#1
Subject: What is going on in Russia? The views and values of ordinary Russians
Date: Thu, 17 Dec 2015
From: Karen Hewitt <karen.hewitt@conted.ox.ac.uk>
I am attaching the talk which I have given (with adaptations) to various groups of non-professionals who are interested in Russia. Some professionals in the audience, sometimes, but it was not intended for them.
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What is going on in Russia?
The views and values of ordinary Russians (2nd July 2015)
By Karen Hewitt
Lecturer,Oxford University Department of Continuing Education
I have spent the last 26 years trying to explain Britain to the Russians and - to a more hesitant extent - Russia to the British. Since I spend up to two months a year in cities all over Russia, living and talking with Russians, and not seeing or speaking to other westerners, I may misunderstand a lot, but I am not like a journalist looking for a story and listening to other journalists.
What we hear in Britain - and in Western media generally - about what is going on in Russia is so different from what I observe in all those cities and towns, in the universities and schools and public offices, in the shops and markets that I feel an obligation to challenge our media. The situation has been hugely exacerbated by the Ukraine crisis - in which outrageous things have been said on both sides - but with far less evidence and far more falsification on the 'Western side'. That there are significant lies in the mass media of both countries is clear. That there is disturbing ignorance on our side is clear. So I decided to be more systematic than usual in exploring what ordinary thoughtful Russians believed was going on. To ask lots of questions and to take lots of notes.
A brief history of Russia as seen by Russians since the 1970s.
Many generations among my correspondents but this background should help
Anyone born in the Soviet Union in the 1960s and 1970s would have spent their childhood in a predictable world. They had a home, albeit often a communal home, food, electricity and (usually) running water, paid employment, serious education, a national health service, cheap travel within the country, long holidays in the summer, and an ethos which encouraged 'joining' things and doing things together. Lots of summer camps, lots of sport, lots of group 'voluntary work', lots of joint projects in which grown-ups and children joined (such as building community centres.)
This life was reassuring in many ways. It did not encourage individual decisions, work based on enterprise and personal initiative. It did not encourage dissent. By European standards (though not by the standards of most of the world) what was available in homes and domestic products was limited and shoddy; stepping out of line could be and often was punished though with nothing like the widespread ferocity of the Stalin years. For most grown-ups it was a matter of looking over your shoulder and teaching your children to be discreet. But for most children themselves, the virtues of the Soviet system - stability, lots of attention to children as a group, and a firm ideology or belief couched in optimistic and cheerful terms - gave them a happy childhood.
In my early years in Russia (I went first in 1984) and then annually or more often from 1988) I was at first suspicious of these widely prevalent accounts of happy childhoods. What about those who were often unhappy or traumatised - by families, by individuals, by social expectations?. The Soviet Union must have had numbers of unhappy children, especially those trapped by illness or the alcoholism of their parents. But the system was child-friendly in its values and practices. The difficulties and restraints become much more obvious as those children grew up - if you were somebody who wanted to argue, who wanted to go your own way, who wanted to take initiatives or who loathed committees.
Most adults were probably reasonably content within work groups - and there was work for everyone, even if it was not very strenuous and involved long holidays; going on holiday in groups was also normal. More people were able to move out of communal flats where they had just one room of their own into their own flats. In terms of getting hold of things - the system worked like a black market - a deficit market - people learnt how to use the system. Prosperity seemed to be gently increasing even as Brezhnev slept.
But Brezhnev died in 1982 by which time the economic problems of the Soviet system were becoming all too obvious, at least to those in power. He was followed by Andropov who died in 1984 and Chernenko who died in 1985, leaving the way clear for Mikhail Gorbachev to become General Secretary and hence leader of the Soviet Union. Russians - and the other Soviet peoples - were about to enter years and years of chaos after decades of stability and stagnation.
Gorbachev had to deal with the consequences of economic stagnation and the collapsing price of oil. There were no resources left. He tried to liberalise markets - and politics. Political liberalisation was more exciting, especially for educated people, and went far farther than anyone had envisaged, very quickly. That's what most Westerners remember.
But how does anyone turn a black market into a capital market? If what you can buy is regulated by a lack of goods rather than a lack of money, how do you free up and double or treble your domestic production - and keep some kind of control of money so that people learn what you can spend and what you have to save. How, in fact, to change totally the relationship between work, productivity and money, if the people governing the country and trying to do this have had no experience of our kind of economy and social structures?
And just as important -how do you teach people about money who have lived all their lives with rationing? Rationing is fair - and also get-roundable. Getting round it depends on what you can barter. Money is not so significant.
The Soviet perestroika reforms meant that people started losing their jobs. People were paid less. Inflation took hold. But at the same time there was nothing in the shops, because if you were controlling supplies and it seemed likely that they price would go up, you held back the goods in the warehouses. People were worried about the increasing lack of control and responsibility as other people started showing initiative.
For at least two years before the Soviet Union was broken up - deliberately by Soviet leaders - in December 1991 - people were getting more and more confused by different economic and value systems that were co-existing, though they made no sense operating together.
On 2nd January 1992, Yeltsin, now President of the Russian Federation, divorced now from all those other countries which had made up the Soviet Union, declared that prices were liberalised. Sellers could charge what they wanted. With a few exceptions prices would not be controlled by the state. (Rather too late, he realised that in fact state assets technically belonged to the people.) By the time his advisers had devised vouchers for the population so that they could realise some of their assets, the vast wealth of the country was in the hands of really clever ruthless entrepreneurs - the people whom we call 'oligarchs' and their slightly lesser ranks of the very rich, called 'New Russians'. Naturally these people were helped by the advisers who flooded in from Western countries and who were eager to turn Russia into a 'Western-style' country which would be helped/controlled by experienced 'democracies'. (Lots of money was put into Russia to help with developing civil society, but it was a tiny fraction of the money put into Russia in order to exploit an economic situation which was devastating the population.) And so began what the Russian refer to as 'the nineties'.
The country suffered hyperinflation and therefore the people lost all their savings; they lost their jobs; industry collapsed as did the agricultural farms. One disaster fuelled another: for example the Soviet welfare system vanished since it made no sense in a new entrepreneurial world. The creaky but universal national health service was - Russians were told - not the way to solve health problems. Everyone except the British explained you should privatise the health system - which meant that most people could not afford doctors except those brave doctors who went on working without pay. Nobody could pay the school teachers either, but teachers were old ladies who went on working anyway, and who were officially despised for it.
Most of the population lived on organic vegetables grown on their own dacha plots. But they could buy Mars bars and Snickers bars and increasingly cheap computers which the children demanded. Meanwhile the shops began to fill with posh foreign goods bought with dollars by those (mostly in Moscow) who had managed to land jobs with foreign firms. So this society which had in Soviet times been based on pretty equal distribution of wealth became the most unequal of societies - the fabulously rich; the very rich, and the vast majority of the struggling poor who wondered every month whether they would get paid. And then the homeless.
The death rate shot up - the majority of men were dying before they reached 60 - of illness, alcohol, joblessness, and essentially of broken hearts. The birth rate went right down: why have babies in this chaos? And there was no cheerful ideology to keep people together. In fact there was no coherent system of values at all which, even when most people are essentially decent, is deeply traumatising.
By 1997, with Yeltsin, an alcoholic in thrall to the squabbling courtiers around him, the economy looked briefly as if it was slowly normalising. Inflation had come down to, say, 25% - and people were finding ways to work. But then there were world economic convulsions, and Russia (by now hugely in debt to the money institutions of the world) defaulted on its debts in 1998. Once again there was serious inflation and this time - because foreign investors were affected - the world took notice. But the Russian population mostly laughed. They had lost all their savings, their assets, their right to public assets and their security six years earlier. They had little or nothing left to lose. And so Russia staggered into 1999, with the people, on the whole, disillusioned, confused, ashamed and exhausted. At the very end of 1999, Yeltsin announced that he was resigning, and that, until proper elections should take place, he was appointing someone else to take over - someone virtually unknown to the people - Vladimir Putin.
Putin has been in power as President for 11 years, and in tandem with President Medvedev for 4 years from 2008-2012. From the Western point of view - for reasons which are, I think, deep in US geopolitics, Putin was rather quickly demonised.
From the point of view of ordinary Russians he brought stability, coherent policies and a doubling, trebling, of their personal incomes and the wealth of Russia. He made the oligarchs pay taxes, he broke up some of the illegal empires of energy wealth and nationalised them, He dealt with local warlords in distant parts of the Russian federation and insisted that governors should be appointed from Moscow, so that he could keep an eye on them. With the oil money his government built up a huge emergency reserve so that it would never again be the basket-case of world economies, and he and his ministers devised and largely carried out federal-wide improvement projects in Education, Health, Agriculture and Infrastructure. People are hugely better off than they were, and although of course there are plenty of poor people, they too are better off than they were. (The homeless have gone from the streets of Perm, where - as with everywhere else in Russia) they were obvious and pitiful and shameful to their fellow-citizens in the 1990s.) Not all of this is attributable to the policies of the Government, still less to President Putin - oil prices are important - but from the ordinary Russian's point of view, they have much to be thankful for under Putin.
There is more censorship than there was in Yeltsin's years when there was no censorship at all - about anything. There are opposition websites and some newspapers but other opposition newspapers have their editors replaced by the authorities. There are state television channels which follow the government line with daily focus on the President and the kind of 'analysis' by which the decisions of the government are always shown to be correct; on the other hand, these news programmes show - on the whole - more of what is going on in the world than our national BBC programmes, for example.
[As for other domestic problems: I have yet to hear a teacher in higher education in Russia who does not complain about the Minister of Higher Education, the lowering of standards, the lack of attention to the humanities, the chasing after money rather than scholarship, etc etc. (When I tell these indignant people that you can hear exactly the same complaints in Britain, they are astounded. Surely Britain is a civilised country?!.)
Corruption is also a complaint: why haven't Putin and Medvedev done more to combat it? In fact they are doing something. Russia is slowly - but too slowly - climbing up the list where the least corrupt nations are at the top. 136 out of 175 countries. But there are interesting observations by ordinary Russians about this corruption.]
So where are we now: or rather where were we in late February 2014 when the crisis in Ukraine erupted.?
What can I say about this which won't be shouted down by one side or the other?
Ukraine is an unhappy country, put together out of several large areas with different histories, cultures, faiths and loyalties. In 23 years its leaders, mostly quarrelling oligarchs from all sides, have failed to think about Ukraine as a pluralist country that can develop its own pluralist sense of pride. The economy has dropped more than that of any other post-Soviet country and many people live in real desperate poverty.
Ukraine is related to Russia. If you ask how - my analogy is to say: take Wales, Scotland, Northern Ireland and the Republic of Ireland, roll them into one and say this is a nation which has a long, long relationship with England. Imagine what you would say about that. It would not be easy. Ukraine's relationship with Russia is intimate, historical, full of love and solidarity, but damaged by bitterness and a sense of oppression. Lots and lots of family and friends on both sides. And three million Ukrainians working in Russia.
Now for the questions which I have asked Russians - hundreds of Russians from the Arctic to the Caucasus, from Smolensk across European Russia, across the Urals, to Siberia and on to the far east, to Vladivostok. I have been to all these places and I have talked. I have extensive notes. But I know that I can be biased as we all can, in what I want to hear. So I circulated about 300 university teachers of English with 8 questions, and asked them - entirely optionally - for their answers and those of their friends and relations. Later I turned the questions into Russian and asked especially for the opinions of men. As a result I have about 70 detailed answers from teachers, lawyers, engineers, IT specialists, business people, journalists, students, pensioners. Educated people - so not sociologically accurate BUT typical, it seems to me, in the range of answers and the kind of answers that they give.
Some people would say that in their answers, these ordinary thoughtful Russians were unduly influenced by mass-media propaganda. To that I would say two things: a startlingly high proportion of Russians use the internet and watch foreign TV channels. They have access to many sources of information and misinformation - more than their British equivalents. And even more important, millions and millions of Russians including probably more than 50% of this sample have friends and relations in Ukraine whom they phone or write to or skype with, often daily. They are living in a complicated connected world. Of course their views are not just parroted.
(1) Are you more or less satisfied with the annexation of Crimea? The vast majority, about 9 out of 10 approved of Crimea seceding from Ukraine. They objected to my word, 'annexation'. The Crimea used to belong to Russia, its inhabitants had long wanted to return to Russia, they held a referendum and they voted to leave Ukraine and then - to ask Russia to accept the autonomous republic as part of the Russian Federation.
Although Russian special forces popped up all over the place, no violence took place and no-one was killed. (I was surprised that my respondents did not make much more of the peaceful change of power)
The Russians said 'It was right to let them decide: they have decided.'
A number complained that their own hard-earned salaries were being taxed to pay for economic aid to Crimea. This was not ideal for Russia and some of my respondents should be put down as 'against the inclusion of Crimea'. But they did not doubt that it was a very good move for the people of Crimea.
One or two pointed out that probably the main aim of the Russian government which was certainly active in the process, was to ensure the integrity of Sevatopol.
As for the small minority of those who disapproved, they did not explain Why - except one who said that it was against international law. Perhaps the others felt the same objection, but they answered with a vigorous 'No', and left comments and explanations to those who supported what happened.
I spoke at length to a thoughtfully sardonic Crimean teacher who said 'Most of us voted to leave Ukraine and then to join Russia because we were terrified of becoming victims of violence like the wretched eastern Ukrainians. Even in those early days we could see what was happening as the Kiev government turned against the people in Donbass. And we said, No way! We must escape that. So thank you East Ukrainians for showing us what would have been our fate!
She said the Crimean Tartars were worried at first, but after a year most of them have stopped being worried.
(2) Would the Annexation of eastern Ukraine be a good idea. A large majority said, 'Certainly not! What for? Russia has never sought to grab eastern Ukraine which belongs to another country - utterly unlike Crimea.' This big majority insisted that this was an internal problem which Ukraine must sort out for itself. But of course this opinion, pure as it might be is difficult - remember my analogy with Scotland/Wales/Northern Ireland/Ireland. Many Russians frequently expressed pity for the victims. And many knew relations and friends in the Donetsk and Lugansk separatist regions who were hoping for some kind of support.
A year ago, answers such as 'It is nothing to do with us.' 'It is unimaginable that we would invade Ukraine' were even more common. In April last year (2014) I met no-one who thought that Russia would or should invade eastern Ukraine. But my most recent responses have included some long and thoughtful ruminations on the problem. Only one said firmly, 'Invade Ukraine and bring the civil war there to a quick halt!' and one said ' so many people are suffering, so many civilians. Perhaps we ought to do something to avoid genocide.' But there was more of 'If the separatists think they can no longer live within Ukraine, after a year of fighting, what should Russia do then? If there is no hope for peace?'
Here is one such response.
'I honestly do not know. The Ukrainian government is set on not granting any degree of autonomy to the region, and the Russian language has been denied the status of the second official language consistently, despite the fact that a large proportion (more than half according to some sources, both Russian and foreign) of the population there speaks Russian as their first language. However, to me that does not mean that Russia should take over by military force, as this would be an invasion of another country's territory, which is completely inacceptable. At the same time, I am appalled at the double-standard the EU has shown in this matter: while upholding the rights of ethnic minorities in European countries, the EU openly supports a government that discriminates against their own people. I believe that the Russian government is right to apply political and economic leverage in order to support the large Russian community in Eastern Ukraine.'
Two people took what I would call a Ukrainian line. They explained that the east Ukrainian separatists are 'terrorists'.
And various people in Rostov who are going backwards and forwards across the frontier pointed out that after a year of fighting, the militias fighting for Donetsk and the separatists were almost as bad as the Ukrainian Nazi militias.
Several respondents had experience of the refugees who came to Russia. One said that 19 members of her husbands family had now moved across the border to Russia where they had relatives. Maybe they were not exactly refugees - but they had left their homes and jobs and ordinary life to escape to Russia. [I have personally interviewed at length a shy 20-year-old refugee from Ukraine, living now in Perm. His own story showed that militias (probably on both sides) lose all sense after a time. ]
(3) Do you believe your government when it says the Russian army is not fighting in Ukraine?
This was a tricky question. Few people simply said, 'I believe them' or 'they are liars'. They all know that 'the West' accuses Russia of using its military to destabilise Ukraine. They all know that Putin and his ministers say this is not true. So who is right?
Some people said 'I know lots of people in the army and they do not know anyone who is fighting in Ukraine. Rumours are bound to be flying about, so if they say they know nothing, then there aren't any soldiers there.'
Another argument was as follows:
'The claim is true. I'm not a person to take on trust whatever the authorities and mass media say. I've witnessed bitter moments of blinding my nation (Afghanistan, Chechnya), but those lies were evident: mothers buried their sons in Siberia, Nizhny Novgorod, Volgograd, Rostov, Ekaterinburg... and with that, you understand, the army presence in an aria was impossible to conceal. I'm 45 now and belong to the generation of mothers whose sons are draft age. Since 2014 I've heard of not a single case of a mother losing her son in military operations in Donbass.'
[In fact mothers have protested, but there have been small numbers, and government efforts to suppress comment. So that isn't quite true. ]
Others said, 'Of course the Russian army isn't there. If they were they could defeat Ukraine in a week. OR Why doesn't the Kiev government present proof - photos, satellite evidence, captured prisoners. Not just two prisoners and five passports, - as if soldiers would have their passports anyway. The Americans keep talking about this huge Russian army, but they have not seen it, and they cannot identify it.
A lot of people said, 'I don't know'.
Many said - 'we know that there are Russian volunteers. I know of people who have volunteered to help the east Ukrainians.'
And who are these volunteers? Well they may be enthusiastic idealistic students; friends have talked to me of several such students and have described their accounts. Other comments: If there are real army people there, I bet they have been sent by exasperated officers who want us to DO something. Not chief command, but lower down where they feel Russia is not responding to a disaster as it should do.
Some one said: I know those boys who drive the lorries full of humanitarian aid to Donetsk. They are not against the aid but they are so frustrated. 'Why let the Ukrainian militias destroy all these civilians without responding.' And somebody else said 'Veterans can't live without war. If they were professional soldiers once they will get to Ukraine somehow. '
But is the Russian government lying?
One inspired person said - 'I think what they say is 80% true.
And here is a provincial journalist who seems to know what he is talking about:
'It was a habit in the USSR to conceal the presence of its military in war zones. [He gives examples] People living in Russia well understand their recent history. They know that if our weapons are fired in Ukraine, there are Russian soldiers firing them. Not the army, not thousands of companies, not whole divisions. Not the airforce, not ballistic missiles. But special forces, signallers, reconnaissance troops, tank drivers. They are there. Not in the statistics. But the coffins arrive back in Russia.
I suspect that respondent saying 'it's 80% true' would agree with him. Small numbers of special forces. The Russian government is 20% lying. Others, in their answers suggest something similar.
'I think it's not completely true. It would be a lie to say, that there are large groups of Russian soldiers fighting for Donbass, but it would also be a lie to deny Russian army's participation. I do not know to which extend our army is involved and it's hard to find out amongst all this propaganda from both sides. But still I believe, that most of rebels fighting for Donbass are Donbass people.'
And then comes the troubled justification.
'It is hard for me to judge as, obviously, we are brainwashed (as well as all the others). I think there might be someone from Russia fighting in Donbass but I also think people from Donbass need someone to help them. What we see is the Ukrainian government oppressing the Russian population in their historically multicultural country. For me it's like oppressing people who speak French in Canada. Europe is not willing to help Donbass and when I see (on TV) the civilian population of Donbass (the old, women and children) being killed by the Ukrainian government I can't but justify the presence of Russians in Donbass helping their "brothers".'
(4) What more of practical action can Russia take to help solve the crisis in Ukraine?
To this question there was widespread gloom -'There is nothing more that we can do.' 'This is a questions for the Ukrainians, it is nothing to do with us; and they do not want to solve it.'
The minority who thought that Russia was actively meddling in Donbass said 'Withdraw all our military, and the Ukrainians will defeat the separatists, so the war will stop.' Or 'Russia wants a destablised Ukraine under its control. So it does not want the war to stop.' I had perhaps 3 answers like that. I wrote to one of the respondents asking if he could explain how a destablised Ukraine could be in the interests of Russia: expensive, messy, very unpopular with the majority of Russians, inviting the wrath of western countries, and ruining even further the Ukrainian economy so that it cannot pay it debts to Russia. My respondent replied that there were several theories - he listed 7 - all of them ingenious, far-fetched, and miles from real-politik which is what Putin is usually accused of.
