#1
Russia Insider
www.russia-insider.com
January 13, 2016
Congrats Germans! This Is How You Do a Putin Interview
Charlie Rose take notes
By Alexander Mercouris
Alexander Mercouris is a writer on international affairs with a special interest in Russia and law. He has written extensively on the legal aspects of NSA spying and events in Ukraine in terms of human rights, constitutionality and international law. He worked for 12 years in the Royal Courts of Justice in London as a lawyer, specializing in human rights and constitutional law.
Putin used Russia's Christmas break to give an interview for the German tabloid Bild-Zeitung
Unusually for the Western media, the German interviewers proved to be both well-informed and intelligent and avoided cliches, giving Putin a good opportunity to explain himself concisely on a wide range of topics.
The fact the interviewers from Bild-Zeitung conducted the interview so intelligently incidentally shows that the true causes of the present tensions in international relations are well understood in Germany - including by the media there - even if they are not openly articulated.
NATO Expansion - "not an inch east"
On most of the topics covered by the interview, Putin had little to say that was new. This issue was the exception.
As is well-known, the Russians have an established grievance that following the fall of the Berlin Wall NATO was expanded eastward in contradiction to promises given to Russia.
There has in recent years been a sustained attempt by some academic historians in the US to deny this.
Supposedly no promise not to extend NATO eastward was ever given, and the well-known statements - some of them public - made by various Western officials over the course of 1990 that appear to make that promise supposedly only referred to eastward deployment of NATO military installations in the former East Germany and were only intended to apply whilst the USSR was still in existence.
This denial is scarcely credible, and has been flatly contradicted by some Western officials who were actually involved in the talks.
Putin claims he recently ordered research of the Russian archives and that further confirmation the promise was given has been found there.
Putin refers to talks between Valentin Falin - the then head of the Soviet Communist Party's International Department - and various German politicians, which he claims have never been made public up to now.
Since Valentin Falin was a Communist Party official records of his meetings would have been kept by the Soviet Communist Party's Central Committee rather than by the Foreign Ministry, which may be why they have been overlooked up to now.
Putin claims these records not only provide further proof the promise was given, but show that one of Falin's most important interlocutors - the prominent SPD politician Egon Bahr - even suggested recasting the entire European alliance system to include Russia, and warned of future dangers if this were not done.
Bahr has just died, and it may be the true reason the Russians are only disclosing what he told them now was to spare him embarrassment.
If so then Putin's disclosure of his conversation in 1990 with Falin may have been intended as much as a reminder to contemporary German politicians - Merkel, Gabriel and Steinmeier - that the Russians keep a complete record of what they tell them, as it was to cast light on the question of what promises were given in 1990 on the question of NATO expansion.
My own view is that though a promise not to extend NATO eastward was definitely and repeatedly given the Western politicians and officials who gave it with a few notable exceptions never had any serious intention of keeping it.
Bahr - who I remember well - was no such exception. His grandiose talk of a pan-European alliance including Russia was in my opinion just another example of a German politician pulling the wool over the Russians' eyes in order to make it easier for the Germans to achieve their goal - which was German unification within NATO.
I strongly suspect Putin thinks the same thing.
His single most interesting comment in the whole interview was his admission that Russia was itself to blame for trusting the West too much, and for not defending its interests vigorously:
"We have failed to assert our national interests, while we should have done that from the outset. Then the whole world could have been more balanced."
That comment is as much a pointer to how the Russians will act in the future, as it is about the past.
The "Right" of East European nations to join NATO and the EU
Anyone who discusses the issue of NATO's and the EU's eastward expansion with one of its advocates invariably comes up against the argument that the Russians have no right to complain about NATO's and the EU's eastern expansion because it is the right of the people of eastern Europe to have it.
I saw this argument used again just a few days ago in a discussion between the British journalist Peter Hitchens - who opposes NATO's and the EU's eastward expansion - and a group of British students.
It should be said clearly that this is a bogus argument.
East European states have no "right" to join NATO or the EU. They have a right to apply to join NATO and the EU.
