areas include maritime activities, maritime transport, maritime science and the production of mineral resources. The regional areas include the Atlantic, the Arctic, the Pacific, the Caspian Sea, the Indian Ocean as well as the Antarctic, which is a new addition to the Naval Doctrine.

The revised Naval Doctrine primarily focuses on two regional geostrategic areas: the Atlantic and the Arctic. The former is accounted for by continued NATO expansion in the Euro-Atlantic region as it approaches Russia's borders and the actual resumption of the Cold War with the West. The new version of the Naval Doctrine states that NATO plans to move its military infrastructure closer to Russia's borders are unacceptable to Russia, and that this is what determines the nature of NATO-Russia relations. In its definition of the national naval policy for the Atlantic region, the Naval Doctrine refers to "the existing conditions in this region that are advantageous only to NATO, and the imperfection of legal mechanisms for ensuring international security."

In turn, Moscow sees the Arctic as a region that is important for its economy and defense, as it boasts vast resources off the continental shelf, is home to the Northern Sea Route, awaits a possible reduction in the Arctic Ocean ice and has overall importance to Russia in providing relatively free access to the Atlantic and the Pacific. Russia is actively "returning to the Arctic" militarily (establishing the "fifth" joint strategic command and actively developing military infrastructure) and economically (as it began to build a new nuclear icebreaker fleet and is putting together plans for developing offshore oil and gas fields).

Regarding Crimea and Sevastopol, the new edition of the Naval Doctrine states that focus should go, among other things, toward "improving the personnel and the structure of the Black Sea Fleet and developing its infrastructure in Crimea and off the coast of the Krasnodar Territory."

In light of the expanding military shipbuilding in Russia and the attempts to develop "major" commercial shipbuilding, with due account of the problems that arose in the process, the revised Naval Doctrine naturally incorporates a new section on shipbuilding. This reflects a greater focus of the supreme authorities on military shipbuilding and various aspects of civil shipbuilding.

An important section of the revised Naval Doctrine deals with the government administration of maritime activities. It outlines the role of the Russian Government's Maritime Board and specifies the competence of other public authorities, which will help plan the implementation of the national maritime policy provisions for the long run.

Thus, adopting the updated Naval Doctrine indicates that Russia's current leadership focuses on expanding the Navy and pursuing a national maritime policy as a top priority.

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 #28
Interfax
August 18, 2015
U.S. claims about Iranian general's visit to Russia based only on media reports - Moscow source

Washington's claims concerning an alleged recent visit to Russia by Iranian General Qasem Soleimani were based only on unconfirmed media reports, a diplomatic source in Moscow told reporters.

"It appears that it was an article by a Western correspondent that contains a reference from an Iranian source who asked not to be named. References to anonymous sources as official statements of the state are a new word in diplomatic practice. Now we will know this," the source said.

The United States claimed earlier that General Soleimani, who is on the UN Security Council's sanctions list, had recently visited Russia. However, U.S. Department of State spokesman John Kirby said later that he was unable to confirm these reports.

Russian Foreign Minister Sergei Lavrov, for his part, dismissed the reports about Soleimani's recent visit to Moscow as rumors.

"These rumors have been commented on and there is nothing to add about this particular episode in a chain of suspicions from our American colleagues. Rumors are just rumors," Lavrov said.

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 #29
Moscow and Tehran implementing joint plan on settling Syrian crisis
By Tamara Zamyatina

MOSCOW, August 18. /TASS/. Long-term prospects of cooperation not only in the trade and energy sphere, but also in the settlement of the Syrian conflict and other crises in the Middle East are emerging between Moscow and Tehran, experts polled by TASS said following Monday's talks between the foreign ministers of Russia and Iran Sergey Lavrov and Javad Zarif in Moscow.