Many people mentioned continuing humanitarian aid - which is getting more urgent, not less; decent treatment of refugees, long-term visitors and immigrants from Ukraine.
The gloom included assumptions about American intentions. 'The war will not stop because the US does not want it to stop. Probably the EU would like it to stop, but the EU is - and has been for a long time - America's poodle."
This thoughtful answer - from another sceptic -sums up many responses:
'I think that Russia has done more than enough. In 1995 Russia managed not to fully stop, but at least kick start the peace process in Chechnya at the very brink of obvious military victory over the Islamists. Still our government was wise enough to see further than immediate political gain. So Poroshenko's team as well as other negotiators have a lot to learn from Russia who, unlike many countries in Europe knows how to deal with such problems. I think that Poroshenko had better chances in the beginning when Donbass claimed more autonomy for local authorities and especially tax freedoms. The situation is worse now. It would be best for both parties to stop fighting and start negotiating. Jaw-jaw is always better than war-war. But nobody cares.'
One person was blunt: 'I don't know what Russia can do. But I'm sure that to stop artillery firing in the east Ukraine there will be enough one telephone call to Ukraine from the US.'
(5) What about the sanctions. Should they be lifted?
Three months ago I was in a car with a lawyer aged about 60. The conversation had turned to sanctions. The lawyer was rapidly becoming apoplectic, not so much with rage as with the extreme frustration of the intelligent having to deal with the stupid. He kept taking his hands off the wheel, and I feared that we might be serious victims of this international device to make Russia 'behave'.
'Sanctions!' said my friend. 'What on earth have sanctions to do with us! We didn't start the war! We are not prosecuting the war! The war is being fought on Ukrainian territory by Ukrainians against other Ukrainians. By what logic should the US impose sanctions on Russia which has nothing to do with the trouble that America itself stirred up. How are we to blame?'
If in less vigorous terms, that view is almost universal. Even the strong anti-Russian-Government respondents think that the sanctions are illogical, ineffective, and causing unnecessary trouble to business trying to develop internationally. The pain to ordinary people has been the Russian government's reverse sanctions in which food from the EU is barred from entering Russia. Interestingly no-one objected to this in the sense of saying that the Russian response should be abolished. Sanctions and counter-sanctions were part of the package.
Almost nobody expected them to be lifted; people regularly pointed out that the US is not hurt by them, and wishes to go on hurting Russia, while the EU is hurt by them, and many European countries, let alone their businesses and producers would like to see them lifted, but the EU is America's poodle. (This view is certainly drawn largely from Russian media and propaganda. It also happens to be true.)
Given that they are here to stay, how have sanctions affected ordinary Russians. There was a distinct divide between the responses of people from Moscow and St Petersburg and those of the rest of the country. The people in the capitals miss the foreign cheeses, and chocolate and the doubling of the cost of foreign travel. Most of the rest of the country is less troubled: I couldn't afford those foreign goods anyway. I always buy Russian food and there is plenty of it and it is good.
Also, many people argued that the sanctions have thrown the Russian economy back on its own resources and productions. So there are more local businesses, more initiative, less dependence on imports generally. So the sanctions are actually improving the economy.
Now that last point is certainly part of what the government tells the people. I don't know how far it is true. Probably the government doesn't know either, because Russia is a huge country. But one or two people mentioned specific new activities in their areas.
Everyone said that prices had gone up - partly because of sanctions, partly because of low oil prices. But this was part of life. No financial difficulties were like the disasters of 15 years ago. A nuisance, a tightening of belts, a pulling-together.
It's strange but the fact is that sanctions imposed on Russia have united our country.
Or from someone more sceptical, and in other answers critical of the government:
'If you hate Putin, punish him, but if you hate all the Russians, we will also hate you. The most severe sanctions were imposed after the MH-17 tragedy. [The Malaysian airliner crash] The West was not right. We don't know who was really to blame! The other sanctions have not much angered me and my friends. I hope the sanctions will be lifted.'
NOW FOR FOUR MORE GENERAL QUESTIONS.
Question 6. Is a drawing together of the Russian Orthodox Church and State a good idea?
I got a wide range of answers to this, but rather little analysis. If I divide them into three, the smallest group - but still a reasonable number - said 'Surely this is a good thing'. 'What is the problem?" 'Russians have always been spiritual'.
The next group - a third, say - said that they did not understand my question because they did not recognize the situation. The Russian Constitution insists on a separation of Church and State; different religions are recognized within the constitution; the political elite sometimes make official visits to Mosques and Buddhist temples and Synagogues as well as the Orthodox Church with which a big majority of the ethnic Russian population identify. The papers publish photos of political leaders with lots of leaders of different faiths: that is part of acknowledging the varied cultures that make up the Russian Federation. Russia is - and is recognized - as a multi-faith and no-faith culture.
Many pointed out that they thought of themselves as Russian Orthodox, but this was for them a cultural identification rather than a spiritual one. They didn't expect to go to Church, but it was useful for the soul to take the fast seriously. [Fasting in Lent has recently become almost an obsession; I am in Russia during April each year, and so I arrive at the height of the Fasting Season. Fasting means cutting out meat, butter and dairy produce, sometimes fish but rarely alcohol. So in the bakery they will warn you that such and such a loaf is not good for Lent Fasting because it contains milk; in restaurants and in canteens there are special Lent menus. With a mixture of moaning and enthusiasm much of the population joins in, at least during the week before Orthodox Easter. Then they have huge feasts with eggs and special decorated cakes and a glorious cream cheese dish flavoured with many good things. At such moments many Russians will look at you solemnly and say they are Orthodox at heart - but in the next breath they can begin to mock fat corrupt priests.]
Anyway, this group can't understand my question because they don't really think it is happening.
And then a slightly larger group admit that they are worried. Most of them are not worried very much. When I have asked friends who are religious themselves, they have shaken their heads slowly and said, ' I don't like it. I think religion is a private thing and it is no part of my religion to be reflected in what our government does.'
Others - non-believers - were more scathing. The Orthodox Church is an institution which is always trying to get more power. That's a tendency in all countries but it should be resisted.
Several said that the Orthodox Church is now de facto an arm of government - 'And what I hate most about it is that these elites used to be atheists and now they adore the church.'
and
'It's a very worrying influence, mostly due to the Russian Orthodox Church's long connections to the FSB (former KGB).'
The actual views that the Church seeks to impose on the people - or at least it declares its position with seeming Kremlin complicity - include strong disapproval of gay people, strong disapproval of 'western moral standards', and a belief that Russia must take its own spiritual path. Which tends to proud isolationism.
So some of the objections by this group are to 'Mediaeval opinions - but what can you expect of the Church?;' resentment that any institution is telling you what to do with that kind of authority; attacks on the assumption that there is a connection between the Church and the 144 million Russians - who are diverse with diverse opinions. Still, this moderate answer was most typical.
'I don't think it's a good idea. But right now (as I see it) Russian people do not see any threat in that. A lot of people from Russia do not believe in saintliness of clergy. We have seen a lot of photographs in our press and blogosphere showing priests in luxurious cars and wearing hugely expensive cloaks. We may go to church, we may skip church. It's not a big deal. That's why most of us do not care about the problem.'
That was certainly the view of students in classes where I asked the question. 'No big deal.'
Finally I had several respondents who retorted, reasonably enough - What about your Queen in Westminster Abbey? What about your Archbishop in Canterbury? Our constitution is secular; yours is not.
Questions 7 and 8 On Active students and on the Immortal Legion.
These were alternative Questions; I was wanting to find out if there was an increase of civic activity in Russia recently, and 3 people from 3 different cities spontaneously mentioned the increased enthusiasm of their students. But the question was obviously irrelevant for non-university respondents so I replaced it by one about the Immortal Legion walks on Victory Day. Neither turned out to be an ideal question but they raised some interesting points.
Plenty of university teachers said that students are students, they vary, some years are more active than others; they are ignorant and immature except for a few.... 'A very dull lot this year...' Etc.
But a significant number said that more and more of their students (at least in the humanities) were taking up voluntary work such as helping in orphanages, visiting elderly people, donating blood. The students organize such activities themselves, but clearly there is a national mood going round the country. It is certainly helped by government-approved media. But that doesn't mean that it is less real. Two years ago there were really devastating floods in the Russian Far East Thousands of homes destroyed, tens of thousands homeless. Through TV channels there were appeals for money and help, and thousands of students volunteered. Normal decent responses. But many teachers thought that the response was more vigorous than it would have been in earlier years. Also, following the example of Britain, much was made of student volunteers at the Sochi Olympic Games. I spoke to lots of students who went there as volunteers and they were as excited as their British counterparts. As a result it has become fashionable to be helpful and to volunteer for Russian activities. (And I do not use 'fashionable' cynically but as a way of tracing a trend.)
Moreover several respondents noted that students are more politically active. Of course they are a small minority, but bigger and noisier than they were. Here is an enthusiastic comment from one teacher in her thirties.
'My students are very inquiring, I've been teaching for 11 years already and do think that the young people are more open, sensitive and what is really amazing - patriotic! About 10 years ago 90% of students of Foreign Languages Department wanted to leave the country and now they all want to stay, they broaden their horizon, get involved into many voluntary projects, they help so many people!'
Now I want to look at the other question. What do you think of the Immortal Legion. In Soviet times there were two important national holidays - 1st May and 9th May. 1st May - workers' day - was so linked with the Soviet Union that it could not be celebrated except as a communist festival. So it is still a public holiday, but most of the population who can do so rush off to their dachas to begin planting for the summer season. It's a spring break of several days.
9th May was celebrated in Soviet times as the great Victory Over Fascism Day. Military hardware was brought out onto Red Square, and in cities and towns up and down the country the army paraded and people both rejoiced in the repelling of invaders from their homeland and mourned the millions who had died. It has always been a public holiday but in the 1990s not so much was made of the display. The Russian Federation was not at war, the Great Patriotic War of the Soviet Union was about a different world in a different country, and Russians had other things to worry about.
In Putin's time, not immediately but slowly, Victory Day has been brought back as a patriotic holiday, with the idea of uniting all the people. With 27 million dead, every Soviet family suffered deaths, let alone the wounded and traumatized who did return. And 'Soviet people' included of course the peoples living in what is now the Russian Federation. So this seemed to be a day to bring them all together.
Is it a day for showing off the military? Not nearly so much as it used to be - until this year when Putin made it clear that the display of military equipment did have a political agenda.
This year there was a huge official build-up to the 70th Anniversary. Everywhere were posters, declamations, exhibitions, people-participation in events before the great day. But also in response to aggressive and hostile actions by the west, there was also a lot of military stuff on display.
Several times, as carefully as I could, I raised the question of whether this was an appropriate public holiday 70 years after the event. 'You no longer celebrate throwing Napoleon out of Russia. When are you going to stop celebrating throwing the Nazis out of Russia?'
And almost always the answer was as if I had seriously hurt the person I asked.
'Karen, surely you understand - so many people died. And they died for us, and we must not forget that. Children forget so much these days so it is very important to tell them about their great-grandfathers.'
'But why Victory? Isn't this a bit too late for Celebrating Victory?'
'It doesn't mean that we are thinking of other peoples as enemies. It means that we are proud of ourselves.'
Now to the Immortal Legion or the Immortal Regiment. About four years ago in some Siberian city, a group of people decided to walk behind the usual marching soldiers and youthful cadets, holding home-made posters with a photograph of someone in their family who had been killed in the war. It was a local initiative which caught on very quickly and spread across the country. By 8th May 2015 (when I was in Perm as part of an official Oxford city delegation) thousands of Permians spent the evening making posters ready for a walk in a procession the next day. And so in Perm on May 9th, out in the big parade area we had ballet and soldiers, children, and a Perm-made tank that went all the way to Berlin, mounted on a lorry - that got big applause - and largish crowds. But after these displays there came, walking down Komsomolsky Prospect 30,000 Perm citizens, carrying posters. [Population - one million.]
It was entirely people-led; it was entirely civic, and it was very moving.
What did my respondents say. Almost all of them said that this was a wonderful idea that came from the people, represented the people, and gave pride and love to everyone. Even the most extreme sceptic said 'On this matter I have not yet made up my mind' which was some kind of grudging approval. But one young pacifist-humanist could not quite approve.
'Again, a difficult question. On the one hand - Immortal Legion is a good idea for national rejoicing and preserving the national historical memory. It caught public's attention and was widely shown on TV. But on the other hand - isn't it better to show national rejoicing in some more socially useful arrangements? Helping the poor, orphans or even just planting trees. To my mind it was better, when some years ago we had a celebration of Victory day planting a pine tree and placing a sign with a name of relative, who died during the war. I think, our ancestors would have approved it more.'
One of the words that appeared in answers to these two questions about Civic Society was 'patriotic'. It occurred quite often. And it raises the question of when 'patriotism' is a good thing and when it is not.
One of the accusations levelled against Putin by 'the West' is that he has encouraged nasty kinds of nationalism; that in order to bolster up Russia he has given quiet support to various neo-Nazi Russian groups.
I want to say something about this immediately. I do not doubt that there are unpleasant Russian 'nationalists', just as there are unpleasant British 'nationalists' quite a number of whom expect to see increasing attention to their views in this country. Russian neo-nazis have their websites, their anti-Muslim, anti-Semite, anti-Caucasian, anti-Ukrainian views. They have drunken fracas and they can be murderous. But I have never seen or heard any Russian approving of such groups - including the most fiercely patriotic and enthusiastic followers of official Russian propaganda. Of course I meet a selected number of people both in Russia and in Britain. I don't meet extreme nationalists in Britain. But in both cases these people seem to be fringe groups, not welcomed at all by governments or officials.
On Victory Day in Moscow, as I said, the government brought out missiles and advanced armaments - the biggest display ever. In that sense Russian nationalism was to the fore. In a short speech Putin thanked the Americans, the British and other allies for helping to defeat Nazism in 1945 - and quietly indicated that they had chosen not to come on this 70th anniversary. He talked about the fight for humanity to which all these Russian citizens' ancestors had contributed, And he showed off Russian strength to the foreign dignitaries.
Then - advancing on Red Square came a mass of ordinary people. And to the confusion of the Chinese President, Putin got down off the tribunal and went to join the walkers, carrying a picture of his own father who fought in the war. In this crowd he was one of half-a-million.
Is this an example of grotesque government propaganda? Is it an example of the President taking over the local civic demonstrations of the people? Or is it a way for the President to be part of the people. (He was after all, walking in the midst of thousands some of whom probably did not feel totally enthusiastic about him.)
Would Obama do this? Would Cameron? Does it matter?
I ask these questions as I come on to the last question which I sent out to my readers.
(8) Has Russia changed recently. And if so, for the better or the worse.
Some people said nothing much had changed except prices had gone up. Usually the implication seemed to be - life is generally dull or gloomy and we have to put up with it.
A smallish minority said it had definitely changed for the worse: no respect for human rights, too much Church-propaganda, terrible mass-media, a generally brain-washed population.
"Russia has changed for the worse because of the active governmental propaganda: all those talks about 'external enemies of Russia', 'Russian spiritual bonds', and 'greatness of Russia' make me sick."
The majority however said, 'Yes, something has changed. A coming together of people, a sense of being Russian with pride.' So what makes one respondent sick is obviously related to the pride felt by others. Is it, though, more than grand words from top people transmitted through the population?
Here is a comment by a very thoughtful correspondent.
'Russia has changed a lot for the last twelve years (not many changes since 2013, as I can see). There are very good things - for example, in bigger cities rather successful work against corruption is being held; people have become "sated" with food, goods and pleasures and are looking for something else. And still, there are things that seem to me sad and savage - the mentioned "closeness" of State and Church, some types of discrimination, censorship in media, for example.'
And now, from a provincial city - and I could have picked up many other comments:
'I think Russia has changed and is changing for the better. People are becoming more patriotic, they are more confident in their future (you can see that by the number of babies being born) - our birth rate is definitely going up! More people are willing to work for the benefit of the country. Not only for their personal survival.
'Another thing that I notice, since I am in touch with this sphere, is that they are closing down a lot of orphanages, because there are just too few children in them. They are merging several orphanages into one, because we don't need that many any more. One reason is that less and less babies and children are abandoned and the other thing is that a lot are being adopted. There is a whole boom of adoptions, I know several families, who have adopted children even having their own ones. That is another positive tendency that says that people are becoming more empathic to others, they are not only centered around their personal lives, but looking outward, trying to help their "neighbours".
'A national idea is being formed again, which has been sadly lacking after the fall of the USSR.'
Or as someone else put it:
"This did not happen overnight but gradually. The people are straightening their shoulders..."
I could go on but I will leave it there and wait for questions.
Answers came from: Arkhangelsk, Barnaul, Belgorod, Blagoveshensk, Chelyabinsk, Chita, Khabarovsk, Kolomna, Krasnodar, Kurgan, Kursk, Magnitogorsk, Moscow, Naberezhny Chelny, Novgorod, Omsk, Perm, Piatigorsk, Rostov-on-Don, Samara, St Petersburg, Tomsk, Tula, Tver, Ulan-Ude, Vladivostok and Yekaterinburg.
Extra contributions which are of interest:
Are you more or less satisfied with the annexation of Crimea?
'Yes. In 2010 (!!!) I had a backpacking summer travel in the Crimea and stayed overnights at dozens of ordinary homes I had never known before. I returned to Russia rather startled with the poverty and despair those people lived in, as well as with their strong resolution to start military actions against Kiev, in case the Ukrainian government proceeded with the pro-NATO policy and turned their back on Russia. Lots of people were keeping arms in the cellars (I saw that!!) and men spoke about their readiness to defend "Crimea, the Russian land" (as one Cossack, aged 30 said, "We are Russian, and if Kiev ever trenches on our right to be Russian, we are organized, armed and ready to combat, we'll defend our land"). The atmosphere of hatred between various parts of Ukraine was shocking and really frightening. It was evident, it couldn't last long.'
'So, what I want to say is: 1) the conflict in Ukraine is a result of long-time domestic tensions; 2) any forces that have been fueling the conflict are merely using the ground that became badly ill because of unwise actions of the Ukrainian leaders in the 00s; 3) the other scenario in March 2014 would have probably meant severest civil war in Ukraine, with much more drastic consequences for Ukrainians than they are having now.'
(4) The Russian government has repeatedly called for a negotiated peace settlement in Eastern Ukraine, and worked at the Minsk 1 and then the Minsk 2 agreements. Is there anything more - anything practical - that the Russian government can do to bring about peace?
'I think no, because it's not our problems, really I don't understand why whole World asks Russia to make something for peace. The problem first considered Ukraine, their politic, economic and social habits, they make it by own causes. Many of Ukraine people wants to live in Russia, EC and other countries, because they can't live in Ukraine. What and why should we do else. Russia helps refugees, but EC and USA don't, so why?'
Has Russia changed for better or worse?
(An extreme view, but one which is supported (or seems to be supported) by official government propaganda.) 'I do not want my children to live according to European stereotypes and standards - and they, to put it mildly, have degraded recently, if to recall only the gay policy!!! This is DEGRADATION of the moral values and this is diseased mind which is being imposed on Russia, a strong and independent nation. I do not want to live among gays and lesbians. These are abnormal cases which are popularized by mighty Europeans and Americans, who want to control the world, but are actually losing the game, because it's impossible to oppress people who have their own identities (Russians, Muslims, Jews...).'
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Kremlin.ru
December 17, 2015
Vladimir Putin's annual news conference
[Text in Russian and video here http://kremlin.ru/events/president/news/50971]
The President's news conference was broadcast live by Rossiya-1, Rossiya-24 and Channel One, as well as Mayak, Vesti FM and Radio Rossii radio stations.
Television channel Public Television of Russia (OTR) and its site (http://www.otr-online.ru/online/) provided live sign language interpretation of the news conference.
President of Russia Vladimir Putin: Friends and colleagues,
We regularly meet at the end of the year. Only recently I made my Address [to the Federal Assembly]. Honestly speaking, I do not know what else to add to what I said then. I believe I covered all the key points.
Nevertheless, there must be issues, which you want us to clarify. When I say 'us', I am referring to my colleagues in the Presidential Executive Office and the Government Cabinet and myself.
Therefore, I suggest that we skip any lengthy monologues and get right down to your questions so as not to waste time.
