#2
www.rt.com
January 12, 2016
Russia supports both Assad troops and rebels in battle against ISIS - Putin

Russia supports Syrian President Bashar Assad's forces and will back anti-Assad rebels as long as they are fighting Islamic State, President Vladimir Putin told Germany's Bild, countering claims that Moscow only backs the regime rather than hitting jihadists.

"We support both Assad's army and the armed opposition," Putin said in a lengthy recent interview to the newspaper, now published in full. "Some of them have publicly declared this, others prefer to remain silent, but the work is ongoing."

According to the president, "This is hundreds, thousands of armed people fighting Islamic State [IS, previously ISIS/ISIL]."

"We are coordinating our joint operations with them and support their offensives by airstrikes in various sections of the front line," Putin said.

The Western media has repeatedly criticized Russia over its airstrikes in Syria, claiming they only support the Assad regime and allegedly focus on hitting the Syrian opposition rather than IS.

"They are telling lies," Putin reacted, when asked about the allegations. Despite the existence of evidence showing the facts on the ground, Russia's critics "prefer to ignore it."

"Look, the videos that support this version appeared before our pilots even started to carry out strikes against terrorists. This can be corroborated," the president said.

By contrast, Putin brought up the deadly US airstrike on a hospital that killed over 20 people in northern Afghanistan in October and the following lack of mainstream media attention.

"American pilots hit the Doctors Without Borders hospital in Kunduz, Afghanistan, by mistake, I am sure," he said. "Western media outlets have attempted to hush this up, to drop the subject and have a very short memory span when it comes to such things. They mentioned it a couple of times and put it on ice." On the contrary, "this phony evidence" about Russian pilots allegedly targeting civilian targets "keeps circulating," Putin added.

"If we tag the 'live pipelines' that consist of thousands of petrol and oil tankers as civilian targets, then, indeed, one might believe that our pilots are bombing these targets, but everyone is bombing them, including the Americans, the French and everyone else," he said.

Explaining Russia's goals in the conflict, Putin reiterated that the main concern is to avoid the creation of a complete power vacuum in Syria, leading to the devastation of the country, as happened in post-Gaddafi Libya.

"I can tell you precisely what we do not want to happen: we do not want the Libyan or Iraqi scenario to be repeated in Syria," he said.

In order to avoid such a turn of events, Syria should restructure its government, basing it on a new constitution, the Russian president said.

"This is the only way to achieve stability and security, to create conditions for economic growth and prosperity, so that people can live in their own homes, in their homeland, rather than flee to Europe," Putin added.

Putin reiterated that the Syrian people should decide their own country's future, regardless of whether Assad stays in his post.

"I assure you, if this process is conducted democratically, then Assad will probably not need to leave the country at all," Putin said.
When asked if he would grant Assad asylum in Russia if he was forced to leave Syria, the President said it was "premature" to speculate about that.

"We granted asylum to Mr. Snowden, which was far more difficult than to do the same for Mr. Assad," he added.

On Russia's global ambitions: 'We do not claim the role of a superpower'

Putin also responded to questions regarding Russia's position on the global stage. He disagreed with US President Obama's labeling of Russia as "a regional power," but added that Moscow is not striving to become a "superpower."

"We do not claim the role of a superpower. This role is very costly and it is meaningless," Putin said, pointing out that, in fact, the Russian economy occupies "roughly the sixth place in the world."

Speaking at a nuclear summit at Dutch capital The Hague in March 2015, Obama referred to Russia as a "regional power that is threatening some of its immediate neighbors."

While admitting that everyone is entitled to their own opinion, Putin said that Obama's remark was quite vague.

"If we say that Russia is a regional power, we should first determine what region we are referring to," he said pointing out Russia's vast geographical territory, which stretches from Europe, China and Japan to the maritime borders with Alaska in the US and "Canada across the Arctic Ocean."

"I think that speculation about other countries, an attempt to speak disrespectfully about other countries, is an attempt to prove one's exceptionalism by contrast. In my view, that is a misguided position," Putin said.

On Russia-NATO tension: 'If we're not welcome, that's fine with us'

The interview also touched upon prospects for the renewal of Russia's cooperation with the G8 and NATO. Both groups cut ties with Russia amid the ongoing conflict in Ukraine.

"It was not Russia that cut off cooperation through the G8 or the Russia-NATO Council. We are willing to interact with everyone, once there is a matter for common discussion," Putin said.

Yet, Russia will not go out of its way to be accepted back into these forums, he added, instead advocating a happy relationship "when the feeling is mutual."

"If we are not welcomed as partners, that's fine with us then," the president said.

Russia-NATO ties worsened following Turkey's downing of Russia's Su-24 jet and the killing of its pilot by Ankara-backed Turkmen rebels on November 24. Shortly after the attack, Ankara called an emergency NATO meeting.

"Instead of trying to provide us with an explanation for the war crime they committed, that is, for downing our fighter jet that was targeting terrorists, the Turkish government rushed to NATO headquarters seeking protection, which looks quite odd and, in my view, humiliating for Turkey," Putin said.

He expressed the hope that "such incidents" would not trigger "large-scale hostilities," but insisted that Russia "would defend its security interests by all available means at its disposal" should it be threatened.

Putin's comments were published as the second part of a wide-ranging interview to Bild, the mass-circulation German newspaper, conducted on January 5 at his residence in Sochi.

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 #3
Moscow Times
January 12, 2016
Half of Russians Think 'Hardest Times' Ahead - Poll

More than half of Russians - 52 percent - believe that the "hardest times" for the country are yet to come, a poll by state-run pollster VTsIOM revealed on Tuesday.

It is the highest percentage of people that are pessimistic about Russia's future since 2009, when 30 percent claimed the hardest times were still to be lived through, according to the pollster.

Only 19 percent of respondents said that the country has already survived its toughest times, while 22 percent claimed it was doing so right now.

Thirteen percent told VTsIOM that state of affairs in Russia was "excellent" or "good" right now, while 62 percent said it was "normal" and 22 percent believed it was "bad" or "awful," the poll showed.

The survey was conducted on Dec. 26-27 of 2015 among 1,600 respondents in 46 Russian regions. The margin of error did not exceed 3.5 percent.

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 #4
www.rt.com
January 12, 2016
Citizens see situation in Russia as 'normal' but expect crisis to deepen, poll shows

According to a public opinion poll, about 62 percent of Russians see the situation in their country as "normal," but 52 percent expect the national economy to sink further in the future.

On Tuesday, Russian state-owned polling center VTsIOM released the results of research into the so-called "index of social moods" - the general perception of the situation in the country by ordinary people. The better the population's opinion about the situation, the higher the index. According to VTsIOM, it was decreasing throughout 2015 and hit its lowest level in December.

Only 1 percent of Russians described the situation in the country as "excellent," but another 12 percent said that it was "good." Sixteen percent said that the situation was definitely bad, and 6 percent more estimated it as "absolutely terrible." Three percent claimed that the question was too difficult to answer.

The majority of respondents - 62 percent - said that they saw the current situation in Russia as "normal" - up from about 50 percent in January 2015.

However, when researchers asked the public about their views on the future of the nation, the share of optimists turned out to be the lowest over the past few years. Fifty-two percent of respondents said that they expected the general situation to deteriorate. Nineteen percent of Russians answered that in their opinion the hardest period of the current crisis has passed, while 22 percent said that the hardest times are currently being experienced and 7 percent declined to answer.

Despite the fact that the majority of Russians acknowledge the current hardships, and are rather pessimistic about the future, the approval rating of President Vladimir Putin hit an all-time high of 89.9 percent in October last year. VTsIOM pollsters connected the surge in the Russian leader's popularity with the successful anti-terrorist operation in Syria.

In late June 2015, independent polling agency the Levada Center published the results of its own research, which said that the share of Russians who are happy with Vladimir Putin's work as president had reached 89 percent. Sixty-four percent think the current policies of the Russian authorities are correct - also the highest in history. The proportion of Russians who expressed dissatisfaction with Putin's work was 10 percent.

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 #5
Intellinews.com
January 11, 2016
Will Russia run out of money with $30 oil?
Ben Aris in Moscow

Oil prices crashed again in the first week of January, falling to an 11-year low of about $32 per barrel. The Russian federal budget was already going to struggle under the official $50 oil price assumption, and finish this year with a forecast 3% deficit. But if oil prices stay this low, won't Russia's budget balloon and burn up all the Kremlin's lauded reserve funds in the process?

The World Bank reiterated its 0.7% contraction of GDP in 2016 on January 9 as economic black clouds rapidly gathered in the first week of the New Year. That stands against the Russian Ministry of Finance's official forecast of 0.7% growth, if average oil prices come in at $50 at the end of this year.

"The global economy will need to adapt to a new period of more modest growth in large emerging markets, characterized by lower commodity prices and diminished flows of trade and capital," World Bank Senior Vice President and Chief Economist Kaushik Basu said in a report titled "Global Economic Prospects in 2016: Spillovers amid Weak Growth."

With the renewed tumble in oil prices that assumption of oil at $50 is looking shakier than ever. If oil falls to an average of $40 then even the Ministry of Finance doesn't expect any economic growth this year, but a contraction of 1.5% instead. And if oil falls to an average of $30 the contraction would be 2.4%, according to analysts at Bank of America Merrill Lynch, which is in the middle of the range for most investment banks' predictions.

All said and done, a 1-3% economic contraction would be unpleasant but manageable as Russians have built up a large income buffer over the years as wages were running well ahead of inflation for most of the last decade and corporates have amassed their own war chests of cash. The more difficult problem will be financing the federal budget deficit.

The 2016 budget assumes a deficit of 3% of GDP, or RUB1.7 trillion ($28.32bn), a level that President Vladimir Putin has declared a "red line". However, this target will almost certainly be missed even if oil does average $50, as the state will have to bail out its de facto development bank VEB, which needs a RUB1.2 trillion ($20bn) injection of fresh capital to deal with bad loans incurred from cases like underwriting investments for the Sochi Olympics.

And even counting VEB's bail-out (the government is still trying to find a way to give it money that won't come out of the public purse) the Ministry of Finance has already warned that the current budget assumption with $50 oil may be too optimistic: according Finance Minister Anton Siluanov's calculations, revenues could be RUB750bn less than the forecast in the current official budget, which would lead to a deficit of 4.1% of GDP.

And it all gets worse as the average oil price in 2016 sinks: with oil at $40 the deficit becomes 5.2% (again without counting in the VEB cost), or a revenue shortfall of RUB4.1 trillion.

Where's the cash?

So it looks very likely that the government will have to find between RUB1.7 trillion and RUB4.1 trillion to fund the deficit (and add RUB1.2 trillion for VEB and if possibly another RUB2.5 trillion if the state gives the same support to the banking sector if gave in 2015).

Where is this money going to come from? The state is reluctant to borrow at home due to high interest rates (the budget has RUB300bn of borrowing against the RUB 1 trillion in "normal" years) and can't borrow internationally thanks to the West's financial sanctions (the budget assumes $1.5bn of international borrowing, presumably from the Chinese).

The only resource left are the two reserve funds: the Reserve Fund that is specifically meant for plugging budget deficits in hard times; and the National Welfare Fund that is earmarked for pension payments in the future.

At the end of 2015, the funds held RUB3.4 trillion and RUB4.6 trillion respectively. The state has already said it will spend at least RUB2.5 trillion from the Reserve Fund to supplement the 2016 budget spending, which leaves a reserve of RUB1.1 trillion. But Siluanov already admitted in December that he expects the Reserve Fund to be fully exhausted by the end of 2016.

If oil ends 2016 at $50 then the state will scrape through the year with RUB1 trillion in reserve, but if oil falls to $40 then there will still be at least a RUB2 trillion short fall (not counting the extra costs). The temptation to tap the National Welfare Fund will almost certainly become overwhelming and at least half of that fund, if not all of it, could be burnt up too. The bottom line is Russia can get through 2016 even with oil at $40 with the resources it has in hand but it would go into 2017 flying on fumes.

Austerity Russian style

The financial headaches the government is facing are made much worse by the political calendar. There are parliamentary elections slated for this autumn and crucial presidential elections in 2018 where Putin can stand for the last time (under the rules of the current constitution). If anything the government will want to increase spending, not cut it.

But that will be hard. Russia's regions are already under pressure to up spending as part of the 2012 'May decrees'. But unlike the centre they don't have buckets of petrodollar revenues flooding into their coffers and are already under severe financial pressure, which could come to a head in 2018 according to international ratings agency Standard & Poor's (S&P).

Social spending already accounts for a quarter (27.6%) of expenditure, which so far has largely remained untouched as much of this goes to the blue collar workers that are Putin's core constituents. The government could make entitlements more difficult to get, but that would represent a big political risk and test exactly how fragile Putin's sky-high popularity really is, as some have suggested.

Pensioners were the recipients of significant budget largess in the 2012 elections, but this time round they have already been sacrificed after index rate for pension hikes were cut to 4%, way below inflation.

Cutting military spending is the most obvious and least painful cut the state will make and will almost certainly not happen. Indeed, during the budget debates the Ministry of Finance pushed hard to curtain military spending - and was promptly slapped down.

Putin has made it crystal clear that the modernisation of the armed forces is sacrosanct and is willing to lay the economy on the sacrificial alter to his geopolitical goals - whatever those may be. A third of budget expenditure (32%) will go to the military with very few cuts (and $1.2bn for the Syria campaign).

Increasingly the government seems to be grasping at straws to fill the gap. In December, Siluanov announced an ambitious RUB1 trillion privatisation programme for 2016 with some big sexy names on the mooted list, including stakes in oil major Rosneft, shipping giant Sovkomflot and oil minor Rosen. Deputy Finance Minister Alexei Moisseev told investors in London that Sovkomflot will be sold "come what may". But the privatisation plan is exactly the same one that was floated in the summer of 2008 at the end of the boom years, which came to nothing then before the global crisis broke. Even if the privatisation target was hit, that could still leave the state RUB1 trillion short to close the budget deficit.

The most likely scenario for 2016 is that the Kremlin runs down its reserves and lets more ruble devaluation take the rest of the strain. Despite all its problems, Russia is still running a trade and current account surplus with the latter bringing in a profit of about $60bn in hard currency in 2015. As the government has significant revenues in dollars but expenditures in unadjusted rubles, letting the value of the ruble slide absorbs much of the oil price shock. Analysts estimate the ruble will end 2016 at about RUB80-85 to the dollar from the current RUB70, but if oil prices continue to fall then RUB100 is not impossible.

 #6
Russian Finance Ministry to review 2016 budget in Q1 due to lower oil prices

MOSCOW, January 12. /TASS/. Russia's Finance Ministry may review 2016 budget in the first quarter due to lower oil prices after it's accorded with macroeconomic forecast of the Economic Development Ministry, a federal official familiar with the matter told TASS on Tuesday.

"In the first quarter," he said when answering the question when 2016 budget parameters may be reviewed.

Earlier Russia's Finance Minister Anton Siluanov said 2016 budget might be partially reviewed in end-2015 though there were no reports about such revisions. In end-December Siluanov said the government had prepared a list of measures regarding expenditures, including budget revision, and mentioned extension of privatization program, particularly regarding Russia's biggest oil producer Rosneft, among potential measures to increase budget revenue base.

According to Vedomosti business daily and Reuters news agency, Russian ministries and departments are due to outline expenses to be cut by 10% in 2016 before January 15, and submit the information to the Finance Ministry, otherwise the latter will forcedly reduce budget limits by 10%.

Russia's 2016 federal budget is based on the Urals crude oil price at $50 per barrel while at the moment the price is below $29 per barrel.

The budget projects revenues of 13.738 trillion rubles (about $196 billion) and expenditures of 16.099 trillion rubles ($229.9 billion) with a budget deficit of 2.36 trillion rubles ($33.9 billion) or 3% of GDP. The 2016 budget is based on the inflation rate of no more than 6.4% (December 2016 on December 2015). Russia's GDP is projected at 78.673 trillion rubles ($1.12 trillion) in 2016.

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 #7
Forbes.com
January 12, 2016
Russia's Finance Ministry Should Redo 2016 Budget
By Kenneth Rapoza

Russia will have to redo its 2016 spending budget. Their $50 oil price is so off, you could put a target next to the target and Russian financial planners would miss it.

The continued beat-down in oil market fundamentals this year has Barclays Capital making some large adjustments to its price forecasts. The still see oil prices bottoming by the second half, but the bottom has gotten much lower than previously thought.

On Monday, BarCap analysts led by Kevin Norrish in London said he expects Brent and WTI crude futures to average $37 a barrel in 2016, down from their previous forecasts of $60 and $56, respectively.

Russia forecast around $80 per barrel in 2015 and had to redo its budget based on $60. The Finance Ministry and budget office must have based their 2016 decision on market consensus at the time, which still had oil turning the corner this year towards $60. Russian oil tracks Brent futures, not WTI. But weak demand from China, coupled with Saudi Arabia and even Russia itself pumping oil with reckless abandon means there is no end in sight to oil's decline.

Unless demand picks up steadily in the U.S., the major oil producers will have to make cutbacks. Instead, the Saudis are turning to other ways to raise capital, by opening up its Aramco state-owned-oil firm to the stock market.

The new Saudi-Iran rivalry on the religious front is as much a guise for Saudi's oil fears as it is Sunni disdain for Shiite Muslims. Aramco is reportedly selling oil at cheaper rates than ever to Europe in order to undercut Iran from gaining market share once sanctions lift.

As a result of this pump and dump strategy, oil is worse than previously thought, Barclays said.

OPEC's December 4th meeting led to the announcement that the group was no longer setting production limits. It was every nation for itself, though this can just as well be translated into meaning Saudi Arabia for itself as it desperately tries to squeeze Iran and the U.S. out of the market.

From the Barclays report yesterday:

"Given the lack of OPEC unity and poor relations between Iran and Saudi Arabia, we now see no likelihood at all of other OPEC members cutting output to accommodate Iran. Indeed, the latest data suggest that OPEC output has continued to climb rapidly in recent months. Preliminary statistics show OPEC December output exceeded its October and November average levels by at least 500 kb/d, with the biggest increases from Saudi Arabia, Kuwait, and Iraq."

Last week the World Bank lowered its outlook for oil demand last week following a revision in global GDP to 2.9% from 3.3%. The Bank blamed the decline on the continuing economic slowdowns in commodity dependent nations. Russia was one of the stand-outs, and the only one that bases its entire fiscal budget on oil futures.

The strong dollar is not helping. Emerging economies like Russia have been see-sawing between a weak dollar and now a strong dollar with no happy-medium since the Great Recession. They have been responding as much to home-grown economic matters as they have the whims of the Federal Reserve's monetary policy committee.

The Fed is expected to raise rates at least two more times this year, tightening U.S. dollar liquidity with adverse implications for investment flows into commodities and surely into Russia.

Barclays lowered their 2016 oil demand growth expectations from 1.2 million to 1 million barrels per day. They expect the official demand forecasts to be revised lower in the coming months, especially if the northern hemisphere has a warm January.

For Russia, weaker oil means a weaker ruble but not necessarily a stronger stock exchange. The Russian currency will head into the 80s, its weakest level on record, if oil falls below $30. Some economists surveyed by FORBES expect oil to bottom in the high $20s.

Russia's government would be wise to redo its budget based on $30 oil. If oil does follow the market's forecasts, then Russia will be faced with accepting larger deficits or recalculating its spending for this year just like it did in 2015.

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 #8
Forbes.com
January 11, 2016
Moscow Just Set A Record For Residential Construction: Is A Housing Bust On The Way?
By Mark Adomanis

As Russia's economy first slowed and then entered a recession of indeterminate length and severity, the housing sector seemingly defied the laws of economic gravity. On a population-adjusted basis, 2014 saw Russia set a post-Soviet record for new housing construction. New construction in 2014 comfortably surpassed both the 2007-08 peak of the oil boom and the post-crisis years as well.

Why was housing performing so (relatively) well? Well, production volumes in the housing sector were boosted by modest overall growth in personal incomes, the gradual development of Russia's mortgage industry, and, to a lesser extent, state programs such as the "maternal capital" program whose cash payments for the birth of a second or third child could be used as down payments on new apartments. This wasn't a crazy China-style boom of "ghost cities" in Eastern Siberia, but there was a genuine, sustained growth in housing output that was easily visible in most of the larger cities. I remember traveling in Russia during the summer of 2014 and being downright astonished at the number of cranes dotting the sky of Yaroslavl, a rather sleepy provincial city of around 700,000.

It would be logical to expect that 2015 saw the beginnings of a sharp correction. Russians' real, inflation-adjusted, incomes fell by around 10%, already high interest rates spiked dramatically, and unemployment started to creep higher. That's a combination that really should substantially crimp output of new housing, or at least prevent it from rising. People had significantly less money to spend, expectations of future economic conditions were turning sour, and borrowing was much more expensive.

Despite all of that Russia's housing industry chugged ahead in 2015, with Moscow setting a new record with about 3.8 million square meters of new construction. In square feet terms that's about 41 million, or 41,000 new apartments assuming an average size of 1,000 square feet per apartment. For comparison's sake, that would mean Moscow completed around three times as many new apartments as supposedly "booming" New York managed to in 2014.

Vedemosti is careful to note that a lot of the new supply coming online is from projects that were started two or even three years ago, and that while developers would like to extend construction timelines or even mothball some of their developments their actual ability to do so is highly constrained. Rather, Vedemosti, citing an industry analyst, predicts that the developers will press ahead to completion and try to recoup at least some of their initial investment.

It's true that the housing sector is not as exposed to commodity and currency movements as other parts of the Russian economy: the huge majority of developers' costs and revenues are denominated in rubles. The collapse of the ruble versus the dollar certainly doesn't help matters, it helps exacerbate uncertainty about the economy's future course, but it's not an insurmountable problem. The real issue is that even in ruble terms Russian consumers are going through one of the toughest stretches of the past decade and a half. Given inflation and wage trends, it stands to reason that not many Russians are going to be in a hurry to make huge real estate investments. In order to entice demand, developers are going to have to cut prices steeply, making their losses even bigger.