Javad Zarif's visit demonstrates that Russia plays the key role in the implementation of this plan. In particular, the Russian side is tasked with transporting low-enriched uranium from Iran. Apart from that, Russia, which pioneered Iranian nuclear sphere starting with a nuclear power plant in Bushehr, will construct eight more power units in the country. At the meeting in Moscow, the sides confirmed common approaches to the Syrian problem - the Syrian people should decide whether President Bashar Assad should stay or go. Iran, along with other countries in the Middle and Near East, is interested in implementing Russia's proposal on creating a coalition with regional players to fight the Islamic State terrorist organization.

"Javad Zarif prepared a plan on peaceful settlement of the Syrian crisis consisting of several points. He held negotiations with Saudi Arabia's foreign minister, as the country heads the Cooperation Council for the Arab States of the Gulf, with representatives of Oman. Saudi Arabia, which just recently raised a question of ousting Syrian President Bashar Assad by military means, listens to Tehran's position. One cannot say that there is consensus there, but positive shifts are obvious," leading research fellow of the Institute of Oriental Studies at the Russian Academy of Sciences Boris Dolgov told TASS.

"Tehran's role in the Middle East has considerably grown since the Joint Comprehensive Plan of Action on Iran's nuclear program was signed in Vienna. At July's conference 'Role of the media in countering terrorism' in Damascus, the Iranian delegation was met with reverence, and its speeches set the tone for discussions. Let us not forget that Tehran finances Syria's special services to fight IS terrorist organization," Dolgov said.

At the same time, Boris Dolgov said he doubts the Joint Action Plan on Iranian nuclear program will be implemented fast. "US Congress has not yet approved the deal. It has to make a decision by September 17. Barack Obama is an outgoing president, while presidential candidates view the agreement negatively. Even if it is approved, the step-by-step plan of its implementation will take 10 years, and sanctions against Iran may be reinstated under any pretext. I will also remind that Iran's Mejlis has not approved the agreement as well," the expert said.

President of the Institute for the Middle East Yevgeny Satanovsky says close cooperation between Russia and Iran in the settlement of the Syrian crisis can be explained by the fact that Tehran is really fighting with IS. "Unlike Middle Eastern countries that only talk about IS threat or support this group by destroying Kurds who are fighting against it, Iran provides substantial financial, economic and oil support to Syrian government forces to resist militants. Without Iranian support, Syria would have already been wiped out from the global map," Satanovsky told TASS.

"Signing the Joint Comprehensive Plan of Action on Iran's nuclear program opens great prospects in front of Tehran. Iran has always been a reliable trade and economic partner. The sanctions that were imposed on it destroyed hundreds of lucrative contracts, and many countries are waiting for them [contracts] to be restore," the expert noted. "Russia unblocked many acute angles between Washington and Tehran at talks on Iranian nuclear program. Now it is all up to the Iranian side and how consistently they will implement the agreement," he concluded.

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 #30
Sputnik
August 18, 2015
US Spies Find Open Source Investigations Worthless, Blame 'Russian Trolls'

US intelligence officials are becoming increasingly confused by open source intelligence gathering they use to provide confidential reports to policy makers.

US officials revealed that "open-source" investigations are essentially worthless for intelligence gathering, but "Russian trolls" are to blame, according to an article in DefenseOne.

While intelligence officials rely on social media to gauge public opinion, the reports are then classified and passed on to policy makers and not made available to the general public. US State Department officials have cited "social media" as evidence of various unproven claims, including allegations that Donbass militias are responsible for shooting down Malaysia Airlines Flight MH17.

"That's where I would worry: If one of our tools gave an incorrect forecast, it could lead to giving bad advice to the senior leadership," US Office of the Director of National Intelligence (ODNI) Science and Technology Director David Honey told Nextgov.

Open Source to Closed Access

According to the intelligence official, it is often difficult to find out if social media postings come from real people. It is unclear if the issue has already been addressed, such as when it was revealed in 2011 that the US military is developing social media trolling software that, according to the Guardian would "allow one US serviceman or woman to control up to 10 separate identities based all over the world."