NATO and the EU have no obligation - legal or moral - to accept that application if it is made. On the contrary, they have a duty to refuse that application if accepting it threatens peace and contradicts promises they made previously to the Russians.
As for the Russians, they have as much right to object to NATO's and the EU's eastern expansion as the east Europeans have to demand it. In fact, given that they were repeatedly promised it would not happen, they have more right.
Whenever this point is made, it always seems to come as a surprise - even though it is in essence no different from what Westerners tell the Russians - that they are free to apply to join NATO or the EU if they wish, but there is no chance they will ever be admitted.
It is striking therefore to see Putin - for the first time to my knowledge - publicly make this point:
"Does the (NATO) Charter say that NATO is obliged to admit everyone who would like to join? No. There should be certain criteria and conditions. If there had been political will, if they had wanted to, they could have done anything. They just did not want to. They wanted to reign. So they sat on the throne. And then? And then came crises that we are now discussing."
Ukraine and the Minsk Agreement
Following my piece on the importance of the appointment of Boris Gryzlov to the position of Russia's representative on the Contact Group, there was some understandable concern that the appointment of this heavyweight was being made in order to bully the militia into making more concessions to the Ukrainians.
Putin's interview should put that fear to rest. He makes absolutely clear that it is Kiev that is breaching the Minsk Agreement, and that it is Kiev that must compromise.
Putin also makes the same point I have made previously - that it is completely absurd to link the question of lifting EU sanctions on Russia with that of the implementation of the Minsk Agreement, when it Ukraine not Russia that is not implementing it:
"Everyone says that the Minsk Agreements must be implemented and then the sanctions issue may be reconsidered.
"This is beginning to resemble the theatre of the absurd because everything essential that needs to be done with regard to implementing the Minsk Agreements is the responsibility of the current Kiev authorities.
"You cannot demand that Moscow do something that needs to be done by Kiev. For example, the main, the key issue in the settlement process is political in its nature and the constitutional reform lies in its core. This is Point 11 of the Minsk Agreements. It expressly states that the constitutional reform must be carried out and it is not Moscow that is to make these decisions.
"Look, everything is provided for: Ukraine is to carry out a constitutional reform with its entry into force by the end of 2015 (Paragraph 11). Now 2015 is over."
I would add that this exchange provides a good example of Putin's extraordinary knowledge and mastery of detail. When the German interviewers tried to trip him by misrepresenting the content of the Minsk Agreement, he had the facts at his fingertips and immediately put them right:
"Question: The constitutional reform must be carried out after the end of all military hostilities. Is that what the paragraph says?
Vladimir Putin: No, it is not.
"Look, I will give you the English version. What does it say? Paragraph 9 - reinstatement of full control of the state border by the government of Ukraine based on the Ukrainian law on constitutional reform by the end of 2015, provided that Paragraph 11 has been fulfilled, which stipulates constitutional reform.
"Consequently, the constitutional reform and political processes are to be implemented first, followed by confidence building on the basis of those reforms and the completion of all processes, including the border closure. I believe that our European partners, both the German Chancellor and the French President should scrutinise these matters more thoroughly."
As an aside, on the question of the legitimacy of the present Ukrainian government - something that still gets talked about in Russia from time to time - I would repeat a point that I made a year ago.
Not only does Putin continue to insist that the change of power in Ukraine in February 2014 was unconstitutional and illegal and was not a revolution but a coup, but he carefully avoids using the term "Ukrainian government" to refer to the authorities in Kiev. Instead he uses words like "Kiev" or "the present Kiev authorities" to refer to them.
It is difficult to avoid the impression that Putin - and presumably the whole of the Russian government - deep down do not consider the present government in Kiev to be legitimate - and will not do so until there have been fresh elections in Ukraine following agreement on a new constitution.
Crimea
Putin said nothing new on this subject, but he did repeat an important point that he has repeatedly made ever since Crimea voted to join Russia in March 2014.