None of this means that "Russia is doomed" or that we're on the precipice of a societal collapse. Housing is relatively modest as an overall share of Russian GDP, and "over-investment" in real estate has never approached the crazy scale seen in places like Spain or China. A housing bust would be painful, especially for developers, but it wouldn't be fatal.

Nonetheless, housing was one of the few brights spots in the Russian economy. Continued high output in the construction sector helped prevent unemployment from heading even higher or the recession from being even deeper. During 2016, that is going to change.

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#9
RussEurope
http://russeurope.hypotheses.org
January 10, 2016
Russian economic dilemmas
By Jacques Sapir
Director of studies at École des Hautes Études en Sciences Sociales (EHESS) in Paris, and head of the Centre d'Étude des Modes d'Industrialisation (CEMI-EHESS).
[Charts here http://russeurope.hypotheses.org/4625]

Prospects for the Russian economy are gloomy for 2016. Quite certainly, the situation is not to be as bad as it was in 2015. Growth could resume by the end on the second quarter and hit, by the end of 2016 a mere 0,7%. Of course Oil prices are an important factor but definitely not a decisive one. Even if oil prices are to be back at 50 USD a barrel by the end of 2016, the impact on Russian economy is to be moderate. The truth is that the development model of years 2002-2008 has exhausted its capacities. A new model is to be created. But it will take time and will need protracted efforts. The main issue is not just to develop diversifying and modernising sectors but also to understand that nothing could be really successful without changing rules in the banking and financing sector. To change the model of development implies a truly integrated effort.

The post-1998 development model

Russian growth has been impressive since 1998. But it was linked to different factors. In the years following the 1998 crisis, the GDP "rebound" as it was called was mostly linked to direct and indirect effects of the sharp ruble depreciation. Imported good became overnight much too expensive, opening a window of opportunity for local producers. This raised their profits and they had to largely increase the production level to face the demand. By doing so they induced first a huge movement of inventories rebuilding and then, from 2001 on, a similar movement for investments. The large increase in labour productivity enabled production costs to be kept relatively low. Destruction of a large part of speculative markets (i.e. markets for GKO) implied that savings could not be used on these markets and were mostly used for investment.

By 2002, when commodity prices began to increase a new mechanism began to set in. The large financial inflow coming from exports first began to beneficiate the population but also led to a creeping raise of the exchange rate (notably after early 2006). The increase of income level, be it linked to a direct mechanism (the economy rebuilding) or to indirect ones (the real exchange rate appreciation), boosted internal demand. A significant number of foreign enterprises came then to Russia, not just through imports but also notably by developing their owns production capacities, boosting economic efficiency. This became obvious with high prices for hydrocarbons. Economic growth became strongly linked to consumption and the huge consumption lag accumulated since the late 1980's gave birth to consumption frenzy.

The Government played ball and supported through direct or indirect investment the development of public infrastructure. Then Russia partly avoided to end into a grossly unbalanced growth. But support to innovation and to the development of small and medium enterprises was sill low.

Contradictions and dependency to Western finance

In retrospect these years gave birth to a very specific development model where Russia was not just specializing into commodities export but became dependant too of the Western financial banking system to fund its development. This was one of the biggest challenges for Russian sovereignty. Capital exports, fuelled by the huge trade surplus, were used as a kind of guaranty for Western loans. Reasons behind this trend were complex. Certainly, the fact that interest rates were lower on international finance markets that in Russia, a fact made more obvious by the Real Exchange Rate appreciation, played an important role in these developments.

The Central Bank policy, with its preference for high interest rates, but the state of the Russian banking industry too, were a distinct factor into this preference for borrowing money abroad to finance industrial development. But they were not the only factor. Uneasiness of Russian industry owners or stakeholders with the current Russian government, uncertainty in the Russian institutional system, corruption, all these were important factors too in this preference for using foreign financial mechanism. This could explain why Russian banks and large enterprises have become so dependent in foreign money even if to a large extent internal financing capabilities existed and could have been used to fund economic development.

Time is running short

This development model was actually undermined by the world financial crisis of 2008-2010 but it collapsed when the United-States and the European Union implemented the so-called "Sanctions" regime. It is to be understood that material sanctions have been mostly counter-productive[1]. But financial sanctions, cutting Russian banks and large enterprises from western financial markets, or at least severely constraining their ability to borrow money created serious difficulties. They were compounded with the huge drop in oil prices weakening the rubles.

It is true to say that the Russian government has put a priority on the development of a modern manufacturing sector for years. But, when the Ukrainian crisis began to shape international relations Russia has not broken with its traditional model. To some extent the crisis in international relation has to effect to make the change of model both an absolute necessity but also a very hard undertaking. So far Russia is still caught in the middle of a kind of new "transition", but time is running short. The fact that oil prices are at their historical low since 2004 is then compounding the transition problem.

Limited success

Quite clearly Russia needs to develop a strong industrial sector to provide both the internal market and the export market too. Such a development doesn't imply to stop developing the commodity sector. Actually, the oil and gaz sector could become major consumer of Russian manufactured goods. The main issue here is more how to ensure the development of manufactured goods without compromising the production of commodities. It is not just a problem of developing new productions but also one of changing the whole structure of Russian industry as a significant number of new enterprises are to be created to develop these new productions, and their development is challenging an industry used to rely on large integrated groups.

Some progresses have been made. In 2015 for the first time since the early 1990's exports of manufactured goods have been more important than hydrocarbon exports. The share of manufactured goods in the total amount of exports has jumped from 38% to 48%[2]. This is in part linked to the huge Ruble exchange rate depreciation that is boosting competitiveness of manufactured goods and to other part to the boom of weapons exports. But whatever factors behind it proves that Russia has a strong export potential for manufactured goods[3]. The share of internally produced consumption goods is also increasing fast on the internal market. But, the issue of defining a new integrated development model is still pending and this could be seen on to the fact that investment is still depressed and still mostly funded through borrowing on foreign financial markets.

Toward an integrated effort

This raises one major question. Could the Russian government really engineer this change of model without massively revamping the financing system? So far the government has pledged its willingness to use market-based mechanism. There is nothing wrong here. But it depends a lot of what kind of market-based mechanisms are used. Loans made for specific sectors of for specific kind of enterprises at low interest rates either to cover circulating capital or investment in fixed capital have been a characteristic of European economies in the 1950's to early 1980's. Because the Central Bank and the Ministry of Finance are still very cautious, and caution could be well explained by painful memories of the 1998 crisis, Russia's financing system has been let quite undeveloped. The main problem Russia is facing now is to revamp its financing sector to give emerging enterprises the possibility to really develop and to strongly reduce its exposure to international finance. To do so the Russian government has to admit it would need a larger budget deficit than the 3% planned so far for 2016 and probably till 2018 (something it could be done quite easily), but even more important it would develop a new financing structure channelling Russian savings toward the new sectors and enterprises.

This is an absolute priority for the government but would induce tremendous institutional change not just in the Banking sector but also in the way the Central Bank is managing it and in practices used by the Ministry of Finance.

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 #10
China's slowing economy no tragedy for economic relations with Russia
By Lyudmila Alexanderova

MOSCOW, January 12. /TASS/. The slowing economy of China as an important trade partner of Russia, the plunge of China's stock market and the falling stock prices of Chinese companies do not promise the Russian economy anything good but this should not be perceived as a tragedy for bilateral relations, Russian experts say. Russia needs to adapt to new conditions and diversify its relations, making emphasis on the export of Russian goods rather than on loans from China.

"The serious slowdown of the Chinese economy will continue for at least another six months, with slight rises, but the general trend will mark a downward movement," Head of the School of Eastern Studies at the Higher School of Economics Alexei Maslov told TASS.

"This situation is not linked with a temporary setback on the Chinese market but is related to a whole number of structural crises, first of all, because China's GDP grew for a long time exclusively due to fixed capital investment rather than to consumer market growth. A considerably long period will be needed to reverse this trend," the expert said.

"The second aspect is the need to close down inefficient enterprises and bankrupt businesses, which cannot repay loans, and liquidate inventory stocks," he added.

All these measures are expected to improve the performance of key Chinese enterprises so that investors, including from foreign countries, can again be confident in the efficiency of the Chinese economy, the expert noted.

"It is hardly possible to expect at least that kind of the growth that was observed five years ago. Most likely, China's annual GDP growth will be around 6-5.5% in coming years," he said.

Serious measures to improve China's economy were mapped out already last year, the expert said.

"That is, the Chinese leadership looks sensibly at the situation. The question is not about whether the government understands the need for implementing measures but about the possible resistance of local elites and inertia of Chinese regional society," he noted.

Russia has been viewing China in the past year and a half as its basic economic partner and there have been big hopes that China will act as the largest investor in the Russian economy, Maslov said.

"As the past year has showed, both Russian-Chinese trade has fallen by more than 30% and there have been actually no substantial Chinese investments, despite promises. As a whole, it can be stated that China will hardly act as a major investor in the Russian economy. This may seriously affect Russian projects in the Far East and large infrastructural projects, primarily, the construction of railways," the expert noted.

China wants quick investment recoupment, considering its economic difficulties, the expert said.

"That is why, it is basically focusing on absolutely safe options. And this can explain, for example, why it is laying a whole number of trade routes outside Russia but through Kazakhstan and Turkey where it can wholly control the entire process," the expert said.

Russia should not expect Chinese investments but should create a pool of export products, which China would want to buy, Maslov said.

"This means earning from sales rather than from obtaining loans. This refers to agricultural produce, profound oil refining products and the technologies of Russian medium business. We should not expect noticeable development of economic relations between Russia and China this year but there will be no tragedy in that," he added.

No sharp slowdown in the Chinese economy can be expected further, Associate Professor of the Department of Oriental Studies at the Moscow State Institute of International Relations (MGIMO) Natalia Stapran said.

In her opinion, the 30% contraction in trade between Russia and China does not reflect quite adequately the real situation in bilateral economic relations.

"It is necessary to take into account the fall of oil prices, the change in the US dollar rate and the preservation of oil exports to China in Russia's overall trade turnover," she told TASS.

"As a whole, this is not such a tragic situation as it seems at first glance. China has a two-digit minus in trade relations with many other countries as well," the expert said.

"The slowdown of the Chinese economy will hardly pull back the entire world economy because Americans prevail on world markets and have control over them," the expert said.

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#11
AFP
January 11, 2016
Western sanctions 'severely' harming Russia: Putin

Berlin (AFP) - President Vladimir Putin acknowledged Monday in an interview with German daily Bild that Western economic sanctions over the Ukraine crisis are affecting Russia.

"Concerning our possibilities on the international financial markets, the sanctions are severely harming Russia," he said in a long interview, calling the EU sanctions "a theatre of the absurd".

Moscow has been hit by US and European sanctions over the conflict between pro-Russian separatists and Ukrainian forces which has claimed more than 9,000 lives since April 2014.

In late December, the EU extended its sanctions by six months, arguing that the Minsk peace agreement signed by Moscow has not been fully implemented.

Putin said, however, that "the biggest harm is currently caused by the decline of the prices for energy," according to an English-language transcript published by Bild online.

"We suffer dangerous revenue losses in our export of oil and gas, which we can partly compensate for elsewhere," he said.

"But the whole thing also has a positive side: if you earn so many petrodollars -- as we once did -- that you can buy anything abroad, this slows down developments in your own country."

Putin said Russia was now "gradually stabilising our economy".

"Last year, the gross domestic product had dropped by 3.8 percent. Inflation is approximately 12.7 percent. The trade balance, however, is still positive.

"For the first time in many years, we are exporting significantly more goods with a high added value, and we have more than $300 billion in gold reserves."

While Russia has since September 30 launched airstrikes in Syria, Putin called on Western countries to collaborate more closely with Moscow in the fight against the Islamic State group.

"Yes, we should cooperate much more closely in fighting terrorism, which is a great challenge," he said.

According to Moscow, the Russian strikes target only jihadist groups, including IS, while the West has accused Russia of also hitting other rebels fighting Syrian President Bashar al-Assad.

Asked about the crisis in Ukraine, caused by Russia's annexation of Crimea in 2014, Putin said that "for me, it is not borders and state territories that matter, but people's fortunes."

"Of course one always has to follow international law. This was also the case in Crimea.

"The Russian population is absolutely clear about the situation. Napoleon once said that justice is the incarnation of God on Earth. I'm telling you: the reunification of Crimea and Russia is just," Putin continued, describing the sanctions against Russia as "foolish".

Ukraine is not the first former Soviet-era satellite to be involved in a conflict with Moscow.

In August 2008, Georgia fought a brief border war with Russia, losing control of the Abkhazia and South Ossetia regions as a result.
 

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 #12
Reuters
January 12, 2016
Sanctions Impact on Russia to Be Longer Term, U.S. Says

BRUSSELS - Western sanctions on Moscow are intended to exert long-term pressure on Russia and not to push it "over the economic cliff," a U.S. State Department official said on Tuesday.

EU and U.S. restrictions imposed on Moscow in 2014 over the Ukraine conflict shaved about 1.5 percent off Russian economic output in 2015, the official said, citing data from the International Monetary Fund.

The effect of falling world oil prices was far greater, said the official, who requested anonymity, meaning that Russia's economy shrank 3.8 percent in 2015.

"The direct effect is pretty small ... at about 1 to 1.5 percent. It's the indirect effect that's larger," the official said, adding that international companies previously considering 20-year investments in Russia were scaling back to five years.

"The sanctions are designed not to push Russia over the economic cliff," the official, who was on a visit to Brussels, said. "That would be bad for the Russian people."

Sanctions on Russia's banking, energy and defense sectors, imposed from July 2014, are part of the West's efforts to pressure Russia to help end the crisis in eastern Ukraine, which has killed more than 9,000 people since April 2014.

Russian President Vladimir Putin was quoted on Monday as telling Germany's Bild newspaper that sanctions "are severely harming Russia", although he also noted a bigger impact from global oil oversupply that is weakening energy prices.

With neither the West nor Russia able to resolve the Ukraine crisis so far, the European Union and the United States will keep economic sanctions on Russia until the end of July 2016.

That means Russian companies cannot borrow from the EU and the U.S. banks and on markets for more than 30 days, limiting oil producers such as Rosneft from raising funds for investment.

"From what we know and from my conversations with market participants, other countries are not bridging the gap," the official said, although he added that China has offered some financing at higher rates and with shorter maturities.

Any lifting of sanctions on Russia is tied to the implementation of a peace deal on Ukraine which was negotiated by the leaders of France, Germany, Ukraine and Russia almost a year ago.

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 #13
AP
January 12, 2016
IAAF taskforce head: Russia trying to reform on doping

MOSCOW - The head of the IAAF taskforce set up to determine whether Russia's ban from global track and field should be lifted says the country is making efforts to reform after its doping scandal.

Russia was suspended by the IAAF from international competition, including the Olympics, in November after a report by a World Anti-Doping Agency panel detailed a state-sponsored doping program.

Norwegian anti-doping expert Rune Andersen, who heads the IAAF taskforce, held meetings Monday and Tuesday in Moscow with Russian government and sports officials.

Andersen tells The Associated Press that "the Russians have recognized that there is an issue, a problem, and they are trying to fix it."

He adds that "several" more meetings are planned with "our Russian friends" before the taskforce reports back to the International Association of Athletics Federations in March.

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 #14
Russia Direct
www.russia-direct.org
January 11, 2016
Review of the week: most important Russian foreign policy events
The rise of new Saudi-Iranian tensions and North Korea's alleged nuclear test were the focus of Russian foreign policy during the first week of January.
By Dmitry Ofitserov-Belsky and Gevorg Mirzayan

Last week saw increased international security concerns as North Korea claimed to have tested a hydrogen bomb and the conflict between Saudi Arabia and Iran took another turn for the worse. However, there has been no credible evidence that North Korea actually did test such a device, and even if it did, little is known of the weapon's characteristics. Similarly, Saudi Arabia's provocative behavior could be nothing more than a show of force. Even so, Russia cannot ignore either of these events and the risks that they bring.

The balance of power in the Middle East

Officially, the Kremlin has taken a neutral position, calling on Saudi Arabia and Iran to show restraint and negotiate. In all likelihood, however, their future model of behavior has not been fully developed, and even the involvement of a majority of regional players will not solve such a dilemma.

For Moscow, Iran is one of its most important partners in the Middle East. Both countries are fighting terrorists together in Iraq and Syria. Moreover, because terrorism represents an existential threat to both states, they could cooperate against terrorism and other areas as well, such as in Afghanistan and Tajikistan.

On the other hand, Saudi Arabia stands in opposition to Russia in Syria, is said to be one of the key sponsors of international terrorism, and supports the sharp fall in energy prices that has blown a hole in the Russian budget.

At the same time, realistically it is just such a neutral position that Moscow needs to take. Firstly, taking part in the conflict directly on Iran's side would seriously complicate Russia's relations with other Arab states, primarily those that, like Egypt, have decided not to support Saudi Arabia's position and have not broken off relations with Iran.

Secondly, Iran does not need Russia's help in its conflict with Saudi Arabia. It is clear that if current trends in the region continue, Riyadh would lose a war of attrition.

Thirdly, Moscow is not interested in seeing the Kingdom of Saudi Arabia suddenly and rapidly collapse, as this would strengthen Iran too much. And the Kremlin needs a balance of power in the region. However, taking a position of neutrality certainly does not mean ignoring and keeping out of the conflict.
Even so, there is not going to be a major armed conflict between the two regional powers in the near future. Saudi Arabia's aggression should be seen not as the prologue to a major regional war, but as actions aimed at building a wider anti-Iranian coalition in the region.

North Korea's nuclear tests

North Korea has announced its latest nuclear test - this time a hydrogen device that, according to the North Korean authorities, brings the country's capabilities to "a new level." Internationally, this move has not been applauded; in fact, the test has been called a serious provocation and North Korea has been threatened with sanctions. The UN Security Council and individual countries (e.g. the U.S. and South Korea) are already discussing how to respond.

However, the sanctions route does not normally show rapid and hoped-for results. Yes, North Korea should be punished. However, given North Korea's typical pattern of behavior, sanctions would only exacerbate the situation: North Korea's leader simply has to meet aggression with aggression, otherwise he loses face and authority. Pressure on North Korea can have some effect only if Russia, China, South Korea, Japan and the U.S. consolidate their efforts and take a common position, leaving Pyongyang no room for maneuver.

Such an approach is unlikely, however - China has long been tired of North Korea's actions, but Beijing has absolutely no interest in either the further radicalization or the collapse of the North Korean regime, which is located right on China's borders. Nor would Russia be willing to associate itself with a tough resolution against North Korea.

The Kremlin understands that the gradual evolution of the North Korean regime through reforms, the gradual transformation of North Korea from a dictatorship to an authoritarian state, and the emergence of the country from international isolation could be the only chance of resolving the North Korean nuclear problem. This is not something that will happen quickly, so the world will have to live with a nuclear North Korea for some time yet.

Russia's pivot to Asia

Russia is increasing its activities in the Asia-Pacific region, where the U.S. and China are now practically rivals. On Jan. 8, Russia's Minister of Industry and Trade, Denis Manturov, returned from a visit to Indonesia. The talks covered future projects in railroad construction, mining, civil aviation, the metals industry, shipbuilding, nuclear power, the arms trade and various other areas.

During the visit, the Russian Minister noted that the Eurasian Economic Union and Indonesia could start negotiations on establishing a free trade zone.

The sanctions war between Europe and Russia gives Indonesia considerable scope for increasing its food exports to Russia. For its part, Russia is ready to increase its exports of high-tech products and services, and in December of last year, both sides signed a memorandum of cooperation on the construction of a major nuclear power plant and in other areas of nuclear energy.

Russia's pivot to Asia may be happening slowly, and may hardly have produced the results hoped for by those overseeing it, but this long-term program is being implemented. Its ultimate goal is to balance Russia's ties with Western countries with relations comparable in scope with Asian countries.

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 #15
Russia Direct
www.russia-direct.org
January 11, 2016
Russia's new security strategy: Why is the Kremlin so threatened by NATO?
Russia now considers NATO one of the main security threats it faces - and for good reason. Since the 1990s, NATO has consistently expanded to Russia's doorstep despite the nation's new role as a weakened regional power in Eurasia.
By Mikhail Molchanov
Mikhail Molchanov is professor and former chair of the Department of Political Science at St. Thomas University, Canada. His research focuses on international relations in Eurasia and the international political economy of regional integration. He holds a Ph.D. in Philosophy from the Academy of Sciences of Ukraine, a Master's in Public Administration from New York University and a Ph.D. in Political Science from the University of Alberta. He was the founding chair of the Department of Public Administration at the Institute of Public Administration and Local Government, Ukraine (currently, the National Academy for Public Administration under the President of Ukraine), worked for the federal government of Canada, and taught at several universities in Canada.

On the last day of 2015 Russia adopted a new security strategy that explicitly lists NATO's expansion as one of the main security threats facing the nation. According to Russian President Vladimir Putin, the independent domestic and foreign policy conducted by Russia "triggers counteraction from the U.S. and their allies seeking to keep up their domination in global affairs."

As usual, Western pundits responded as a chorus, condemning Russia's paranoia. NATO officials were quick to react rehearsing an old adage that NATO enlargement is not directed against anyone. NATO, they say, spread stability and prosperity in Europe since the fall of the Berlin Wall.

Unfortunately, there are signs that the by now familiar statements of this sort are, at best, an example of wishful thinking or, at worst, a rather awkward attempt to hide the truth. The truth, according to the Russian side, is that the United States is using NATO as an instrument of its influence in Europe and beyond.

What are the signs that this is, indeed, the case?

First of all, there is the very fact of the expansion of the Alliance, which has grown from 12 members at the time of its creation to 16 by the mid-1980s to 28 today. The Soviet-led Warsaw Pact, which was established six years later than NATO in response to the re-militarization of West Germany and its inclusion into the Western alliance, evolved from 8 member states to 7 by the mid-1960s to zero in 1991.

The only military alliance where Russia participates at the moment, the Collective Security Treaty Organization (CSTO), has shrunk by three members over the years and currently includes 5 other post-Soviet states.