Mr Peskov, please.
Presidential Press Secretary Dmitry Peskov: Last year we started a good tradition by beginning the press conference with a question from one of the most experienced members of the Kremlin's press pool, Vyacheslav Terekhov. However, we have another press pool old-timer, Alexander Gamov from the Komsomolskaya Pravda. I would like to give him the opportunity to ask the first question.
Alexander Gamov: Thank you very much Mr President, for your 11th press conference of this kind.
Here is my question. Before coming here, I reread the transcript of your last year's press conference, and there we also discussed the difficult situation developing in the Russian economy. When Vyacheslav Terekhov and our other colleagues asked you then how long it would take to get over this complicated situation, you said in the worst case scenario this would take a year or two. These were your words. I am sure you remember them. This means this would be roughly late 2016 - early 2017.
Could you please tell us if your feelings regarding our economic recovery have changed? The country is going through very hard times, and you know this better than we do. What is your forecast for the future?
Sorry, I forgot to introduce myself: Alexander Gamov, Komsomolskaya Pravda - radio station, website and newspaper. Thank you.
Vladimir Putin: To begin with, I will tell you a very old joke.
Two friends meet and one asks the other: "How are you?" The other says: "My life is all stripes - black stripes followed by white ones." - "So which one is it now?" - "Now I'm in the black one." Another six months pass, they meet again: "How's life? I know it's all stripes, but which one is it now?" - "It's black now." - "But it was black last time!" - "Looks like it was white last time."
We are having something very similar.
When a year ago we spoke of our plans and how we would move ahead to recover from the crisis, about our prospects, we, knowing that unfortunately our economy is very dependent on foreign economic factors, mainly the prices for our traditional exports like oil and gas, petroleum products and chemicals, which are all calculated based on oil and gas prices, proceeded from the idea that the average price of Brent, our crude oil, would be around $100 a barrel.
This was in early 2014. We used this figure in all our further calculations of macroeconomic parameters, revenue and spending, and social support and support for the economy, and late last year the Economic Development Ministry built its development plans proceeding from these figures. However, by the end of this year we had to rerun all our calculations, and even last year we had to do this as oil prices fell almost by half, not by some percentage, but by half from $100 a barrel to $50.
We calculated the budget for next year based on this very figure, a very optimistic one of $50 a barrel. However, now it is what - $38? Therefore, I believe we will have to make further adjustments.
At the same time, I would like to use your question to demonstrate where we stand.
Statistics show that the Russian economy has generally overcome the crisis, or at least the peak of the crisis, not the crisis itself.
Naturally, after the drop in energy resource prices all our other figures started 'sliding'. What are they? The GDP has gone down by 3.7 percent. As of December 7, the inflation has reached 12.3 percent since the beginning of the year.
I find it important to say this, because there are sure to be other questions dealing with our development prospects and our current state of affairs. To understand these things we need to know these figures and proceed from them.
The real disposable household income has gone down; fixed investment has dropped by 5.7 percent over the first 10 months of the year. At the same time, as we have already said, statistics show that the Russian economy has generally overcome the crisis, or at least the peak of the crisis, not the crisis itself.
Starting with the 2nd quarter of this year, we have been observing signs of economic stabilisation. What leads us to such a conclusion? In September-October the GDP grew (it is growing already) by about 0.3-0.1 percent compared to the previous month. The volumes of industrial production stopped falling as of May. In September-October, we also had a small growth in industrial production - 0.2-0.1 percent. Incidentally, industrial production in the Far East grew by 3.1 percent.
Agriculture is demonstrating positive dynamics with an at least 3 percent growth. This means we are doing all the right and timely things to support agriculture. For the second year running our grain crops exceeded 100 million tonnes - 103.4. This is very good. I would like to use this opportunity to once again thank our agricultural workers for their effort.
The labour market is stable, with the unemployment rate hovering around 5.6 percent. We can see that if we look back at 2008, this is an overall positive result of the Government's efforts.
Our trade balance also remains positive. The overall trade volumes have gone down, but the export surplus remains at a rather high level of about $126.3 billion. Our international reserves stand at $364.4 billion - this is a slight reduction, but a good figure nevertheless.
The Russian Federation's external debt has gone down by 13 percent compared to 2014. Capital outflow has also significantly dropped. Moreover, in the 3rd quarter we observed a net inflow.
The reduction in our debt burden is a very important positive indicator. This is the other side dealing with the so-called sanctions. It would have been good, of course, to have access to foreign refinancing markets, so that all the money would stay in the country and help us develop, but on the other hand over-crediting is also a bad sign.
So, what did we do? Despite all limitations, we complied with all our commitments to our partners, including international credit institutions. We pay everything due on time and in full. As a result, the overall joint debt, which is not the state debt, but the total debt of our financial institutions and companies operating in the real sector of the economy - the overall joint debt has gone down, which is generally a very positive thing.
As I have already said, we are observing a net capital inflow, which is also a very positive factor, and I am sure experts are saying this as well. This means that investors, seeing the realities of our economy, are beginning to show some interest in working here. Despite the complicated situation, the fuel and energy complex continues developing. The production of oil, coal and electricity has grown. More than 4.6 gigawatt of new generating capacity will be commissioned by the end of the year.
We have already commissioned about 20 facilities; this is somewhat less than last year and the year before that. In the previous two years, we had an absolute record, but 4.6 gigawatt is also very good. We will retain this rate in the following years. This is also very important as it shows the growing capacity of the economy as a whole, its energy security.
The infrastructure is also developing actively. Russia's entire seaport infrastructure has grown by 19.5 million tonnes worth of capacity. I would like to use this opportunity to draw your attention to the fact that over the January-September period the volume of cargo loaded at Russian ports went up by 3 percent. What does this mean, colleagues? Why have our budget revenues from our export goods gone down? Because of the prices. Meanwhile, as we are observing growing trade turnover at the ports, it means the physical volume has not gone down but has actually increased. This is a very positive factor.
We continue developing our airport system. In the first nine months, our airports served over 126 million passengers, which is 2.5 percent more than last year. Internal air traffic has also grown noticeably - by more than 16 percent.
Despite the complicated financial and economic situation, we continue our responsible state financial policy. In the 11 months of this year federal budget revenue reached 12.2 trillion, spending - 13.1 trillion. The budget deficit, as we can see, stands at 957 billion. The expected budget deficit by the end of the year is about 2.8 - 2.9 percent of the GDP. This is a satisfactory figure for the current economic situation, even more than satisfactory.
To achieve a balanced federal budget this year we used our reserve fund. At the same time, it is very important that the sovereign funds generally remain at a healthy level of 11.8 percent of the GDP. The reserve fund amounted to 3.931 trillion rubles, which is 5.3 percent of the GDP, while the national welfare fund was 4.777 trillion rubles, which is 6.5 percent of the GDP.
We have complied with all our social commitments this year and are witnessing a natural population growth. This is a very good figure that speaks of the people's state of mind, shows that they have the opportunity to plan their families, which makes me very happy. Thus, 6.5 million Russian families have received maternity capital over the entire period since the programme was introduced. We have now extended this programme. I would like to remind you that in 2016 maternity capital payment will remain the same as in 2015 at 453,000 rubles.
In the majority of regions, the situation with accessibility of preschool facilities has been resolved by over 97 percent.
According to the Federal State Statistics Service, life expectancy at the end of this year is forecast to exceed 71 years.
We have complied with our commitments in terms of adjusting pensions to the actual inflation in 2014, with the PAYG component increased by 11.4 percent. As of April 1 of this year, social security pensions have gone up by 10.3 percent.
You began your question by asking about last year and our expectations for next year and the year after that. Proceeding from the current value of our exports, the Government is expecting our economy to achieve at least a 0.7 percent growth in 2016, 1.9 percent in 2017 and 2.4 percent in 2018.
I would like to draw your attention to the fact that all our calculations were based on the oil price of $50 a barrel. Now the price is lower. Volatility is high. We will not rush to adjust the budget, as this would lead to a reduction in the funding of both the social and real sectors; however, the Government is of course working on different development scenarios. The Government should have this instrument available, to be ready for any developments.
Our calculations were based on the oil price of $50 a barrel. Now the price is lower. We will not rush to adjust the budget, as this would lead to a reduction in the funding of both the social and real sectors; however, the Government is working on different development scenarios.
Of course, potential GDP growth is not limited to our export-related opportunities. We must also promote import replacement, as I said in my Address to the Federal Assembly, which is not a cure-all, but we believe that it will help us retool a large park of the production sector and the agriculture industry. This programme will enable us to introduce novel technology and, hence, to increase labour productivity. We must certainly continue working to improve economic management, to de-bureaucratise our economy, and to create more attractive conditions for doing business and for helping entrepreneurs achieve the goals that are facing them and the national economy as a whole. We will be working hard, with a focus on these targets.
Thank you for your question: it allowed me to use the materials at hand.
Yelena Glushakova: Thank you. Yelena Glushakova, RIA Novosti.
Good afternoon! Mr President, you said we are past the peak of the crisis, however the economic situation continues to be very disturbing, something economists say. In particular, your team mate Alexei Kudrin calls for reforms, but he is known to be an optimist.
This week, for example, your Ombudsman, Commissioner for Entrepreneurs' Rights, Boris Titov, expressed very disturbing thoughts. He said, in particular, that the Central Bank interest rate is extremely high. So our entrepreneurs, who for obvious reasons are unable to borrow in the West, cannot borrow in Russia either because the costs are too high. He said that if this situation continues, we will turn into Venezuela, where there is one national currency exchange rate on the black market and a very different official rate.
Do you share these concerns? Do you support the monetary policy of the Bank of Russia? Do you consider it necessary to lower interest rates?
Thank you.
Vladimir Putin: Please give a long applause for this question.
Naturally, these are everyone's concerns. And of course, everyone wants the Central Bank refinancing rate lowered, because everyone knows it guides commercial banks in lending to businesses. This, by the way, is not the only thing that affects the rates in the commercial sector, but a major one of course.
Boris Titov does the right thing in fighting for the interests of the business community, and it is important that we have such a man and such institutions. Why do you think I insisted on appointing a business ombudsman in the first place? Because I want to hear different points of view, and I do not want to miss important and essential elements of our economic life over all the current issues.
To begin with, I will simply answer your question. I support the policy that the Central Bank and the Government pursue to ensure macroeconomic stability. That is first.
Second, however much we want to lower the rate, it cannot be done by administrative methods. We have to work from the realities of our economy and its structure. Of course, I often hear this talk about interest rates being far lower outside Russia. Of course, there are lower rates. So they do it on purpose. But they have other problems, and a different economic structure. We are threatened by inflation, and they probably have deflation looming when manufacturers cannot sell what they make. That is their problem.
We have a different problem. To lower the rate, we need to help the Central Bank and the Government suppress inflation and reduce devaluation risks and expectations, rather than snap at the regulator as was common in Soviet times in the planned economy. Once we can do both, once we start down this road, then the market will calm down naturally and Central Bank refinancing rate will decrease.
When there's a possibility to support the real economy, the Central Bank is doing it anyway. That said, it should not be pushed to do even more, since this could affect its ability to keep the inflation at bay, which is one of the key issues, not the only, but still a very important one. It could prompt the question: Does the Central Bank have any objectives other than making sure that the country's financial and banking systems are up and running? And we can argue that this is the way things are at the present time. What else is the Central Bank doing? For example, together with the Government it is working on the so-called project financing programmes: the Government oversees a wide range of projects under various programmes worth tens of billions of dollars, about 250 billion already, and up to 500 billion moving forward. Under these programmes, the Central Bank provides funding to Russian private banks so that they can finance these specific programmes. The Central Bank is also involved in new investment projects. It uses a wide range of instruments. For now, this is enough.
Veronika Romanenkova: TASS news agency, Veronika Romanenkova.
Mr Putin, could you tell us in all honesty whether you are satisfied with the Government's work? To what extent are the initiatives that are being taken against the backdrop of crisis developments you've just described adequate? Can any changes in the Government line-up be expected?
Vladimir Putin: Well, as you may know or could have noticed throughout the years I've been in office, I a) value people highly and b) believe that staff reshuffles, usually, but not always, are to be avoided and can be detrimental. If someone is unable to work something out, I think that I bear part of the blame and responsibility. For this reason, there will be no changes, at least no major reshuffles.
We are working together with the Government on ways to improve its structure. This is true. This is about finding solutions for enhancing the Government's efficiency with respect to the most sensible economic and social issues. There are plans to this effect, but there's nothing dramatic about them and they don't boil down to specific individuals. Our efforts are aimed at improving the operations of this crucial governing body.
As for the question whether I'm satisfied or not, overall I think that the Government's work has been satisfactory. Of course, it can and should be even better. An anti-crisis plan was drafted and enacted in early 2014. I don't remember its exact title, but essentially this was an anti-crisis plan. If you look at what has been done, you can see that unfortunately 35 percent or more than one third of the initiatives listed in this plan have yet to be implemented. This goes to show that efforts on the administrative, organisational front undertaken by various ministries and agencies did not suffice to respond to the challenges we are facing in a prompt and timely manner. However, let me reiterate that overall in terms of its strategy the Government is moving in the right direction and is efficient.
Let's give the floor to Tatars. There's such a big poster. How can we possibly do without Tatars? Nothing is possible without Tatars here.
Yelena Kolebakina: Thank you very much, Mr President. I'm Yelena Kolebakina with Tatarstan's business newspaper Business Online. The people of Tatarstan won't forgive me if I don't ask you these questions.
In your address, you said - you stressed, actually - that the kind, hard-working people of Turkey and the ruling elite should not be put on the same plane and that we have a lot of reliable friends in Turkey. As you know, over the years Tatarstan has forged extensive economic and cultural ties with Turkey. What are we supposed to do now? Rupture these ties, cut our bonds with the entire Turkic world? After all, this is precisely the message of Vladimir Medinsky's recent cable with his recommendation that all contacts with the international organization Turksoy be broken. What is to be done with the Turkish investors who have invested a quarter of all foreign direct investment in Tatarstan? This is my first question.
And allow me to ask the second question or the people of Tatarstan will be unhappy. In keeping with the federal law, from January 1, 2016, President Rustam Minnikhanov of Tatarstan will no longer be referred to as president. However, this can hurt the ethnic feelings of all Tatars in the world while you - let me remind you - have always said that in accordance with the constitution, it is up to the republic itself to decide what to call the head of the region. So, will the federal centre insist on renaming the position of the head of Tatarstan after all?
Thank you.
Vladimir Putin: Yes, I saw the "Turkey" poster. Please go ahead with your question and you too. We'll sort this out.
Yelena Teslova: Yelena Teslova with the Anadolu news agency. I have a similar question. I'd also like to start off with the fact that in your Address to the Federal Assembly, you said that we should not put the Turkish people and the part of the Turkish elite that is directly responsible for the death of our military personnel in Syria on the same plane. On a day-to-day level, however, the impression is somewhat different. Complaints are coming to the Turkish embassy in Moscow from students saying they have been expelled and from business people who say that are about to be deported. What is to be done about this?
The second question concerns Syria. The position on the fate of the Syrian president is well-known. Russia says it should be decided by the Syrian people while the United States and its allies insist that he has no political future. Did you address the issue with John Kerry during his visit to Moscow? Will this issue be raised in New York? Thank you.
Vladimir Putin: And your question please.
Fuad Safarov: Mr President, Fuad Safarov with the Turkish news agency Cihan.
The rapid deterioration of relations between Russia and Turkey benefits neither side. What's more, this has only harmed both sides. Do you believe there is a third party in this scenario?
The second question, if you'll allow me. An Islamic anti-ISIS coalition was established recently, but we know that there is also the NATO-led coalition and the Russian-Syrian coalition. It turns out that there are three coalitions against ISIS. Is it really so difficult to deal with this evil? Maybe there are some other goals and some other plans here? Maybe it's not ISIS that is the problem? Thank you.
Vladimir Putin: Okay, I'll talk about Syria in the end. Now, regarding the conflict that has flared up. We believe that the actions of the Turkish authorities (in relation to our warplane, which they shot down) are an unfriendly, hostile act. They shot down a warplane and our people were killed.
What outraged us so much? If it was an accident, as we heard later, apparently, the Turkish authorities did not even know it was a Russian plane... What is usually done in such cases? After all, people were killed. They immediately make a phone call and straighten things out. Instead, they immediately ran to Brussels, shouting: "Help, we've been hurt." Who is hurting you? Did we touch anybody there? No. They started covering themselves with NATO. Does NATO need this? As it turned out, apparently it does not.
What is the most important thing for us? I want you to understand this. I want our people to hear this and I want Turkey to hear this as well. Apart from the tragedy, the fact that our people were killed, what has upset us so much, do you know? After all, we have not abandoned cooperation.
When I was last in Antalya I had contact with Turkey's entire leadership. Our Turkish colleagues raised very sensitive issues and asked for support. Even though our relations have soured now (I won't say what the issue was - this is not my style), but believe me, they raised issues with us that are very sensitive and that do not fit into the context of international law when we consider the decisions proposed by the Turkish side.
You'll be surprised, but we said, "Yes, we understand, and we're willing to help." You see, I hadn't heard about the Turkomans (Syrian Turks) before. I knew that Turkmen - our Turkmen - lived in Turkmenistan, and so I was confused... Nobody told us about them. But after we indicated our willingness to cooperate on the issues that are sensitive to Turkey, why didn't they phone us via the cooperation channels between our militaries to say that during our discussions we overlooked a certain part of the border where Turkey has vested interests. They could have expressed their concerns or asked us not to hit a certain areas. But nobody said anything!
As I said, we were willing to cooperate with Turkey on very sensitive issues. So why did they do it? Tell me, why? What have they accomplished? Did they think we would just pack up and go? They couldn't have thought that of course, Russia isn't that kind of country. We have increased our presence and increased the number of warplanes [in Syria]. We didn't have air defence systems there, but after that we dispatched S-400 systems to the area. We are also adjusting the Syrian air defence system and have repaired the highly effective Buk systems that we'd sent them before. Turkish planes used to fly there all the time, violating Syrian air space. Let them try it now. Why did they do it?
You asked if there is a third party involved. I see what you mean. We don't know, but if someone in Turkish leadership has decided to brown nose the Americans, I'm not sure if they did the right thing. First, I don't know if the US needed this. I can imagine that certain agreements were reached at some level that they would down a Russian plane, while the US closes its eyes to Turkish troops entering Iraq, and occupying it. I don't know if there was such an exchange. We don't know. But whatever happened, they've put everyone in a bind. In my opinion - I've looked at the situation and everything that's happened and is happening there - it appears that ISIS is losing priority. I'll share my impressions with you.
Some time ago, they invaded Iraq and destroyed that country (whether this is good or bad is beyond the point). The void set in. Then, elements tied to the oil trading emerged. This situation has been building up over the years. It's a business, a huge trafficking operation run on a commercial scale. Of course, they needed a military force to protect smuggling operations and illegal exports. It's great to be able to cite the Islamic factor and slogans to that effect in order to attract cannon fodder. Instead, the recruits are being manipulated in a game based on economic interests. They started urging people to join this movement. That's how I think, ISIS came about.
Next, they needed to protect delivery routes. We began attacking their convoys. Now, we can see that they are splitting up with five to 15 trucks hitting the roads after dark. However, another flow, the bulk of the truck fleet, is headed for Iraq, and across Iraq through Iraqi Kurdistan. In one place there - I will ask the Defence Ministry to show this picture - we spotted 11,000 oil trucks. Just think of it - 11,000 oil trucks in one place. Unbelievable.
Whether there's a third party involved is anyone's guess, but a scenario whereby these moves were never agreed with anyone is quite likely. However, today, the Turkish authorities are taking quite a lot of heat - not directly, though - for islamising their country. I'm not saying if it's bad or good, but I admit that the current Turkish leaders have decided to let the Americans and Europeans know - yes, we are islamising our country, but we are modern and civilised Islamists. Remember, what President Reagan said about Somoza: Somoza may be a son of a bitch, but he's our son of a bitch. Just keep it in mind, we are Islamists, but we are on your side, we are your Islamists.
There may be such an overtone, but nothing good came out of what happened. And the goals, even if Turkey had any, not only were not achieved, but, on the contrary, the situation got even worse.