This is that contrary to claims repeatedly made by Western governments and by the Western media, Crimea's secession from Ukraine and its subsequent decision to join Russia are in compliance with international law as set out by the International Court of Justice in its Advisory Opinion on Kosovo, and as was argued in that case by the legal representatives of the West's governments.
Putin is absolutely right about this, and I was very surprised to see that in an otherwise fine interview the commentator Rostislav Ishchenko does not seem to realise the fact.
The fact Putin's interpretation of the Advisory Opinion is right is shown not just by the text of Advisory Opinion itself.
It is also shown by the way Western governments and the Western media have suppressed all discussion of it so that the Western public knows nothing about it.
This even though - as Putin's interview shows - his German interviewers certainly know of it.
I would add that if Putin's interpretation of the Advisory Opinion was wrong, Ukraine would certainly have brought a claim against Russia to the International Court of Justice.
Ukraine constantly litigates in other courts against Russia on other far less important subjects. It beggars belief if they really thought they would win a case over the far more important issue of Crimea they would not have brought one by now.
The fact Ukraine has not brought a claim against Russia to the International Court of Justice shows it knows - and has been warned by Western governments - it would lose.
The Russian economy
The interview concentrated mainly on foreign policy. However Putin was careful to say something about the state of the Russian economy, even though he was not asked a direct question about it.
Putin gave the figures for the Russian economy in 2015 - a contraction of 3.8% in GDP, 3.3% in industrial output, and inflation of 12.9% (the latter figure has now been confirmed by Rosstat).
He made it fairly clear that - as I expected - the Russians will respond to the further fall in oil prices since the start of the year by budget cuts rather than by raising taxes or by borrowing on the international money markets (though I notice that Reuters has now rather grudgingly admitted that Russia does indeed have this option).
"As to the worst harm inflicted by today's situation, first of all on our economy, it is the harm caused by the falling prices on our traditional export goods.
"However, both the former and the latter have their positive aspects. When oil prices are high, it is very difficult for us to resist spending oil revenues to cover current expenses. I believe that our non-oil and gas deficit had risen to a very dangerous level. So now we are forced to lower it. And this is healthy...
"The total deficit is quite small. But when you subtract the non-oil and gas deficit, then you see that the oil and gas deficit is too large. In order to reduce it, such countries as Norway, for example, put a significant proportion of non-oil and gas revenues into the reserve. It is very difficult, I repeat, to resist spending oil and gas revenues to cover current expenses. It is the reduction of these expenses that improves the economy."
The Russian budget undoubtedly does have scope for spending cuts, and this together with the continued fall of the rouble in line with oil prices should suffice to keep the deficit within controllable limits even if oil prices continue to fall.
The major problem for Russia caused by the continued oil price fall is not its effect on the budget. It is that it is forcing the Central Bank to keep interest rates high, thereby prolonging the recession.
The Middle East
Putin broke no new ground here, though as is always the case now he made it perfectly clear that he thinks it is the regime change strategy pursued by the US and some of its allies since 2001 that has destabilised the region.
Outside the still powerful and vocal community of Western liberal interventionists and neocons, there are few now who would disagree with him.
However Putin did once again explain the motives behind Russia's intervention in Syria.
"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....... In my view, no effort should be spared in strengthening legitimate governments in the region's countries.
"That also applies to Syria. Emerging state institutions in Iraq and in Libya must be revived and strengthened. Situations in Somalia and other countries must be stabilised. State authority in Afghanistan must be reinforced. However, it does not mean that everything should be left as is. Indeed, this new stability would underpin political reforms."
In other words Russia's current support for President Assad is not an end in itself. Russia has no geopolitical interests in Syria or in the region. However it sees the spread of chaos and violent jihadism into Syria and elsewhere as exceptionally dangerous - first and foremost for itself, but also for the world in general - and is determined to do what it can to prevent it.
The Russian intervention in Syria is intended to stabilise the situation there, with the Russians however pushing for a political solution to the conflict in parallel with their military effort.
Again, there are few people now outside the still very powerful Western liberal interventionist and neocon community who would openly disagree with this analysis, though there are some who might question whether Russia's motives really are as uncomplicated as Putin says they are.