Why would NATO need to expand, despite the withdrawal of Russian troops from East Germany and other East European countries, the end of the Warsaw Pact, the victory of the pro-Western Yeltsin regime in Moscow and a more than tenfold cut in Russian military expenditures on the eve of the Alliance's 1999 eastern enlargement?

It seems that post-Soviet Russia did everything it could to ingratiate itself with the West - at least until the 2008 war with the U.S.-backed, expansionist Georgia - and yet it still got a hostile military alliance at its border! Why?

The answer is honestly given by Stratfor, a CIA-affiliated private intelligence company, in its recent report, according to which it has never been the threat of Communism as such but rather Russia's geopolitical significance as a long-standing bulwark against Western imperialism that propelled the centuries-old confrontation.

"The geopolitical imperative underpinning the United States' containment policy - blocking the rise of regional hegemons on the Eurasian landmass that could challenge the Western alliance structure - never disappeared. Thus, NATO and the European Union continued to expand," Stratfor said.

NATO's decision last month to invite Montenegro to become the twenty-ninth member of the Alliance was cheered by The Economist with a gleeful headline, "In the Balkans, NATO has outmuscled Russia." Clearly, this was not meant to sound confrontational, was it?

Yet, the description of someone "outmuscling" someone else typically refers to a fight, a more or less violent confrontation where one side wins at another's expense.

Outmuscling, squeezing out, pushing around as a means to spread stability and prosperity in Europe? It seems the language implies that Russia is not the one to share in this promise of prosperity and stability but rather the one that should be excluded from it.

Or more precisely, the whole purpose of the existence of the Western military bloc is to ensure the avowed prosperity to its members at outsiders' expense, to undercut the non-Western leaders' development in order to "block their rise," according to the language of the Stratfor report.

Against such a background, it seems the new redaction of Russia's National Security Strategy has been about sixteen years late in the making. It should also be clear why Moscow reacted so dramatically to the revolutionary change of government in Ukraine in 2014, seeing the change as prompted by the West and couched by the West in more or less openly anti-Russian terms.

The idea that the U.S. should check the rise of independent regional powers in Eurasia to prolong its own global dominance, by military means if necessary, speaks to American relations with China no less than to its relations with Russia. In both cases, the logic is similar. This logic applies to the case of a rising challenger - China - even more than to the case of a weakened regional hegemon that struggles to protect its shrinking sphere of influence.

Because of that, the conclusions that both countries might draw from the eastward NATO enlargement - and from U.S. attempts at the strategic encirclement of China - may well be similar, too - to counter the expansion of the Western alliance structures with an alliance structure of their own.

According to the principles of realpolitik, any action invites reciprocal counter-action, whether it's based on paranoia or not. Western attempts to isolate and lock Russia in its own corner of the Eurasian continent may only end with integration of the Chinese and Russian "corners" in a new structure of continental security with no role for the Western partners to play.

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 #16
www.rt.com
January 12, 2016
Western defense: Russia to form 3 new army divisions in 2016

Three new army divisions will be formed this year to reinforce the Russian military in the western part of the country, Defense Minister Sergey Shoigu said. The new units will be formed amid NATO's continuing build-up across Eastern and Central Europe.

"I cannot but mention such a critical task which is the formation of three divisions in the western theater. The task is extremely important," TASS reported Shoigu as telling journalists.

Shoigu also added that alongside the creation of the new divisions, the army will have to set up proper infrastructure including barracks, firing ranges and military hardware depots.

While details of the new formations are unknown, the minister's announcement came amid a US and NATO military build-up in Central and Eastern Europe - against what Washington and its allies call "Russian aggression."

The new edition of Russia's military doctrine, signed by President Vladimir Putin in December 2015, specifies that NATO's militarization and arms build-ups pose a national security threat to Russia that requires an appropriate response.

The standoff between NATO and Russia escalated last year after Ukraine, which previously insisted on its non-aligned status, went through a violent protest that ousted its elected government and imposed a new one with the West's vocal approval. Kiev's new authorities have since made joining NATO one of their strategic goals, claiming that they need protection against Russia.

Over the past year, NATO has dramatically increased the number and pace of massive military drills across Europe, most intensively near Russia's borders.

In November, the alliance launched its massive "Trident Juncture 2015" exercises involving 36,000 troops, as well as more than 60 warships and around 200 aircraft from all NATO member states. Seven more partner nations were involved: Australia, Austria, Bosnia and Herzegovina, Finland, Macedonia, Sweden and Ukraine. This made Trident Juncture the biggest drill since 2002, when about 40,000 troops took part in NATO's "Strong Resolve" exercise.

Additionally, to boost what it calls its "deterrence" of Russia, NATO has moved a remarkable amount of heavy weapons, including tanks and self-propelled artillery, to Baltic states on a "rotational" basis.

With the Kremlin having said that NATO's build-up will lead to reciprocal measures, about 30 units and forces have already been created in the Western Military District since the beginning of 2015, according to the Russian Defense Ministry.

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 #17
Carnegie Moscow Center
January 12, 2016
From Isolation to the Board of Directors: Why Russia Supported the United States at the UN
By Alexander Baunov
Alexander Baunov is a senior associate at the Carnegie Moscow Center and editor in chief of Carnegie.ru. Before joining Carnegie, Baunov spent five years working as a senior editor at the independent news website Slon.ru, where he worked since its launch.

The goal was to return to the club where the destiny of the world is being discussed, not as an ally (because given the current economic disparity, one could only be a subordinate ally) but as a "partner"-a word that is invariably spoken in Russia with phonetic quotation marks: a disobedient, sometimes blunt neighbor with whom considerations of the world order must be shared.

If you weren't paying close attention, you might have missed the gentle mocking tone during Vladimir Putin's meeting with John Kerry in the Kremlin on December 15. "We can't keep up with your movements. You need some sleep, I can see that," suggested Putin. (Translation: "You are tired, Mr. World Policeman. You're learning that you can't do it all by yourself. Go get some rest. Maybe I can help you out.")

Then the Russian president twisted the knife, just in case any advocates of punishing and isolating Moscow needed to be reminded that Obama was now actively soliciting help from his longtime nemesis. "Together, we are looking for resolutions for the most serious of crises," Putin continued.

The practical results of this newfound spirit of Russian-American cooperation were announced just three days later at the UN Security Council, when Moscow supported UNSCR 2254, a U.S. -sponsored initiative for political transition in Syria.

The contortions from U.S. policymakers were painful to watch. After finishing a stroll down Moscow's famed Arbat pedestrian street, capped by interactions with the quintessential man on the street, Kerry grandly announced that Washington "[doesn't] seek to isolate Russia." It didn't take long for the White House to walk that one back. On the eve of Kerry's visit to Moscow, White House Press Secretary Josh Earnest insisted that nothing had changed and that Russia is isolated from the rest of the international community.

Western policy toward Russia has often been divided into two camps. The first holds that the world will be more secure only if the West takes an extremely tough, unyielding stance. The other camp maintains that frank dialogue and diplomatic engagement can bring benefits without compromising on principles. Members of the latter camp talk to Russia like they would to someone in a fit of rage or someone about to take leave of one's senses.

Yet today Russia is clearly less isolated than it was 12 months ago. Although Kerry's visit to Sochi in May took the world by surprise, Lavrov and Kerry often communicate several times per month or even per week, and Putin and Obama have had three substantive conversations in the past three months. Considering the events of the last two years, this is remarkable.

This new surge in bilateral communication would be happening without the Russian intervention in Syria. The intervention appears have a number of goals, one of which is just to have some target practice, according to a rather careless admission Putin made to journalists. But there's no mistaking that the Syrian operation allowed the Kremlin to preserve some of the dividends the Russian regime scored at home over the last two years and to cut its reputational losses abroad. This move tries to draw a line under the triumphant conquest of Crimea and shift Russian public attention away from the messy outcome in eastern Ukraine. With Russia in the grip of an economic crisis, it's not a bad thing for the conversation to shift to exotic locales in the Middle East. But the regime has spared no effort in trying to portray the Syrian military campaign as an illustration of Russia's ability to stand up to the United States and undermine the now-discredited suggestion that "Assad must go."

Staying Relevant

Those who think that entering Syria was a way for Russia to separate from the West and isolate itself are wrong. Russia doesn't see itself in a cocoon; being a butterfly is much more enticing. Yet those who think that Russia is there to make peace with the West and rejoin it are also wrong.

The idea was to come back on Moscow's terms to the top table where big global issues are discussed-not as a junior ally, but as a "partner."

Putin and other Russian officials always pronounce the word "partner" with considerable irony, the same irony that could be read in the Russian president's suggestion that John Kerry should "get some sleep."

The Syrian campaign was the regime's attempt to retain the domestic prestige it won with the annexation of Crimea and to break out of the external siege that was laid by the West immediately afterwards. And, as outmoded as it may sound, the Kremlin still believes that it can create a global order where the mighty and the powerful can cut deals over the heads of the little guys and establish their tidy little spheres of influence. Russia is making a dash alright, but it's a dash to the past, to the way Europe looked one hundred years ago, on the eve of World War I.

Those who think that entering Syria was a way for the Kremlin to further rupture ties with the West are misguided. But so are those who think that Russia is in Syria to make peace with the West and move toward joining it.

The goal was to return to the club where the destiny of the world is being discussed, not as an ally (because given the current economic disparity, one could only be a junior, subordinate ally) but as a "partner"-a word that is invariably spoken in Russia with phonetic quotation marks: a disobedient, sometimes blunt neighbor with whom considerations of the world order must be shared.

Russia doesn't want to join the West (it would have to change to be accepted there). Instead, it is trying to fit into the new global order where powerful nations make deals, join short-lived alliances, and establish spheres of influence. It is a race to the past, when this sort of geopolitics predominated; it is a return to Europe on the eve of World War I.

At the same time, refusing to cooperate won't work. To earn its seat on the world's board of directors, Russia has to be constructive. In particular, it has to be willing to discuss Assad's departure. That's precisely what happened when Russia supported the U.S.-sponsored UNSCR 2254, which was unanimously adopted on December 18.

By supporting the resolution, Russia agreed to the start of negotiations in January 2016 on the formation of a "transitional governing body with full executive powers" in Syria. It also agreed to support a new draft constitution and elections that will include Syrians now residing abroad.

Russian diplomats are being honest when assuring the public that their goal is not to save Assad personally. Rather, their goal is to save face-they are against any humiliating regime change. Assad may go, but will do so only with dignity. He won't be killed, convicted, or extradited to stand trial in The Hague. There will be no occupation of Damascus or cleansing of the Alawites and Baath Party elements at the hands of some group of moderate Islamists. The ministries and state institutions will continue their normal work, and the big bosses will depart peacefully rather than have to flee in the middle of the night.

The resolution mentions "ensuring the continuity of governmental institutions" twice and calls for combating terrorist acts committed by ISIS, Al-Nusra Front, Al-Qaeda, and other terrorist groups. A Jordanian-led process is supposed to work out an agreed list of terrorist groups, an effort that could retroactively exculpate Moscow for bombing so many of them.

Of course, this arrangement may still fall apart, since the heart of the resolution is focused on creating a ceasefire, which will involve all hostile parties except for ISIS. But how can there be a ceasefire when one of the most important parties doesn't want it? Eventually, those who don't agree to take part in negotiations will be equated with terrorists, and those who are willing to negotiate will be considered legitimate forces.

Yet make no mistake about Russia's actual yardstick for success: the Russian military gambit in Syria will be considered successful only if it reduces tensions with the West. Putin himself spilled the beans about that. "I'm going to tell you an important thing now. We are supporting the initiative of the United States, including the preparation of a UN Security Council resolution on Syria; in fact, the Secretary of State brought the proposed resolution on this visit," Putin admitted at a press conference.

The Kremlin approved the U.S. proposal because Kerry gave the Russian leaders a real New Year's gift. Their dreams finally came true: the Americans consulted Russia before making a decision. They showed Russia some respect and got what they wanted in return.

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 #18
Interfax
January 12, 2016
Putin talks about possibility of granting asylum to Assad in Russia

It is premature to discuss if Russia should grant asylum to Syrian President Bashar al-Assad, Russian President Vladimir Putin has said.

"I think it is quite premature to discuss this. We granted asylum to Mr. Snowden, which was far more difficult than to do the same for Mr al-Assad," he said in an interview with the German Bild newspaper, when asked if Russia would grant asylum to al-Assad if he loses election in his country.

"If this [voting] process is conducted democratically, then al-Assad will probably not need to leave the country at all," Putin said.

"And it is not important whether he remains President or not," the Russian leader said.

Putin said that al-Assad does not want extermination of his citizens - their sufferings are caused primarily by the armed people who are fighting against the Syrian government and aiding militants.

"It is not his goal to destroy his country's population. He is fighting those who rose up against him with deadly force," he said.

"And if the civilians suffer, I think that the primary responsibility for this is with those who fight against him with deadly force as well as those who assist armed groups," the Russian president said.

At the same time he noted that "this does not mean that everything is all right out there and that everyone is right."

"This is exactly why I believe political reforms are needed so much there. The first step in that direction should be to develop and adopt a new Constitution," Putin said.

Vladimir Putin also stressed that Russia does not want the situation in Syria to evolve according to the Libyan or Iraqi scenario.

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 #19
Interfax
January 11, 2016
Russian air force operates in interest of 11 Syrian opposition units

The Russian Aerospace Forces aviation group has carried out dozens of air strikes in support of the offensive conducted by 11 detachments of the Syrian democratic opposition fighting against terrorists in Syria, head of the Main Operative Department of the Russian Armed Forces General Staff Lt. Gen. Sergei Rudskoi told reporters on Jan. 11.

"Russian aviation is giving its support to patriotic forces fighting against international terrorists in the Syrian territory. Today our warplanes carry out strikes in the interests of 11 units of the democratic opposition, more than 7,000 strong," Rudskoi said.

The Russian Aerospace Forces carried out 19 airstrikes supporting the detachments of the Jaish Ahrar Al-Ashair group (Army of Free Tribes) that is a part of the Southern Front of the Free Syrian Army over a few past days, he said.

There is an increasing number of detachments of the Syrian democratic opposition that is ready to engage in the fight against terrorists in Syria, Sergei Rudskoi told.

The 'Surein' and 'Chelobia' detachments expanded the territories freed from terrorists, moving from the east and west of the dam over the Euphrates near Mehshiyet et-Tavahin, Jubb al Hamzah, Arbaa Segir, Judaida, al-Ahmar.

"The 'Lions of the East' and 'Qalamoun' units in the southern vector, supported by our aviation, advanced by more than 50 kilometers in the course of their offensive towards Palmyra, taking populated areas of Zaza, Qessarah and the town of Mhasse. The units of the Syrian democratic forces currently go on developing their success in all the vectors," Rudskoi said.

"The work aimed to combine efforts of all the forces interested in the liberation of Syria from international terrorists resulted in the constant increase of the number of units of the patriotic opposition," he said. "We are convinced that it's only by way of joining efforts of the actual Syrian government and other patriotic forces that one can achieve an ultimate victory over terrorism," Rudskoi said.

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 #20
www.thedailybeast.com
January 12, 2016
Russian Airstrikes Are Helping U.S. Allies
Washington and Moscow are supposed to be backing opposite sides in Syria's war. But in the ISIS fight, enemies of enemies often become battlefield friends.
By Nancy A. Youssef

American-backed Kurdish and Arab forces have found an unlikely ally in their push to win ground in Syria: the Russians.

Some of the nearly 25,000 U.S.-backed forces made some of their biggest gains in Syria in recent months when they retook villages near the hotly contested city of Aleppo with the help of Russian airstrikes. The Russian attacks targeted other opposition groups, and the U.S.-backed coalition exploited them to gain back parts of the city.

The Russian strikes were not designed to help those U.S.-backed forces, nor were the groups coordinating with the Russians. But nevertheless, the air attacks allowed the U.S.-created Syrian Democratic Front to make advances, four defense officials told The Daily Beast.

"It's not a planned thing. It is not something Russians are trying to do. It is happenstance," one U.S. official told The Daily Beast. "The net sum of everything the Russians are doing helps Assad and prolongs the war."

And now, U.S. officials fear such success could create a new alliance between its proxy forces in Syria and the Russian military, which American generals have repeatedly called a potential "existential" threat to the United States.

The Russian strikes could appeal to the Kurds because the U.S.-led coalition's air war is aimed almost exclusively at the self-proclaimed Islamic State, whereas the Russians have attacked any group opposed to Assad. The Kurds and Syrian rebels want to see Assad toppled, as well as ISIS defeated.
 
Officials believe that within days of Russian airstrikes on positions held by the Nusra Front, al Qaeda's branch in Syria, Kurdish forces moved forward to take at least three villages within the city, helping them make notable gains.

Aleppo, Syria's second-biggest city, has long been a battlefield, and a prize for nearly every group vying to control territory in Syria.

There is no indication of direct communications between the American-backed ground forces and the Russians, U.S. officials said. But the fact that the Kurds made so much progress in Aleppo thanks to those Russian airstrikes has some U.S. officials worried that a new Kurdish/Russian alliance could form. That would add another layer of complexity in an already fraught war in which alliances are constantly shifting.

The Russians, after all, are committed to saving the Bashar al-Assad regime. The U.S. is formally committed to ending it. And so far, the Obama administration has resisted all calls to put aside those differences and form some sort of grand alliance with the Kremlin.

"Coordination with the Kurds would allow for Russia to continue to present itself as a worthwhile anti-ISIS actor in Syria, while angering Turkey and disrupting U.S. operations," Genevieve Casagrande, a research assistant at the Institute for the Study of War who focuses on Syria, told The Daily Beast. "We aren't seeing this escalation quite yet, but it is something that these airstrikes can open up the possibility for in the future."

Two U.S. officials told The Daily Beast they have seen a similar pattern of ground forces moving in following Russian airstrikes near Raqqa, the self-proclaimed Islamic State capital. These land grabs weren't as successful as those in Aleppo, officials said.

"If you look at the entire course of fighting on the ground, it's an enemy-of-my-enemy-is-my-friend war." In that context, it's not only plausible that U.S-backed and allied groups would coordinate with the Russians; it's likely.
Nor do they necessarily represent a harbinger for a future in which Kurdish forces overtly side with the Russians-a development that could potentially undermine the Kurds' alliance with the U.S. and strengthen Russia's influence.

Two U.S. officials told The Daily Beast that the rebels and the Kurds weren't likely to take sides with the Russians, at least not in the near term. Their alliance with the U.S. has largely been one of battlefield convenience. But the ground forces have a longer history with the Americans that they're not likely to abandon overnight, the officials argued.

Still, a Kurdish and rebel alliance with the Russians can't be ruled out. Indeed, in the complex stew of the Syrian conflict, various factions have coordinated with their adversaries.

"If you look at the entire course of fighting on the ground, it's an enemy-of-my-enemy-is-my-friend war," Daveed Gartenstein-Ross, a senior fellow at the Foundation for the Defense of Democracies, told The Daily Beast. The YPG-the Syrian-Kurdish military forces-has coordinated with the Assad regime, and the Free Syrian Army has done so with al Nusra, he said. In that context, it's not only plausible that U.S-backed and allied groups would coordinate with the Russians; it's likely.

Recent events could also be driving the Kurds closer to Moscow. After Turkey shot down a Russian jet it said had crossed into its airspace last year, Russians took to social media to express sympathy for and solidarity with the Kurds in their conflict with Turkey.

Also, in November, the Kurdish Democratic Union Party began meetings with Russia to discuss its own plans for greater self-rule. That was an apparent stab at the U.S., Russia's strategic rival, and arguably a bid to win Washington's support for Kurdish independence, as well as more weapons.

One more reason the Kurds might saddle up with Moscow: They wouldn't necessarily see their new alliance as turning their backs on the U.S. The Russians are conducting more strikes and have less compunction than the American-led coalition about whom they target.

The result has been a terrible human toll. Most recently, the Syrian Observatory for Human Rights alleged Russian strikes in Aleppo killed at least 12 children and three adults.

But the Kurdish rebels may be using a different calculus.

"I think from their perspective, there's no reason that they wouldn't work with the Russians and with us," Gartenstein-Ross said. "The Russians have at this point a more robust presence. I'm not sure they'd see it as betraying their relations with the U.S."

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 #21
Russia Beyond the Headlines
www.rbth.ru
January 12, 2016
Who is happy to see Russian pilots in Syria?
The arrival of the Russian Air Force in Syria has upset the figures on the board of the "Great Chess Game" in the Middle East and has given hope to supporters of al-Assad for personal survival, although perhaps not a quick conclusion to the war.
DMITRY VINOGRADOV, SPECIAL TO RBTH

"We shall restore everything that has been destroyed"

"Russia's involvement has given us hope," says 25-year-old Amir Suliman, a resident of Aleppo. "Now we expect that the war will finally be over and we shall return to our homes." Aleppo, Syria's "economic capital," has for several years now been divided into sectors controlled by the Syrian army and various groups, including the Islamic State and the al-Nusra Front.

We meet Suliman at Latakia Airport where he is waiting for a Ministry of Emergency Situations plane to take him to Russia amidst the backdrop of the roar of Russian SU aircraft engines.

"My mother is Russian and my father is Syrian," says Suliman. "Militants captured our house in Aleppo, so we had to flee to Latakia. I am now flying to St. Petersburg to continue my studies for a degree in architecture at the mining institute there. I hope that by the time I graduate the war in Syria will be over and architects will be in demand again. We shall restore everything that has been destroyed."

It is hard to say now when this will happen and when Suliman will be able to return home and see his family. Hostilities are under way just 30 kilometers to the north of Latakia, where Syrian government troops are trying to establish control over the border with Turkey and from where rebels are receiving reinforcements and ammunition.

In Latakia itself there are no signs of war although in August 2011 there was fighting in the streets of this city. In the evenings, local residents gather in cafes and on weekends they have dinner parties and attend dance nights and weddings. During the day local residents can be seen at the beach. Women wear swimsuits and conduct themselves in a relaxed and easygoing manner. Clearly, these people have no wish to see extremists take control because then they would have to either flee the country or wear a niqab.