Now, regarding Turkic peoples residing in Russia. Of course we need to continue to maintain contacts with those who are close to us ethnically. I'm saying "us," because Turkic-speaking peoples of Russia are part of Russia, and in this sense the Turkish people, whom I mentioned in my Address as our friendly people, and other Turkic-speaking peoples remain our partners and friends. Of course, we will and must maintain contacts with them.
We have learned from experience that it is hard or almost impossible to reach common ground with the current Turkish leadership. Even when we tell them "yes, we agree," they are trying to outflank or stab us in the back for absolutely no good reason.
Consequently, I don't see any prospects for improving relations with the Turkish leaders in terms of state-to-state relations, while remaining completely open to humanitarian cooperation. However, even this area is not without issues. I think that Turkish leaders have actually gone beyond their own expectations. Russia is forced to impose restrictive economic and other measures, for example, in tourism.
You know, the creeping islamisation that would have made Ataturk turn over in his own grave, affects Russia. We know that there are fighters from the North Caucasus on Turkish soil. We have told our partners time and again: "We don't do such things with respect to Turkey." But these fighters are still there, they receive treatment and protection. They benefit from visa-free travel arrangements and are able to enter Russian territory using Turkish passports and disappear, while we have to go after them in the Caucasus or in our million plus cities. For this reason, we will certainly have to do it along with a number of other initiatives to ensure our national security.
As for the President of Tatarstan, there's a saying in Russia: "Call me a pot but heat me not." This is Tatarstan's business. I don't think that this is such a sensitive issue or that it could hurt national feelings. You know the people in the Caucasus always react vehemently to all issues related to their national identity. However, even Chechnya said: no, the country should have only one President, and we will not call the head of the Republic this way. This was the choice of the Chechen people. We will respect the choice of the people of Tatarstan. It is up to you to decide, all right?
Anton Vernitsky: Anton Vernitsky, Channel One.
Vladimir Putin: I'm sorry, I forgot, but I wrote down your question. Again, I'm sorry, Anton.
The fate of the Syrian President. I have said it many times, and I would like to repeat it: We will never agree with the idea of a third party, whoever it is, imposing its opinion about who governs who. This is beyond any common sense and international law. Of course, we discussed it with US Secretary of State Kerry. Our opinion remains the same, and this is our principled approach. We believe that only Syrians can choose their leaders, establish their government standards and rules.
Therefore, I will say something very important now. We support the initiative of the United States, including with respect to the UN Security Council draft resolution on Syria. The Secretary of State's visit mainly focused on this resolution. We generally agree with it. I think Syrian officials will agree with the draft, too. There may be something that somebody does not like. But in an attempt to resolve this bloody conflict of many years, there is always room for compromise on either side. We believe it is a generally acceptable proposal, although there could be improvements.
As I have said before, this is an initiative of the United States and President Obama. This means that both the US and Europe are highly concerned with the current situation in the Middle East, Yemen, Syria and Iraq. We will do what we can to help settle the crisis and will aim to satisfy all parties with our solutions, however complicated the situation.
But first, it is necessary to work together on a constitution and a procedure to oversee possible future elections. It must be a transparent procedure that everyone trusts. Based on these democratic procedures, Syria will decide which form of government is the most suitable and who will lead the country.
Anton Vernitsky: Back to the Syria issue. Mr Putin, do we have a clear-cut plan on Syria or we are acting impulsively? I mean, Turkey shot down our plane and we immediately increased our military presence in Syria. When will our military operation end? What will you regard as the end point of our military operation in Syrian airspace? Do you believe that the intra-Syrian conflict can, after all, be switched to a political track? Though you already talked about it, is it possible?
VladimirPutin: I have been trying to answer this. We think that, A, it is possible; and, B, we believe that there is no other way to resolve the situation. Anyway, this will have to be done sooner or later, and better sooner than later because there will be fewer casualties and costs, and there will be fewer threats, including to Europe and to the United States as well. Look, 14 people were killed in the United States − ISIS has made its way into the US. US law enforcement has acknowledged that it was a terrorist act committed by ISIS, so it's a threat to everyone. And the sooner we do it, resolve this, the better.
Let me repeat, there is no solution to this problem except a political one. Do we have a plan? Yes. And I just spelled it out. In its key aspects, strange as it may sound, it coincides with the American vision, proposed by the United States: cooperative work on the constitution, creating mechanisms to control future early elections, holding the elections and recognizing the results based on this political process. Of course, it's a complicated objective and of course there are various claims: some don't like this group and others don't like that group, some want to work with the Syrian Government and others refuse categorically. But what is necessary is that all conflicting parties make an effort to meet each other halfway.
Anton Vernitsky: And what about the military operation?
Vladimir Putin: So what about the military operation? We've been saying that we would carry out air strikes to provide support for offensive operations by the Syrian army. And that's what we've been doing while the Syrian army conducts their operations.
To be continued.
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#3
Sputnik
December 17, 2015
Who Makes the President Proud? Putin's Top Answers at His Annual Q&A
Every year President Putin holds his year-end Q&A session, where both Russian and foreign reporters get to address the country's major problems and achievements directly with the head of state. And every year journalists try to sneak in some personal questions. This year was no exception. Here is a selection of some of the president's top answers.
This time the president started straight away with the questions, skipping his usual opening address where he touches upon what he deems most important. As he rightfully noted, he has had so many public appearances this year that he "does not know what else to add" to his previous statements.
"I believe I covered all the key points. Nevertheless, there must be issues which you want us to clarify. When I say 'us', I am referring to my colleagues in the Presidential Executive Office and the Government Cabinet and myself."
"Therefore, I suggest that we skip any lengthy monologues and get right down to your questions so as not to waste time."
After this particular phrase the Russian leader took off his watch and put it nearby. Many then wondered if he was keeping half an eye on the time?
The event, his 11th media news conference, was attended by a record number of journalists - 1390, most of whom were Russian. There were therefore many questions on the internal economic situation, low energy prices, fall in value of the Russian ruble and further hardships.
Among the issues of particular interest to the foreign reporters were Russia's relationship with Turkey, Ukraine and Georgia, its air campaign in Syria, the downing of Russia's Su-24 bomber and the fate of Syrian President Assad.
On the downing of Russia's Su-24
The president said that the incident with the downing of the Russian bomber is not just an unfriendly act but a hostile one. Moreover, Turkey ran to complain to NATO instead of settling it with Moscow. Had it been an accident they could have apologized.
"They [Turkish authorities] thought that we would turn tail and run! No, Russia is not that country! We have increased our presence in Syria, have increased the number of combat aircraft deployed there. There was no Russian air defense system there - now there is S-400. If, before, Turkey had constantly violated Syrian airspace, let them try now."
"You've asked whether there is a third party involved [in Su-24 downing]. I get your idea. We don't know it yet. But if someone in the Turkish government decided to lick the Americans in a particular place, I don't know if they are acting in a right way. I don't know whether the Americans need this."
On the Russian air campaign in Syria
The president made assurances that Russia will stay in Syria while the Syrian army keeps fighting terrorists. However, he added:
"As soon as we notice the political process has begun, and the Syrian government decides it is time to stop the airstrikes, [we are going to stop]. We are not going to be more Syrian than the Syrians themselves. We don't need this, do we? The sooner it [the process] starts, the better."
On the relationship with Georgia and its ex-president Saakashvili
The president reiterated it was not Russia who initiated the deterioration of the relations with Georgia but solely and completely the Georgian authorities. But, he stressed, Russia is ready to restore those relations. And is ready to abolish the visa regime with Georgia.
However the Russian leader commented on the appointment of Georgian fugitive ex-president Mikheil Saakashvili as the governor of the Odessa region.
"In my view, this is spitting in the face of the Ukrainian people. Besides just putting Ukraine under external rule, they have delegated power to such characters there."
"Saakashvili was denied a working visa into the US. So, they sent him to Ukraine - let him command there. So there he is, actively functioning there."
The president also noted that the Ukrainian authorities have been earlier told that they would not only be under external control, but they would be sent people from "more civilized countries" to manage key positions in the country.
"Out of 45 million people, was it that difficult to find 5-10 honest decent managers?" he wondered.
But, as usual, the most interesting were the answers about the president's private life.
After having commented on doping and corruption in sports, the president was complimented by one of the female journalists on his great shape and healthy appearance.
Putin laughed and quipped that "all his achievements are doping-free."
Proud Putin Tells Press His Daughters Live and Work Right Home in Russia
The Russian leader seldom comments about his private life and almost never - about his children. This time however he broke his rule and shed some light on his daughters.
"I've seen different reports about my daughters - the media were saying they are getting an education abroad and are living abroad. Now, thank God, this isn't the case. It's true: my daughters are living in Russia; they do not have any other permanent residence. They've only been studying at Russian universities."
"My daughters have never lived in the limelight. They speak three European languages fluently, they can also speak one or two oriental languages. I am proud of them. They are living their lives and are doing it decently."
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#4
www.rt.com
December 17, 2015
Worst of crisis over for Russia, but country needs to adjust to life with cheap crude - Putin
Russian President Vladimir Putin said next year's budget based on oil at $50 a barrel is too optimistic, considering current prices. However, he has assured the country that the worst of the economic crisis is over.
"We are aware of the high dependence of our economy on the price of our traditional export products - oil, gas and their derivatives. We proceeded from the fact that the average price for Brent will be $100 per barrel," said Putin during his annual televised press conference on Thursday.
"When the price dropped from $100 to $50 per barrel we planned the budget considering these figures. Now the price is $38. We are forced to revise again," Putin said.
Putin said low oil prices have dragged down the Russian economy, but it's slowly recovering and the worst of the crisis is behind.
"It is a 3.7 percent GDP contraction, 12.3 percent inflation. The real income of the population has fallen, the investment in fixed assets decreased by 5.7 percent. However, statistics show that the crisis in the Russian economy as a whole has passed its peak. From the second quarter, there are signs of stabilization in business activity. In September and October, GDP grew by 0.1-0.3 percent compared to the previous month," he said.
The President also addressed concerns over using the country's reserves to fill the hole in the budget left by falling crude prices. In October, Russian Finance Minister Anton Siluanov said the nation's Reserve Fund could be depleted in 2016, forcing the government to dip into its last remaining reserve, the National Welfare Fund.
"Our foreign reserves stand at $364.4 billion. They've depleted a bit, but it's still a very solid figure," said Putin.
Later on Thursday, the Central Bank of Russia reported that the country's international reserves had grown almost $7 billion in the second week of December to $371.2 billion.
According to Russian Economic Development Minister Aleksey Ulyukaev, $40 oil doesn't threaten stability in the economy, but won't allow GDP, production and consumer demand to turn positive next year.
In the adopted budget for 2016, the Kremlin was relying on $50 per barrel and 63.3 rubles per dollar.
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#5
Wall Street Journal
December 17, 2015
Vladimir Putin Warns Government May Cut Budget Over Oil Price Fall
Russian president says peak of crisis is over, sees return to growth next year
By JAMES MARSON And ANDREY OSTROUKH
MOSCOW-President Vladimir Putin said on Thursday that the government may have to cut the federal budget because of a plunge in oil prices, but tried to reassure Russians that the worst of the economic crisis was over.
At a televised news conference that lasted more than three hours, Mr. Putin didn't commit to immediate major overhauls that some government officials have called for to plug budget holes, such as raising the retirement age or selling stakes in state companies. Russia's economy, which is set to contract 3.7% this year, will return to growth in 2016, as long as the oil price recovers somewhat, he said.
Russia has been hard hit as the price for oil, which accounts for around half of federal-budget revenues, has fallen well below $50 per barrel, the figure used to calculate the budget for 2016. The government is looking for ways to fill the budget gap, which Mr. Putin has ordered should be no more than 3%, including potential sales of state assets or increased local borrowing.
"We'll probably have to adjust something here," Mr. Putin said of the budget. But he played down the problem, saying the government wouldn't do so in haste.
"Volatility is very high," he said, referring to the crude price. "We won't rush with recalculations and making adjustments in the budget, because that brings with it a reduction in the volume of financing for social spending, the nonfinancial sector."
The news conference, an annual marathon attended by hundreds of reporters, was shorter and more subdued than in other years, with Mr. Putin focusing on reassuring Russians over the country's economic woes and falling living standards.
Mr. Putin reiterated that the peak of the crisis in Russia was over. He rattled off economic statistics, forecasting that the economy would shrink 3.7% this year but return to growth next year if oil prices average $50 per barrel. Still, he said that the price forecast looked optimistic.
Mr. Putin, who has been in power since 2000, defended his record, saying that the economy had nearly doubled in the past 15 years and that household incomes had grown and the country's military might had increased. Without answering specific allegations, he glossed over recent scandals, including doping claims against Russian athletes and accusations raised by the country's opposition that the children of Russia's elites use their positions for personal gain.
Mr. Putin praised the Bank of Russia and the government for their handling of the economy, saying that there shouldn't be pressure on the central bank to cut lending rates, and instead measures should taken to reduce inflation to allow the bank to reduce rates.
Deprived of high oil prices but committed increases in salaries for pensioners and state workers, the government is looking for ways to plug holes in the budget.
Finance Minister Anton Siluanov said Wednesday that the government is considering selling a 19% stake in the country's largest oil firm, OAO Rosneft, although Economy Minister Alexei Ulyukayev said the potential asset sale hadn't been approved.
Mr. Putin said a partial privatization of Rosneft is possible given that the state will retain the controlling stake in the company, but that a decision should be made by the government. Rosneft Chief Executive Igor Sechin, a close confidant of Mr. Putin, has long resisted any stake sale.
Mr. Putin conceded that another measure to ease budget strains-raising the retirement age-would be necessary eventually, but said now wasn't the right time.
"At some point we will have to do it," Mr. Putin said, adding that expectancy of life in Russia has increased. "But if we do it, then it should be done...not in a hurry, [but] calmly."
The president said that Russia's military operation against opponents of Syrian President Bashar al-Assad won't have a sizable impact on the budget, comparing airstrikes that Russia began at the beginning of September to a military drill.
"It's hard to imagine a better training drill," he said. "We can exercise there for quite a time without substantial damage to our budget."
Russia's operation over Syria has raised concern about conflict between major powers entangled in the conflict there. Mr. Putin attacked Turkey for shooting down a Russian plane on the Turkey-Syria border last month.
Russia hit back with sanctions against Turkey, including ending travel tours and banning some food imports. Mr. Putin said relations with Turkey on a state level were unlikely to improve in the near future.
Responding to a reporter's question about whether a third party was involved in the incident, he said: "We don't know. But if someone in the Turkish leadership decided to lick the Americans in a certain place, then I don't know whether they acted correctly or not."
Asked about Russia's role in the conflict in eastern Ukraine, Mr. Putin reiterated denials that Russia's army was involved. But he did appear to concede some level of involvement in military actions there.
"We never said there aren't people there who are solving certain issues in the military sphere, but that doesn't mean that regular Russian troops are there," he said. "Feel the difference."
Still, he said the two countries should talk about exchanging prisoners.
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#6
New York Times
December 17, 2015
Vladimir Putin Praises Donald Trump, Chides Turkey and Backs Russia's Economy
By ANDREW E. KRAMER
MOSCOW - Alternately pugnacious and conciliatory, with his customary swagger and salty language, President Vladimir V. Putin held forth on a broad array of topics in his traditional year-end news conference on Thursday, even throwing in a glowing assessment of Donald J. Trump.
Mr. Putin drew applause from the crowd of journalists when he lashed out at Turkey for having shot down a Russian bomber, daring the Turks to try it again with Russia's advanced air defense system in place and surmising that perhaps the Turks "wanted to lick the Americans in one place."
Yet he praised the efforts of Secretary of State John Kerry to find a political solution to the war in Syria and admitted that there were Russian personnel in Ukraine, though no regular soldiers.
In the wide-ranging, more than three-hour event, Mr. Putin offered rare hints about his closely guarded family life, saying his two grown daughters were living in Russia and "taking the first steps of their careers."
Not surprisingly, he threw in a few curve balls. He rose to the defense of Sepp Blatter, the embattled president of soccer's world governing body, FIFA, who is under criminal investigation for corruption, saying Mr. Blatter should be awarded the Nobel Peace Prize.
And he even inserted himself into the Republican primary contest in the United States, speaking highly of Mr. Trump in remarks after the news conference ended. "There is no doubt that he is a very bright and talented man," the Russian leader said. "It is not our business to assess his merits; that is up to the U.S. voters. But he is an absolute leader of the presidential race."
Beneath the pyrotechnics, Mr. Putin seemed most concerned with driving home the point to his domestic audience that Russia's battered economy had bottomed out, an indication that Russia's recessionary economy had his full attention.
Peppered with dozens of questions, Mr. Putin lingered on those that allowed him to reassure Russians that their living standards would improve.
He went out of his way, in several answers, to say that Russia's economy had hit bottom this year, and that it was now bouncing back - though independent economists and even Russia's central bank, in a report released this month, have contested that view.
The gross domestic product, a broad measure of the economy's health, is projected to fall 3.7 percent this year but will grow by 0.7 percent next year, Mr. Putin said. It would pick up more in following years, he added.
Real incomes, he conceded, are falling, but other indications of social well-being such as the birthrate are up, he said.
Mr. Putin backpedaled on his prediction a year ago that Russia would pull out of its current slump within two years, and blamed the tumble in oil prices. "Yes, after this fall in prices in energy resources, all the indicators slipped," he said.
Despite the recession, Mr. Putin's popularity remains extraordinarily high, with supporabove 80 percent in some polls. While the economy is biting at home, even as Mr. Putin pursues a swaggering foreign policy, the hardship has not yet translated into widespread political discontent.
Surveys and the answers to questions posed to focus groups show that the pillars of Mr. Putin's popularity shifted in early 2014, just before the current downturn. Russians now say they admire Mr. Putin more for a role as a "protector" from external threats than for the role of "provider," a study by an influential Russian sociologist, Mikhail E. Dmitriyev, concluded this year.
Mr. Putin also offered positive signals for a round of talks on a Syrian peace plan scheduled to take place in New York on Friday, saying he could largely support the American plan described by Mr. Kerry in their meeting this week in Moscow.
Russia under Mr. Putin has deployed its military in several countries, and at one point on Thursday the president suffered a slip of the tongue in answering a question about Georgia, where Russia fought a war in 2008 and later recognized two separatist regions.
"Concerning the territorial integrity of Ukraine, ah, excuse me, of Georgia ... " he said, going on to say the breakup of Georgia was the fault of that country's former leaders, not of Russia.
Speaking of his daughters, he said they "have never lived in the limelight" but speak three European languages that they use "in their daily work." He did not directly deny reports published this year that his older daughter runs a program at Moscow State University.
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#7
Russia Beyond the Headlines
www.rbth.ru
December 17, 2015
What's behind John Kerry's festive goodwill to the Kremlin?
U.S. Secretary of State John Kerry's official visit to Moscow this week for talks with Russian President Vladimir Putin and Foreign Minister Sergei Lavrov caught Russian pundits off guard, with Kerry striking a conciliatory tone and insisting that the U.S. was not seeking to isolate Russia. But can any serious change in Washington's stance be read into Kerry's comments?
SERGEI STROKAN, VLADIMIR MIKHEEV, SPECIAL TO RBTH
After more than three and a half hours of talks with Russian President Vladimir Putin and Foreign Minister Sergei Lavrov, the United States' top diplomat sounded cautiously but overall optimistic. Suffice to pick up on just a few of his comments at the final press conference on Dec. 15:
"We see Syria fundamentally very similarly"
"The U.S. stands ready to work with Russia"
"Despite our countries' differences, we demonstrated that when the United States and Russia pull together in the same direction, progress can be made"
"We don't seek to isolate Russia as a matter of policy"
Moreover, Moscow and Washington have found "common ground" on which Syrian opposition groups have the right to participate in peace talks leading to a political transition, Kerry revealed.
A meeting of world powers on Syria was also approved, which will take place in New York with the mission to draft a resolution on the essence and format of a political solution for Syria. The resolution would be then presented to the UN Security Council to assume the absolute legal authority.
On top of it all, Kerry admitted he had "a good discussion about Ukraine" with President Putin, and said that once the Minsk peace agreements are fully implemented, "U.S. and EU sanctions can be rolled back."
Nevertheless, sceptical pundits in Moscow claim Kerry's visit has left a bitter feeling of déjŕ vu, recalling the unmet expectations after the previous upbeat rhetoric in the aftermath of his lightning visit to Sochi in May.