On the conflict between Saudi Arabia and Iran, Putin was very careful not to take sides, pointing instead to Russia's good relations with both Saudi Arabia and Iran, whilst making it clear that Russia's friendship is primarily with Iran:
"We have very good relations with Iran and our partnership with Saudi Arabia is stable."
Summary
The interview with Bild-Zeitung shows Putin at his most articulate.
If he broke no new ground, he clearly relished the opportunity to expand on points he now repeatedly makes.
The intelligence of his interviewers, and the fact they were for once well-informed, gave him a good opportunity to do this.
This contrast with the leaden discussion Putin had last year with the spectacularly ill-informed Charlie Rose, on the sheer awfulness of which I find myself for once in unique agreement with the Kyiv Post.
The interview with Bild-Zeitung covered more topics than I have discussed. It included for example a discussion of Russia's relations with Germany, and of the nature of Putin's relationship with Angela Merkel.
Here - for completely understandable reasons - Putin did not go beyond banalities, though he was at last given an opportunity to scotch the fantastic fable that he deliberately set his Labrador dog on Merkel in order to unsettle and discomfort her.
As he says - without doubt truthfully - he was simply unaware of Merkel's fear of dogs when he introduced his dog to her, and he apologised to her when he found out about it.
This simple and undoubtedly true explanation will - of course - be suppressed or ignored, when stories about this incident are again told in the West.
The interview did also contain one very striking omission.
This was about Russia's relations with China, a subject the interviewers never brought up.
This reflects Western inability to come to terms with the reality of the Russian Chinese strategic partnership, rather than in any lack of importance fot this issue.
The very unwillingness - or inability - of Westerners to talk about it, is in fact a sign of its importance.
Overall the impression of Putin that comes across from the interview is of a calm and confident man, who has thought long and hard about the issues he talks about, and who has discussed them widely and in depth with other members of the Russian government and with his advisers.
There is no doubt the views that Putin expresses are those of the government as a whole, and that Putin believes the things he says, and is sure that what he says is right.
As a result Putin is able to speak in a calm and measured way, avoiding the histrionics and hyperbole Western leaders now routinely engage in.
The only point where Putin seems to have spoken with emotion is when he angrily rebutted Western claims the Russian airforce in Syria is deliberately targeting civilians.
Since Putin unquestionably believes in the things he says, and since all the indications are that the rest of the government agrees with him and supports him as he says them - as does Russian society in general - Western hopes or expectations of any sudden change in Russia's course are unlikely to be fulfilled.
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#2
www.rt.com
January 13, 2016
Russia wants rapprochement with Europe
Moscow wants to re-establish a normal relationship with the European Union, according to Prime Minister Dmitry Medvedev. Europe is still considered by Russia as a major trading partner, despite sanctions, he said.
"Europe is our closest neighbor, an important economic partner. Our turnover with it is still hundreds of billions of euro, despite the regrettable factor of sanctions," said Medvedev, speaking at the Gaidar Economic Forum in Moscow on Wednesday.
"I'm sure, and I mentioned it many times, that in the end common sense will prevail, the sanctions will be left in the past with relations between Russia and the EU returning to normal," he said.
Medvedev also said Russia would continue to develop trade with its Eastern neighbors and other Asian countries.
"Last year, we gradually increased our non-oil exports both in physical and in value terms. To continue that, we should fully use the potential of the Eurasian Economic Union [Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan], to agree on free trade zones with leading trade contractors, to form advanced economic partnerships in the framework of the SCO (Shanghai Cooperation Organisation) and ASEAN countries," he said.
The SCO, a political, economic and military alliance, includes China, Russia, Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan. Other countries holding observer status with the organization include India, Iran, Pakistan, Afghanistan and Belarus.
ASEAN is the Association of Southeast Asian Nations that unites Indonesia, Thailand, Malaysia, Philippines, Singapore, Vietnam and other Asian countries.