"We have many issues with Assad," says history teacher Gadir Uassuf. "But they all pale in comparison with the danger presented by ISIS and al-Nusra Front. All throughout the years of the crisis, the Syrian opposition has not been able to offer an alternative to Bashar (al-Assad). We do not see peaceful areas 'liberated' by them where they have established a normal life 'without Bashar.' This is why the Syrian president himself has turned from a politician who had his strengths and weaknesses into a symbol of resistance to foreign terrorists, who have come here from all over the world. What needs to be done now is to banish them and then we shall start rebuilding normal life and criticizing Assad."

Latakia, a city of contrasts

Yet Russian journalists and service personnel working in Latakia have been advised against visiting Sunni and Palestinian neighborhoods, where support for Assad, and consequently approval of the Russian Air Force operation, is much lower than among Alawites who form one of the government's main pillars of support.

In August 2011 Latakia's Palestinian districts became the scene of an armed anti-government revolt. In order to suppress it, the authorities deployed gunboats to the Latakia coast to fire at the rebels. Now, the situation in Latakia is much calmer: all that reminds one of the events of five years ago are checkpoints around the Palestinian neighborhoods and bullet holes in nearby buildings. However, beyond the checkpoints, there lies a completely different Latakia with dusty streets, poor shops and women in hijabs accompanied by numerous children.

"We are condemned to poverty and most of us have no hope of (finding) a good and well-paid job," says a local resident who has cordially invited me to his shop for a cup of strong cardamom coffee. That is why the protests broke out, the man, a Palestinian, explains. "Of course, none of those who started the protests wanted a war. The unrest was used by foreign radicals that had arrived in Syria to 'help their brothers,' but who were in fact pursuing their own goals. But now we think that if Assad wins, things will return to what they used to be."

Palestinians see the Russian Air Force as being one of the factors that could turn the course of war in Damascus's favor. "Everybody is fed up with the war," my host says. "Our economy, our lives have been destroyed. But what will happen after Assad's victory? Same old, same old? Or will Assad draw some conclusions and change his policy? No one can say."

Patchwork quilt on fire

Syrian society, which before the war seemed peaceful and flourishing, if not a rich one, is clearly divided. Before 2011, it was considered rude to inquire which religious or ethnic group somebody belonged to: it was a person's private business. Now representatives of one group try not to enter other groups' neighborhoods for fear of trouble.

Among the Alawite minority, support for Assad is very high, however, in other religious and ethnic groups things are far from straightforward. Taking into account the countless number of foreign militants who have come to Syria from all over the world (including Russia), it becomes clear that modern Syria is a real patchwork quilt that would be very hard to simply "sew back together."

The attitude to Russians is therefore different depending on the location. In Latakia, they are seen as defenders. A taxi driver, a shopkeeper and a waiter all in their broken English repeated the same repertoire of phrases: "Thank you, Russia! Welcome to Syria! I love Abu-ali Putin" (Father-ali Putin is the name they have given to the Russian president).

However, "the other side," the territories not controlled by the government, accuse the Russian and Syrian military of air strikes against civilian infrastructure providing photographic and video evidence to support their claims. Those who are loyal to Assad view these reports as "a ruse," while those that are opposed to the government see it as further proof of "the criminal nature of the regime."

Every evening in central Latakia one now can hear loud gunfire and see flares going up in the air. This is how Syrian soldiers greet their fellow servicemen who spent two years besieged at the Kweyris airbase in an Aleppo suburb in northern Syria. Several days ago, the Syrian army with the support of the Russian Air Force, drove anti-government forces away from the airbase and ended its siege. The military is back, while the assault on rebels near Aleppo continues. All of this breeds cautious optimism, at least in the hearts of those that remain loyal to Assad.

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#22
Komsomolskaya Pravda
December 22, 2015
Paper gives details of Russians fighting on side of Islamic State
Aleksandr Kots and Dmitriy Steshin, ISIL trains saboteurs for terrorist attacks in Russia. They will be provided with false passports and sent to Caucasus via Ukraine

Two years ago, Komsomolskaya Pravda published our investigation, "Jihad for export". It was about young Russians travelling abroad to fight and die for Islam. The material for the article was collected in Dagestan. We followed the "path of jihad" directly from Makhachkala to the Turkish town of Reyhanli in Hatay Province, where the "gates to ISIL" are still wide open. People from the Free Syrian Army, who met us in the border area, said that they would not be able to protect us against Islamic radicals, who had been slowly but surely establishing control in the rebel territories.

Over the past two years, ISIL has reached full maturity in the Middle East. A caliphate was created, which needed unlimited supplies of cannon fodder. In the fall, when Russian aviation came to the aid of the Syrian Army, a paradoxical situation emerged: Russian citizens began to die under Russian bombs in a foreign country. Why do they go there? We went to Dagestan once more to find answers.

"Light of Islam. Wholesale and retail"

The oriental hassle and bustle of Makhachkala's merchandise market. Messy heaps of Turkish clothes and tidy trays with Muslim attire. The piousness of signs on little shops is quite striking. "Light of Islam. Wholesale and retail," "Horseman's barbershop. Men only. Cleanliness is half of faith." Bothersome street hucksters are trying to foist on shoppers fridge magnets with verses from the Koran. It was amusing, because we had not encountered such ostentatious religious merchandising in any Arab country. It was a new phenomenon in Dagestan too, until recently. As they say here, people began to look for God. And [recruiters] began to look for people...

Zainab Idrisova is selling socks. She says they are from the last batch that came from Turkey before the sanctions were introduced. She does not know where she will get new merchandise to sell. And she has nobody who could help her. She divorced her husband a long time ago and her only son was killed in a bombing raid outside Ar Raqqah in Syria in November 2015. Zainab lays pictures of her son Magomed Rabadanov on a table in front of her.

A rebel's mother: "He went to ISIL and never came back"

[Zainab Idrisova, the mother of a rebel killed in Syria] He did well in junior school but lost interest in studying in high school. I wanted him to go to a medical school. But he said that he wanted to learn the Koran by heart. I never thought that my boy would do something like that.

This is a typical story in today's Dagestan. He said he was going to a village in the mountains so that he could observe the fast there in cool weather. A week later I got a text message from Syria: "Mom, everything is fine, we are here to study." There are now thousands of such stories.

[Komsomolskaya Pravda, for the readers] They had no contact for two months. Then the son wrote that he was alive and well. When asked if he was coming back, he replied categorically: "Drop this subject." His friend wrote later that they were sent on a mission on 11 November. Their positions were bombed. Magomed was wounded in the neck by a shell fragment. He began convulsing and died.

[Komsomolskaya Pravda] Why did he go there?

[Zainab Idrisova] I think they must have spiked his drink in the mosque in Semender (a suburb of Makhachkala). It is a Wahhabi mosque. I think, in a few years, there will be no family left unscathed by this. I have a classmate and friend whose two nephews went away. Another acquaintance left, having sold his taxi minibus. Nobody has heard anything about him for a year and three months. Another acquaintance kept looking for his brother and then followed him a year ago. It is some sort of virus. It is coming from abroad. This is the only way they can destroy us, I guess.

Return transit

In the parallel, secular reality, Dagestan is experiencing a real building boom. All the old problems plaguing the republic become markedly visible against the background of this chaotic construction site. If you are a respected person with money you can disregard all urban planning and architectural standards. You cannot exercise such power in isolation. It means that you have a tribe or a clan behind you. Those who do not fit into this orderly system, where the key to the social elevator is kept by the head of the family, seek happiness elsewhere. They go to Moscow or turn to crime. Some turn to radical Islam, where all are equal from birth and all are brothers.

A humped, nervous man is sitting on a chair in front of us. He held a prominent position in the caliphate's hierarchy. He managed to rise through the ranks through his natural predisposition to fraud. It was this predisposition that eventually prevailed over a craving for pure Islam. To put it simply, he betrayed his brothers-in-arms for money, returning to his homeland with a tidy sum. But he landed in jail straightaway. In Syria, he was involved, among other things, in smuggling new recruits across the border.

Exclusive confession by ISIL fighter

[ISIL fighter] All the guides are Russian speakers - Chechens, Dagestanis. They all have Turkish citizenship or residence permits. I had a Syrian passport, which had been procured in Istanbul for 50 dollars.

[Komsomolskaya Pravda] Was it a real passport?

[ISIL fighter] A fake one.

[Komsomolskaya Pravda] How many people cross the border with Syria?

[ISIL fighter] On average, 30-50 Russian speakers a day. They first receive training and are then assigned to units. There are assault units, which are always at the forefront, and there are elite units - the fedayeen. They spearhead all offensive operations. There are suicide fighters, those who drive cars packed with explosives and then blow them up. Russian speakers seize territory. They are followed by Arabs, who establish Shari'ah law there: They install their mayor, treasurer, and judges.

[Komsomolskaya Pravda, for the readers] What Rasul effectively says is that our citizens are used in ISIL as cannon fodder. Foreigners are also kept away from the oil business. They are, however, very generous with flattery:

Russian speakers - Caucasians, Uzbeks, and Kazakhs - are heroes to them. Arabs do not have such a spirit, Rasul says and his hitherto smooth voice begins to tremble with pride and excitement...

[Komsomolskaya Pravda] What kind of regime do they establish in occupied territories for local people?

[ISIL fighter] Civilians live in fear. They [ISIL] would pull a man's mustache hair by hair with pliers. I witnessed this. If they catch you with a cigarette, they put you in jail. There, they can hang you by your hands and let you hang like that the whole day.

At the same time, according to our interlocutor, there is running water, electricity, and Internet in ISIL-controlled territories. There is thriving trade - cheap goods are imported from Turkey. You can call an ambulance from Turkey for 50 dollars.

[Komsomolskaya Pravda] What is ISIL's situation concerning money and weapons?

[ISIL fighter] There are no problems with money. Their weapons and armoured vehicles are mostly of Soviet and American make, mostly captured from the Syrians. I saw how bullets and grenades were dropped for them from helicopters. By the way, weapons were transported through Turkey to Georgia and the Caucasus. There are people there who dream of returning to the Caucasus. They teach people how to survive there. They produce European and Ukrainian documents for them. For 10,000 dollars you can get a real Ukrainian passport, registered in all the databases. There is a channel for getting to Russia through Ukraine. Some have already left with such documents. I do not know what happened to them since.

[Komsomolskaya Pravda] How many people are being prepared for Russia and the Caucasus?

[ISIL fighter] A group of 250-300 people. I do not know how many of such groups there are.

[Komsomolskaya Pravda, for the readers] Rasul tries to draw a conclusion at the end of our conversation. His conclusion is simple - he did not like it in ISIL:

[ISIL fighter] There are no luxuries there. Those who hope to find luxuries there will get confused even more. And those who go there for action will be used cannon fodder. There is only Islam for ordinary people there and none for people in positions of power. People in positions of power there are not governed by Islam but by their personal interests, which are expressed in money. Young guys die there. If you go there, you will simply not come back.

[Komsomolskaya Pravda, for the readers] This tirade was meant for investigators. In the hope of a lenient sentence.

"Sleeper Sells"

We managed to meet one of those "infiltrators" Rasul talked about. Rashid Nurbakilov is a professional carpenter specializing in laying parquet floors. He used to serve in the Internal Troops in Amur Region. Having watched lots of video clips about a "beautiful life in a fair caliphate," he decided in 2014 to travel to Syria. It is noteworthy that the logistics have changed since 2013. These days, new "recruits" do not take the risk of flying to Istanbul directly from Makhachkala. They do not want to leave the trail. Some recruits now travel to Astrakhan, from where they fly to Rostov and then board a plane for Syria. Some travel by bus through Azerbaijan and Georgia. Nurbakilov flew from Mineralnyye Vody.

In Turkey, however, the arrangements are the same - without any attempts at conspiracy. They take a bus from Istanbul to either Gaziantep or Reyhanli on the border. They then cross the border in a van, without having to show their documents to anyone. [New arrivals] are sorted in the town of Atma and assigned to a training camp.

We studied Islam there, Shari'ah norms, and fighting tactics. Nurbakilov is sitting on a chair, handcuffed. Like all the "returnees," he is subject to criminal liability.

[Rashid Nurbakilov] After the camp, I was sent to Ar Raqqah. Once there, I was assigned to the Mujahireen group, headed by Chechen Abu Musa. I did not have to fight much. We mostly fought the Syrian Free Army. We once captured 40 people.

[Komsomolskaya Pravda] What happened to them?

[Rashid Nurbakilov] They were executed. Some were shot, some were beheaded.

[Komsomolskaya Pravda] Did you take part in that?

[Rashid Nurbakilov] I shot two [prisoners]. Beheadings were mostly carried out by Chechens... They talked a lot there about the need to wage jihad in Russia too. Thus, I was sent home to set up a sabotage group. I was supposed to travel to Makhachkala and to contact a person from Mosul, Iraq. He would tell me who I was to contact in Dagestan and where I was to get weapons. But I was arrested...

Dolce vita for Islamists

In Dagestan alone, about 700 criminal cases have been instigated in connection with involvement in illegal armed organizations abroad. In reality, according to unofficial estimates, up to 5,000 Russian citizens have left to join ISIL. This number only includes men, while many of them take their families. Local security officials told us a mindnumbing story about a woman with three children who ran away from her husband. She married a mujahid from Tajikistan in ISIL. Then, her lawful husband arrived in Syria and told the group's spiritual leader: "What is happening? Our marriage has not been dissolved according to Islamic canons!" The theologians put their heads together and concluded that there was indeed an inconsistency. They reached an amicable agreement. The abandoned husband took the children back, while his now ex-wife stayed in ISIL with her Tajik. In that case, they used a democratic approach in the interpretation of Shari'ah laws. But they could have also stoned the woman. The reason why she was not stoned was because that particular Tajik had a high status.

Arslanbek Gazigereyev, under investigation in Makhachkala, says that he did not go [to Syria] to fight but to build a new life. He took his wife and children there.

[Arslanbek Gazigereyev] There were appeals on the Internet, inviting people to come and work there in reconstruction projects, promising housing and wages. On arrival I was separated from my family and sent to a training camp. My wife and children were housed in a shed with no heating or any other amenities, no sanitation. We decided to leave on the pretext that our family members needed medical treatment. In fact, it was an escape. They do not need civilians or hard workers there. They need people who will sacrifice themselves for the sake of extending the caliphate.

"Most people do not go there to fight but to live in the Islamic State according to Shari'ah laws," another "returnee" by the name of Gadzhimagomedov assures us. "The main emphasis in the recruitment is that you are free not to fight if you do not want to, you can just live and enjoy life there. As soon as you arrive there, the amir asks you: "Why don't you want to do jihad?" And he himself has a very good car, two or three wives, two or three houses. I ask: "And why aren't you fighting yourself?" He says, we have done our share of fighting, if you fight, you will have the same lifestyle as me!

In fact, this is the key point in recruitment. While in the past the emphasis was on living by Islam's rules, the accent has now shifted towards material benefits. The Internet is full of videos about a beautiful life in the caliphate - expensive villas, swimming pools, cool cars...

"Recruiters do not stop at anything," a senior specialist from the Makhachkala Public Safety Department, Magomed Abdurashidov, says. "Their mission is to bring as many people as possible there. Nobody is safe from this. I know a police major whose son has gone to Syria. He says: 'My son has disgraced the whole family. I have been fighting Wahhabis all my life, and then he does something like this.' They are told that there is paradise in Syria. But in reality you arrive there and you have no rights, you only carry out somebody else's will."

This is a total dead end for "jihad warriors". You either die, sooner or later, in ISIL or you get a long prison sentence if you return home. The motherland makes its clear: It does not need "jihad warriors" in any form or shape. Even those who have become disillusioned [in ISIL] and repent their actions. It is cruel, but you cannot explain it to people any other way that there are only one-way tickets to ISIL. There are no return tickets.

In Place of Epilogue. Unwanted Returnees

During the 10 years of fighting Islamic extremism in the North Caucasus, all methods have been tried - hard and soft authority exercised by republic leaders, dialogues with elders, amnesty for insurgents, and "reverse tolerance," when suspicious persons are constantly searched and interrogated in order to keep tabs on them. Religious debates were held and Wahhabi mosques were closed down. Still, the Caucasus goes up in flames with alarming regularity. Imams are simply killed, while to preach Salafism-Wahhabism you do not need mosques in the 21st century, the Internet is enough.

Syria has become a true salvation for the secular Northern Caucasus, having syphoned off the most passionate Wahhabis. Society has effectively rejected them. The local authorities heaved a sigh of relief: the number of terrorist attacks in the Caucasus had fallen noticeably. But the Wahhabis do not lose the hope of returning home and continuing their jihad there. When the story with ISIL is over, all the "dark forces" will be engaged in getting the militants back to the Caucasus - the State Department, the European Union, the United Nations, the Russian opposition, and human rights activists will be exercising pressure through all channels. They will be trying to return in any guise, including public penance. And this is when Russia will have to make a brutal and very difficult choice.
   

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 #23
Kennan Institute
January 11, 2016
Popular Decisions, Unpopular Outcomes
By Maxim Trudolyubov  
Maxim Trudolyubov is a Senior Fellow at the Kennan Institute and the Editor-at-Large of Vedomosti, an independent Russian daily. Mr. Trudolyubov was the editorial page editor of Vedomosti between 2003 and 2015. He has been a contributing opinion writer for The International New York Times since the fall of 2013.

Reality and its interpretation by mass consciousness follow divergent paths in today's Russia. The country's economic slump and growing tension on the foreign-policy front speak of mismanagement and hubris. Public opinion polls, on the other hand, speak of the Russian citizens' support for their government's every move.

"I once suggested that my students count the instances in which Putin would make a decision running counter a sociologically confirmed majority opinion," writes Alexei Chadaev, a pro-Kremlin political scientist and commentator. "We have found only one: Putin's decision to maintain a moratorium on the use of the death penalty." Apart from that humane step, taken years ago, Putin has made no unpopular moves. Authoritarian on the surface, his rule is actually democratic in nature, Chadaev concludes. [http://izvestia.ru/news/601088#ixzz3wCC3cViR]

And yet Putin's leadership is becoming more and more expensive. We have been cutting down on the essentials: by the end of 2015, drug prices went up by 25 to 50 percent year on year, depending on specific items. Russia's New Year celebrations, traditionally the country's favorite holiday, were less plentiful this time. The all important seasonal treats like tangerines, oranges, canned fish, and marinated cucumbers went up 40 to 30 percent year on year. The Russian Olivier salad, an inevitable part of a festive table, was 15 percent more expensive to fix than a year ago.

Investment will be falling for a fourth year in a row and real wages will be contracting for a second year. The economy is expected to shrink more slowly than in 2015, but it will shrink nonetheless. The Russian ruble lost 40 percent of its value in 2014 and went down a further 20 percent in 2015. Egypt and Turkey, favorite tourist destinations that would between them accommodate 6 million Russians a year for coveted sunbathing, are now off limits because of a government ban (terrorism being the reason in the first instance; sanctions against Turkey for shooting down a Russian fighter-bomber in the second). Foreign travel has become prohibitively expensive for many, especially for those outside Moscow. EasyJet and Air Berlin are among the airlines that have announced they would suspend flights to Russia for economic reasons. The ruble, Egypt, Turkey, tangerines, and jobs were recently listed as "losses of the year" by a website in Yekaterinburg, Russia's fourth largest city, located at the heart of the Eurasian continent.

But something strange has happened: either these kinds of losses are too trivial, or economic matters are no longer prevalent in Russia's thinking. This is new. For the better part of the past 20 years, the presidential approval rate closely followed Russians' perceptions of the economic performance of their country and their families' prosperity. The Soviet Union's equality in poverty was such a drag that everyone wanted to get as far from that as possible. Income growth and levels of consumption were the key factors in Russia's domestic politics for years.

But this is no longer the case. The economy no longer seems to drive people's opinions of their government. Mr. Putin's approval rating is flying as high as it was immediately after the annexation of Crimea in March 2014. Crimea was the moment when Russia lifted the anchor and set out on a lonely and dangerous voyage of a power that sets its own rules, unconstrained by international obligations.

Putin's decisions may prove to be good or bad, but he always makes a point of having the majority opinion on his side. The sheer fact of every decision being advertised as "popular" does not preclude it from being wrong, but it does make millions of people complicit in it. The war with Georgia, the expulsion of Georgians from Moscow in 2008, the anti-migrant, anti-NGO, anti-gay campaigns, the annexation of Crimea, the war with Ukraine, and the war in Syria were (and are) popular policies. In the case of Crimea, the Kremlin made a special point of placing its public support on record.

In mid-March 2014, the Kremlin conducted a massive opinion poll in Russia and, simultaneously, a snap referendum in Crimea. The results of both polls, overwhelmingly supportive of the Kremlin's decision to annex Crimea, were published on March 17. The peninsula was officially admitted to the Russian Federation on March 18. Millions of Russians thus subscribed to that decision.

The fact that the current economic crisis caught up with Russia soon after the annexation is extremely advantageous to the Kremlin. Most of the economic decline is due to falling oil prices, not to the West's sanctions,  which means the crisis is systemic. It has more to do with years of mismanagement, corruption, and a failure to reduce the budget's dependence on oil, than with a post-Crimea backlash. But most Russians are unable or unwilling to see this clearly. Helped by state-run television, they believe that they are suffering because of the Western revenge for Russia's audacity, not because of their own leaders' many years of greed and folly.

Making sure that most Russians were in cahoots with the decision to annex Crimea is proving to be viciously prudent. It is a clever psychological setup. Even those who are educated and sober enough to see the real reasons behind the current situation would not admit it, because that would mean backtracking on previous expressions of support for Putin. The president's moves are bound to remain popular, despite leading to disastrous outcomes. Today's Russia may serve as a teaching aide for anyone interested in studying the effects of populism.

The Russians do realize that their economy is in crisis. Almost half of all polled by the Foundation for Public Opinion (FOM), a private pollster with ties to the Kremlin, said that their material wellbeing went down in 2015 and 72 percent said that the economy was in crisis. Numerous studies show that Russian citizens do not have any illusions about the state of economic affairs. The citizens of Russia all live a paradox: popular decisions lead to an unpopular situation, but they don't seem to understand why.