Now US intelligence bodies are struggling to find whether the people who they are tracking on social media to provide intelligence reports to top officials are even real.

"Is somebody is going and blogging 100 times under different names? How do you figure that out? That's a challenge. And so with any of these technologies, you really have to think through how they can be used, how somebody could game them and make sure that you are getting accurate answers," Honey added.

Honey did not comment on the possibility that social media trolling and disinformation by one US intelligence body could then be used by another intelligence body to provide intelligence reports to policy makers.

Because the reports are ostensibly "open source" are then classified and kept secret from the public, it is also impossible for anyone to mount their own "open source" investigation to find if the reports are even based in reality.

Blaming 'Russian Trolls'

The DefenseOne article claimed that "Russian trolls," a Western media term for people who disagree with US foreign policy, are to blame for the US intelligence issues in intelligence gathering.

The article does not cite any examples of Russian social media manipulation, although it does label some bloggers as "coerced typists" and "Russian trolls." Sputnik earlier looked at the evidence provided by former employees of Internet Research, a company accused of conducting "trolling" campaigns, and found a search engine optimization (SEO) operation which masked online forum spamming activities with what appeared to be discussions on a topic.

It is not clear how certain commercial SEO and spam activities can pose a threat to US spies, although it has previously confused one journalist who thought that he found a "staggering" network of "Kremlin bots."

Sputnik looked into similar networks of bots (the ones in the article were banned by Twitter) that appeared to be engaged in politically-motivated Twitter spam with Aleksandr Zimarin, a social media consultant to a Russian State Duma Deputy and a Federation Council Senator.

The inquiries found that there is indeed a massive business engaged in selling and reselling Twitter accounts, with bots which at times engage in posting political content. However, while it can confuse US intelligence officials, together with actual social media manipulation by other US and UK bodies (such as the British Army's 77th Brigade of social media trolls), the greater issue is the reliability of "open source" intelligence

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 #31
Moscow Times
August 18, 2014
West Needs to Up the Ante in Infowar
By Peter Pomerantsev
Peter Pomerantsev is a senior fellow at the Legatum Institute. This is an abridged version of a comment that originally appeared in Vedomosti.

The West is finally coming to a belated comprehension of the power of the Kremlin media machine. The Soviet Union is no more, but the Kremlin holds a media hegemony over 142 million citizens of Russia and 93 million residents of former Soviet republics, for whom Russian is a native language, or fluent second language.

The European Endowment for Democracy project that I co-authored sought a solution to this problem. Our research led us to an understanding of how different the situation is today than during the Cold War era.

In the 20th century, the goal of Western media broadcasts in Russian, like the BBC World Service and Radio Free Europe, was to get information through the Iron Curtain. The battle was fought for alternative points of view against censorship. Today, television is under the strict control of the Kremlin, but the public has access to different media sources through the Internet.

Russian-speaking citizens of Ukraine, Moldova, and the Baltics can get information from a wide range of sources: Kremlin-run, local, or Western, all providing sharply contradictory versions of reality.

A good example is Estonia, whose residents, after hearing the competing Russian and Western versions of the events surrounding the downing of Malaysia Airlines Flight MH17 over Ukraine last year, lost faith in reports from both sides.

The Kremlin blurs the boundary between fact and fiction. Informational and analytical segments are prepared using cinematic techniques and sensationalism. The disinformation is arranged into a coherent narrative. News shows concentrate on military actions in Ukraine, Western conspiracies against Russia, and positive stories about President Vladimir Putin. The president ensures stability in a country surrounded by enemies.

These emotions are intensified through costly documentary films about the glorious battles of World War II and betrayal by liberals, dishonoring themselves by collaborating with enemies of the motherland.

Meanwhile, the Kremlin-run media ignores the local news and important social issues. Analysts from the European Endowment for Democracy recommended creating a news agency that would concentrate on those very details that Moscow strives to avoid.