The Prime Minister also said that with collapsing crude prices Russia should prepare for the worst. Medvedev said a decline in people's living standards is the most painful consequence of the economic difficulties in the Russian economy, adding that the government will try to improve the situation, not waiting for external difficulties to stop.
"Life cannot be put off until better times. As for social support, we will take the most active measures to tackle the current situation," he said.
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#3
Interfax
January 12, 2016
How Russians see themselves and Russia's role in world - poll
Two-thirds of people in Russia believe that Russia's influence in the world has been growing in recent years and only 3 per cent hold the opposite view, while 22 per cent believe it hasn't changed, according to a poll conducted by Russian polling organization Public Opinion Foundation (FOM) on 26-27 December, as reported by privately-owned Interfax news agency.
Asked to give examples of Russia's growing influence, respondents replied that "Russia's military might is growing and we are now feared" (12 per cent) and that "Russia's position is now paid heed to and Russia's position is respected" (8 per cent).
Also, respondents said, Russia conducts correct (7 per cent) and independent (5 per cent) foreign policy.
Russians "give credit to President Vladimir Putin" for Russia's growing influence (9 per cent). They also believe that Russia's growing influence is a result of "Russia helping Syria and fighting ISIL [Islamic State, ISIS, IS]" (7 per cent).!
Opinions are divided regarding how Russia is perceived in the world: 46 per cent believe the attitude to Russia in the world is good and 40 per cent that it is bad. At the same time, 46 per cent of respondents believe the attitude to Russia is the world is biased and 40 per cent believe it is objective.
Asked how the attitude to Russia had changed in recent years, a third of respondents (30 per cent) said it had been improving, another third (31 per cent) said it had remained the same and one in four (26 per cent) said the attitude had been getting worse.
On the whole, people in Russia believe that Russia is respected in the world (74 per cent), that Russia is feared (82 per cent) and that Russia is regarded as a prosperous country (76 per cent), developed country (64 per cent) and free country (61 per cent).
In the opinion of most people in Russia, they live in a free (77 per cent), developed and advanced (74 per cent) and prosperous (65 per cent) country.
The poll was conducted among 1,500 respondents in 104 population centres in 53 constituent parts of the Russian Federation.
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#4
Transitions Online
www.tol.org
January 12, 2016
Russian Outlook Among World's Worst in 2016 - Bloomberg Survey
Only Greece, Brazil and Venezuela face a worse year than Russia, an analysis of the efficiency of 93 economies shows.
After contracting about 3.6 percent in the first nine months of 2015, Russia will not only stay in negative territory this year, it faces an even worse 2016, say economists surveyed by Bloomberg.
Of the 93 countries in Bloomberg's analysis published on 12 January, only Venezuela, "junk-rated Brazil, and debt-laden Greece" have a worse forecast than "commodities-ravaged Russia." It was hit by sanctions imposed by the U.S. and European Union over its annexation of Crimea and by low oil prices.
Crude's collapse from $100 a barrel since mid-2014 has pummeled Russia, which relies on energy for about half its budget revenues and 40 percent of its exports, according to Reuters. During Russia's New Year and Orthodox Christmas break there was a plunge in the oil price to 12-year lows of under $32.
Russia may even have to face the stark prospect of its coffers running empty in just over a year if oil stays at or below $30 per barrel, Reuters says, leaving little to show for a decade of bumper oil earnings.
Russian economic stability hinges on $50-a-barrel oil, Christopher Granville, managing director of Trusted Sources, an investment consultancy, told Reuters. Moscow had hoped to fill by borrowing and dipping into the national reserve fund.
According to Bloomberg's survey of economists, despite the negative outlook, Russia "will also turn the corner on what will likely be its longest recession in over two decades."
-Hit by falling oil prices and western sanctions, the Russian economy is expected to contract 3.7 percent in 2015, the Financial Times reported in December, even though officials had previously suggested it was stabilizing.
-Experts quoted by the FT say that while Putin still enjoys stratospheric popularity ratings, the effect of the faltering Russian economy on the lives of ordinary Russians is a source of concern for the Kremlin. Retail sales were down 13.1% year-on-year in November and consumer goods - ranging from food to cars - have fallen dramatically.