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 #24
Russia Beyond the Headlines
January 12, 2016
7 powerful politicians from around the world that speak Russian
Russian is considered one of the most difficult languages to learn yet there are many influential politicians around the world that have taken it up.
NATALIA MASHINISTOVA, SPECIAL TO RBTH
[Videos with Michael McFaul and Condoleezza Rice here:
http://rbth.com/arts/lifestyle/2016/01/12/7-powerful-politicians-from-around-the-world-that-speak-russian_558729]

Most Russian-speaking politicians live in former Soviet republics and other countries that were previously aligned with the USSR. The knowledge of Russian in these countries was considered necessary to advance one's career as well as being the lingua franca of international communication. While not all leaders of countries such as Lithuania, Latvia, Estonia, Georgia and Ukraine enjoy speaking Russian, when they meet with each other they often use it to communicate. The knowledge of Russian is also widespread among the senior generation of Eastern European politicians and ordinary citizens from Poland, Czech Republic, Slovenia, Slovakia and Hungary. Today there are numerous politicians around the world that speak Russian. RBTH decided to investigate how this came to be.

Angela Merkel

Angela Merkel, the Chancellor of the Federal Republic of Germany and easily the world's most powerful woman, is a fluent Russian speaker.

Merkel was born in Hamburg, West Germany, but her father, an official in the Lutheran Church, moved the family across the border to the East just a few weeks after her birth. Growing up in East Germany where Soviet forces were stationed, Merkel had the opportunity to study Russian, as it was taught in schools as a foreign language. Being a capable learner she competed in East Germany's Russian-language competition and won at every level, from schoolwide to countrywide. She was a three-time champion.

Merkel never speaks Russian in public. However, Russian human rights activist Arseny Roginsky says that while in Moscow in 2005, Angela Merkel did not need an interpreter, and spoke Russian slowly and carefully, like a diligent student.

It is known that Merkel once had a conversation in Russian with Prime Minister Dmitry Medvedev in Sochi in August 2008. She gestured toward the Black Sea and said, "President Putin told me that every morning he swims 1,000 meters out there. Do you do things like that?" Medvedev replied, "I swim 1,500 meters."

Michael McFaul

It should come as no surprise that the former United States ambassador to Russia has a good command of Russian.

The architect of Obama's Russian reset policy, Michael McFaul first traveled to the Soviet Union in 1983 and lived there at several points over the next decade, studying at Leningrad State University and Moscow State University.

McFaul often interacts with the Russian public and has even appeared on Russian television. On November 7, 2012, after Obama's second successful presidential campaign, McFaul was invited to appear on a late night variety show with Ivan Urgant, a famous Russian entertainer. The interview was conducted in Russian and McFaul perfectly understood Russian humor, played along and made some jokes himself.

The 'Evening Urgant' TV-show. Source: YouTube / Vecherny Urgant

Here are some of McFaul's short messages from his Twitter account, where he occasionally professes his love for Russian beer:

Michael McFaul ✔ @McFaul
хотел купить Балтика 7 сегодня но не получилось. уже нету, где раньше продувалось.
3:46 AM - 19 Nov 2015

Праймериз & Снюс @foroforf
@McFaul @kulik_vrn @n_barmaleykina @rykov Главное помнить слово ПИВО :)

Michael McFaul ✔ @McFaul
.@foroforf @kulik_vrn @n_barmaleykina @rykov это слово тоже не забыл. Скучаю по Балтику7
3:20 AM - 11 Sep 2014

Madeleine Albright

Madeleine Albright was the first woman to serve as the U.S. Secretary of State.

Following in her father's footsteps, Albright chose to study political science. She completed her education at Columbia University, earning a certificate in Russian studies and her MA and PhD in public law and government.

Albright has been to Russia multiple times. For example, she visited the Moscow State Institute of International Relations on February 11, 2010 and greeted Russian students in their mother tongue.

Condoleezza Rice

The former U.S. Secretary of State, and one of the most significant policy makers under George W. Bush, studied Russian during her college years.

Condoleezza Rice rarely demonstrates her Russian skills in public. In her own words, she lacks practice and thinks that Russian with all of "these horrible cases" is quite difficult. You can listen to Rice speak Russian in an interview she gave to Russian radio station Ekho Moskvy on April 20, 2005:

Condoleezza Rice speaks Russian. Source: YouTube / Verycuteboyindeed

Kim Jong-il

Kim Jong-il was the supreme leader of the Democratic People's Republic of Korea from 1997 until his death in 2011.

As the Soviet Union was North Korea's biggest patron, Kim Il-sung, Kim Jong-il's father, deemed study of the Russian language essential to bilateral relations between the countries.

Here is the account of Kim Jong-il's private tutor, who first met him when the future leader was 17 years old:

"...The examinee appeared to be extremely nervous sitting alone for an oral exam. The shy boy with puffy, red cheeks responded meekly to each question I posed. He proceeded to read passages slowly from the book and translate them into Korean. His translations were not outstanding, but he managed to read and translate the text without making an error. <...> I asked Kim Jong-il routine questions like his name and birthday, the date and day of the week and the weather, yet he had a hard time responding. During the final conversation phase, he blushed and beads of sweat gathered on his forehead. Without ever boasting that he was the son of the Great Leader, Kim Jong-il patiently endured the exam."

Sauli Niinistö

Sauli Niinistö, President of Finland, confessed that he had "started learning Russian about as many times as he had tried to quit smoking."

Niinistö takes Russian classes every week and regards study of the language as "a matter of politeness," according to an interview with the Helsingin Sanomat newspaper, Finland's largest, in 2012. Recent meetings of Niinistö with his Russian counterpart Vladimir Putin have shown that the Finnish president's knowledge of Russian has progressed: he can now say "thank you" and "I am also very happy to see you."

Jacques Chirac

Jacques Chirac served as the President of France from 1995 to 2007.

In July 2001, before beginning Russian-French negotiations, Chirac gave an interview to the TASS Russian news agency sharing how much Russia meant in his life. In his younger days, Chirac had a Russian teacher who emigrated from St. Petersburg. He made Chirac fall in love with the language to such an extent that the future president single-handedly translated famed Russian writer Alexander Pushkin's "Eugene Onegin" into French.

Chirac recalls, "I was trying to get it published, sent it to different publishing houses, but no one got back to me. The translation, seemingly, was not that good..."

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 #25
New York Times
January 12, 2016
As U.S. Modernizes Nuclear Weapons, 'Smaller' Leaves Some Uneasy
By WILLIAM J. BROAD and DAVID E. SANGER

As North Korea dug tunnels at its nuclear test site last fall, watched by American spy satellites, the Obama administration was preparing a test of its own in the Nevada desert.

A fighter jet took off with a mock version of the nation's first precision-guided atom bomb. Adapted from an older weapon, it was designed with problems like North Korea in mind: Its computer brain and four maneuverable fins let it zero in on deeply buried targets like testing tunnels and weapon sites. And its yield, the bomb's explosive force, can be dialed up or down depending on the target, to minimize collateral damage.

In short, while the North Koreans have been thinking big - claiming to have built a hydrogen bomb, a boast that experts dismiss as wildly exaggerated - the Energy Department and the Pentagon have been readying a line of weapons that head in the opposite direction.

The build-it-smaller approach has set off a philosophical clash among those in Washington who think about the unthinkable.

Mr. Obama has long advocated a "nuclear-free world." His lieutenants argue that modernizing existing weapons can produce a smaller and more reliable arsenal while making their use less likely because of the threat they can pose. The changes, they say, are improvements rather than wholesale redesigns, fulfilling the president's pledge to make no new nuclear arms.

But critics, including a number of former Obama administration officials, look at the same set of facts and see a very different future. The explosive innards of the revitalized weapons may not be entirely new, they argue, but the smaller yields and better targeting can make the arms more tempting to use - even to use first, rather than in retaliation.

Gen. James E. Cartwright, a retired vice chairman of the Joint Chiefs of Staff who was among Mr. Obama's most influential nuclear strategists, said he backed the upgrades because precise targeting allowed the United States to hold fewer weapons. But "what going smaller does," he acknowledged, "is to make the weapon more thinkable."

As Mr. Obama enters his final year in office, the debate has deep implications for military strategy, federal spending and his legacy.

The B61 Model 12, the bomb flight-tested last year in Nevada, is the first of five new warhead types planned as part of an atomic revitalization estimated to cost up to $1 trillion over three decades. As a family, the weapons and their delivery systems move toward the small, the stealthy and the precise.

Already there are hints of a new arms race. Russia called the B61 tests "irresponsible" and "openly provocative." China is said to be especially worried about plans for a nuclear-tipped cruise missile. And North Korea last week defended its pursuit of a hydrogen bomb by describing the "ever-growing nuclear threat" from the United States.

The more immediate problem for the White House is that many of its alumni have raised questions about the modernization push and missed opportunities for arms control.

"It's unaffordable and unneeded," said Andrew C. Weber, a former assistant secretary of defense and former director of the Nuclear Weapons Council, an interagency body that oversees the nation's arsenal.

He cited in particular the advanced cruise missile, estimated to cost up to $30 billion for roughly 1,000 weapons.

"The president has an opportunity to set the stage for a global ban on nuclear cruise missiles," Mr. Weber said in an interview. "It's a big deal in terms of reducing the risks of nuclear war."

Last week, Brian P. McKeon, the principal deputy under secretary of defense for policy, argued that anyone who looks impartially at Mr. Obama's nuclear initiatives in total sees major progress toward the goals of a smaller force and a safer world - themes the White House highlighted on Monday in advance of the president's State of the Union address.

"We've cleaned up loose nuclear material around the globe, and gotten the Iran deal," removing a potential threat for at least a decade, Mr. McKeon said.

He acknowledged that other pledges - including treaties on nuclear testing and the production of bomb fuel - have been stuck, and that the president's hopes of winning further arms cuts in negotiations with Russia "ran into a blockade after the events in Ukraine."

He specifically defended the arsenal's modernization, saying the new B61 bomb "creates more strategic stability."

Early in his tenure, Mr. Obama invested much political capital not in upgrades but in reductions, becoming the first president to make nuclear disarmament a centerpiece of American defense policy.

In Prague in 2009, he pledged in a landmark speech that he would take concrete steps toward a nuclear-free world and "reduce the role of nuclear weapons in our national security strategy." The Nobel committee cited the pledge that year in awarding him the Peace Prize.

A modest arms reduction treaty with Russia seemed like a first step. Then, in 2010, the administration released a sweeping plan that Mr. Obama called a fulfillment of his atomic vow. The United States, he declared, "will not develop new nuclear warheads or pursue new military missions or new capabilities."

The overall plan was to rearrange old components of nuclear arms into revitalized weapons. The resulting hybrids would be far more reliable, meaning the administration could argue that the nation would need fewer weapons in the far future.

Inside the administration, some early enthusiasts for Mr. Obama's vision began to worry that it was being turned on its head.

In late 2013, the first of the former insiders spoke out. Philip E. Coyle III and Steve Fetter, who had recently left national security posts, helped write an 80-page critique of the nuclear plan by the Union of Concerned Scientists, a private group that made its name during the Cold War, arguing for arms reductions.

American allies and adversaries, the report warned, may see the modernization "as violating the administration's pledge not to develop or deploy" new warheads. The report, which urged a more cautious approach, cited a finding by federal advisory scientists: that simply refurbishing weapons in their existing configurations could keep them in service for decades.

"I'm not a pacifist," Mr. Coyle, a former head of Pentagon weapons testing, said in an interview. But the administration, he argued, was planning for too big an arsenal. "They got the math wrong in terms of how many weapons we need, how many varieties we need and whether we need a surge capacity" for the crash production of nuclear arms.

The insider critiques soon focused on individual weapons, starting with the B61 Model 12. The administration's plan was to merge four old B61 models into a single version that greatly reduced their range of destructive power. It would have a "dial-a-yield" feature whose lowest setting was only 2 percent as powerful as the bomb dropped on Hiroshima in 1945.

The plan seemed reasonable, critics said, until attention fell on the bomb's new tail section and steerable fins. The Federation of American Scientists, a Washington research group, argued that the high accuracy and low destructive settings meant military commanders might press to use the bomb in an attack, knowing the radioactive fallout and collateral damage would be limited.

Last year, General Cartwright echoed that point on PBS's "NewsHour." He has huge credibility in nuclear circles: He was head of the United States Strategic Command, which has military authority over the nation's nuclear arms, before serving as vice chairman of the Joint Chiefs of Staff.

In a recent interview in his office at the Center for Strategic and International Studies, in Washington, General Cartwright said the overall modernization plan might change how military commanders looked at the risks of using nuclear weapons.

"What if I bring real precision to these weapons?" he asked. "Does it make them more usable? It could be."

Some of the biggest names in nuclear strategy see a specific danger in the next weapon in the modernization lineup: the new cruise missile, a "standoff weapon" that bombers can launch far from their targets.

"Mr. President, kill the new cruise missile," read the headline of a recent article by Mr. Weber, the former assistant secretary of defense, and William J. Perry, a secretary of defense under President Bill Clinton and an author of the plan to gradually eliminate nuclear weapons that captivated Mr. Obama's imagination and endorsement.

They argued that the cruise missile might sway a future president to contemplate "limited nuclear war." Worse yet, they said, because the missile comes in nuclear and non-nuclear varieties, a foe under attack might assume the worst and overreact, initiating nuclear war.

The critique stung because Mr. Perry, now at Stanford, is a revered figure in Democratic defense circles and a mentor to Ashton B. Carter, the secretary of defense.

Mr. McKeon, the Pentagon official, after describing his respect for Mr. Perry, said the military concluded that it needed the cruise missile to "give the president more options than a manned bomber to penetrate air defenses."

In an interview, James N. Miller, who helped develop the modernization plan before leaving his post as under secretary of defense for policy in 2014, said the smaller, more precise weapons would maintain the nation's nuclear deterrent while reducing risks for civilians near foreign military targets.

"Though not everyone agrees, I think it's the right way to proceed," Mr. Miller said. "Minimizing civilian casualties if deterrence fails is both a more credible and a more ethical approach."

General Cartwright summarized the logic of enhanced deterrence with a gun metaphor: "It makes the trigger easier to pull but makes the need to pull the trigger less likely."

Administration officials often stress the modernization plan's benign aspects. Facing concerned allies, Madelyn R. Creedon, an Energy Department deputy administrator, argued in October that the efforts "are not providing any new military capabilities" but simply replacing wires, batteries, plastics and other failing materials.

"What we are doing," she said, "is just taking these old systems, replacing their parts and making sure that they can survive."

In a recent report to Congress, the Energy Department, responsible for upgrading the warheads, said this was the fastest way to reduce the nuclear stockpile, promoting the effort as "Modernize to Downsize."

The new weapons will let the nation scrap a Cold War standby called the B83, a powerful city buster. The report stressed that the declines in "overall destructive power" support Mr. Obama's goal of "pursuing the security of a world without nuclear weapons."

That argument, though, is extremely long term: Stockpile reductions would manifest only after three decades of atomic revitalization, many presidencies from now. One of those presidents may well cancel the reduction plans - most of the candidates now seeking the Republican nomination oppose cutbacks in the nuclear arsenal.

But the bigger risk to the modernization plan may be its expense - upward of a trillion dollars if future presidents go the next step and order new bombers, submarines and land-based missiles, and upgrades to eight factories and laboratories.

"Insiders don't believe it will ever happen," said Mr. Coyle, the former White House official. "It's hard to imagine that many administrations following through."

Meanwhile, other veterans of the Obama administration ask what happened.

"I think there's a universal sense of frustration," said Ellen O. Tauscher, a former under secretary of state for arms control. She said many who joined the administration with high expectations for arms reductions now feel disillusioned.

"Somebody has to get serious," she added. "We're spending billions of dollars on a status quo that doesn't make us any safer."

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 #26
Water level in Lake Baikal keeps falling

IRKUTSK, January 12. /TASS/. The level of water in the world's largest fresh water reservoir in Eastern Siberia keeps falling. As of today it stands at 456 meters above the Pacific Ocean, four 4 centimeters short of the safe minimum, as follows from data published on the website of the Federal Water Resources Agency (Rosvodresurs).

Baikal went below the lowest permissible mark late last December. Under an effective government resolution as soon as the level of water falls that low, the Irkutsk Hydro located downstream is not allowed to use the 1,300 cubic meters of water per second required for the stable operation of water intakes.

For the first time fast decline in the level of water in Lake Baikal was registered in the autumn of 2014. Experts say that the lake has entered into another period of natural shallowness, already observed in the past. It may last up to a quarter of a century. Since 1962 Baikal has fallen below the 456-meter mark eleven times. An all-time record low of 455.27 meters was registered in 1982.

The head of the Baikal Institute of Natural Resources Management at the Siberian branch of the Russian Academy of Sciences, Yendon Garmayev, earlier told TASS that as the level of water in the lake falls, the perimeter border of the lake shrinks and warm shallow lagoons that are home to many amphibia and rare mammals disappear. The delta of the Selenga River - a vast spawning place is most seriously affected.

The head of the Baikal branch of the federal State Research Fishing Industry Institute, Vladimir Peterfeld, has told TASS that if the level of water in Baikal falls further, commercial fishing in the lake may be suspended.

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#27
Taste of Cinema
www.tasteofcinema.com
January 8, 2016
The 20 Best Russian Films of The 21st Century
By Michael Watson
Michael Watson is an avid fan of all kinds of films. He lives and works in New York City.

In the Soviet Era, strong state support gave way to a bustling film industry through the centralized and prestigious studio Mosfilm. In 1997, a mere 14 films were released in the Russian Federation. The tumult that came about from the dissolution of the Soviet Union had clearly taken its toll on the now moribund film industry.

As the 21st century emerged, Russian film experienced a resurgence. Young filmmakers such as Andrei Zvyagintsev and Aleksandr Sokhurov began garnering international acclaim.

By now, Russian film has firmly re-established itself as a powerhouse by combining many of the elements established by the greats of Soviet filmmaking with their own modern styles.

Russian films, as with all forms of Russian art, have a number of themes that appear frequently. Mysticism, psychology, irony and other often dark motifs locate themselves onscreen as often as they do in the pages of Dostoevsky. Just as Russia's great authors drew inspiration and language from Pushkin, the cinematic language established by Andrei Tarkovsky is unmissable in virtually all serious work even to this day.

Having developed their crafts in a more open society, influence western film is also strong in contemporary Russian work. This list attempts to demonstrate those running themes and historical comparisons, and to draw on cinema across various genres and styles with no particular caveats.

20. Everybody Dies But Me (Valeriya Germanika, 2008)

A bold coming-of-age tale, Everybody Dies but Me tells the story of three fourteen year old girls dealing with alcoholism, economic deprivation, and teen angst all at the same time. The film seeks to juggle these particularly dark elements with typical adolescent experiences.

The three girls are Katya, Zhanna, and Vika who all live in a crumbling neighborhood on the outskirts of Moscow. Katya and Zhanna are both somewhat rebellious, whereas Vika is cheerful and open. The three girls learn soon after the exposition that their school will be hosting a disco on the following Saturday. The films takes place over the next five days as the girls prepare for what seems to be a seminal event in their lives.

Much of the story is conventional high school movie fare. The girls deal with drama and Peer Pressure. But, Everybody Dies but Me is considerably darker. The film seeks to shed light on widespread child abuse that was going on at the time. The film is a dark drama, but it has a humanity that makes it very enjoyable.

19. Faust (Aleksandr Sokhurov, 2011)

The work of Aleksandr Sokhurov has become synonymous with epic, surreal, and unconventional. Faust is the fourth in the director's Men of Power series and arguably it's most complete. Much like its predecessors, this film has been met with polarizing reactions from critics and audiences.

Though it draws loose inspiration from Goethe, Sokhurov leaves his own imprint on the grandiose landscape. Faust is mesmerizing from the beginning as the always moving camera provokes a balletic feel. The strong visuals are bolstered by equally strong performances from Johannes Zeller and Hanna Schygulla. Though often vexing, the beauty and enigma of the presentation makes this film worthy of the Golden Lion it received in Venice in 2011.

18. Euphoria (Ivan Vrypaev, 2013)

Euphoria is a film that is singular in vision and simplistic in its dramatic narrative. The most notable aspect of this film is its sprawling cinematography, which calls to mind Soviet films such as Mikhail Kaltozov's Letters Never Sent. The director, who is trained as a playwright, clearly wants the landscape of the Southern Steppe to be as much a character in this story as the three participants of the ill-fated love triangle of Valery, Pasha, and Vera.

Among the most memorable sequences is when Vera and Pasha are naked in the nearby body of water, with the camera alternating between close-ups and panning views of the surrounding landscape to emphasize the futility of their struggle, and the viewer can vaguely read Vera's lips as she whispers "I'm not going to give this up."

Do not be fooled by the title, Euphoria is relentlessly tragic. The progression of the doomed love triangle plays very well against the bucolic images surrounding the characters. This film is worthwhile both for its emotional narrative and its elaborate visuals.

17. Leviathan (Andrei Zvyaginstev, 2014)

Censorship has always been an unfortunate reality for Russian filmmakers. Even in 2014, illiberal anti-blasphemy laws forced Andrei Zvyaginstev to edit out explicit language from Leviathan in order to secure a domestic release. More controversial though, is the film's overtly political allegory of a society wrought with corruption. Despite the difficulties the film faced for its message and content, it would receive the Golden lion at Venice and was nominated for the Academy Award for Best Foreign Film.

The story follows Kolya, a mechanic struggling to make a living in a small fishing town. The town's mayor, an incompetent reprobate, seeks to seize Kolya's humble property to create a luxurious mansion for his own use. In a series of tragic events, Kolya learns the impossibility of fighting this system as he has his property seized and is framed for crimes.

The film can be taken as an indictment of Putin's Russia, in particular the unscrupulous relationship between the state and the Orthodox church. Although, the director feels the struggle is much more universal. So powerful is the satire of this film, the Ministry of Culture has stated in its wake that their entry for the Oscar's best foreign film will be 'more patriotic' in the future.

16. How I Ended This Summer (Aleksei Popogrebski, 2010)

Set in a remote Arctic Island, How I Ended this Summer tells the story of two scientists conducting geological research from an old Soviet Outpost. One of the characters is the gruff and experienced Sergei, the other is a young intern named Pasha who spurns the antiquated Soviet equipment because he is able to use a computer.