This type of media source would be unlikely to succeed, nor should it try, in convincing its audience of the veracity of one particular version of the events surrounding a passenger plane crash in Ukraine, for example, but it could focus on local stories about hospitals, schools, and courts, and therefore be more relevant.

Ideally, this approach to program creation should correspond to development priorities. When the British Department for International Development supports judicial reform in Ukraine or Moldova, that should be accompanied by the production of television shows and documentaries about the workings of the judicial system. The BBC charity Media Action is already helping Ukrainian public television prepare short films about the lives of young people in a conflict zone. The budget for this project is tiny, but such projects are essential.

High-quality shows aren't cheap. A full-fledged television project like BBC Russia would cost at least 20 million euros a year. Putin knows well that the media is just as important as doctors and soldiers. The West made a big mistake in the 1990s when they left media development in the former Soviet Union to the will of the free market. The media was seized by oligarchs and corrupt regimes.

Reducing financing for media sources like Radio Free Europe was seen as a peacetime bonus in the West. But today, the cost of those savings is high.

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 #32
Sputnik
August 18, 2015
West is Afraid to Lose Information War Against Moscow

The West's paranoia about a "Russian invasion" is now spilling over into the media sphere. The US and its European allies are not only enhancing their military capabilities on the ground, but also preparing for a major war in the mass and social media.

The official website of the US Embassy in Vilnius recently released information that the United States is launching an educational campaign for journalists from the Baltic region to prepare them for the fight against what it deems "Kremlin propaganda".

The training program will consist of several stages, including an internship in the United States. Its official goal is to "to contribute to the diversification of the media landscape," and teach journalists how to counter "disinformation that have multiplied since the beginning of the Ukraine crisis".

Since the conflict in Ukraine broke out, Western countries made numerous attempts to label Russian coverage of international events "propaganda" and present Russia as an "evil" to the international community.

To counter "Russian propaganda," the European Union had event set up a special unit tasked with monitoring Russian media and promoting the activities of EU institutions.

However, this step seems to have had the opposite effect as many residents of European countries and the United States have chosen "the wrong side" and started to sympathize with Russia and with pro-independence fighters in Eastern Ukraine, Czech newspaper Nova Republika reported earlier.

The US, apparently unhappy with this failure, decided to go further and test its new information strategy among Russia's direct neighbors. According to the website of the US Embassy in Vilnius, the US officials seek to make journalists from former Soviet republics more "active" and "mature" as they often lack "instruments" to withstand the influence of the Russian media.

However, critics argue that the goal of this training is not to teach journalists how to counter the so called "Kremlin propaganda", but implant in them a desired pro-American position, Der Tagesspiegel wrote.

For instance, political scientist Andranik Migranyan believes that the West is afraid of losing the information war against Moscow and that the Baltic States with their large Russian-speaking minorities are the most vulnerable spot in this fight.

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 #33
Five Years Ago, Russians Said They Were For Democracy, Something They Wouldn't Say Now
Paul Goble

Staunton, August 17 - Many people assume that the high levels of support that Russians express for the Putin regime now shows them to be by nature authoritarian. Others, citing poll data only a few years old, say that Russians are naturally democratic but are too oppressed by the security services or bamboozled by government propaganda to express that view now.

But there is a third possibility, one that is more probable and ultimately more worrisome: Russians have such a long history of not having an impact on government decisions that they view politics as something alien to them and thus do not have the firm commitment to either democracy or authoritarianism despite what all too many assume.

Instead, like the figure in W.H. Auden's poem, "The Unknown Citizen," who was for one thing when the government decided to go in that direction and in another when the government changes course, Russians shift from one position to another as the government changes, often indifferent to what the changes are.

On the one hand, that means that there is not the reservoir of support for democracy that many among Russian opposition figures and Western analysts and policy makers assume. But on the other, it means that there is not the commitment to authoritarianism that some in the Kremlin would like either.