-The World Bank expects that in 2016, Russia's economy will shrink by 0.7%. A report issued on January 6 said that structural reforms are needed to improve the situation and reduce the geopolitical risks, UNIAN reports.
-Russian oligarch Alisher Usmanov said in an interview broadcast on state television at the end of last year that 2016 could pose an even greater economic challenge for Russia.
-Ukraine, one of last year's worst performers, is still at risk, Bloomberg says. "Even with expected growth this year of 1.2 percent... Economists rate its chance of recession over the next 12 months at 60 percent, the third-highest tied with Argentina."
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#5
Russia Beyond the Headlines/Kommersant
January 13, 2016
Up to 1/3 of Russia's population could join the army of the poor
Economic crisis in Russia is being accompanied by an unprecedented decline in household incomes as well as rising poverty levels.
ALEXEI SHAPOVALOV, KOMMERSANT
The fourth economic crisis in Russia in the last 25 years is being accompanied by an unprecedented (over the last 15 years) decline in household incomes, as well as rising poverty levels. This is all occurring at a time when there are few resources for social adaptation. The forecasts are disheartening: analysts are expecting a massive decline in living standards and the quality of life among citizens. In terms of poverty levels in society, all the gains made during the last decade could be liquidated in 2016, returning the standard of living to 2005 levels.
As recently as 2013 no one could have foreseen the sanction wars and few predicted the fall of oil prices to current levels. Yet even back then many economists forecasted that in the near future the consumption bubble, bloated by very high oil prices and generous budget payments, would burst. Since 2006, GDP levels in Russia grew, while they have declined around the world since 2007. This, however, had a negative impact on the competitiveness and productivity of the economy. In 2014, this indicator was comparable to the world average (52 percent), exceeding the average in developing countries by 11 percentage points (41 percent).
The year 2015 was marked by the sharpest real drop in incomes, wages and pensions in the new millennium. It was accompanied by an increase in underemployment, which will continue into 2016. Russian experts and analysts at the World Bank agree that even the official poverty rate will increase to 16 percent in 2016. Oil revenues will no longer suffice to support household needs.
Neither the state, nor companies, nor the majority of households have the resources needed to support the consumer-based model of economic growth, while effective instruments for the redistribution of wealth and social adaptation have not been created.
"The country is coming back down to a normal level of wages and consumption," says Leonid Grigoriev, chief adviser to the head of the Analytical Center of the Government of the Russian Federation. "This is unfortunate for people, but this is the reality."
Despite the rapid growth of incomes, due to constant ultra-high concentration of wealth in certain social groups and regions, the level of inequality in society has not changed. In 2014, 20 percent of the population lived on incomes of 7,000 rubles per month and between January-September 2015 they accounted for only 5.6 percent of total revenues.
However, the real level of income stratification is much higher in Russian society than is often acknowledged. In October 2015, Russian respondents believed that one percent of the wealthiest citizens of Russia received 53 percent of total revenue. However, the actual figure is closer to 70 percent, according to a study entitled, "Pitfalls of Perception-2015," conducted by Ipsos Public Affairs.
According to Russian analysts, in the near future from 30 percent to 50 percent of the population of the Russian Federation may join the army of the poor - primarily children, pensioners and their families, as well as part-time workers, and if they do not know this yet, they will surely learn about it in 2016.
First published in Russian in Kommersant
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#6
PM Medvedev: Russia's economy stable despite Western sanctions
MOSCOW, January 13. /TASS/. Russian Prime Minister Dmitry Medvedev is confident that the Russian economy is stable even in conditions of the Western sanctions.
"Russia's economy has shown that its market mechanisms are rather stable. Even in conditions when our Western partners act against it by non-market political methods," Medvedev told the Gaidar Economic Forum.
The prime minister said some branches of Russia's economy have even increased efficiency. "Now the conditions for the country's re-industrialization have been improved. Russia no more suffers from 'the Dutch disease' when the extremely strong national currency makes the goods of its own industry non-competitive."