Troika Report approached Andrei Kortunov, director general of the Russian Council of International Relations, with the question: Is this once again groundless optimism or is the ice starting to melt, paving the way for a resolution to the conflict in and around Syria?
"Compared to the situation half a year ago, things have changed dramatically in the region and beyond. The sense of urgency is more explicit now than it was at the time when Kerry came to Sochi. It does not mean that we should expect miracles to happen. Nevertheless, the meetings in Moscow were clearly a step forward."
"They went into considerable detail about the potential coalition, about the moderates inside the Syrian opposition. Also I hope that these meetings will be a catalyst for serious discussions on the political transition in Syria."
- The contentious issues include the fate of SyrianPresident Bashar al-Assad and the list of terrorist organizations. U.S. ally Saudi Arabia, which has just announced the formation of a coalition of its own, considers Hezbollah, the Shiite and pro-Iranian organization, among the radicals to be blacklisted. Meanwhile, Hezbollah fighters are engaged on the ground battling with Islamic State (ISIS). This doesn't leave much hope for a consensus among the "friends of Syria," does it?
"First of all, I would distinguish between the stances taken by the United States and its regional allies. The U.S. has instruments to exercise pressure on its allies and friends in the region. Russia can do likewise. Second, the emphasis has shifted from the fate of Assad. At some point, he will have to go, the issue now is how to maintain Syrian statehood to prevent the country from disintegrating into pieces, with the small remnants fighting with each other. This is well understood by both sides, Russia and the U.S., and it might constitute the common denominator that they are looking for."
- Some 24 hours before Kerry's visit to Moscow an official pronouncement in Washington focused on the "isolation" of Russia. And then came the unanticipated words: "We don't seek to isolate Russia as a matter of policy." What a contrast!
"I think it is premature to assume that U.S.-Russian relations have hit the bottom and will improve soon enough. Yet Kerry's words must have received prior approval by President Obama. It is a sign that the U.S. is reconsidering Russia's role, in Middle Eastern affairs at least. The next couple of weeks will show whether these hopes are groundless or not."
A more critical assessment of the motives of Kerry's conciliatory tone and overtures to Kremlin came from Maxim Suchkov, a visiting fellow at New York University's Jordan Center for the Advanced Study of Russia, who talked to Troika Report.
"It is meant to balance in a certain way the recent visit by U.S. Vice President Joe Biden to Ukraine. Biden used a particularly strong language to signal America's commitment to Ukraine's security in view of the conflict with Russia. Kerry is playing the 'good cop' to Biden's 'bad cop'."
- Yet would it not be fair to assume that the Obama administration would not like to leave plenty of unresolved foreign policy issues behind as its legacy?
"Certainly, the U.S. administration is trying to showcase its credentials to the electorate on this angle. It is important that it succeeds because, most probably, whoever comes next will take a more hawkish stance towards Syria, the whole of the Middle East, and Russia. It is important that in the months left to them in office Obama and Kerry come up with more cooperation. The Kremlin is in fact also keen to forge such cooperation before things heat up with the primaries and the presidential election in the U.S."
In any case, this time Kerry left Moscow with a gift from Lavrov (who calls him an "idealist") - a Russian-style Santa Claus, an amber ring as souvenir he bought from a street stall, and some friendly advice from Putin to find time to have a good sleep to mitigate his travel fatigue. How is the U.S. Secretary of State going to treat these gifts "from Russia with love"? With his positive comments, he has already played the role of Santa Claus for the Kremlin. It sounds good. But does it really matter?
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#8
Russia Direct
www.russia-direct.org
December 16, 2015
Kerry's visit to Moscow should be met with cautious optimism
Even though the Dec. 15 visit of U.S. Secretary of State John Kerry to Moscow is a good sign for bilateral relations, experts warn against exaggerating the significance of the meeting.
By Pavel Koshkin
The Dec. 15 visit of U.S. Secretary of State John Kerry to Moscow seems to confirm the assumption of many Russian and foreign experts that Russia succeeded in persuading the West to take into account its position and role in global affairs.
2015 is believed by many to be the year when the Kremlin promoted its diplomacy vigorously, even though it paid a very high price. At the same time, this year was very effective from the point of view of maintaining personal contacts between Russian and American leaders and top officials.
For example, one of the indicators of the shift in bilateral relations was Kerry's visit to Sochi in May, during which he met with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Even though it was not a game-changer, even skeptics greeted the very fact of the visit with cautious praise.
Afterwards, Putin met with U.S. President Barack Obama on the sidelines of several high-profile international events: the G20 Summit and the Paris Climate Change Conference. Although it is not the reason to be bullish about the future of U.S.-Russia relations, these meetings help to better understand the positions of both and establish a sort of dialogue.
However, some Western experts remain skeptical in any improvement of U.S. -Russia relations until Russia changes its policy in Ukraine. For example, Robert Freedman, a visiting professor at Johns Hopkins University, doesn't see any chance for improvement "unless Russia's policy changes."
According to him, it is very hard to talk about cooperation, when the Kremlin "first of all, invaded and annexed Crimea and aided actively separatists in Ukraine and then lied about" the downing of the MH17 Malaysian Boeing over Eastern Ukraine.
"This does not make for close cooperation," Freedman said in a recent interview with Russia Direct.
So, with Kerry paying a visit to Moscow on Dec. 15, it would be better to express cautious optimism, weighing all the pros and cons. Russia Direct interviewed several experts to figure what motivated the high-profile U.S. official to come to Russia and what are the implications of this visit for U.S.-Russia relations? Should the very fact of the visit be interpreted as a good sign? Are there any reasons not to exaggerate the significance of Kerry's meetings with Putin and Lavrov?
Andrei Tsygankov, a professor of International Relations and Political Science at San Francisco State University:
Kerry came to coordinate and narrow an existing gap between the two countries' perspectives. The U.S. wants Syrian President Bashar Assad to go and is confident that a "moderate" opposition would eventually replace him. For now, the U.S. is prepared to wait while the process of power transition takes place, and Kerry made several statements to this effect.
The other key point is who, or which organizations should be counted as terrorists. Here, there is also a development, as both sides have moved to identify some groups, in order to exclude them from the "moderate" opposition list.
There was a substantive discussion in Moscow that will continue in a few days in New York with participation of other important countries. Now that there is a broadly defined roadmap of political transition in the Vienna talks, there will be many more meetings to make it more concrete and specific.
The distant third issue discussed was Ukraine. At this point, the U.S. prioritizes Syria, but Ukraine is important both in terms of Western commitments made to it and as a lever in conversation with Russia.
In exchange for Russia's continued support in fighting the Islamic State of Iraq and Greater Syria (ISIS) and Assad's eventual departure, the U.S. is signaling its readiness to pressure Kiev to fully implement the Minsk's agreement, particularly the points about amnesty, autonomy and recognition for the eastern part of Ukraine.
For Russia, U.S. support is also instrumental in pressuring and restraining the ambitions of its allies in the Middle East, especially Turkey and Saudi Arabia, although there are no clear signs that this was discussed during this visit in Moscow.
Mark Galeotti, professor of Global Affairs at New York University and a specialist on Russian security affairs:
In my opinion, Kerry's visit is important above all as a symbol of the growing awareness on Washington's part that Moscow not only has to be part of any discussions about Syria but also that it has something to offer, political and not just military leverage.
The fact that the Americans are clearly signaling that Assad's departure, while still a desired end result, is not a precondition for any peace process, demonstrates that they are willing to shift their ground to try and meet the Kremlin halfway.
This does not indicate the start of any grand U.S.-Russian rapprochement: There is no "re-reset" on the way. But it does demonstrate that the campaign to isolate Moscow is over, and even if it is grudging, pragmatic, and focused on very specific issues of common interest, we are seeing a newly flexible and collaborative relationship emerging.
Andrei Korobkov, a professor of Political Science at Middle Tennessee State University:
In fact, U.S. President Barack Obama doesn't agree with the traditional mainstream political line of most elites and media, but cannot be outspoken about his disagreement. Perhaps, he is mindful that it is impossible to resolve the Syrian crisis without Russia's participation.
Likewise, he understands that America's close allies in the Middle East - Turkey and Saudi Arabia - are playing a double, behind-the-scenes game, in which they support Sunni extremists. Nevertheless, Kerry's visit to Moscow doesn't yet mean an improvement in U.S.-Russia relations.
First, in this case, the U.S. has to admit its mistakes in its Middle East policy and soften its position toward Assad. It is hardly likely to happen.
Second, Washington has to admit that Russia is a key player in the Middle East and plays rather a positive role in the region. But this could affect the U.S. position in the region. Third, the U.S. and Russia are intransigent in their differences over Ukraine and won't yield. Fourth, Obama is driven by a domestic agenda: He wants to avoid harsh criticism from Republicans and media for being weak.
Finally, there is one more factor that can hamper U.S.-Russia relations: a great deal of unpredictability and possible provocations in the Middle East from Obama's opponents, both regional and domestic, who might seek to destabilize U.S.-Russia relations even further.
Mark Kramer, professor and director of the Cold War Studies Program at Harvard University's Davis Center for Russian and Eurasian Studies:
The Kerry visit to Moscow was mostly a signal that the Obama administration has backed down almost completely from the stance it took in 2011 calling for Assad to step down. Considering that Assad at the time was brutally slaughtering tens of thousands of his own people, Obama's stance had a good deal of merit.
But because Obama was unwilling to do anything concrete to enforce his demand, it was mostly empty rhetoric. Putin's regime in Russia, by contrast, has been consistent in demanding that Assad be left in power and has taken many concrete steps to back up that demand, most recently by deploying Russian air and ground forces to Syria.
When interviewed on Oct. 12 about Russian military actions in Syria, Putin made clear that the operations were intended solely to "stabilize the legitimate government in Syria," meaning Assad's regime. The slaughter of more than 200,000 Syrians by Assad's forces, far from weakening Putin's support of Assad, has reinforced Putin's admiration of Assad for his relentlessness in using mass violence to stay in power.
Those are the sorts of allied leaders that Putin likes (by contrast, Putin was outraged when Ukraine's ousted President Viktor Yanukovych proved unwilling to resort to brutal violence in Ukraine to stay in power in February 2014).
Kerry's comments to reporters in Moscow on Tuesday, indicating that the United States will no longer insist on Assad's departure, shows that the sharp divergence in the positions of the U.S. and Russian governments has now ended. The Obama administration has accepted Russia's position, and Putin has gotten his way - a pattern that has become all too common under Obama.
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#9
Washington Post
December 16, 2015
The new nuclear arms race
By Katrina vanden Heuvel
Katrina vanden Heuvel, editor and publisher of the Nation magazine, writes a weekly online column for The Post.
On a frigid day in February 1994, William Perry was sworn in as President Bill Clinton's secretary of defense. Perry would take over at the Pentagon during one of the most fluid times in geopolitical history - between the end of the Soviet Union in 1991 and the attacks of Sept. 11, 2001. During his time in office, Perry was one of the architects of a strategy he called "preventive defense," the goal of which was to reduce global threats rather than just contain them. The greatest threat of all was nuclear, as fears spread about such weapons falling into rogue hands.
Two decades later, Perry has written a new book, "My Journey at the Nuclear Brink," in which he offers a dire warning: "Far from continuing the nuclear disarmament that has been underway for the last two decades, we are starting a new nuclear arms race."
This is not hyperbole. The United States and Russia are acting with increasing belligerence toward each other while actively pursuing monstrous weapons. As Joe Cirincione described in the Huffington Post, the Pentagon plans to spend $1 trillion over 30 years on "an entire new generation of nuclear bombs, bombers, missiles and submarines," including a dozen submarines carrying more than 1,000 warheads, capable of decimating any country anywhere. In the meantime, President Obama has ordered 200 new nuclear bombs deployed in Europe.
Russia has been at least as aggressive. As Cirincione described, Russian state media recently revealed plans for a new kind of a weapon - a hydrogen bomb torpedo - that can traverse 6,000 miles of ocean just as a missile would in the sky. On impact, the bomb would create a "radioactive tsunami," designed to kill millions along a country's coast.
This escalation has been a long time coming, and the U.S. owns much of the blame for the way it has accelerated. During the Clinton administration, the United States pushed hard to expand NATO, breaking a critical promise to Russia not to threaten its sphere of influence. Perry, who played a lead role in this effort, has since acknowledged its folly. "That was the first move down the slippery slope," he said at an event hosted by the Defense Writers' Group. "It's as much our fault as it is the fault of the Russians, at least originally. And it began when I was secretary."
During the George W. Bush administration, there were more missteps, especially the U.S. walking away from the Anti-Ballistic Missile Treaty, causing irreparable harm to the countries' fragile relationship. And during the Obama administration, the president seems to have gone out of his way to denigrate Russian President Vladimir Putin, publicly describing him as "like a bored child in the back of the classroom." The Obama administration sent arms into Ukraine, reminiscent of Cold War proxy wars that the United States fought on nearly every continent. This time, the game is even more dangerous, playing out on Russia's border instead of thousands of miles away. And though we are more than a quarter century removed from the fall of the Berlin Wall, the United States still has nuclear weapons pointed at Russia on hair-trigger alert, sending a daily signal of aggression.
As Perry noted, one of the great dangers of nuclear proliferation is accidental war. This is not paranoia. In May 2013, the Air Force suspended 17 officers from controlling nuclear weapons after an inspection found a "breakdown in overall discipline." Seven months later, an Air Force general who oversaw bases with 450 ICBM missiles was fired for what The Washington Post described as a "drunken Moscow bender." The next month, 34 nuclear officers were caught cheating on their proficiency exams. According to ABC News, investigators learned about the scandal during "another investigation that has already implicated 11 junior officers in using illegal recreational drugs."
But the increased tension between the U.S. and Russia will have dire global consequences even if neither side launches a weapon. Defeating the Islamic State is likely impossible without Russia as part of a broad coalition. Not only does Russia bring advanced military capabilities and general resources to the fight, it also brings intelligence, diplomatic and political ties in the Middle East that the United States simply does not have. And beyond the fight against the Islamic State, there are a number of vital geopolitical issues where a partnership with Russia can be profoundly powerful. Without Russia, the United States would never have reached a nuclear deal with Iran. Without Russia, Syrian President Bashar al-Assad would still have chemical weapons.
"In a strange turn of history," Obama said during a 2009 speech in Prague, "the threat of global nuclear war has gone down, but the risk of a nuclear attack as gone up." In yet a stranger turn of history, it is the United States that is contributing to the increased risk of both. Whether Hillary Clinton would follow a similar path remains to be seen. On the campaign trail in 2015, the former secretary of state's comments have not been encouraging. The day after Russia started bombing Islamic State targets in Syria, for example, she called for a no-fly zone, a policy that would not just risk confrontation with the Russians, it would require it.
In that same speech in Prague, Obama criticized those who viewed nuclear proliferation as an inevitability. "Such fatalism is a deadly adversary," he said, "for if we believe that the spread of nuclear weapons is inevitable, then in some way we are admitting to ourselves that the use of nuclear weapons is inevitable." In his final year in office, may he remember his own words. And in the years to come, may we all.
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#10
Moscow Times
December 17, 2015
Is Russia's Cheap Oil Nightmare Coming True?
By Peter Hobson
[Chart here http://www.themoscowtimes.com/business/article/is-russias-cheap-oil-nightmare-coming-true/553010.html]
Picture the scene. It is 2016, oil costs on average $35 per barrel, and Russia's recession rolls into its second year. The economy shrinks by 2-3 percent. Unemployment creeps up, and wages continue to fall, depressing consumer spending. The ruble devalues, driving up inflation. To keep price rises in check, interest rates remain high, discouraging investment. The government drains its reserves, hoping that the oil price picks up before they run dry.
This was the nightmare scenario painted by Russia's Central Bank in its December research paper. The bank, and Russia's federal budget, is still planning for average oil prices of $50 per barrel next year and an end to the recession by early 2017. But with the global oil market oversupplied and prices falling well below $40 per barrel, the likelihood of the pessimistic scenario is rising, the bank warned.
If that happens, Russia could face the first sustained cutbacks in government spending and falls in individual wealth since Vladimir Putin rose to power 16 years ago.
"We must prepare for difficult times," said Finance Minister Anton Siluanov, whose budget relies for around half its revenues on taxes from the oil and gas industry. As the Central Bank published its research, Siluanov said oil prices could fall below $30 per barrel at certain periods, according to the TASS news agency.
Even if oil drops only to $30, the ruble, which falls in line with crude prices, would weaken to around 80 to the U.S. dollar, said Chris Weafer, senior partner with Moscow-based consultancy Macro Advisory. That would be 10 percent weaker than in midDecember and a devaluation of around 60 percent from two years ago, making Russians far poorer in dollar terms.
Not ready to face a $30 average oil price next year, the Finance Ministry instead mapped out the effect of $40 oil on the 2016 budget. It said state revenues would fall by 1.6 trillion rubles ($23 billion), or 2 percent of the country's economic output, while the deficit would grow from 3 percent to 5.2 percent of GDP, or just over 4 trillion rubles ($57 billion).
To cover the shortfall, the ministry said the 4 trillion rubles amassed from oil exports in Russia's Reserve Fund would be almost entirely spent by the end of 2016, according to the Vedomosti newspaper, which obtained a copy of the report. The plan also proposed a 5 percent sequester on spending across swathes of government.
That means the state would do less to offset the higher inflation, lower wages and shrinking output predicted by the Central Bank. And if the Reserve Fund is exhausted before oil prices rebound, the government would be forced to make deeper savings, and the number of victims of the recession would rise.
Poverty is already increasing. The economy is set to shrink by 4 percent this year, and official data show that over September to January, 20.3 million Russians, or 14 percent of the population, was below the poverty line-2.3 million more than in the same period last year.
So far, this has not stopped Putin's ratings from rising to record highs thanks to a wave of patriotism and Russian military action in Ukraine and Syria. But parliamentary elections are scheduled for next year, and a presidential vote is set for 2018.
Prolonged economic hardship would influence a "fundamental change in attitudes toward the state" and support for the government would fall, said Vladimir Milov, head of the Institute of Energy Policy think tank in Moscow.
Aware of the social risks, the government is likely to cut spending, first and foremost, on infrastructure and investment, Weafer said. But this would undercut the foundation of any economic recovery, and as a result "the economy will be weaker for longer," he said.
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#11
Valdai Discussion Club
December 17, 2015
RUSSIA AND EUROPE: A NEW ROUND?
Russia is ready for dialogue with the EU on a fundamentally new basis. A return to the relations we had three years ago is pointless and impossible. We must create a new format.
By Timofei Bordachev
Timofei Bordachev is Director of Center for Comprehensive European and International Studies (CCEIS) in the framework of School of World Economics and International Affairs of the National Research University - Higher School of Economics (HSE); Director for Research, Valdai Club Foundation.
During the past few weeks I had to take part in several events staged by leading West European expert centers in close cooperation with state authorities. I found the extensive expert consultations held by the Hague Institute for Global Justice with the support of the Dutch Foreign Ministry particularly impressive.
The aim of these consultations was to help High Representative of the European Union for Foreign Affairs and Security Policy Federica Mogherini develop a new EU foreign policy and security strategy. Obviously, the EU's previous strategy of 2003 is desperately outdated. It was adopted in a completely different era, notably, "a period of peace and stability unprecedented in European history."
The conduct and reasoning of our European colleagues are governed by two contradictory emotions: satisfaction with the results already achieved and uncertainty about Europe's future in the world. On the whole, European politicians are content with the outcome of the events in Ukraine. Russia is complying with the Minsk Agreements while numerous violations and provocations by Kiev do not prevent the EU from blaming Moscow for delaying the completion of the peace process. The EU does not bear serious responsibility for the future of either Ukraine or Donbass.
The Deep and Comprehensive Free Trade Agreement (DCFTA) between Brussels and Kiev enters into force on January 1, 2016. Its implementation will be accompanied by Ukraine's mounting de-industrialization, the destruction of its social system and the release of considerable amounts of cheap labor into the European market. This workforce will not be protected by Europe's fairly tough social standards and trade unions. At the same time Europe, especially Germany, has received dozens (if not hundreds) of thousands of fresh laborers - representatives of the middle class and religious minorities (Alawites, the Druze and the Yazidis) fleeing Syria and other countries of a disintegrating Middle East to escape DAESH terror.