That makes Russian politics more susceptible to radical and even unexpected shifts, and it means that those who want to promote democracy have a far harder task than they assume because while it is relatively easy for authoritarian governments to suppress the population, it is far harder for democratic ones to involve the people in ways that will make them committed.

At the very least, this perspective should serve as a warning to all those who are all too ready to accept declarations that a former Russian authoritarian is now a Russian democrat as well as to all those who assume that someone with an authoritarian past cannot become a democrat.

Those reflections are among those provoked by a new commentary Pavel Pryannikov offers on his Tolkovatel blog today showing that "five years ago a majority of Russians called themselves democrats and liberals," something relatively few of them would do today (ttolk.ru/?p=24565).

The Tolkovatel blogger suggests on the basis of an analysis of polling data from five years ago that the extent of the change in declared positions from 2010 to 2015 means that "it will be easy to overcome the current trend of society toward obscurantism arising under the influence of television propaganda."

But the very "ease" he points to suggests something else Pryannikov doesn't mention: it may be just as easy to transform that set of views back into authoritarianism once again unless there is an effort to involve people in government rather than simply getting them to change the labels they are prepared to give sociologists.

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 #34
Subject: Response to Gordon Hahn's post [JRL#159]
Date: Mon, 17 Aug 2015 12:07:07 -0400
From: Steve Shabad <steve.shabad@verizon.net>

I find Gordon Hahn's criticism of the WaPo report on the Pew poll about Russia and Vladimir Putin, while technically correct on some points, erroneous in its thrust and misguided. He makes a series of highly objectionable points, and misses the forest for the trees. In fact, I'm not sure what his overall point is, since he agrees that the poll is unfavorable to Russia and Putin.
 
First, a couple of stipulations. Like Mr. Hahn, I am not a fan of Putin - but I am not a knee-jerk critic of him, either. Second, I am often quick myself to criticize pollsters and the media for taking a wrong approach or misinterpreting data.
 
In this case, I think Mr. Hahn is the "misinterpreter."
 
1) Mr. Hahn accuses the WaPo of a "whopper" by making the following statement: "Of the 39 countries polled, Pew found only three where the majority of people felt 'a lot of confidence' or 'some confidence' that Putin would do the right thing regarding world affairs." A "whopper" is a big lie. As Mr. Hahn makes clear, he is not claiming the paper lied, just that the statement was misleading.
 
2) He quotes the Post as saying that the majority of respondents said they had confidence in Putin in only three out of 39 countries polled. But Mr. Hahn objects: "The problem is that in several more countries than just three, including the world's two largest countries by population, more people trust than do not trust Putin. In China 54 percent trust Putin, 29 percent do not. In the world's largest democracy, India, 35 percent - trust, 16 percent do not. That means that the countries making up 36 percent of the world's population trust more than distrust Putin, and countries comprising a large majority of the population of the 39 countries survey do likewise."
 
First of all, China is one of the three with the pro-Putin majority; it is not one of the "several more countries," as Mr. Hahn's wording implies. Second, I would argue that population is of little relevance in this context. Should a certain country, given its common political culture, media, opinion makers, etc., really be given extra weight in the poll just because it has a larger population? If we are talking about international popularity, what counts are the attitudes in each individual country.
 
Third, it makes no sense to argue that if 35 percent of India's respondents express confidence in Putin's (meaning 65 percent do not express that confidence), then India should be put in the pro-Putin column.

Mr. Hahn sums up his interpretation of the Putin poll this way: "Thus, 8 of the 39 surveyed countries trust more than distrust Putin - hardly a win but not the near unanimous distrust spun by WaPo. Moreover, when country population is considered, Putin does notch a win." How is this a win? Even by Mr. Hahn's own (misleading) calculations, "countries making up 36 percent of the world's population trust more than distrust Putin." I'm sorry, Mr. Hahn may not be a fan of Putin, but his admitted bias against "any U.S. or Russian mainstream media institutions" seems to have gotten the better of him.. This is a flagrant case of trying to fit the data to the hypothesis - and they don't.

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