Sergei decides to go on an unauthorized boat trip, forcing his young apprentice to make excuses for him in their correspondences with state meteorologists. Upon his return, Sergei is incensed to find out that Pasha has been fabricating data in order to shirk his work.

This prompts the elder Scientist to lecture Pasha on the importance of this outpost and to wax nostalgic about the Soviet era. As the situation deteriorates, the story turns into a tale of suspense as the characters have to work together to deal with harsh weather conditions and broken communication.

The director offers a clear commentary on modern Russia as the characters allegorically represent ongoing struggle between tradition and modernization in Russian Society. While the plot is often quite conventional, the film is filled with symbolism surrounding the desolate landscape and the conflicts of the characters. The award winning performances by Grigoriy Dubrigin and Sergei Puskepalis make How I Ended This Summer as entertaining as it is important.

15. Paper Soldier (Aleksey German, 2008)

Paper Soldier is a period piece surrounding a space launch for Soviet Cosmonauts in the 1960s. With a well-written script and great set design, the film tells a story of a Soviet Union in the midst of an uneasy transition to a more liberal society.

Doctor Danya is the focus of the story, which begins several weeks away from a launch out of the Soviet Cosmodrome. Danya is tasked with training young cosmonauts, even as he feels a foreboding sense of danger surrounding the situation. His wife feels he is overly dedicated to the mission at the expense of tending to their children.

As the launch draws nearer, Danya attempts to comfort an anxious cosmonaut with his idealistic vision of progress and service to a higher purpose. It fails to calm the intrepid young man. Danya continues to wrestle with his conscious right up until the launch.

With his idealistic commitment to moving Soviet Socialism forward, the main character is perhaps a stand-in for Nikita Kruschev and his mission to revive Soviet society out of the totalitarian mire of the Stalin regime. The film ends ten years later with Danya peering down at a stopped watch. The story is an entertaining and meaningful metaphor for the issues plaguing the Soviet Union at the time.

14. Cargo 200 (Aleksei Balabanov, 2007)

Cargo 200

Alexei Balabanov has focused his career on period pieces. Cargo 200 is a harrowing depiction of late Soviet society through the lens of moonshiners in 1984. Balabanov has expressly stated that this movie is not meant to be a horror film, but the grim depiction of atrocities gives Cargo a grindhouse slasher flick feel.

In the film, an unassuming atheist professor is traveling from Leninsk to Leningrad to visit his brother. After his car breaks down, he meets a young man and his girlfriend. He ends up on a farm of moonshiners. Just outside the farm, a kidnapping of the young girl takes place. What ensues is a maelstrom of smuggling, rape, and murder. Balabanov creates a stomach churning array of gruesome sequences.

The film's title refers to coffins that contained the bodies of Soviet Soldiers in Afghanistan. Whether the film is viewed as an over-the-top black comedy or a grizzly rebuke of the chaotic decline of the Soviet Union, the Cargo 200 is a beautifully shot and deftly acted thriller.

13. The Island (Pavel Lungin, 2006)

During WWII, a Sailor and his captain are captured by the Nazis off the coast of the White Sea in Pavel Lungin's The Island. Aboard the Nazi ship, the main character Anatoly is given the agonizing choice to kill his captain in order to save his own life. He begrudgingly agrees. After being marooned on a small island, Anatoly is rescued by a group of Orthodox Monks and he decides to join the Monastery.

Decades later, Anatoly is a clairvoyant spiritualist who is overcome with guilt for killing his commanding officer. He has garnered a reputation for his magical abilities. He performs healing and exorcisms for children who visit the monastery. Eventually, the guilt he faces becomes overwhelming, and he repents for his sins by predicting his own death and being ritualistically buried.

The film has a simple and straightforward narrative. Bearing in mind the strong tradition of fatalism is Russian literature, Lungin's Island is a moving parable about a man's struggle with his own sins. Deeply spiritual and contemplative, this beautiful story is worthy of its comparison to classic Russian films and stories.

12. Mermaid (Anna Melikyan, 2007)

Mermaid is a radiant, colorful, and erratic modern re-telling of the Hans Christian Andersen fairy tale. Mariya Shalayeva delivers a phenomenal performance as the titular heroine and her life discovering her own magical capabilities. With its focus on a female coming of age and its highly stylized visuals, Mermaid been dubbed the Russian Amelie.

The story begins when the main character Alice is six years old. She is rejected from ballet school and catches her mother having an affair. Over time, she realizes she is able to bend nature to her will (similar to Roald Dahl's Matilda). Her anger at her mother causes a hurricane that prompts her family to move to Moscow. Throughout the film, her powers continue to shape her fate. Though, Alice's abilities are never able to bring her the happiness she desires.

The hyper-stylized approach Melikyan takes garnered a polarized reaction, but less debatable is the quality of the performance by Maria Shelayeva. The director stated that she wanted to use Anderson fairy tales as source material because of a preference for sad endings. What Mermaid lacks in redemption, it makes up for in a unique and bold experience.

11. Mongol (Sergei Bodrov, 2007)

Russian Cinema provided one of the first great historical epics with Sergei Eisenstein's monumental Ivan the Terrible. In that vein, Sergei Bodrov's Mongol is an ambitious historical fiction epic about the early life of Genghis Khan.

Shot on location in Inner Mongolia, the story follows Temüjin as he flashes back to the earliest days of his life while in prison. He harkens to expeditions he embarked on with his father, choosing his wife, and becoming enslaved at the loss of a battle. Through a dizzying array of action sequences, the film chronicles the main character's rise to become Genghis Khan.

The film makes little attempt to be historically accurate or culturally nuanced, but Mongol is filled with a number of well shot and well performed action sequences. As an historical epic, the film is bold and entertaining. It is one of the finer action films to be produced in Russia in the last decade.

10. Hipsters (Valery Todorovsky, 2008)

In the 1950s, rebellious Soviet youth formed counter culture around flamboyant western fashion trends in an attempt to emulate Buddy Holly and Elvis. They were derisively dubbed Stilyagi or 'The Stylish'. While the film Stilyagi is sometimes translated as 'Hipsters' or 'Beatniks', there is no directly analogous western subculture for this unique Soviet phenomenon. Just as unique is this musical film portrayal that has drawn comparisons to the work of Baz Luhrmann for it's over-the-top style and anachronistic soundtrack.

Youth organizations such as the Pioneers (similar to Boy Scouts) and the Komsomol (a teen oriented Soviet youth organization) were considered crucial for connecting young people to Soviet ideals.

The movie begins with a group of Komsomol adolescents gleefully bullying a group of the stilyagi pariahs in Moscow's Gorky Park. The conflict between Red loyalists and countercultural rebels becomes the crux of the plot. As the unfortunate stilyagi members struggle to avoid nonconformity, some of the groups members try steadfastly to remain faithful.

The film's final sequence culminates in a memorable musical number that creates a through-line from the stilyagi to the punk scene that took root in the 1980s. The soundtrack is comprised of notable rock covers from major Russian bands such as Kino. Initial reaction was lukewarm as Russian critics did not know what to make of the anachronisms and off-kilter plot. In the years since its release however, Stilyagi has become a cult hit for Russians and Russophiles for its whimsical portrayal of this fascinating group.

9. Elena (Andrei Zvyaginstev, 2011)

After he failed to make waves with his second film The Banishment in 2007, Andrei Zvyaginstev's follow-up Elena cemented his artistry, as well as his unwillingness to compromise in his portrayals of the modern Russian state. This film offers a depiction of inequality in which Russia's immensely powerful upper class protects its own interests as it looks down with scorn upon the flailing masses.

The titular character, played brilliantly by Nadezhda Markina, is a home care aid who won an ostensible lottery by marrying one of her wealthy patients. She is left in a state of ennui as she cares for her ailing husband and uses his money to support her profligate, irresponsible son Sergei. Their wealthy neighborhood, much like the Russian bourgeoise itself, is sparsely populated.

After Elena's husband is hospitalized with a heart attack, family conflicts are stoked anew, and Elena must devise a plan to ensure that her family does not end up like the derelict Muscovites shown throughout the movie.

Elena serves as both a macropolitical commentary on the scourge of inequality while also being deeply personal. Zvyaginstev finds the perfect way to demonstrate the vast chasm between the rich and the poor in Elena's story.

Cinematographer Mikhail Krichman does a wonderful job depicting the contradictions of the luxurious lifestyle of the rich few with the chaotic existence of the poor many. The film envisions modern society as more of a state of nature than a civilization. Elena is well deserving of its critical praise and award winning pedigree.

8. The Italian (Andrei Kravchuk, 2005)

From Tarkovsky's Ivan's Childhood to Elem Klimov's Come and See, children forced into maturity because of circumstances is a running theme in Russian cinema. The Italian beautifully chronicles the story of a young boy in a rundown orphanage. With uncompromising realism, director Andrei Kravchuck delves into the milieu of rural Russian life.

The main character, Vanya, which is perhaps an homage to the "Ivan the Fool" character of Russian folklore, is selected by an Italian family to be adopted. The other orphans grow envious and mockingly refer to him as The Italian.

Rather than delight in his good fortune, however, Vanya is plagued by the sense that his birth mother is still alive and he must find her. He escapes the orphanage before he is handed over to his adoptive parents to set off on a quest to find his birth mother. What ensues is a cat-and-mouse game played between the greedy Madam of the orphanage and Vanya.

Vanya represents innocence and idealism in the face of decrepit conditions and moral decay. Even against long odds, the young hero remains cunning and determined. It was undoubtedly no accident that the film was called The Italian, while containing a simplistic realism that drew comparisons to the works of Roberto Rosselini and Vittorio Da Sica. Overall, the film is a quintessentially Russian story that is very well delivered.

7. Shultes (Bakur Bakuradze, 2008)

Shultes, the work of Georgian filmmaker Bakur Bakuradze, is so stripped down and scant on dialogue that at times it feels like cinéma vérité. The movie does not have a plot per se, so much as a series of snapshots into the life of a man living one day at a time. This is what makes it so wonderful.

The main character is an uncommunicative pickpocket, who wanders the streets of Moscow with the sole aim of finding easy targets for quick cash. Caroming from metro trains, to cafes, to bath houses, Shultes is found in all facets of contemporary Russian life supporting a meager existence through his illicit trade. He sits with his mother in her cramped apartment. He visits friends. He swipes wallets from bystanders.

Eventually, he takes a young homeless boy as an accomplice. The most jarring sequence comes at the film's denouement, when he covers for the boy and allows himself to be beaten up by a group of friends who assume he stole their things.

It is particularly challenging for films to depict banality without it becoming tiresome. Shultes holds onto the viewer through constant tension (will the character get caught for his crimes?), but also by portraying the minutiae of life in Moscow with astonishing accuracy. The story is unique, and the film is highly enjoyable.

6. House of Fools (Andrei Konchalovsky, 2002)

In a film as unflinchingly anti-war as Paths of Glory, this work by Andrei Konchalovsky is a black comedy about patients in a psychiatric hospital during the first Chechen War. Though a completely unique narrative, it is considered a remake of the French film King of Hearts, and was almost unavoidably compared to One flew Over the Cuckoo's Nest.

On the border between Chechnya and the rest of Russia, an institution is abandoned by its staff for fear of bombings. This leaves the inmates to quite literally run the asylum. One of the inmates is Zhanna, who believes that she is the soulmate of Canadian pop star Bryan Adams. The abandoned hospital is overtaken by a group of runaway Chechen rebels, one of whom takes a liking to Zhanna. Their budding romance never comes to fruition, but in the progression of the story many horrors of the war come to light.

House of Fools, particularly in the US, was met with generally negative critical reception upon its release. Some critics took exception to the use dark comedy, seeing it as callow and insensitive. However, the film is a powerful indictment of the Chechen conflict that takes no side other than that war is hell and entrenched in corruption. Viewing it as such, House of Fools utilizes black comedy to ponder whether these inmates could ever be as deranged as the system that perpetuated such strife.

5. Wild Field (Mikhail Kalatozishhvili, 2008)

Wild Field exists nominally in an alternate, post-apocalyptic reality that is concerned neither with a linear timeline nor a concrete backstory to reveal what sort of disaster leveled the setting. This is absolutely an art film with an aesthetic as important to the story as the characters. It is lyrical, enigmatic, and stunningly beautiful.

The movie is compartmentalized into a prologue and an epilogue with nine 'episodes' and interludes in between. The constant throughout is Mitia, who exists listlessly in desolate fields. Each episode details an archetypal visitor such as a sheriff, an alcoholic and a shepherd with a sickly animal. Each of these visits present their own dilemmas that offer wrinkles in Mitia's otherwise mundane life. The rhythmic movement through each sequence gives the film a poetic feel.

Wild Field is heavily influenced by Russian classics such as Stalker. Its weighty ambitions are actualized though the tight directions and the dazzling cinematography of Pyotr Dukhovskoy. The story is ambiguous and esoteric, leaving room to interpret its vast symbolism. All of this culminates in a memorable and worthwhile cinematic experience.

4. Russian Ark (Aleksandr Sokhurov, 2002)

Creating a film out of one continuous shot is a concept used quite sparingly in the history of film. Aleksandr Sokhurov uses this idea to take the audience on a dreamy tour of St. Petersburg's Hermitage. Dancing through various periods of Russian history in no particular order, the continuous shot concept helps to create an immersive experience.

Russian Ark begins with a French nobleman entering the Hermitage. He wanders from room to room surveying centuries of Russian art. Other historical figures like Catherine the great surface throughout the film, sometimes breaking the fourth wall with the narrator. The most grandiose scene comes when the camera swoops into a a ballroom filled with hundreds of dancers, festooned in historical regalia. Their choreography is as precise as that of the steadicam used to shoot the film.

In a movie chocked full of highly conceptual pretensions, Sokhurov's bold creative choices pay off in a mesmerizing vision. Compared favorably with the famous collaboration between Bergman and Tarkovsky Nostalghia, Russian Ark is challenging and highly rewarding.

3. War (Aleksei Balabanov, 2002)

Many of the finest and most deeply psychological war films have come from Russia. The great patriotic war was amongst the most frequent subject of Soviet films in the twentieth century. Although, the moral dimensions of World War II were less complicated than those that the Russian Federation would delve into after it. Aleksei Balabanov adds one of the most grim entries in the canon of Russian war cinema with his portrayal of the Second Chechen conflict.

War is initially introduced as a frame tale where the main character Ivan Yermakov is being interviewed about his experiences. He recalls being held captive in a camp in Chechnya, where the prisoners are confronted with random beheadings. He is joined in the camp by a couple of British actors who were kidnapped while performing Shakespeare in nearby Georgia.

Eventually, Ivan is rescued from the conflict and returns home to find nothing but turmoil. This pushes Ivan back into conflict with his British compatriot. The story continues to unravel as both contend with the horrors of war.

Balabanov faced some criticism for the film being viewed as excessively pro-Russian. While the the film does not offer the Chechen point of view, it also does not portray Russians in a fully heroic light. Ivan has a callous disregard for human life, and the Moscow leadership is exposed as hollow and incompetent. Ultimately, War is a work of stylistic genius, and a crucial study in the horrors of brutal conflict.

2. The Cuckoo (Aleksandr Rogozhkin, 2002)

Finding humor in the Second World War is no easy task. Aleksandr Rogozhkin uses a simple device to create a poignant dark comedy: language barrier. In the Cuckoo, both a Soviet and a Nazi soldier find themselves in the exceedingly uncomfortable circumstance of working together.

Ivan is a Soviet commander accused of being a traitor; Veiko is a finnish soldier accused of desertion just days before Finland withdrew its support for the Nazis. As both men flee, they fatefully cross paths at the home of a native Laplander who only speaks Saami. Both feel that this is their only safe haven, and thus a Russian, A Finnish Nazi, and a primitive Saami are all left to coexist without being able to understand anything the other says.

The result is a hilarious comedy of errors. Ivan will only say Poshol Ty! (Russian for fuck off), so that is assumed to be his name. Anni, the beautiful and unassuming Laplander, has no idea of the conflict waging outside of her remote village. Over time, the combatants forge a reluctant bond, until even more misunderstanding turns them apart again.

Any movie with a basic message of 'we are all brothers' risks being overly sentimental. In The Cuckoo, though, absurdity reigns supreme in an atypical wartime tale. For successfully juxtaposing the stark realities of the Second World War with silly comedy and brilliant irony, this film is unique and superb.

1. The Return (Andrei Zvyagintsev, 2003)

With his first feature, Andrei Zvyagintsev created a mystical yet minimal story that immediately dubbed him the heir apparent to Andrei Tarkovsky. Driven by enigmatic symbolism and Biblical themes, The Return is one of the greatest films in the history of Russian cinema.

One day, young Ivan and Andrei awake to a surprise. Their father, who for reasons unexplained has been absent for over a decade, is sitting at their kitchen table. He suggests that the boys and he go on a fishing trip. The elder Andrei is excited for the reunion, while the younger brother is stooped in resentment.

Nonetheless, the boys drive off with their father. Even as they are excited for adventure, the father's futile attempts to rekindle their relationships creates painful awkwardness. The younger Ivan increasingly rebuffs his father, and things become frigid between the two as the threesome arrives at their mysterious island destination.

The father cannot assuage the concerns of his son, eventually driving him into a forest where he climbs a flimsy tower. The Father follows him, and in attempt to bring little Ivan down he falls from the tower. His lifeless body lies on the ground with his arms sprawled out in the image of a crucifix. The boys are left alone, still without any knowledge of why the return took place.

The film closes with a slideshow of black and white still photographs from the trip. Deliberately, The Return leaves a number of central questions unanswered. No one knows where the Father came from, and the sense of mystery forces the audience to take the same existential leap of faith that the children do at the beginning of the film.

This is a movie that plays exceptionally well with contradictions between its narrow scope and its grand themes. In the esteemed history of Russian cinema, The Return has earned its reputation as a modern classic.
 

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 #28
Maclean's (Canada)
http://www.macleans.ca
January 10, 2016
In Ukraine, a gun becomes a necessary tool
Andrey Lomakin's 'Amulet' portrait series captures how the Maidan Revolution changed Ukranians' view of guns
By Michael Petrou
[Photos here http://www.macleans.ca/news/world/in-ukraine-a-gun-becomes-a-necessary-tool/]

Ukraine's necessary tools

"I'm from Donetsk. In spring 2014 it became clear that without weapons it will be hard. A week after i bought a rifle, the house where I stayed with my friends was attacked by armed people. I had to shoot. Probably, it saved our lives."  Alexey, 29 years old, businessman, in his apartment in Brovary with rifle, which he bought in April 2014 in Donetsk. (Andrey Lomakin)

Ukrainian photographer Andrey Lomakin says his fellow citizens' attitude toward guns changed after the Maidan Revolution of 2014 in which the country's pro-Russian president, Viktor Yanukovych, was ousted following months of street demonstrations and the deaths of scores of protesters at the hands of security forces. "Maidan was a tipping point," he says. "Two years ago, weapons owners were hunters or people who like to shoot targets in a shooting gallery. Nowadays almost all owners consider their guns for self-defence first."

Lomakin has tried to capture this change in a series of photographs he calls Amulet, because of the talisman-like sense of security some Ukrainians now derive from their firearms. They are not like soldiers, Lomakin says of his subjects. "They are ordinary people who simply want to protect their family and houses like anyone in the world. Not everyone is comfortable to point a weapon at the aggressor and shoot, but everyone feels safer having one."

Lomakin says he began looking for subjects through friends and acquaintances who had bought weapons during and after the Maidan protests. They introduced him to others, and eventually he built a network. He says it was important to interview his subjects before photographing them in order to build trust. The results are apparent in the photos-most of which were shot in the subjects' homes and reflect a familiar intimacy. Some of Lomakin's subjects appear to cradle their weapons almost affectionately. Their guns are like sports cars, Lomakin says, that can be upgraded with fancy scopes and the like. But most of his subjects, he says, consider their guns to be necessary tools-"like a computer, washing machine or fridge."

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#29
Irrussianality
https://irrussianality.wordpress.com
January 12, 2016
OPINION POLLS
TAKING UKRAINE'S CARROT
By Paul Robinson
University of Ottawa

Ukraine, we are often told, has made a choice - to become a 'European' country, and in this way to decisively cut its historical ties to 'non-European' Russia. But what if Europe (in the form of the European Union (EU)) turns Ukraine away?

This has always been more likely than supporters of Ukraine's post-Maidan government have been willing to admit. Ukraine's situation is somewhat analogous to that of Turkey - even if the country were to fulfill all the demands that the EU makes of it, there is a very good chance that the Union would deny it membership anyway. The same applies to membership of the North Atlantic Treaty Organization (NATO). 'Europe' is like a carrot dangling always out of the reach of a Ukrainian donkey.

For the European dream to survive, Ukrainians have to fail to understand this. Given that the official integration process into the EU and NATO is a lengthy one, as long as those institutions keep up the pretence, it could take a considerable amount of time until Ukrainians realize that they are being duped. But what if the pretence is dropped and somebody takes away the carrot?

On 6 April this year, the people of the Netherlands will vote in a referendum on whether to ratify the EU's association agreement with Ukraine. All EU members have to ratify any such treaty for it to come into effect, so if the Dutch were to turn down the association agreement, Ukraine's carrot would suddenly disappear. Ukrainians would have carried out a revolution and fought a war in order to join an institution which would have said in reply, 'No thanks, we don't want you.'

This is a very real possibility. The results of a poll issued on Saturday show that 53% of eligible Dutch citizens said that they are certain to vote in the referendum (which requires a 30% turnout to be considered valid) and another 17% said that they are likely to vote. Also, just over 50% indicated that they would definitely vote to reject the agreement with Ukraine and another 25% said that they would probably do so.

These figures should not come as a huge surprise. On the rare occasions when they are allowed a direct vote, EU voters have a habit of rejecting agreements, as shown by the Danish rejection of the Maastricht Treaty, the Irish rejection of the Nice Treaty, and the French rejection of the European Constitution. So what would happen if, as is quite possible, the Dutch choose to slam the door on Ukraine?