This flood of refugees has challenged the solidarity of the EU member countries. Many analysts even speak about the strongest crisis of European integration in history. However, based on their historical experience, the majority of European policymakers still believe in their ability to steer the integration ship out of this storm. Judging by the crisis resolution processes of the past few years, the ship will be no less sturdy than following the aftermath of any cyclic integration crisis, all the more so since the European economies, with a few minor exceptions, are recovering.
Talks with the United States on forming the Transatlantic Trade and Investment Partnership are making slow headway. The Europeans are counting on getting several serious concessions on access to the US market and then bog down the implementation process during its subsequent ratification by the European Parliament and the 28 national legislative bodies. At any rate, for the time being no European believes that the proposed partnership will ever become a reality.
At the same time, European politicians, including those at the top level, noted many times that the time when Europe and the West in general could dictate their will to the world is gone and never to return. They openly admit that the West is "super-represented" in international economic institutions, primarily the World Bank and the International Monetary Fund. Hence, it would appear that it is time to accept the need to revise the quota ratio in these institutions in favor of the new growing economies, first of all China's. Europe is more reserved than the United States regarding the opportunity to replace the old and "failing" international institutions with their new region-oriented versions. The brightest example of the latter is the recently established Trans-Pacific Partnership (TPP).
So, the global ambitions of the EU are done away with. Obviously, now European countries are badly in need of stronger borders and utmost stabilization of their adjacent areas. It is no accident that the new version of EU neighborhood policy will be aimed not at transforming their neighbors but at stabilizing neighborly relations. Europe needs peace and calm at its borders in order to resolve its domestic problems and digest the acquisitions of the past few years.
All these tasks are prompting Europeans to think of ways of improving relations with Russia, which have been seriously harmed in the past two years. The same idea is expressed in the recently published Clingendael Report by the Netherlands Institute of International Relations, a think tank that works in very close cooperation with the Dutch Government and Foreign Ministry. Its author, prominent Dutch expert Peter van Ham, bluntly names the blunders of EU policy towards Russia and outlines the need for a more realistic and practical EU-Russia relationship.
For its part, Russia is ready for dialogue with the EU on a fundamentally new basis. A return to the relations we had three years ago is pointless and impossible. We must create a new format, but before doing this we all must answer a number of most important questions, such as:
Will the EU manage to make its policy towards the rest of the world customer-friendly instead of being producer-oriented (EU)? Since its inception the EU's policy towards both close and remote partners has been based on what Europe can offer and what it wants to gain from foreign ties. It has continued, as it were, the EU's internal structure with all its pluses and minuses. That said, this policy has not reflected the world's expectations from Europe or the interests of the EU partners in the world arena.
Will the EU switch to a policy of "genuine multilateralism" that would not divide international organizations and integration groups into "good" and "bad"? For the time being the EU was very selective in this respect and cooperated only with those groups that have recognized its leadership and been oriented toward Brussels. This policy has already produced some major aberrations. Thus, Brussels has not recognized for years the existence of Eurasian integration and refused to establish formal relations with its institutions. Meanwhile, the time to establish direct relations between the EU and the Eurasian Economic Union and draft a relevant framework treaty has long been overdue.
Will Russia be able to preserve its pivot to the East and translate it into practical deeds? Russia and its Asian partners, especially China, have made spectacular progress in the past few years. Moscow-Beijing ties have turned into a strategic partnership of having each other's backs. This new quality of relations should be embodied in the linking of the Eurasian economic integration with the Silk Road's economic belt, which was approved by the leaders of the two countries in May 2015. This positive dynamic should not be wasted. Acting as a strong Eurasian player, Russia will be better suited to develop its new strategic relations with Europe.
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#12
The National Interest
December 16, 2015
Don't Count on Putin's Russia Collapsing Soon
By Rachel Bauman
Rachel Bauman is a Resident Junior Fellow at the Center for the National Interest.
Given the currently tense and complex relationship between Russia and the United States, it seems like a daunting task indeed to chart the future trajectory of U.S.-Russian affairs. But that is precisely the task that the contributors to a comprehensive new report published by the Center for the National Interest that is titled The United States and Russia after the Ukraine Crisis: Three Scenarios undertook. The volume examines several possibilities-not predictions-for the course of U.S.-Russian relations in the next two to three years.
In an event at the Center marking the release of the report, Executive Director Paul J. Saunders, who also edited the report, served as moderator. Authors of the scenarios comprised the discussion panel, including Matthew Rojansky, Director of the Kennan Institute at the Woodrow Wilson Center for International Scholars, and Samuel Charap, Senior Fellow for Russia and Eurasia at the International Institute for Strategic Studies.
Charap, tasked with the challenge of outlining a best-case scenario in which the United States and Russia relax tensions enough to pursue a "functional relationship," acknowledged that such an outcome is unlikely. It would depend on both stability, that is, managing disagreements on destabilizing issues, and compartmentalization, in which disagreements are still pursued with vigor, but the two countries are able to collaborate on mutual interests. The result, according to Charap, would be similar to the current relationship between the United States and China-adversarial, but cooperative on many issues.
Rojansky's scenario envisions the Ukraine-Russia confrontation developing into a frozen conflict similar to Moldova-Transnistria, but on a much larger scale. Whereas much of Charap's scenario was predicated on positive developments in Ukrainian domestic politics, Rojansky's scenario assumes Ukrainian politics will be business as usual, with the spirit of Maidan still alive but the energy to effect change squelched by previous disappointments. Rojansky suggests that Russia will continue its "redefinition process," riding the historical wave of Slavophilism in an attempt to distinguish itself from the West. U.S. politicians, in turn, will continue "Russia-bashing," which Rojansky referred to as an "easy and cost-free" way to score political points. This would produce an enduring confrontation.
Nikolas Gvosdev, professor of national security studies at the U.S. Naval War College and a contributing editor of The National Interest, authored another scenario in the volume. Though he was unable to be present at the event, Paul Saunders briefly outlined Gvosdev's effort, which draws upon existing differences within Europe and between the United States and some European countries over policy toward Russia to illustrate the consequences of a breakdown in consensus. In this case, Western European "Ukraine fatigue" and a growing focus on more pressing crises, such as terrorism and Syrian refugees, may lead to a realization on the part of some nations that cooperation with Russia is necessary. Gvosdev's scenario also suggests that an "erosion of unity" fed by far-right parties in Europe may swing the pendulum toward, rather than away from, Russia. EU members may realize that individual nations' interests trump the EU's collective interest, causing some of them to reconsider Russian sanctions.
Following the discussion of the report, the panelists elaborated on the current Russian political environment. Rojansky characterized the current Russian system as "inherently brittle," resting on the whims of Putin and his associates, the oligarchs and political elites. He expressed concern about the "Russian nationalist fringe," noting that Putin "seems to be obliged to give these people a platform." Charap suggested that Putin will remain in power for some time, but warned that whoever succeeds him may not necessarily be any better, and policymakers need to keep this in mind.
Saunders concurred, stating that the system will be stable as long as the Russian people have faith in Putin. Without that assurance, much like the stock market, there may be a political "crash," throwing the existing order into turmoil. Rojansky also noted the interesting state of Russia's economy as compared to Putin's rhetoric, stating that Putin is "giving liberal economic speeches. . . but there is rot at the top of the system." Rojansky suggested that Putin is indeed interested in economic liberalization, but considering the lack of transparency, corporate governance, and functional institutions in the country, the task seems insurmountable. Charap agreed, stating that we are likely to continue to see an economic "hybrid model" which has existed since the 1990s, with the state playing a sizeable role in the Russian economy.
Charap noted that in his scenario, Russian economic motivations would be a factor in improving relations between Russia and the West. Rojansky said that U.S. sanctions on Russia are likely to continue, as "economic warfare" remains the most popular tool of the moment. It seems to be the method of choice because policymakers believe that it costs the United States nothing while still inflicting damage on the opponent. In Europe, however, the cost of sanctions is greater on both sides, and sanctions fatigue may set in, leading Europe, or at least parts of it, to consider lifting or loosening sanctions, much like in Gvosdev's scenario of a divided Europe. When it comes to Russia, uncertainty, it seems, is the only certainty, and as Charap stated, responding to Russian behavior has so far been more important than any distinctions in policy between the United States and Europe.
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#13
Moscow Times
December 17, 2015
Back to the Uncertain Future for Mikhail Khodorkovsky
By Dmitry Elovsky and Mikhail Fishman
The mob-style execution of Vladimir Petukhov, mayor of the Siberian oil capital Nefteyugansk, one summer morning in 1998 was not an unusual occurrence for the "wild 90s" era of Russian business. But it has returned to the spotlight as part of the reanimated prosecution of former Yukos chief Mikhail Khodorkovsky, which he now links to the Hague court ruling on the enormous payment to the former company's shareholders. Now, the saga of the face-off between the state and its once richest mogul enters its newest phase.
Khodorkovsky, 52, who resides in London following his pardon by Russian President Vladimir Putin in 2013, has now been officially charged by the authorities with Petukhov's murder - based on newly discovered evidence, according to the Russian Investigative committee official press-release.
"The resurrection of Petukhov's murder case was triggered by Putin's instruction to provide countermeasures to attempts to win claims via court orders and my financing the opposition," - Khodorkovsky told The Moscow Times in an interview.
Back to 1998
Sixteen years ago, Yukos, which had recently taken over oil assets in the region, was indeed in conflict with the independent and quarrelsome newly elected Nefteyugansk mayor, former political analyst and consultant, Andrey Volchkov, told The Moscow Times. Back in 1998, Volchkov was hired to do opinion polls in Nefteyugansk and arrived there right after the murder.
Yukos had incited the regional Accounting Chamber to look for evidence of wrongdoing by Petukhov. "I detest Yukos, and Khodorkovsky personally. He is to blame for a number of violations. But by the time Yukos had all legal documents necessary to have Petukhov brought up on fraud charges, they had no reason whatsoever to kill him. Politically it only made things much worse for them", Volchkov told The Moscow Times.
Two members of a local criminal syndicate were charged with the murder, but were also found dead shortly thereafter. The case was dropped - until Yukos came under fire from the state in 2003. In that year, Yukos, and its head, became the target of what is generally considered a politically motivated campaign led by Putin. As a result, the company was destroyed and Khodorkovsky was sentenced to 8 years in prison on financial charges.
That's when Petukhov's murder regained the spotlight. Alexey Pichugin, Yukos' chief security officer, was sentenced to life in prison, and Leonid Nevzlin, a major Yukos stockholder, was tried in absentia and also sentenced to life imprisonment for the murder.
State oil giant Rosneft took over all Yukos assets in Nefteyugansk, and Petukhov was lionized as the helpless victim of Yukos criminal activities in the region. A monument to Petukhov was even erected in 2013. Putin and Rosneft CEO Igor Sechin publicly linked Khodorkovsky to the murder.
Breaking the Deal
There is still no public knowledge as to why Khodorkovsky was suddenly released and secretly sent to Germany in December 2013. Analysts agree that most likely it was a mixture of Putin ramping up his image before the Sochi Olympic games, the effectiveness of behind-the-scenes diplomacy from Angela Merkel and former German deputy chancellor Hans-Dietrich Genscher, and the fact that Khodorkovsky's mother was gravely ill.
After his release in 2013, Khodorkovsky said he was not going to challenge Putin nor engage in Russian politics, but would participate in activities focused on building a civil society in Russia. Earlier this year, when the new charges suddenly emerged, he claimed that they were not initiated by Putin, since the two had already "sorted things out."
But now, it looks like if there ever was a "deal", it's canceled. As Putin's press secretary, Dmitry Peskov, put it: when Putin released Khodorkovsky in 2013, he had no way of knowing about these charges.
New Attack
There is an obvious reason for the new murder charges, said political analyst Stanislav Belkovsky. A lawsuit filed by former Yukos shareholders against Russia resulted in a ruling in July 2014 by The Hague Court that Russia has to pay $50 billion in compensation for seizing its assets in contradiction with the international Energy Charter signed earlier by Russia. Starting from January 2015, the Russian government has been getting billed $2.6 million dollars daily in interest on the unpaid fine.
"Creating an image of Khodorkovsky as an assassin would send a message to judges: you should trust neither him nor his former partners," Belkovsky said.
Putin has publicly denounced the Hague decision, saying Russia never ratified the Energy Charter, which it was accused of breaking. The Russian Government is challenging the ruling in the local Hague court. Meanwhile, local courts in the United States and Europe have already started proceedings to seize Russian property as a way of implementing the Hague decision. This process is expected to gain new impetus in 2016 and could lead to different financial complications if Russia doesn't at least show the will of settling the dispute. For instance, one could imagine Ukraine getting the right to assign its debt to the Russian Federation by selling it to the litigants, a source close to the plaintiffs told The Moscow Times.
"Creating an image of Khodorkovsky as an assassin would send a message to judges: you should trust neither him nor his former partners," Belkovsky said.
Russia has also shown no signs of readying to pay the 1.86 billion euros awarded to Yukos shareholders by the European Court of Human Rights in Strasbourg on July 2014. President Putin just signed a law which gives Russia's Constitutional Court the right to ignore ECHR rulings.
This is an example of one problem snowballing into a whole destructive process, said prominent political analyst Gleb Pavlovsky, and no state can afford to be isolated from the system of international jurisdiction.
The penalty awarded to the Yukos shareholders in The Hague is definitely perceived by the Kremlin as a threat, and legal proceedings will drag on, Pavlovsky told The Moscow Times. The case will be closed during what he calls "the [country's] next historical era - over the next 5 to 10 years or so."
Fighting Back
On Dec.9 Khodorkovsky gave a speech in London. In his strongest language since his release in 2013, the former tycoon stated that in his de facto fourth term in office, Putin is usurping the constitutional rights of civil institutions. "We are witnessing an unconstitutional coup," Khodorkovsky said. A new revolution is inevitable, he added, and he believes his mission is to make it as peaceful as possible. Putin and his colleagues have to pay for what they've done, standing trial in an independent court, he said. As soon as he finished, the Prosecutor General's office started checking the speech for extremist content.
Khodorkovsky also announced he would be reshaping his Open Russia Foundation, designed to build and strengthen Russian civil society, which he manages from exile.
The human rights subdivision, which now has 24 activists, has just been expanded.
"We'll be providing more help and legal support for political prisoners as well as helping their families financially," said Maria Baronova, the head of the subdivision. "Although it's essential that the prisoners share European values."
Khodorkovsky also said he is starting a group to monitor elections to carry on the work of civil observers who tracked the parliamentary elections of 2011, which were marked by accusations of rigging.
"I am not part of the opposition, but I want to provide society with alternative," Timur Valeev, the newly appointed head of this watchdog group, told The Moscow Times.
Valeev was a producer at one of the state-owned TV channels with a reputation for blatant propaganda and censorship. His appointment by Khodorkovsky's camp is surprising given Valeev is scheduled to be honored in the Kremlin for his involvement in "The Immortal Regiment," a public initiative to commemorate the memory of those who died during the World War II. The initiative received the full support last year from Putin, who even joined the rally.
However, Valeev said, even within the realm of Russian official media, there is "a large number of people, especially younger ones, who think and act outside the box," and strongly disagree with the current political agenda.
Khodorkovsky is also launching an online series promoting literacy about civil liberties and is even rumored to to be contemplating the creation of a Russian language newspaper in London. Open Russia recently started a discussion club in London in his office at Hanover square.
Any of these activities are not likely to trigger an impact in Russian politics. "My main task for the next couple of years is to find activists and help them become popular and get political experience", Khodorkovsky told The Moscow Times.
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#14
After Minsk, Another Munich has Now Taken Place in Moscow, Illarionov Says
Paul Goble
Staunton, December 17 - Russian commentators across the political spectrum, from the most liberal to the most nationalistic, agree that Vladimir Putin achieved a significant victory for his policies in Syria and Ukraine in the course and as a result of US Secretary of State John Kerry's visit to Moscow.
One Moscow analyst who regretfully accepts that conclusion but is thoroughly appalled by it is Andrey Illarionov who describes what took place as part and parcel of "the Munich-Minsk-Moscow process" in which the United States in order to get an agreement has made ever more concessions to Putin (echo.msk.ru/blog/aillar/1677986-echo/).
Illarionov makes that point by listing "the brief results of the visits of J. Kerry to Moscow on December:"
First, he writes, this marked "the end of the so-called 'Putin isolation.'" After three meetings of Putin and Barack Obama "over the last two and a half months, after Hollande's visit to the Kremlin and Putin's trip to Paris, after two visits by Kerry to Russia in this year, it isn't appropriate to speak about any international isolation of the current Russian regime."
Indeed, Kerry himself declared that isolating Putin was not American policy. In response to a Russia Today journalist who pointed out that Obama had said about a year ago that "it is America that currently stands strong and united with the allies, but Russia is the one that's isolated," the US secretary of state declared that isn't American policy.
"Now, we don't seek to isolate Russia as a matter of policy, no. At that particular moment of time, there was an effort to try to make a statement about what had happened...
Today, we met here as a matter of good diplomacy to try to solve problems, and I believe we will continue that effort in New York on Friday."
"There is no policy of the United States per se to isolate Russia," Kerry concluded.
Second, Illarionov continues, the US has now accepted Putin's call for "a joint coalition of Russia and the US for 'the resolution of common problems." Kerry declared in Moscow that "we have consistently said that the world is better off when Russia and the United States find common ground and an ability to be able to work together."
The top US diplomat added that "It's a sign of the maturity of both leaders and their understanding of the importance of the role they play... There is a policy of the United States... to try to work with Russia to join together in as constructive a way as possible to, as I said a moment ago, find the common ground.
Third, the Moscow analyst says, despite the failure of Russia's military operation in Syria and "the impossibility of saving the Asad regime with force alone ... Putin without difficulty convinced the Nobel aspirant to shift to 'a political process,' to diplomatic negotiations about the preservation of Asad as head of Syria."
Despite the fact that the US had declared many times that no solution in Syria would be possible as long as Asad remained in power, Kerry said in Moscow: "As I emphasized today, the United States and our partners are not seeking so-called 'regime change,' as it is known in Syria."
Consequently, the future of Syria will now be decided not by negotiations of the Syrian opposition groups without Asad and not by negotiations in which both the opposition groups and Asad are participants but rather, Illarionov points out, by talks between Asad and "a delegation of the unified opposition," thus tilting the outcome in his favor.
Fourth, Kerry disowned as Moscow had already the decision by "Muslim counties, tired of the exceptionally flexible position of the current American administration" to form "an Islmic military coalition of 34 countries" to oppose ISIS and Asad. And immediately after Kerry did so, Russian Foreign Minister Sergey Lavrov "immediately agreed" the secretary of state.
Fifth, Kerry again discussed Ukraine once again with the leaders of the country that are the aggressors in Ukraine "but without the participation of Ukraine, the victim of this aggressor," Illarionov notes.
Specifically, the US secretary of state said "I also underscored today the need to take steps with respect to the implementation of the Minsk agreements and our efforts mutually to try to bring an end to the conflict in Ukraine. We had a good discussion about Ukraine and we agreed on the spot that we will continue to grow out the bilateral process that the presidents agreed on and established recently - some months ago, as a matter of fact."
Moreover, Kerry made it clear that from Washington's perspective the situation in Ukraine is one in which both Russia and Ukraine are in violation of the Minsk Accords, noting that "President Putin has agreed on steps that need to be taken. The government in Kyiv also has steps that we agree need to be taken, and we intend to work hard in order to see that both sides' obligations under this agreement are met."
Finally, signaling just how pleased he was with his visit to Moscow, Kerry did not conceal from the public his complete satisfaction with what he had been able to achieve jointly with dear 'Sergey' (he used that expression five times) and with 'President Putin' (whom he thanked three times." Summing up, Kerry said "so this was a productive day."
What happened in Moscow, of course, was a classic example of what occurs when one side has a consistent policy and is prepared to wait for others to move and when the other side doesn't and with time makes more and more concessions to the first in order to get some kind of agreement, even if it is one that violates the latter's principles and earlier declarations.
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#15
Carnegie Moscow Center
December 16, 2015
Deglobalizing Russia
By Sergei Guriev
Sergei Guriev is a professor of economics at Sciences Po in Paris.
[Text with charts here http://carnegie.ru/2015/12/16/deglobalizing-russia/in6d]
The real cost of Russia's current isolation will be felt in the long term: the country will miss opportunities for growth and will continue to stagnate.
When Vladimir Putin won the presidential election in 2000, there was no doubt that his vision was to integrate Russia into the global mainstream. His core economic program, which was developed by the then economic minister Herman Gref, included among other things joining the WTO as soon as possible.
In practice, the pro-globalization rhetoric of Putin's elites has always coexisted with protectionist policies and resistance to integration. Russia eventually managed to join the WTO, but only in 2012. Both before and after that, the government took numerous steps aimed at undermining free trade and foreign direct investment (FDI). In 2006, Russia forced the Shell-led Sakhalin energy consortium to sell a majority stake to Gazprom. In 2008, the Kremlin adopted a list of more than 30 sectors (including broadcasting, fishing, and publishing) in which foreign investment was subject to government approval; this list eventually expanded to include 45 industries. Even in industries not on the list, there were multiple cases in which foreign investors were quietly dissuaded as their acquisition targets were slated for takeover by politically connected Russian businesses who did not like competition.
Given the high level of corruption in Russia,1 these moves were not unexpected. However, the overall vision of a more globalized Russia was never questioned-until 2014. Even as Russia's economy under Putin grew more corrupt and more statist, it was also becoming more and more integrated into the global economy.
The Ukraine crisis changed everything. Russia's March 2014 annexation of Crimea and the resulting Western sanctions brought about a clear division in Russia between "us" and "them."
The ultimate proof was the introduction of Russia's countersanctions. In August 2014 the government banned Western food imports, even knowing that it would hurt Russian households much more than Western farmers. In 2015, the government went a step further and ordered that any embargoed food that found its way into Russia be burned. Given Russia's history of famine, this move was politically risky. Yet the government still opted to demonstrate that it would rather destroy Western food than hand it out to Russia's poor.
The Road to Isolation
How did Russia's elite arrive at this seemingly genuine antiglobalization stance? Even though Putin's initial intention was to integrate Russia into the global economy, the current course is actually a logical result of his regime's evolution.
Until very recently, the regime's legitimacy was based on a straightforward social contract. The public would enjoy rising incomes and living standards in exchange for the unaccountability of corrupt elites. Both would benefit from the openness of the economy, as growing commodity prices bolstered economic growth and allowed the elite to buy, among other things, luxury real estate abroad and to take their place among the world's moneyed elite.
However, by 2012 Russia's economic engine had run out of steam. The preexisting sources of growth had been exhausted. Oil prices were still high but had stopped growing, labor was no longer as cheap or abundant, and there was no excess production capacity. Russia had recovered the losses incurred during the 2009 recession, but further economic growth could come only from new investment and improved productivity of existing firms. This would in turn require reforms to secure property rights, enforce contracts, and promote competition-which would directly endanger the rents of the ruling elites.
Not surprisingly, such reforms-which were publicly announced and even promised in writing-were never implemented. Economic growth slowed from 4 percent in 2011 to just 1 percent in 2013. Given that the social contract and the regime's support were premised on rising incomes, the economic slowdown coincided with a fall in Putin's approval ratings from 79 percent in late 2010 to 61 percent by the end of 2013.
The regime started to look for new sources of legitimacy and eventually, thanks to the annexation of Crimea and hostility to the post-Maidan government in Ukraine, tapped into a vein of Russian nationalism. This quickly helped to boost Putin's popularity, driving it back up to well over 80 percent, but in the process destroyed Russia's relations with the West.
Prior to the Ukraine crisis, some public figures in Russia had employed harsh anti-Western rhetoric, but American and European politicians and businesses were assured that this was merely pandering aimed at Russia's reactionary elements. After the annexation of Crimea, however, anti-Western propaganda stopped being just cheap talk.
It may well be the case that the Russian government miscalculated the economic costs of Crimea annexation and the violent destabilization of eastern Ukraine. The Kremlin may have thought that the interdependence of the Russian and European economies would limit the West's reaction to critical statements and perhaps limit sanctions.
In April 2014, Putin began openly referring to southeastern Ukraine as Novorossiya (New Russia) and arguing that the region's six provinces should follow Crimea's example. However, after the imposition of Western sanctions-which also made threats of future sanctions credible-the Kremlin changed tactics. While Crimea became part of Russia just a week after its referendum, the other breakaway territories met a different fate. Moscow did not recognize the May 2014 referendums in Donetsk and Luhansk and shied away from publicly supporting Donbas's independence from Ukraine. The downing of Malaysia Airlines Flight 17 strengthened Western resolve and led to the imposition of sectoral sanctions, which significantly disrupted Russia's economic and financial ties with the West.
Another important element of the Kremlin's strategy has been its pivot to Asia. Russia assumed that stronger ties with China would absorb the economic impact of a break with the West. In this sense, Russia was seeking not so much to deglobalize as to redirect trade and investment flows from West to East.
Yet these hopes have not materialized. Russia has managed to sign quite a few protocols of intentions and memoranda of understanding with China, but binding agreements and tangible investments have yet to follow. There may be several explanations for this.
First and foremost, while China values its relationship with Russia, its economic relations with the West are simply much more important-not only to the Chinese government but also to state-owned banks and corporations. The latter, in particular, have learned from the painful experience of the French bank BNP Paribas, which paid a $9 billion fine for violating U.S. sanctions against Iran: they understand that losing their U.S. business would be even more costly than obeying the sanctions.
Another possible explanation is that Chinese negotiators may have decided to wait until their Russian counterparts become more desperate-and then offer them better terms. This theory does not provide grounds for much optimism about Russia's predicament. With the price of oil and the value of the ruble both falling and China's own economic growth slowing down, the space for grand bilateral initiatives is shrinking. China's main geoeconomic project, One Belt, One Road, will also require tens of billions of dollars, and China may not be able to afford too many new expensive investment projects.
Finally, Chinese corporate bosses may also be affected by political pressures at home. Given President Xi Jinping's unprecedented anticorruption campaign, they may be feeling more cautious regarding deals with Russia's notoriously corrupt state companies.
Russia's growing integration with the members of the Eurasian Economic Space-Armenia, Belarus, Kazakhstan, and Kyrgyzstan-has not brought any tangible benefits either. These countries offer neither advanced technology nor large domestic markets nor substantial financial reserves. The customs union's economic impact on Russia could therefore never begin to compare with that of the West or China. Furthermore, the annexation of Crimea, along with Putin's subsequent remarks that Kazakhstan had never had any form of statehood before 1991, prompted both Belarus and Kazakhstan to start worrying about potential Russian encroachments upon their own sovereignty. Neither has recognized the annexation of Crimea, while Belarus has become an important channel for exporting embargoed food products to Russia, by either reprocessing or simply relabeling them.
The Russian government, especially the Central Bank, has largely managed to preserve financial stability, a brief outbreak of panic in December 2014 notwithstanding. To offset the loss of access to Western financial markets, the Central Bank has relied on a new instrument-foreign currency repurchase agreements. In effect, the Central Bank has lent dollars to Russian banks that essentially posted their own dollar loans to Russian companies as collateral-and in turn used the dollars to repay their external debt. This has allowed Russia to stave off a run on the ruble as well as major defaults on Russian corporates' dollar-denominated debt.
The government, for its part, looked into the issue of recapitalizing systemically important banks. It is a critical issue as the isolation is especially costly for the banking system. It is very likely that Russian banks-aside from Sberbank, which is run by Gref-will suffer losses in 2015. The Deposit Insurance Agency has already exhausted its funds and has asked the Central Bank for help.
While government support is indeed needed, the government itself lacks extra funds. Though the 2016 budget draft foresees cutting spending by 8 percent in real terms, it still includes a budget deficit equivalent to 3 percent of GDP.2 That is why the government has chosen to recapitalize the banks with government bonds rather than cash. Doing so solves the problem for the time being, but it increases major risks in the long run. Essentially, it threatens a vicious circle of sovereign debt and bank default. If banks hold sovereign bonds, then the sovereign debt crisis will hit their capital-and to recapitalize banks, the sovereign budget will need to issue new debt. The eurozone faced this problem in recent years and tried hard to break out of this cycle by creating a banking union. It is ironic that Russia is brazenly refusing to learn from the EU's mistakes and may walk directly into this trap.
Is Isolation Beneficial?
Having understood that its current foreign policy can only lead to isolation, the Russian government has put together a narrative in which this was its plan all along-that isolation is actually good for Russia.
By reducing imports and foreign investment, the government claims that sanctions and countersanctions will eventually promote import substitution and growth. In essence, the Russian government has once again turned to the infant industry argument that if a domestic industry is almost competitive, protectionist policies will allow it to catch up with and then outgrow its international competitors.
Many governments around the world have abused this argument, but the Kremlin is a particularly egregious offender.
For the infant industry argument to work, several conditions have to be present. First, the formula applies to a narrow set of industries, not to the economy as a whole. As a rule, a promising industry lagging behind its foreign competitors will often rely on the use of state-of-the-art technology that has to be imported. Second, the protected industries have to be very close to the productivity frontier whereas labor productivity in most Russian industries-especially the protected ones-lags behind that in the United States by at least a factor of two. Third, in order to catch up, the so-called infant industry has to be able to depend on a large domestic market. While Russia is a large country, its domestic market, especially given the low oil prices, is no longer sizable; in nominal dollars Russia's share of global GDP is now only 1.6 percent. Finally, whatever protection is imposed must be temporary or the protected industry will have no incentive to catch up, while the cost for households will be greater than the benefit to protected industries.
It is clear that the infant industry argument cannot conjure up the supposed benefits of isolation out of thin air. Russia needs more investment. Russia needs modern technology, both in terms of technical capabilities and managerial best practices. Russia needs access to modern services, including financial markets. Russia needs access to global markets. Whatever the government says, Russia-like any other modern economy-cannot prosper on the basis of autarky.
Even in the oil sector, which is Russia's relative strong point, autarky is costly. Before the sanctions, the state oil company Rosneft struck large deals with leading multinationals as it recognized that it needed modern technology to develop new fields. Without American and European technology, Russian oil production is expected to peak in several years, with obvious negative implications for the federal budget.
In the non-oil sector, there are even fewer grounds for optimism. Non-extractive businesses need access to technology and Western finance. The same is true for the education and healthcare systems.
That is why it is not surprising that Russian exports have not increased, even with the weak ruble. The ruble's depreciation, the sanctions, and especially Russia's own countersanctions have resulted in a collapse in imports to 16 percent of GDP-the lowest level since 2009. However, exports have not budged: the average export-to-GDP ratio in the second half of 2014 and the first half of 2015 was 34 percent-similar to the 32 percent ratio in the two previous years (see figure 1).
The real cost of Russia's current isolation will be felt in the long term: the country will miss opportunities for growth and will continue to stagnate.
Isolation also undermines export growth potential in new markets, including the transportation sector, tourism, and agriculture. Now these can serve only the domestic market which, given low oil prices and the weak ruble, is half of its pre-2013 size.
Kremlin propaganda has repeatedly returned to one of its favorite subjects-World War II- arguing that victory was due to Stalin's industrialization, which was allegedly carried out without external help. While it is not clear how this argument can benefit Russia today, it is also false. First, the Soviet Union received substantial support during the war through the Lend-Lease program. Second, industrialization in the 1930s would not have been possible without imports of modern industrial equipment from the West. Finally, and most important, Stalin's methods of industrialization had catastrophic economic and social costs: Russian agriculture was destroyed, which in turn hampered industrialization, and millions of lives were lost to famine and political repression.
What Next?
Where the Russian economy is heading will depend on the nature of both foreign and domestic policy. If the status quo holds, Russia's isolation will continue. The weak ruble will keep out imports, leading inevitably to import substitution. Households will have to buy expensive domestic substitutes of previously imported goods, and living standards will fall.
To mitigate the threat of public discontent and possible protests, the government will increasingly redistribute wealth. It will first tap into the Reserve Fund and the National Welfare Fund, but these likely will be exhausted in one to two years. After that, it will have to increase taxes on businesses, which will undermine incentives to invest, resulting in continuing capital outflow and a further decline in GDP.
Isolation, then, is going to be very costly for the Russian economy.
However, since 2014, the government has discovered that its popularity is not necessarily linked to the economy. Using a comprehensive program of propaganda and censorship, the government has managed to convince the public that the economic difficulties are driven by external problems-or conspiracies. The new social contract, in which the government's legitimacy is based on propaganda rather than on prosperity, actually benefits from isolation. The less trade and investment there is, and the less contact with the West, the easier it is to convince the public that the West is to blame for Russia's hardships.
How long can Russia stay on this trajectory? The answer may be found in the famous adage: "You may fool all the people some of the time; you can even fool some of the people all the time; but you can't fool all of the people all the time." Given the unprecedented scale of the current propaganda effort, it is hard to predict when Russians will start to see the real causes of their country's economic troubles. Until then, isolation is likely to continue, and Russia will remain cut off from international trade and investment. This may or may not have disastrous implications for the economy in the short run. The Soviet Union had a very closed economy, yet it lasted for nearly eight decades. The real cost will be the long-term one: Russia will miss opportunities for growth and will continue to stagnate.
The real cost of Russia's current isolation will be felt in the long term: the country will miss opportunities for growth and will continue to stagnate.
Notes
1 In the last fifteen years Russia consistently ranked in the 20 percent most corrupt countries (according to both Transparency International and World Bank data). The progress in fighting corruption during Putin's first term was undone during his second term. And the positive trend of President Dmitry Medvedev's anticorruption efforts did not continued after 2012; moreover, in 2014 the situation with corruption started to worsen again-see figure 2 in the appendix.
2 The 3 percent GDP deficit is not large but because Russia lacks access to financial markets, it can rely only on its Reserve Fund. Given that the Reserve Fund accounts for only 6.7 percent of GDP, it is not surprising that the government stopped drafting three-year budgets.
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#16
Russia Insider
www.russia-insider.com
December 17, 2015
9000 Guests Throng Massive Culture Forum in St. Petersburg
Our contributor attended Russia's 'Davos of Culture', and sends this report
By Gilbert Doctorow
Gilbert Doctorow is the European Coordinator of the American Committee for East West Accord. His most recent book, Does Russia Have a Future? was published in August 2015.
In the days leading up to the 4th International Cultural Forum in St Petersburg that closed today, Russian media promoted the event to the domestic audience as the "Davos of Culture."
There would be 9,000 visitors to concerts, dance performances and panel discussions led by curators, film directors and a lot of well-known art scholars.
The venues were concentrated in the General Staff building of the Hermitage on Palace Square but also spread out across the historic center of the city. The international dimension would come from diplomats and government officials from more than 40 countries.
If Europe would be woefully underrepresented (just Luxembourg was on the roster of participants), there would be a lot of Far Eastern worthies to make up the gaps. Moreover, the biggest foreign presence was UNESCO-related, part of the 70th anniversary of that institution which just happens to be headed by a Russian-speaking graduate of the Moscow University for International Affairs, Irina Bokova (Bulgaria).
However, out on the streets of St Petersburg, the hoopla of the Cultural Forum was just a backdrop for the visit to the city of President Vladimir Putin, who has not been here for months, I was told.
Taxi drivers, who were in Soviet times and remain today among the best informed and eager interlocutors about the ins and outs of politics, were speculating on the imminent removal of St Petersburg Governor Georgi Poltavchenko, because he was nowhere to be seen at the big events of the Forum, whereas the big bosses from Moscow were everywhere.
The expected appearance of Vladimir Putin at opening ceremonies of the Forum was known for weeks in advance and was the talk of the town. On the one hand, a vast number of little celebrities would vie for an invitation to these closed events. On the other hand, the various 'security organs' at local and federal levels would outdo themselves to ensure there were no incidents.
Some bright guys in these special services put so many hurdles in the path of issuing badges, with or without access to certain events (notably the ones with Putin), with or without holograms, that their computer system crashed, causing utter chaos in processing visitors from the general public, journalists and participants in the Forum.
The madness continued at the entrance to the Mariinsky-2 Theater, where the main opening ceremony was held Monday evening. Our printed invitations proved to be worthless. The end result was improvised violation of the system by the staff who were totally overwhelmed and pasted on the essential holograms to move folks along.
Once past the lines for re-accreditation, past the machine verification of access and the metal detectors, a surreal calm and note of elegant hospitality at the presidential level took over. Flutes of champagne were distributed by radiant young staff.
Putin did not keep us waiting. He was first to speak on stage, delivering a brief salutation to the audience and making a quick exit. The two hour ceremony was followed by a traditional Russian walking dinner as guests thronged and picked clean the passing trays of caviar and crab sandwiches.
For those who read into my account the suggestion that there are vulnerabilities in the presidential security, my best advice is to send in emails to the Kremlin urging Vladimir Vladimirovich to yet again sack his security detail and bring in more clever folks. The last thing we all need is regime change in Russia, whatever Mikhail Khodorkovsky and Masha Gessen have been telling the readers of The New York Times.
As my well-informed taxi drivers tell me regularly, the man one heart-beat away from Vladimir Putin is Sergei Ivanov. A President Ivanov would make Putin look like a pussy-cat in dealing with the West. And if Ivanov goes, next in line is likely Dmitry Rogozin, another fervent patriot and Kremlin favorite. There are no Liberals beloved of the West in Russia's present Matryoshka doll of power. That is a message that Beltway insiders would do well to absorb.
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#17
Russia Beyond the Headlines
www.rbth.ru
December 17, 2015
Russia's future under the microscope at Yeltsin Forum
Experts analyze the reforms and the mechanisms of the Yeltsin's times to help creating a system of transformation for the future.
NADEZHDA USTÍNOVA, SPECIAL TO RBTH
Nearly a quarter of a century after the collapse of the Soviet Union and founding of today's Russia, experts have met to discuss constitutional principles and their prospects for development in the country.
The forum, at Moscow's the Boris Yeltsin Presidential Center, held December 16, was dedicated to the 25th anniversary of the Declaration of State Sovereignty of the Russian Soviet Federative Socialist Republic in Dec. 1993.
"Time has shown that those ideas and principals, formulated under Yeltsin, have suffered significant erosion," political scientist Andrey Medushevsky told the conference. He believes that Russia again faces a choice: what path it should follow, how it should implement reforms, what the country should refuse.
By examining such issues, he said, the forum could analyze the reforms and the mechanisms of the Yeltsin's times to help "create a system of transformation for the future."
Yeltsin's closest adviser Gennady Burbulis, forum moderator, told RBTH: "The Yeltsin Center's activity today is based on understanding the epoch of the first Russian president and how that influences the country today."
The Yeltsin Center was created in 2008. The core of the center is the Boris Yeltsin Museum in Yekaterinburg. Its archives include tens of thousands of documents, photos, more than 130 video interviews and 163 media programs.
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#18
Forbes.com
December 17, 2015
Ukraine's Politics Are Still Badly Broken
By Mark Adomanis
In the aftermath of the Maidan, the US foreign policy elite quite rapidly consolidated around a position that, due to Russian aggression, Ukraine was "more united than ever." The White House said it. Our former ambassador to Russia said it. The International Republican Institute said it. Talking Points Memo said it. The German Marshall Fund said it. Outside of a few curmudgeonly realists like Stephen Walt and John Measrshimer, who continued to note Ukraine's deep regional cleavages and essentially said that there wouldn't be much of a change to the status quo ante, virtually everyone of significance in foreign policy said it.
Across both partisan and ideological lines, the overwhelming consensus among policymakers was that Putin had lost Ukraine irrevocably and that Ukraine's politicians had consolidated around a new, pro-Western position. Ukraine's days of chronic political infighting were over, replaced by a broadly shared understanding that the country needed to move as close to Europe as quickly as possible.
As 2015 comes to a close, however, reality is proving increasingly resistant to this rather optimistic reading of Ukrainian politics. There was a fistfight (and quite a nasty one at that!) in the Ukrainian parliament between supporters of the President and the Prime Minister. That is to say that members of the same nominal coalition so loathe and despise each other that they were, in very literal terms, beating the daylights out of each other. Any political coalition will, of course, have some level of internal tension, but the awkward combination of Arseniy Yatsenyuk (whose poll numbers have collapsed so thoroughly that his party didn't bother to contest the most recent round of elections) and Petro Poroshenko (who is doing better, if still not terribly well, in the polls) seems to be collapsing.