There are three possibilities:

1. The Dutch parliament ignores the result of the referendum. Under Dutch law, referenda are not legally binding on the government; the latter merely has to take the results into consideration. The largest party in the governing coalition, the VVD, has already said that it won't change its support for the agreement no matter how the people vote. In the event of a 'no' vote, we can expect parties in the Dutch parliament to come under heavy pressure from other EU states to ignore the result. This pressure may prove effective.

2. The Dutch parliament heeds the will of the people, and rejects the association agreement once and for all. This is not impossible. The centre-right Christian Union party, for instance, has said that 'if we're overruled [by the people], we need to know our place.' This scenario would shatter Ukraine's European dream in a very public way. The promise of a 'European' future lies at the heart of the post-Maidan regime. Without it, all the reforms proposed by the Ukrainian government would lose their legitimacy. Having pinned all their hopes on Europe, it is hard to see where pro-Maidan Ukrainians could go if Europe told them 'no'. The prospects for those now governing Ukraine would be bleak indeed.

3. The Dutch parliament heeds the will of the people, and rejects the association agreement, but only in its current form. The government expresses its willingness to seek better terms; a long period of negotiation then follows, during which EU leaders try to make the minimum number of changes to the agreement required to get the Dutch people to change their minds. A revised agreement is then put forward for another vote, accompanied by all sorts of threats of the catastrophic consequences which will follow if the Dutch again then vote 'no'. This is the train of events which followed previous unwelcome referendum votes, and must be considered quite likely. It would keep the carrot dangling in front of the Ukrainian donkey, but it would be a smaller carrot hanging rather further away. The Maidan regime might just about survive this, but the European narrative which sustains it would come under considerable strain.

Not being an expert in Dutch politics, I will not attempt to predict who will win. But if the polls are correct and the 'no' side triumphs, we have some interesting times ahead.

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 #30
UNIAN (Kyiv)
January 12, 2016
Consumer prices rise 79% in two years of crisis

Consumer prices increased by 79% during 2014-2015 against the backdrop of a weaker hryvnia and increased tariffs for utility services, according to Olena Bilan, the chief economist at Dragon Capital.

"Over the last two crisis years, consumer prices rose by 79% against the backdrop of almost a threefold increase in public utilities tariffs (+173% in 2014-2015), as well as the weakening of the hryvnia from 8 UAH/USD in late 2013 to 24 UAH/USD in late 2015," Bilan said.

The rise in prices (by 20 percentage points) in the past two years has been attributed to the increase in housing and utility tariffs, with the remaining share mostly caused by the weakening of the national currency. While decline in oil prices has mitigated only slightly an impact of the weak currency on inflation, according to the expert.

"Since the hryvnia has remained largely stable since March last year, the effect of the currency devaluation has been fully realized itself in consumer prices, and should not create additional pressure on inflation," Bilan said.

Taking into account the expected scheduled increase in utility tariffs, the inflation is expected to slow down to 14% year-over-year at the end of 2016 due to the effect of the comparison base, as well as rigid fiscal and monetary policy.

"This forecast is based on expectations of a relatively stable exchange rate. However, each further weakening of the hryvnia by 10% will add an estimated 3 percentage points to the inflation rate, with its full effect being translated into prices within five-six months," she added.

As UNIAN reported earlier, inflation in Ukraine rose to 43.3% in 2015 (December 2015 to December 2014) as compared with 24.9% recorded in 2014, hitting the highest level over the past 20 years, according to the State Statistics Service. In December 2015, inflation slowed down to 0.7% against November 2015, from 2% recorded a month earlier.

In 2014, consumer prices in Ukraine increased by 24.9%.

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#31
Brookings.edu
January 11, 2016
Ukraine's challenges for 2016
By Steven Pifer
Steven Pifer is director of the Brookings Arms Control and Non-Proliferation Initiative and a senior fellow in the Center for 21st Century Security and Intelligence and the Center on the United States and Europe in the Foreign Policy program at Brookings. A former ambassador to Ukraine, Pifer's career as a foreign service officer centered on Europe, the former Soviet Union, and arms control.

Ukraine faces another difficult year as it grapples with two daunting challenges: Russia's continuing effort to use the unsettled conflict in the Donbas to destabilize Kiev, and the need to implement critical economic reforms. In order to put the country on a path to becoming a successful European state, Ukraine's leadership has to solve these two problems simultaneously. As Kiev tries to do so, the West can and must help-but U.S. and European support will be affected by the depth of Kiev's commitment to reform.

Implementing Minsk II?

After last summer's fighting, the ceasefire in the Donbas seemed to hold better in the autumn, but key elements of the Minsk II agreement have not been unfulfilled. While Moscow's focus has shifted to Syria, it is not yet apparent that the Kremlin wants a settlement in eastern Ukraine, as opposed to maintaining an open wound that Moscow can use to pressure Kiev. Unfortunately, the Donbas seems destined to remain a frozen, or not-so-frozen, conflict for some time to come.

Ukraine should nevertheless do everything that it can to implement the Minsk II provisions. That will increase the thin prospects for their success. It will also allow Kiev to place the responsibility for the failure of Minsk on the separatists and their supporters in Moscow. Among other things, that could prove key to sustaining European support for sanctions on Russia.

Accelerating reform

On the challenge of reform, Kiev has taken important steps, under difficult conditions. But President Petro Poroshenko and his government should do more, and they should do it faster. That means reforms in the areas of public administration, deregulation of business, privatization of state-owned enterprises, and further steps to build a competitive and transparent energy sector-all while avoiding populist measures that the country's budget cannot afford.

Accelerated reform includes a more vigorous effort to root out corruption. Given his performance over the past year, it is not clear why Prosecutor General Viktor Shokin remains in office. That office needs a shake-up, and the country badly needs to reform its judicial sector, so that citizens and business can have confidence in a fair court system.

Absent greater progress on such questions, the Ukrainian public will grow more disillusioned, as opinion polls already indicate. And Ukraine cannot afford a perception in the West that it is slow on reform; that would erode U.S. and European support.

Western support

Provided that Kiev accelerates reforms, the West should increase its support. That means making available to Ukraine an additional $5 to 10 billion in credits and grants to create a margin of comfort for more radical reform. It means providing greater military assistance to help Ukraine defend itself. And it means continuing to press Moscow, including with sanctions, to end its aggression against Ukraine.

Ukraine faces a tough road ahead and, unfortunately, will not be able to find its way out of crisis by the end of the year. Still, Kiev can make decisions now that will put the country on the right path, one that begins to realize the promise of the Euro-Maidan and that will sustain Western support. As Ukraine progresses down that path and becomes stronger and more resilient, the chances for a real settlement with Russia will grow.

This article appeared in Russian in the Ukrainian weekly Novoye Vremya.

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 #32
Facebook
January 11, 2016
Maidan protests
By Ivan Katchanovski
University of Ottawa

In a recently leaked phone call with Mustafa Nayem, who launched the "Euromaidan" protests, the leading Ukrainian oligarch and then governor of the Dnipropetrovsk Region states that the head of the Yanukovych administration knew in advance about the Yanukovych government order to disperse several hundred remaining Maidan protesters on November 30, 2013. This is corroborated by other evidence, such as presence of Inter TV, controlled by Lyovochkin and Firtash, on Maidan at 3:00am, its live broadcast of this violent dispersal by the Berkut police, and its initial coverage of the dispersal. http://oligarh.org.ua/node/136

My APSA paper (p. 61) notes that "there is also a certain evidence, such as statement by Anatolii Hrytsenko, one of the Maidan politicians, that the opposition leaders had advance information about this dispersal, because the opposition was able to intercept radio communications of Berkut concerning this operation."

This evidence suggests that the violent dispersal of the Maidan protesters by the Berkut police was not prevented but instead exploited by both the formerly pro-Yanukovych oligarchs and the opposition leaders to advance their own political interests.

Коломойский - Найему: "К разгону студентов на Майдане причастен Левочкин" | ОЛИГАРХ
Коломойский - Найему: "К разгону студентов на Майдане причастен Левочкин" пн, 14/12/2015 - 22:40 Любопытная аудиозапись разговора двух людей, голоса которых похожи, как это принято говорить, на голоса бизнесмена Игоря Коломойского и экс-журналиста и народного депутата от БПП Мустфы Найема, появилась...

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 #33
Russia Insider
www.russia-insider.com
January 12, 2016
SOLVED: Opposition Shot Victims on Kiev's Maidan
The study by Ivan Katchanovski at the University of Ottawa did not specify the exact identity of the perpetrators
(German Economic News)

Originally Appeared at German Economic News. Translated from the German by Susan Neumann

Translator's note: The first version of the Snipers' Massacre in Kiev was presented October 1, 2014.

With the support of thousands of pieces of evidence, including video footage, an analysis from the University of Ottawa has come to the following conclusion: the shots fired at demonstrators did not come from the government, but from snipers of the Western-supported opposition. The EU-Ukraine Association Agreement became operational January 1, 2016 - a poisonous and latent consequence of the violence of Maidan.    

An analysis by the University of Ottawa has newly studied the causes of the Maidan Massacre and has come to the conclusion that the massacre designed to overthrow the government of Yanukovych and thus allow a new version of the Cold War starring EU, Ukraine, and the US versus Russia, was not carried out by Yanukovych. The analysis produces an overwhelming amount of proof that the shots fired demonstrators fall under the responsibility of the Western-backed opposition. The group led by Julia Tischoschenko and the right-wing extremists were actually able to achieve their goal through violence. The government fell - and it looked like the anti-Russian course was firmly set. The EU-Ukraine Association Agreement became operational January 1, 2016 (Video at the beginning of the article) - a poisonous and latent consequence of those shots fired from an ambush at police and demonstrators.

The conclusion of the analysis from the University of Ottawa (Author: Ivan Katchanovski) is really worth studying in detail:

[An excerpt of the English version has been posted here in place of the German.]
http://www.academia.edu/8776021/The_Snipers_Massacre_on_the_Maidan_in_Ukraine

"The massacre of several dozen Maidan protesters on February 20, 2014 represented a turning point in Ukrainian politics and a tipping point in the escalating conflict between the West and Russia over Ukraine. In particular, the mass killing of the protesters and mass shooting of the police that preceded it led to the violent overthrow of the semi-democratic government of Viktor Yanukovych, who was backed by the Russian government, by a Maidan alliance of oligarchic and far right parties, supported by the Western governments. This massacre also gave a start to a large-scale violent conflict that escalated into a civil war in Donbas and to and Russian military intervention in Crimea and Donbas. The conclusion promoted by the post-Yanukovych governments and the Ukrainian media that the massacre was carried out by government snipers on a Yanukovych order has been nearly universally shared, at least publicly, by the US and other Western governments, as well as the media in Ukraine and the West before any investigation conducted and all evidence considered.

"For instance, Ukrainian President Petro Poroshenko, inhis speech to the US Congress on September 18, 2014, stated that the Yanukovych government's
overthrow resulted from mass peaceful protests against police violence, in particular the killings of more than 100 protesters by snipers on February 20, 2014.

"The research question is which side was involved in the "snipers' massacre." Related questions include which side broke the truce agreement and killed and wounded protesters and  police, and whether this was this was a spontaneous or organized massacre. This paper is the first academic study of this crucial case of the mass killing that led to the escalation of the violent conflict in Ukraine, an overthrow of the government and ultimately a civil war in Donbas, Russian military intervention in Donbas and Crimea, and the annexation of Crimea.

"The next section of this paper reviews different narratives concerning the Maidan massacre by the governments and the media in Ukraine, the West, and Russia, results of the official investigation and a trial, and representations of this mass killing in previous academic studies. The second section presents a theoretical framework used in this study and evidence and research methods that it employs. The next two sections analyze, respectively, the mass shootings of the police and Maidan protesters. A brief analysis of other major cases of violence during and after the "Euromaidan" is followed by conclusion, summarizing main findings of  this  paper and their implications."
 
One of the results of the investigation is that the All-Ukrainian Union "Fatherland" Party of oligarch and former Prime Minister Yulia Tymoshenko  clearly played a leading role in the coup d'etat. This group has been a sister party to the German Christian Democratic Union (CDU) since 2008. Both are allied with the European People's Party (EPP).

Meanwhile, it is also known that the Konrad Adenauer Foundation vigorously involved German taxpayers' money in the political upheaval in Ukraine. The Konrad Adenauer Foundation has claimed to be active in Ukraine since 1994 and has involved themselves in more than 500 projects. They also helped to build Klitschko's party, the "Ukrainian Democratic Alliance for Reform" (UDAR), by means of "logistical support" and training. The pro-European party has made it a goal to integrate the Ukraine into the EU as soon as possible.

Ukraine is on the verge of bankruptcy due to mismanagement, corruption, and civil war in the East. The EU-funded government in Kiev is close to collapse. Tymoshenko's party apparently wants to service the demands of the extreme right who are the ones that overthrew the government. A new civil war is imminent, but this time in the Western Ukraine.

Even Premier Yatsenyuk is under pressure. He's accused of corruption. It's therefore obvious that the government needs an outside enemy to help pull itself out of the firing line. Just like at Maidan, It's apparently willing to exhaust all possibilities to provoke a fight. The right-wing extremists have started a blockade of Crimea and they've cut off the power - without any resisting intervention from the government.

Immediately following the coup, the German Chancellor Angela Merkel promised the German people an official investigation of the Maidan incident. To this day, there is not the slightest recognizable effort to shed light on the events.

Moscow has had its own reaction to the events by announcing at the beginning of the year that foreign-initiated color revolutions pose a threat to Russia's national security.

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#34
Analyst: Europeans should beware "dehumanization" of part of Ukrainian society
By Tamara Zamyatin

MOSCOW, January 11. /TASS/. The Europeans should beware the "dehumanization" of part of Ukrainian society, which is fraught with the emergence of more terrorist groups and further outbreaks of genocide in Ukraine, a member of Russia's Civic Chamber, Sergey Markov, has told TASS, when asked for a comment on a controversial YouTube clip showing phoney execution of a Russian air pilot, staged in a Kiev restaurant. On the video a young man wearing an embroidered ethnic Ukrainian shirt puts a knife to the throat of another, kneeling man impersonating the pilot of Russia's Sukhoi-24 bomber, shot over Syria at the end of last year. The scene is accompanied by the signature tune the terrorist Islamic State outlawed in Russia often uses in its promo videos. All those around are invited to have fun.

"True, some might interpret the incident merely as an outrageous escapade by a drunken visitor, who ridiculed the memory of the Russian air pilot, mutilated by Islamic State militants. But such anti-Russian and inhuman demarches in Kiev are too numerous to count. Just recently, in December, Ukrainian bloggers posted on the world web the names and addresses of Russian planes' crew members participating in the air strikes against the Islamic State in Syria. In this way Ukrainian users provided terrorists with crucial information for identifying the air pilots and their families," Markov said.

It looks like part of Ukrainian society has lost the awareness of the tragedy unfolding in the country. Thousands of civilians in Donbas have been killed during the Ukrainian army's crackdown on the area. Memories are still fresh of the Odessa tragedy, where Ukrainian nationalists in May 2014 burned alive tens of their opponents locked inside the Trade Unions building. The Ukrainian nationalists invariably refer to their opponents in the self-proclaimed Donetsk and Luhansk republics as 'Colorado beetles.' Just several days ago an aide to Ukrainian President Petro Poroshenko outrageously called Russians in his blog as "insects," Markov recalled.

"All this is much worse than insults of Russians' ethnic dignity and the fanning of official Russophobia in Ukraine. If this trend is not nipped in the bud, Ukraine may see the emergence of more terrorist Al-Qaeda or Islamic State-type organizations. Their religious basis may be different, but the misanthropic essence is the same. Such organizations may be fraught with major risks not just for Ukraine itself, but for the European countries, as well - the very same countries that are expected to coerce Kiev into compliance with the Minsk Accords on the settlement of the crisis in the southeast of Ukraine, in fact, into putting an end to civil war," Markov said.

Asking the authorities in Kiev to prevent nationalist escapades by Ukrainian citizens would make no sense. Both President Petro Poroshenko and Prime Minister Arseniy Yatsenyk set a bad example with their anti-Russian rhetoric, Markov believes. Moreover, the Kiev authorities' silence over the faked Russian pilot execution show or comparisons of Russians to insects in fact encourage the incitement of animosity.

"As far as the Western countries are concerned, many of them prefer to turn a blind eye on preposterous manifestations of nationalism, in fact, Nazism, in Ukraine, which is so eager to become an EU member and to obtain a visaless status. Possibly, it makes some Europeans in the countries that have prolonged the anti-Russian sanctions feel good at the thought that all this is directed against Moscow. But militants often act indiscriminately. They may develop a grudge against Europe, too, for not being in a hurry "to welcome Ukraine into the club."

The Civic Chamber, of which Markov is a member, is conducting systemic analysis of all manifestations indicating dehumanization of part of Ukrainian society. "At an EU-sponsored conference in Lodz, Poland, at the end of January I am going to brief my European counterparts on the conclusions Russia's Civic Chamber has made regarding the risky processes in Ukraine, which may provoke more acts of genocide. These processes are to be countered with the all legal means available," Markov said.

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 #35
AFP
January 12, 2016
Protests across Ukraine against Russian cigarettes
By Vassyl Trukhan

Lviv (Ukraine) (AFP) - Hundreds of activists in several Ukrainian cities blockaded on Tuesday the cigarette distribution centres owned by a Russian tycoon with alleged links to ousted pro-Moscow president Viktor Yanukovych.

Ukrainian lawmaker Sergiy Vystotskiy said the protest action was launched in Kiev and the Western city of Lviv and other locations around warehouses of a firm controlled by Moscow-based retail magnet Igor Kasaev.

Forbes magazine identifies Kasaev as president of the Mercury group of companies that controls 70 percent of the Russian cigarette market and more than 90 percent of those in Kazakhstan and Ukraine.

A Kiev police spokesman confirmed to AFP that "activists" had launched a protest action in the Ukrainian capital on Tuesday around a warehouse owned by Mercury.

He provided no other details and directed all questions to the organisers of the protests aimed at getting the government to break up the Russian-linked firm.

Vystotskiy claimed on Facebook that Kasaev had secretly split the Ukrainian branch of his company "50:50 with Yanukovych's family" -- an expression used by the ousted leader's critics to describe insiders who allegedly profitted from preferential deals.

Yanukovych fled to exile in Russia hours after his ouster by pro-European protesters in February 2014. His flight was followed weeks later by the Kremlin's annexaction of Crimea and a bloody separatist uprising in pro-Moscow regions of eastern Ukraine.

An AFP correspondent in the heavily pro-Western and nationalist city of Lviv saw around 300 protesters gather early Tuesday in an attempt to prevent employees of the Russian cigarette distribution company from driving up to their office.

"We will force Russian businesses not only to feel uncomfortable in Ukraine, but to actually leave our country," one protester, Mykhailo Siriy, told AFP.

"Those who sponsored our (eastern separatist) war have no place in Ukraine -- and especially not in Lviv."

Other organisers said they had no plans to resort to violence or to try to storm the company's premises by force.

Frozen trade relations

Economic relations between Russia and Ukraine have been effectively frozen since the moment Kiev entered a free trade agreement with the European Union at the start of the year.

Russia and Ukraine have launched mirror import bans against each other's food products that reflect those Moscow has already imposed on the West.

The United States and the European Union had earlier slapped economic sanctions on Russia for its supposed orchestration and involvement in eastern Ukraine's 20-month conflict in which more than 9,000 have died.

Neither Moscow nor the Russian oligarch issued an immediate comment on the protests.

Yanukovych in exile has largely avoided the limelight and said nothing in public on Tuesday about his reputed links to the Moscow tycoon.

Ukraine's pro-Western leadership that rose in his place has had trouble breaking oligarchs' grip on the struggling former Soviet country's financial flows and national politics.

President Petro Poroshenko's efforts to keep reins on tycoons who profited in the post-Soviet era of predominantly pro-Russian rule have been hampered by internal bickering within his own ranks.

Several of Ukraine's top new leaders are linked by the Kiev media to the very same oligarchs Poroshenko has vowed to fight.

They deny the charges but still face repeated urgings from the West to crack down on corruption with full force.

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 #36
Crimea to gain energy independence from Ukraine by May 1

SEVASTOPOL, January 12. /TASS/. Authorities of Sevastopol, a city of federal importance in Crimea, said on Tuesday the Black Sea peninsula will gain full energy independence from Ukraine by May 1.

Sevastopol Governor Sergey Menyaylo said at the meeting with the city utility service providers that Sevastopol will receive the necessary limit of electric power consumption in late February.

"By the end of February we will keep the electricity saving regime. The limit that we need will be in late February-March after the launch of a new line of energy bridge. By May 1 we will gain the full energy independence," Menyaylo said.

Crimea will get a further 450 MW and will reach the consumption level that used to be before the emergency situation occurred, the governor said.

The authorities had to declare a state of emergency in the Crimean Federal District in the aftermath of the subversive act organized by a nationalistic faction of the Crimean Tatars and far-right Ukrainian nationalists, who had launched the so-called blockade of Crimea.  

The situation started improving after the commissioning of the first power line of the so-called 'electricity bridge' that was laid across the seabed of the Strait of Kerch from the Krasnodar territory. It went on stream on December 2.

The commissioning of a second power line of the 'power bridge' on December 15 increased electricity transmissions from mainland Russia to 400 megawatts. The authorities plan to bring two more power lines into operation next spring. This will make the Crimean Federal District totally independent of power supplies from Ukraine. The previous agreement on supplies of Ukrainian electricity to Crimea expired on December 31.

In December, Ukraine partially restored electricity supplies to Crimea, but Russia refused to sign a contract with Kiev for 2016 as it demanded to specify in the document that the peninsula is part of the Ukrainian territory.

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 #37
Kyiv Post
January 12 2016
New special confiscation: Despite the guarantees, property rights Are threatened
By YURIY PETRENKO, Partner, Spenser & Kauffmann

Expanded grounds for use of special confiscation and ambiguity of the scope of powers of the National Agency of Ukraine for identifying, tracing and management of assets may prevent due property rights protection. The debate is likely to end either at the Constitutional Court of Ukraine or at the European Court of Human Rights.

The package of anti-corruption laws includes the laws "On amendments to the Criminal Code of Ukraine concerning improvements in the field of special confiscation in order to eliminate corruption risks of its usage", "On Amendments to the Criminal Procedure Code of Ukraine on specific seizure of assets in order to eliminate its usage for corruption purpose" and the Law "On the National Agency of Ukraine for identifying, tracing and management of assets derived from corruption and other crimes."

Despite the declared transparency and fight against corruption, these legislative changes may have the opposite effect in view of the following.

According to the new changes, there are two grounds when the property is subject to arrest: if a third party obtained property free of charge from the suspect, accused or convicted or purchased such property at a price significantly below market; or knew or should have known that the purpose of the transfer of property is to avoid confiscation.Although a special confiscation cannot be applied to the property of a good faith purchaser, acquisition of such property should not be automatically viewed as an evidence of the purchaser's bad faith. Even if the person knew that the previous owner of the property acquired it illegally, it is very difficult to prove in practice, especially if the property was purchased at the market price.

Subject to Art. 10 of the Law, the National Agency of Ukraine for identifying, tracing and management of assets derived from corruption and other crimes can submit claims for recognition of agreements to be null and void, obtain any kind of information (including information involving bank secrecy), make requests for information outside the context of specific criminal proceedings even without having to explain the reasons for that. At the same time, the agency cannot make an independent assessment of the assets. For this purpose, it will involve third-party companies intended to optimize the management. There are no specific criteria and principles of assessment of seized assets, as well as of the selection of entities to do it. This casts a shadow of a doubt on the objectivity and transparency in the implementation of assessment procedures in practice.

Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms of 1952 protects property rights that, as the ECHR pointed out in Marckx v. Belgium, Sporrong and Lönnroth v. Sweden cases, means such protectionalong with maintaining a fair balance between the public interests and the rights of individuals. However, these principles may be violated in case of, for example, liquidation of a bank,because the funds put into it by the National Agencywill be returned to a person only within the limit of 200 thousand hryvnias.

In addition, the EU Directive on the freezing and confiscation of instrumentalities and proceeds of crime in the European Union of 3 April 2014, used as a guide for drafting the law on special confiscation, does not seem to be identical to the Ukrainian versionconcerning the new powers of public authorities.

Significant gaps in legislation will definitely entail many high-profile trials in Ukraine. The end of the debate as to the scope of the use of a special confiscation may be put by the Constitutional Court of Ukraine, and the prospect of claims against Ukraine to the European Court of Human Rights for abusive seizure and confiscation of the property is also quite certain.

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 #38
UNIAN (Kyiv)
January 11, 2016
Bezsmertniy: Putin's statement on borders in Donbas is absurd and legally futile

The representative of Ukraine to the sub-working group on political issues of the Tripartite Liaison Group in Minsk, Roman Bezsmertniy, said in an exclusive interview with UNIAN that the statement of Russian President Vladimir Putin's on a special regime of local governance in Donbas is an attempt to destabilize Ukraine.

Speaking of the Minsk process and Putin's position voiced in the Russian President's interview with the German Bild, Bezsmertniy said that he heard nothing new.

"What was said in this interview, I heard every time when I attended the negotiations of the political subgroup (in Minsk)," said the official.

At the same time, he noted that the Ukrainian side has a very simple response to such statements.

"It's up to the Ukrainian people to determine the constitutional order, and up to the authorized body - the Verkhovna Rada of Ukraine. And no region, no country has the right to dictate what the Ukrainian people and the authorized body should do with the Constitution, and what edition [of the Constitution] to adopt," said Bezsmertniy.

He said that the respected experts on constitutional law worldwide say that "the main purpose of any constitution is stability, the creation of a stable political regime."

"Based on this key thesis regarding the Constitution's purpose, what Putin said is absurd and legally futile. Because it lays the foundation for constant destabilization in Ukraine," said the representative of Ukraine to the political subgroup.

According to Bezsmertniy, "during the key event that took place due to the decision of the Normandy Quartet, which was the Berlin Conference, attended by renowned European constitutionalists ... it was clearly stated that it's up to the Ukrainian people and the Parliament as an authorized body."

Ukraine's representative also related territorial integrity and human rights to the need for stability in the context of the purpose of the Constitution.

"In this regard, Ukraine meets in full the requirements of the Minsk agreements. So in this case, what Putin said is completely contrary to, first of all, what has been done by the Ukrainian side, and what it plans to do. It is the Kremlin's own interpretation of the Minsk agreements," Bezsmertniy said.

Answering the question whether Putin's words can be interpreted as Russia's refusal to give back control over the border to Ukraine, Bezsmertniy said that "in terms of, say, the wishes of the Kremlin, I would agree with you that somewhere between the lines, it sounds and looks like a kind of blackmail: either you do this... or you will get..."

At the same time, he noted that "It's about political will to choose either option, and it gives even more proof that the requirements of a specific integration into the Constitution of the relevant rules is not an attempt to stabilize the situation and resolve the conflict, but on the contrary - to spread this destabilization across the entire territory of Ukraine," said Bezsmertniy.

At the same time, he noted that this does not mean that such an argument is contrary to the Minsk format.

"Rather, it is a tactic step using a particular interpretation of the agreements," said Bezsmertniy.

As UNIAN reported earlier, Vladimir Putin said in an interview with the German Bild that Ukraine would be able to retake its eastern border with Russia only after constitutional reform had been introduced.

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 #39
Video cameras mounted near Shyrokyne for OSCE round-the-clock monitoring in conflict area

KYIV. Jan 12 (Interfax) - Modern video surveillance cameras, which will help Organization for Security and Cooperation in Europe (OSCE) monitors conduct round-the-clock monitoring and record shellings in the populated area of Shyrokyne in the Donetsk region of Ukraine, have been installed, the press service of the Ukrainian Defense Ministry said.

"On January 12, modern video monitoring cameras, which will be monitoring the outskirts of the Shyrokyne settlement, were installed in the presence of monitors of the OSCE Special Monitoring Mission in Ukraine and the Joint Center for Control and Coordination [JCCC] on the issues of ceasefire and stabilization of the disengagement line between the sides," it said.

The press service said the cameras had been mounted on 18-meter-high towers and are conducting round-the-clock panoramic video recording that enables monitoring of the territory within a range of up to 2.4 kilometers.

The use of this equipment provides an opportunity for the real-time round-the-clock monitoring and recording of shellings from the main OSCE office.

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 #40
Interfax
January 11, 2016
Moscow dismisses Ukrainian official's idea for new format for talks

Moscow, 11 January: The statements by a representative of Ukraine in the political sub-group of the Tripartite Contact Group, Roman Bezsmertnyy, regarding the launch of a new Minsk 3 process from 1 January appears incompetent, Russian Foreign Ministry spokeswoman Mariya Zakharova announced.

"The statement by a representative of Ukraine in the political subgroup about the launch from 1 January of some new process called Minsk 3 appears incompetent, even illiterate," Zakharova told journalists on Monday [11 January].

"There is a package of documents adopted a year ago during the summit of the Normandy four in Minsk. Adhering to them rigorously is the main task facing all the sides involved in the settlement process," she added.

According to Zakharova, "inventing new formats, about which the Ukrainian representative spoke, is, of course, an engaging process but has no meaning without fulfilling the obligation already taken upon oneself".

"This kind of loose handling and personal interpretation of the content of the agreements signed by the presidents of four countries, and this is exactly how one could describe the statement by the Kiev representative, only hinders the settlement process," Zakharova concluded.

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 #41
Fort Russ
http://fortruss.blogspot.com
January 10, 2016
Ukraine's Nightmare Will Continue in 2016

Translated by Ollie Richardson for Fort Russ
Antifashist
http://antifashist.com/item/v-2016-godu-ukrainskaya-tragediya-prodolzhitsya.html

A difficult year for relations between Russia and Ukraine has ended, whilst the next phase of the economic war begins:  litigation with respect to Eurobonds, another attempt to block electricity to Crimea and the prolongation of the Minsk agreements.

The free trade area with Ukraine, in force since 2011, no longer exists as of January 1, 2016. On 30th December, Russian president Vladimir Putin signed the corresponding decree. In place of the free trade zone, which favoured Ukrainian products, these will now be subject to the applicable fees according to the tariffs of the Eurasian Union.

The official reason for the termination of the free trade agreement with Ukraine is the implementation of a similar agreement with the European Union. As a result, the Russian market will experience an influx of european goods through the Ukrainian territory. But, according to some experts, the discrepancies are not limited to the economic aspects, but are also related to the confrontation between Kiev and Moscow over the fate of Donbass.

The harsh reaction of Moscow is also a response to the refusal of Ukraine to pay the debt of $3 billion in Eurobonds, for which the Ukrainian government recently passed a moratorium of the payment of those obligations. Commenting on this decision, the Prime Minister Arseny Yatsenyuk claimed that it was a consequence of the refusal of Russia to restructure the debt obligations along with other creditors. "Therefore, the Ukrainian government approved a moratorium to stop the payment of any debt to Russia as of this moment, while Russia does not accept the position of Ukrainian debt restructuring," said Yatsenyuk.

The Minister of Finance Anton Siluanov has already announced his intention to go to court. But the Minister also stated his readiness to continue negotiations with the Ukrainian side: "If in this period [of courtesy], our Ukrainian colleagues change their minds and want to come back to discuss the payment of the debt, we are willing to consider the proposals or to take legal action," said Siluanov.

The reaction of Kiev was not long in coming. On the penultimate day of 2015, adventurers in Kiev launched literally a bundle of responses. It may be that the measure least damaging is the embargo on the import of products from Russia. According to the plans of the government, the proposal prohibits the import of meat, fish, dairy products, processed cheese, coffee, tea and other food products. Among the industrial products, it is prohibited to import equipment for railways, trams and locomotives.

Obviously, the embargo will not affected the supply of gas or coal, required to balance the country's energy supply and to operate a large part of the metallurgical companies. Recently published information says that Naftogaz Ukraine intends to significantly increase the rate of transit of Russian gas.

Another surprise of the New Year in Kiev was another attempt to cut the electricity to Crimea. According to the Minister of Fuel and Energy [of Crimea], Svetlana Borodulina, on the 30th of December, Ukraine completely  stopped the supply of electricity to the peninsula. Despite the messages from the authorities of Crimea to ensure that this will not affect the supply, Crimea continues to suffer from shortages and continues to rely on a part of the supply of electricity from Ukraine. Currently, a schedule has been established to limi consumption, which may cause power outages.

As is evidenced by the information, the position of Kiev remains belligerent. All attempts to defuse the confrontation have failed. The discounts of the gas, the supply of coal to the industrial sector, the proposed restructuring of the debt or the recognition of Donbass as part of Ukraine have clashed with new provocations from Kiev.

The main result of the disagreements between Russia and Ukraine is the continuation of the conflict in Donbass. The two objectives that need to be solved are the peace and the restoration of the socio-economic life in the region.

The decision taken on New Year's Eve by the Normandy Four, to extend for a further year the period in force of the Minsk agreements, confirmed the fact that the situation is far from finished. In fact, the war continues regardless of any arrangements or formats of a ceasefire. The possibility of a resumption of hostilities this year remains high.

All of this suggests that the West has no intention of altering its strategy and will continue to use Ukraine as a base to destabilize Russia. The strategy of Moscow should make certain adjustments, as certain issues may not be resolved this year or in 2017. For Ukraine, the tragic events of the past few years, they will, in the next few years, become the norm.

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 #42
Fort Russ
http://fortruss.blogspot.com
January 11, 2016
Zhuravko: "Keep Your Children Away From the Fratricidal War"

Translated by Ollie Richardson for Fort Russ
Antifashist
http://antifashist.com/item/aleksej-zhuravko-obratilsya-k-materyam-ukrainy-vstante-zadumajtes-ne-kalechte-sudby-svoih-detej-uderzhite-ih-ot-bratoubijstvennoj-vojny.html

A Ukrainian politician, the people's Deputy of Ukraine of the previous convocation, disabled from birth, Aleksey Zhuravko, perhaps, knows all too well how to live life suffering with injuries, injuries such as no arms and no legs. Such a fate the enemy does not want. And certainly it would not be wished on his countrymen, that strangers, cold-blooded, cynical and indifferent to the will under the stars and stripes and its Kiev puppets, are embroiled in a fratricidal, absolutely alien war to them.

The politician appeals to mothers of Ukrainian soldiers, especially those who have already been sent to the slaughter, and those who have yet met such a prospect. The politician asked the mothers to keep their sons from this step, and save their lives and health.

Crippled, armless and legless, they will be doomed to lead a miserable existence, spending the rest of their life on the roadside, forgotten and abandoned by all, especially the state that runs the current regime.

"Dear and respected mother of Ukraine, grandfathers! On my knees, I beg you, reach out to your sons, that they do not go into a fratricidal civil war, which was arranged for representatives of the current authorities.

Think about how many young men never came back,  how many became disabled, which today are necessary to nobody because they are unable to function properly. Many families were destroyed because of this useless war.

I know what a story is, I know about Kievan Rus, I know about brotherly people, you know, what our grandfathers did in the Great Patriotic War, and it's all history, but then we had a common enemy - fascism, the Nazis, who destroyed our land, our Slavic people!

Mother Ukraine, watch this video.

Maybe someone will like it, and others will not like it, some will condemn, some will support. But I wanted to tell you in this video how hard it is to live as a disabled person, as well as the consequences in life.

Mothers, fathers, stand, think, or mutilate the fate of your children. You gave birth to them not to kill, or for war, but for the world!

...Two years of civil war, approximately 50000 to 80000 deaths. One and a half thousand people on both sides disabled, military and civilians. How many missing persons, unknown to anyone", - said Zhuravko.

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#43
Sputnik
January 12, 2016
Kiev Authorities Finishing Off Last Remnants of Ukraine's Economy

Either by malice or folly, Ukraine's government is attacking the country's economy on multiple fronts. Zealously stepping up the struggle against imported Russian goods, Kiev has simultaneously cut social benefits, raised tariffs, and proudly announced its adherence to an association agreement with the EU which could finish off the economy.

In the new year, in accordance with IMF loan conditions, authorities have extended cuts to the pensions of working pensioners, while those in the civil service won't receive them at all. Pilots, doctors, teachers, artists and social workers have lost the previously available benefit of early retirement. Meanwhile, beginning this month, assistance for single mothers and low-income families has also been reduced, via the transfer of responsibility from the national government to cash-strapped regional authorities.

Kiev is introducing trade restrictions in response to Russia's food embargo and Moscow's decision to suspend the free trade zone with Ukraine.

Furthermore, inflicting a blow against the nation's economy from the outside, Kiev has decided to join the Washington and Brussels-inspired economic sanctions against Russia, prompting Moscow to respond by banning the import of Ukrainian food products for six months. Kiev responded with an embargo against Russian food products.

More importantly, in connection with the stepping into force of the economic portion of Kiev's association with the European Union, Moscow suspended the CIS free trade area agreement with Kiev, depriving Ukraine of favored trade status in most of the former Soviet space. Previously, the Customs Union between Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia had constituted much of Ukraine's exports, particularly those which could not meet the stringent standards of the EU.

Pondering the implications of the expanding war of sanctions, countersanctions, and counter-countersanctions, Oleg Noginsky, president of the Suppliers of the Customs Union, a Ukrainian organization seeking to increase trade turnover with the Customs Union, suggested that Kiev's efforts are part of an effort to reorient the country's economy away from Russia, and toward Europe.

Interviewed by independent Russian newspaper Svobodnaya Pressa, Noginsky recalled that "the Ukrainian government  has boasted that since January 1st, [Ukrainian producers] have been issued more than 900 [EUR1] certificates," ostensibly providing Ukrainian companies with duty-free access to the EU.

"At the same time, Kiev is tactfully silent about the fact that most of these certificates were issued for raw, unrefined products. This includes things like apple concentrates, seeds, honey - that is, purely raw goods. As experts had earlier predicted, the certification of enterprises producing finished products is going ahead very slowly. In the last year, only eight companies were given such certification, and this despite the fact that they have been working at it for several years now."

"In other words," Noginsky laments, "the bulk of Ukraine's manufacturers still do not have access to the European market. And this is not even because of the tariffs, but because of 'non-tariff regulations' and the closed nature of the European market."

"After January 1, these same producers lost the Russian market. For example, the meat and dairy industry will factually face crisis, since the main buyers of Ukrainian meat and dairy are Russia and the other countries of the Customs Union."

To make matters worse, asked about the consequences of the Ukrainian counter-counter sanctions banning Russian food products, Noginsky noted that such measures have only one purpose: "to see Russian goods replaced with European ones on the Ukrainian market."

"The government is factually just making it easier for European companies to access Ukraine, and nothing more. In order for companies to safely head to market, it is necessary to first remove any competitors and thus to free up the niche. As a result, people will be forced to switch to European goods. Factually, the Ukrainian government is working for the benefit of European producers, not their own citizens. European goods are more expensive, but due to lack of choice, naturally, people will buy them."

In effect, the expert says, "destroying our own exports is absolutely illogical, and is aimed at destroying Ukraine's economy and turning it into a raw materials-producing nation. What is Europe ready to buy? Raw, unprocessed goods. Our exports last year clearly demonstrated this, with corn, grains and ferrous metals serving as Ukraine's main exports [to Europe]."

"Only a few dozen Ukrainian companies will be able to receive these EUR1 certificates. The rest are simply incapable of doing so. The transition to the new standards requires significant investment. By the way, of those companies that did receive certification, eight have European owners, Danone being an example. In other words, the European owners have opened their factories toward exporting to their own home countries."

As for producers in Ukraine's traditional industrial southeast, Noginsky suggests that it is not certification, but the ban on trade with Russia which has hit them the hardest. "It's no secret that a significant portion of their output is related to the defense industry. The decision to stop the sale of dual-use products to Russia and the Customs Union has led to a stoppage and the factual destruction of many plants in Zaporizhia, Kharkiv, Dnipropetrovsk, and Mykolaiv. Europe is not going to buy any gas turbine engines, aircraft engines or turbines. They have their own excellent manufacturers, such as Siemens. They have absolutely no need for Ukrainian producers."

Ultimately, Noginsky laments, "all of these actions by the cabinet of ministers are aimed at the 'primitivization' of Ukraine's economy. It's almost as if they are deliberately attempting to destroy the working class and to turn Ukraine into a ruralized nation, because peasants do not protest. Apparently, the authorities are read up on their Marx."

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 #44
Atlantic Council
January 5, 2016
Ten Reasons Why I'm Optimistic About Ukraine's Economy in 2016
By Anders Aslund
Anders Åslund is a senior fellow at the Atlantic Council and author of the book "Ukraine: What Went Wrong and How to Fix It." This article was originally published in Russian by Novoye Vremya and has been abridged.
   
The outlook for the Ukrainian economy in 2016 is positive. Many important reforms were carried out in 2015. The necessary exchange rate adjustment has occurred and most required bank closures have taken place. The parliament has adopted tax changes and a decent budget for 2016. The debt restructuring deal has postponed foreign debt service. The current account is in approximate balance. Now is the time to move forward with more structural reforms.

1. The governing coalition needs to hang together, at least the Poroshenko Bloc and the People's Front. They can gather alternative support for various votes. Early parliamentary elections should be avoided in 2016, and those in power are presumably interested in doing so.

2. If the coalition is to survive, Ukraine's leaders need to put up a credible fight against corruption. That means that they have to sacrifice several top policymakers who are evidently guilty of corruption. The choice is theirs, but real culprits must be exposed, sacked, and punished.

3. To fight corruption, reform of the general prosecutor's office and the court system has to start. This will be a prolonged battle, but the government can no longer avoid it.

4. Energy reform has been one of the greatest achievements in 2015 and it needs to be completed. From April 1, 2016, all energy prices should be unified to avoid further privileged arbitrage for certain insiders. A real market for gas and electricity can and should be introduced and supervised by a truly independent regulator. The repression of independent gas producers through taxation, market regulation, and criminal prosecution needs to stop.

5. A mission from the International Monetary Fund is likely to come in mid-January and clear Ukraine for a major disbursement in early February. Yet it will be a challenge for the government to keep the IMF happy as populist pressures persist.

6. On the monetary side, everything looks promising. Most of the bank closures have been carried out, and the international reserves have risen from $5 billion in March to currently $13 billion, which is sufficient to keep the exchange rate stable. With the next IMF disbursement, reserves will rise so that the current draconian foreign exchange restrictions can be eased somewhat. In 2016, inflation will continue to fall, and with that the National Bank of Ukraine can cut the interest rate, and gradually a new credit expansion can start.

7. Privatization and management of state enterprises are becoming hotter issues because state enterprises are a major source of corruption, which is best ended through open and complete sales. Open, large-scale auctions of state assets of little value must start. The management of the big state enterprises will continue to improve, and some big state enterprises will finally be sold in open auctions.

8. Russia might actually return the occupied Donbas to Ukraine. The appointment of Boris Gryzlov as Russia's top negotiator in Minsk is an important positive signal because he settled the Orange Revolution in December 2004. Another important Russian personnel change is that Deputy Prime Minister Dmitri Kozak has replaced Vladislav Surkov as the Kremlin man dealing with the Donbas. While Surkov is a notorious troublemaker, Kozak is a manager of frozen conflicts. The Kremlin currently ignores Ukraine, while focusing on its war in Syria. These negotiations with Russia must be a top government priority. The mutual sanctions, however, are likely to last.

9. Ukraine's economy is set to grow more than Russia's in 2016. After two quarters of stabilizing output, 2016 is likely to see economic growth, and when growth starts it is usually higher than expected (currently 2-3 percent) because so many resources are underutilized after a big output fall.

10. The European Union cannot stay so passive any longer. The EU Association Agreement is now fully in force. That means that the EU is obliged to provide more effective assistance to Ukraine. What is most important is that the EU is likely to open up for visa-free travel for Ukrainians in the summer of 2016.

My outlook is quite optimistic because so many reforms have been implemented in 2015, and Ukrainian politics have hung together. Now the public concerns about corruption need to find constructive outlets so that corruption really declines. Yet, Ukraine remains sadly poor and will do so for years.

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