That, unfortunately, is far from the only open manifestation of chaos within the Ukrainian elite. Arsen Avakov, the Interior Minister, and Mikhail Saakashvili, the former President of Georgia and the current governor of Odessa Oblast, also got in an alternation in recent weeks. This, mercifully, didn't turn into another fistfight, it "only" escalated to the point that Avakov threw a glass full of water on Saakashvili's face. The fight is relevant not just for its bizarre, cartoon-like nature, but because both Avakov and Saakashvili are, at least nominally, allied with President Poroshenko. It thus shows that the administration itself is exhibiting levels of tension and discord broadly similar to those which boiled to the surface in parliament.
The point isn't to laugh at the absurd spectacle (when you take a step back and really think about it, there's actually very little that's funny about parliamentarians beating each other up in parliament) it's to note that the idea that Ukraine's political elite is "united" behind anything is obviously untrue. There's no agreement on who should be in the government, much less what sorts of policies the government should implement. Please note that all of the fighting and tension described above is taking place within the current Ukrainian government, it doesn't even involve the, sizable and growing, "opposition" which takes a decidedly more pro-Russian view of things.
Ukraine's leaders have, of course, recently pledged to stop the infighting. But they've made similar pledges before, only to break without a second thought. It's unclear why this time would be any different. Despite lots of optimistic rhetoric, then, Ukraine's political system is following a familiar, and depressingly, pattern of petty bickering and infighting. There's very little reason to think that this government will be able to implement the sorts of radical reform that the country needs.
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#19
Russia Insider
www.russia-insider.com
December 17, 2015
Reviled by Ukrainians but Backed by US PM Yatsenyuk Stays On
Who needs popular support when you have the backing of Uncle Sam? Despite popularity in the single digits Yatsenyuk soldiers on as the PM of Washington's client state of Ukraine
By Alexander Mercouris
Last week's fight in the Ukrainian parliament between Prime Minister Yatsenyuk and a deputy of Poroshenko's party has made world headlines.
In doing so it has obscured the single most important fact about political developments in Ukraine over the last two weeks.
This is that despite the collapse of his support and popularity Yatsenyuk is still Ukraine's Prime Minister.
Talk of Yatsenyuk's resignation or dismissal has circulated for months.
There was a flurry of such rumours back in April, which I briefly discussed at the time, pointing out that Yatsenyuk's departure would not change anything and would certainly not make the Ukrainian government more moderate.
Since then Yatsenyuk's unpopularity has if anything increased.
This is hardly surprising as the economy has gone from bad to worse and as rumours of corruption have swirled around him and his government.
This sets the background for the events of the last two weeks.
Prior to the parliamentary session last Friday rumours circulated that it would result in the dismissal of the government.
Virtually all the political parties in the parliament apart from Yatsenyuk's own seemed to be uniting around a demand that he go. This consensus appeared to include Poroshenko's party and Tymoshenko's party - both members of the ruling coalition.
In the event, instead of being voted out of power, Yatsenyuk delivered a speech of quite extraordinary and offensive arrogance, provoking the altercation with the deputy that made world headlines.
In the days since no moves have been made to remove him, and he is still there.
Yatsenyuk's rise, and his continued presence at the top of the Ukrainian power structure, would be inexplicable if Ukraine were a genuinely sovereign state.
Not only is he massively unpopular, he has never actually been popular. At the height of the Maidan protests in 2013-2014 he was overshadowed by his two erstwhile partners in the Maidan triumvirate - Klitschko and Tyagnibok.
Nor does Yatsenyuk have a strong political power base. Whereas at the time of the Maidan protests his partners Klitschko and Tyagnibok headed their own political parties - Udar and Svoboda - Yatsenyuk was no more than the caretaker leader of Tymoshenko's party - despite being on poor terms with Tymoshenko herself.
The party Yatsenyuk now heads is almost entirely a post-Maidan construction, cobbled together by Yatsenyuk using the patronage his position as head of the Ukrainian government has given him. It is now so unpopular that it did not even dare to participate in the local elections that took place in Ukraine a few weeks ago.
Despite having no support inside Ukraine Yatsenyuk remains its Prime Minister for one reason only - he has the support of the United States.
This became obvious during the Maidan protests when US assistant Secretary of State Victoria Nuland was overheard making a telephone call to US ambassador to Ukraine Geoffrey Pyatt insisting that Yatsenyuk and not Klitschko be made Ukraine's Prime Minister (the famous "Nuland call").
It continues to be true since.
There has been much discussion about the reasons for US Vice President Biden's recent visit to Kiev.
Some have pointed to the comments he made in the Ukrainian parliament appearing to endorse the Minsk Agreement and calling for federalisation.
Others have speculated that his visit was connected to the continued Ukrainian military build-up in eastern Ukraine and the renewal of the fighting there.
Still others have speculated that it was to push the Ukrainians further on the road to "reform".
Biden's visit doubtless served multiple purposes. However the key reason for his going to Ukraine was because the US's two local proconsuls - Nuland and Pyatt - have been struggling to control the political situation there as demands for Yatsenyuk's removal have boiled over.
A visit from Biden himself - the US administration's ultimate manager of Ukraine (he was already Yanukovich's chief US interlocutor at the time of the Maidan protests, with the number of telephone calls between him and Yanukovich almost beyond count) - was therefore deemed necessary.
Rumours in fact circulated during Biden's visit that Biden discussed Yatsenyuk's removal with Poroshenko, and that he went over with Poroshenko a list of possible candidates to replace Yatsenyuk.
This included some unlikely individuals, such as former Georgian President Saakashvili and Finance Minister Jaresko - both persons who until recently had foreign (ie. non-Ukrainian) citizenships.
The most plausible candidate mentioned was however Poroshenko's close political ally - in fact his henchman - Rada Chairman Volodymyr Groysman.
In the event the days have passed and Yatsenyuk is still there.
Possibly Biden and Poroshenko agreed that Yatsenyuk be given a decent interval before being told to go. That however is pure speculation.
Yatsenyuk's extraordinarily arrogant speech at the parliamentary session on Friday however suggests on the contrary someone who is sure of his political support, which suggests that Biden still backs him, a fact which no doubt explains why he is still there.
If so then that says everything about where power in Ukraine actually lies.
As for Yatsenyuk himself, he comes across as just another in a long line of political leaders - including Chiang Kai-shek in China, Nguyen van Thieu in Vietnam, George Papadopoulos in Greece, Mobutu Sese Seko in Zaire, Hamid Karzai in Afghanistan and Ahmed Chalabi in Iraq - whose virtues are invisible to everyone except their friends in Washington.
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#20
www.rt.com
December 16, 2016
Kiev court bans Communist Party in Ukraine
The Communist Party of Ukraine is now out of politics after a Kiev court ruled to ban its activities.
On Wednesday, the Kiev District Administrative Court ruled for the plaintiff - the Ukranian Ministry of Justice - that had filed a lawsuit in 2014 requesting a ban on all activities of the Communist party in Ukraine. "The court has fully met the claim," the court stated.
The lawsuit accused the Communist party of actions aimed at "amending the constitutional order by force, violation of the sovereignty and territorial integrity of Ukraine, propaganda of war, violence, incitement of ethnic hatred, encroachment on human rights and freedoms," according to the Unian news agency. The ministry also stated that representatives of the Communist party "systematically call for the formation of military groups."
The case has been surrounded by controversy, as in February police raided the office of Judge Valery Kuzmenko, who was presiding over the suit, but withdrew from the case following the seizure of some materials.
Following the scandal, other judges in the Kiev District Administrative Court also filed applications requesting to be excused from hearing the case, according to Kuzmenko.
In July, the Ukrainian Justice Minister, Pavel Petrenko, signed a decree banning all communist parties from participating in the elections of the country. This came in the wake of the de-communization law signed by Ukrainian President Petro Poroshenko on May 15.
The Communist Party has been quite vocal in speaking out against Ukraine's new authorities, which came to power after a coup in February 2014.
The party has also slammed Kiev's military campaign in the southeast of the country, branding it a war against its own people. Communist leader Pyotr Simonenko has openly accused the Ukrainian authorities of the "slaughter of civilians and mass murder."
In April, Ukraine's Parliament passed a law which equated communism and Nazism, banning both regimes and all their symbols. The MPs passed another law at the same time officially recognizing Ukrainian nationalists as "freedom fighters," including members of the Organization of Ukrainian Nationalists (OUN) and Ukrainian Insurgent Army (UPA) who had collaborated with Nazis in the 20th century.
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#21
Bloomberg
December 17, 2015
IMF Says Ukraine Bond Owned by Russia Is Official Sovereign Debt
By Andrew Mayeda
The International Monetary Fund's executive board ruled that a bond sold by Ukraine to Russia should be considered official sovereign debt, putting pressure on Ukrainian officials to start restructuring talks with their Russian counterparts.
Russia bought a $3 billion bond from the government of former Ukrainian President Viktor Yanukovych in 2013. Ukraine, which is preparing to default on the bond due Dec. 20, has offered Russia the same restructuring terms, including a 20 percent principal writedown, that creditors led by Franklin Templeton accepted in October. Russia has insisted on payment in full.
The IMF's executive board, which represents the fund's 188 member nations, decided that the bond should be treated as official debt, rather than a commercial bond, the fund said in an e-mailed statement late Wednesday in Washington.
The bond was acquired by and is held by Russia's National Wealth Fund, an agency acting on behalf of the Russian government, according to a staff paper considered by the board.
The board approved a policy change on Dec. 8 that will allow lending to countries that default on debts to sovereign creditors. The change clears the way for the Washington-fund to continue lending to Ukraine if it fails to repay the bond.
But under the new policy, the debtor country will be expected to make "good-faith efforts" to restructure the debt. This may mean Ukraine will have to overcome its frosty relations with Russia to try to reach a bilateral agreement over the debt.
The new policy also pushes Russia to the negotiating table, by trying to prevent IMF loan programs from being held up by "holdout" creditors. Sovereign lenders would be expected to accept offers consistent with the IMF's assessment of a borrower's debt sustainability and financing needs.
Russia refused to take part in the debt-restructuring agreement Ukraine reached with its commercial Eurobond holders, claiming it should be treated as an official lender. Ukraine, which is treating the bond as commercial debt, is barred by the terms of that debt restructuring to pay Russia in full.
Russia has been softening its tone on the debt since refusing to accept terms of the broader restructuring this year, with President Vladimir Putin proposing last month that Ukraine be able to pay it back over three years so long as a western government or bank provide a guarantee. That offer fell through earlier in December. Asked if there was a chance for an out-of-court settlement, Russia Finance Minister Anton Siluanov said earlier Wednesday: "We're open to cooperation but technically it's impossible."
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#22
Forbes.com
December 16, 2015
IMF Says Russia Right About Ukraine $3 Billion Loan
By Kenneth Rapoza
Russia apparently is not always blowing smoke. Sometimes they're actually telling it like it is.
The International Monetary Fund said on Wednesday that the $3 billion Russia loaned to Ukraine in 2013 was indeed an intergovernmental loan and not a private one as Kyiv contests. The Ukrainian government argued that Russia's loan came from their National Wealth Fund and not directly from the Russian government and should therefore not be part of the IMF rules that require Ukraine to make good on sovereign debts as part of its bailout package.
The IMF agreed with the Russian government today, stating that Russia could not loan the money directly from the Russian budget because it was not allocated to do so at the time. Back in 2013, the Russia friendly Viktor Yanukovych was in power. He was ousted through extra legal means in the Euromaidan protests in February of 2014 and replaced by Washington's handpicked successor Arseniy "Yats" Yatsenyuk. The IMF said that the money from the Russian sovereign wealth fund constituted government funds and was therefore a sovereign credit, as the Russian government declared.
Moreover, the Russian government confirmed to Euroclear, at the request of the Ukrainian authorities at the time, that the Eurobond was fully owned by the Russian government. The IMF said in a statement that the Eurobond was "an official claim" by the Russian government and fit the purposes of the IMF policy of debt in arrears to official creditors. The Eurobond is held by the Russian sovereign wealth fund, an agency acting on behalf of the Russian government and the money originates from a transaction where the fund acted on behalf of the Russian government to provide financing to Ukraine. The decision by the IMF today puts further funds in jeopardy, unless Kyiv can agree to a refinance deal, or pay the debt in full.
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#23
Reuters
December 17, 2015
Putin: Russia Did Have People in Ukraine Doing 'Certain Military Tasks'
MOSCOW - Russian President Vladimir Putin said on Thursday that Russia did have personnel in eastern Ukraine who were carrying out certain military tasks but denied Moscow had deployed regular troops there.
"We never said there were no people there who were carrying out certain tasks including in the military sphere," Putin told an annual news conference.
"But that does not mean there are Russian (regular) troops there, feel the difference."
Putin said Russia was ready to persuade separatists in eastern Ukraine that a compromise was needed in order to achieve a political settlement of the conflict there.
He also said he expected trade relations with Ukraine to worsen, but that Moscow would not impose any sanctions on Kiev related to its trade deal with the European Union.
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#24
The Vineyard of the Saker
December 14, 2015
SITREP Crimea 13.12.15 by Auslander
1. Electric supply from the mainland is now a fact. The first power cable from the nuclear power plant in Krasnodar Krai was put in operation a little over a week ago. The amount of electricity provided by this cable is, depending on who you listen to, 200 to 225 megawatts. Last night, 11.12.15, the second cable from Krasnodar Krai was put in operation, this resulting in temporary power outages to several areas in Krimea including North Side Sevastopol. This cable is the same as the first cable, combined the two will provide 400 to 450 megawatts of power to the peninsula.
2. Electric generating capacity in Krimea and Sevastopol (I separate the two because they are two different entities, The Autonomous Republic of Krimea, a member of Russian Federation, and The Federal City of Sevastopol, a city of Russia and traditionally considered the third capitol of Russia.) has increased to approaching 600 megawatts of power, this increase due to more gas turbine semi portable generators coming on line. Combined with the two power feeds from the mainland Krimea and Sevastopol combined have approaching 1000 megawatts of power available. This amount is suitable for summer conditions but is roughly 100 to 150 megawatts short of winter power demands. I do not know what plans, if any, are extant to address the shortage.
3. There is no shortage of either petrol or diesel fuel. Prices are stable and to a great extent controlled from Mockba.
4. The increase of home generators is significant. The first night of the power blockade from Ukraine, 22 November, we had the only generator that we could see in our valley and the surrounding hills. We did take a drive and observed from Radio Gorka to Gollandia Regions, west to east, and there were no lights visible anywhere on the north side besides our house. Not even Militsiya, Fire Department and the hospital had power. Southside observed from the heights of Radio Gorka was almost totally dark. Last evening during a one hour power outage on our side of harbor I counted 27 houses visible in our valley alone that had power including two close neighbors. We did not take a drive this time to count in the other regions on north side. Southside, much of which is clearly visible from our valley, was a veritable sea of small lights.
5. Food supplies are stable, there is no shortage of any commodity in regards to food. Prices are also stable and unofficial price controls have been instituted. Many of the large shops, small magazines and kiosks have a generator to keep them open and lighted. There are price controls on basic staples, basic breads, milks and other dairy products, buckwheat for porridge among others. Tobacco supplies are plentiful and those prices are State regulated. Beer, wine and spirits are also in good supply.
6. The citizens of this city are in general calm. Any angers at the current crisis are directed at Ukraine, not Russia. Still, no one bothers anyone with a Ukraine flag or sticker on their car or flying the Ukraine flat at their house or flat and even now, well over a year after Ukraine was sent packing from this peninsula, there are two houses in our district who fly the Ukraine flag. No one cares and no one touches them. However, it may well behoove The Powers That Be to fix the damned roads.
7. The Tatar Mejilis is a done deal, what little support they may have still had in the Tatar community evaporated somewhere around 22 November 2015. Dawn of 23 November the Tatari around Bachti Sarai woke to no power for their houses, shops, stores, magazines and their very extensive greenhouse facilities in which they grow the fresh vegetables and fruits that supply large areas of Krimea. The possibility spoken by the now exiled to Ukraine Mejilis, who by the by were extensively involved in the destruction of the power supply lines from Ukraine to Krimea and proudly photographed themselves doing the deed, of terrorists from Turkei storming across our border to help the Tatari in their struggle against the Russian occupiers and abusers is a forlorn dream of Mejilis.
8. Our harbor is empty. We all know sailors, soldiers, airmen, Marines and Spetznaz who are now serving either off the coast of Syria or in Syria. The Kruiser Varyag will be arriving shortly off Syria to relieve our flagship, the Kruiser Mockba, so he can return to our harbor. I do not know if his escorts will accompany him home or stay to support Varyag, Varyag being the same class as Mockba.
9. The weather has turned, winter has arrived. In the first week of the electric crisis the weather was still soft and relatively warm, at least in our little city and surrounding area. Not so now, highs are 6 to 8 and we have had the first hard frosts. That means to the north and east of us you can subtract 3 to 5 degrees from our local temperatures for most of the rest of Krimea. The skies are dark and menacing most days, clouds low and mist often touching the ground. We have now just barely enough power to supply the flats houses and individual houses with power. Many factories and such are still shut down to conserve electric for the citizens. Manufacturies with their own power supply are of course allowed to continue to work as are defense related facilities.
10. We took a drive couple days ago, again out in to the country but this time due north past Lubimovka and Kacha on the west coast, then a little east to the truly outlying villages. We had planned beforehand to not hide the fact of me being foreign or us being from Sevastopol. We stopped in just about every little village we came across, in the center where any shops they may have were located. We deliberately conversed in English the moment we exited the vehicle. No one noticed or raised an eyebrow. A few of the villages had not had any electric since the Ukes blew down the towers but most were at least getting something now. All were making do. In almost every village there seemed to be a community generator that ran the few shops and kiosks and were also used to charge cell phones and lap tops. This is a change compared to two weeks ago when the villagers were using auto batteries for that purpose. In the villages there are no shortages of food and drink. We looked in a shop or two in each village and verified these statements. They are correct. Prices are a little higher than in Sevastopol. Everyone was bundled against the cold, it was around +4 at midday. In one village it seemed half the women were in advanced pregnancy. I told my wife to not drink the water there, the last thing we need is a surprise at our ages.
11. An interesting little item turned up at a meeting about two weeks ago. Among discussions of the power grids and the amount of electric just coming on line for allocation someone from Electric mentioned that some areas seemed to be using more electric than they should considering the number of residential and commercial meters registered in the districts. Communications were made with Krimea Electric and we were informed they had noticed the same problem a few days before and found a large number of unregistered meters and electric services in every area they checked. Most of these unregistered electric consumers were from Ukraine times but more than a few were more recent, from the current administrative time frame. In preliminary inspections the same phenomenon was found in this city and region, in particular newer restaurants, houses and flats buildings but also older flats where the meter was simply bypassed in the jumble of old wiring in the electrical panels for each floor. The situation is being addressed vigorously.
12. All and all, things are returning to normal in this city and region and the villages and towns we visited on our foray north. While there is an undercurrent of anger in some people we talked to it was generally directed to local administrations about the obvious favoritism shown to more well heeled residential areas who seemed to have electric when no one else did.
13. Factories and businesses are due to start working again Monday, 14 December, in our city and city region. It is adjudged that the power supply is now adequate for almost normal services and commercial activities.
14. The general mood of the citizens concerning Ukraine has changed. Whereas before there was certainly a bit of anger and frustration concerning Ukraine in general and the war in Novorossiya in particular, except for the war it was generally 'well, what do you expect from 'the borderlands''. Not so now. What started with an almost total blockade of the Krim/Ukraine border on the Ukraine side, both commercial and citizenry, degenerated to a total cut off of electric power to the entire peninsula, this power supply legally contracted and paid for very handsomely and to the minute on the day payment was due. Those two actions by Ukraine were the straw that broke the camel's back. The locals who still fly the Ukraine flag no one will touch, the long term visitors from Ukraine, in essence sitting out the war and the turmoil in Ukraine and almost all fully intending to return when things become normal, I have a feeling they will be in the not too distant future required to register formally and obtain residency permits with the appropriate residency documents and propeeska.
15. The shops, magazines, parks and churches are full. Schools are back in session. People are going about their daily lives, living as they want. Children laugh and play, young couples walk of an evening in City Center Park, the teenaged guards at Guard Post #1 at the Eternal Fame in City Center change every hour on the hour, the streets and roads are again clogged with cars and trucks. Life is almost normal, and life goes on regardless of who does what to us.
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