"Russia's metals companies have become the leaders for the production costs, one of the lowest in the world. Agriculture and chemical industry, and also machine-building complex show stable growth," he said.
The prime minister also said that Russia will focus on competitive companies and will not support those enterprises that will never become competitive. "Import replacement can lead to growth in prosperity only if the goods and services are competitive at the global level."
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#7
Russian government considering ambitious privatization plan for 2016 - deputy PM
MOSCOW, January 13. /TASS/. Russia's government is considering an ambitious privatization plan for 2016, First Deputy Prime Minister Igor Shuvalov said on Wednesday.
"We're considering a more ambitious privatization plan," Shuvalov said when answering the question whether the Russian government is considering privatization of the country's biggest lenders in 2016.
According to a spokesman for Shuvalov's secretariat, the issue of privatization hasn't been taken off from the agenda. "Negotiations are constantly underway and investors' attention hasn't gone down. Privatization at whatever the cost is not a professionally set question. Market environment and general quality of sales is taken into consideration during negotiations," he said.
Russia's economic situation difficult
The official called the current situation in Russia's economy is difficult though the country passed most challenges in 2015. READ ALSO Russian economy in lingering recession, hoping for recovery
"We once again confirm that we don't isolate anyone from ourselves and sanctions have nothing to do and cannot have anything to do with what we're doing amid current environment as the situation is really difficult. But I think we passed the full extent in 2015," Shuvalov said.
According to First Deputy PM, the start of 2016 presented certain challenges but if the current situation is compared with January 2015 the situation is totally different, more stable.
"This was a totally different situation while the current situation is much more stable. I can say that amid the ruble's volatility and current oil price the situation is being taken more properly. People calculate incomes and expenses in dollars less, people think about rubles," he said.
Spending reduction useful for improvement of budget
According to Sghuvalov, reduction of Russian budget expenditures is useful for improvement of the country's budget system.
"True, we'll have to take tough decisions regarding budget. We'll have to act here not only by defining what is efficient and what is not efficient. We'll have to act according to another rule, meaning to cut budget expenditures and to define inefficient (expenses) among those to be financed," he said.
According to Shuvalov, the most important public programs contain an idea of what is efficient and what is not. He added though that the situation cannot be regarded as comfortable.
"But the situation is useful. This is useful for improvement of the budget system, useful for shifting to a more diversified economy," Shuvalov said.
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#8
Sputnik
January 13, 2016
Russian Government Made 'No Major Mistakes' in 2015
MOSCOW (Sputnik) - The Russian government made no major mistakes in 2015, Russian First Deputy Prime Minister Igor Shuvalov said Wednesday.
"Just like any other normal living people we make mistakes in real life, but we're told after analyzing our activities for 2015 that the government has not made a single major mistake," Shuvalov said.
He added that in 2016 the government would have to take tough decisions, specifically on budget expenses and cuts to inefficient spending.
"I cannot say we are comfortable to do this," the minister said. "But it is absolutely necessary. It is beneficial for the health of the budget system and for our effort to switch to a more diversified economy."
Shuvalov admitted that sanctions took a toll on the Russian economy, especially in 2015. "The economic situation in January 2015 was a different thing. The situation is more stable now," he emphasized.
Last January, the Russian government presented an anti-crisis plan set to stabilize the country's economy, which stipulated deep spending cuts and aimed to balance Russia's budget by 2017.
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#9
Moscow Times
January 13, 2016
Russian Ruble Crashes to 77 Per Dollar Amid Oil Price Slump
The Russian ruble fell to 77 against the U.S. dollar on Tuesday for the first time since December 2014 as global prices for oil continue to slide, the RIA Novosti news agency reported.
As of Tuesday morning, the Russian currency had slipped to 77.01 against the U.S. dollar and 83.80 against the euro, according to the data from the Moscow Exchange.
The official exchange rates set by Russia's Central Bank on Monday stand at 75.95 rubles against the U.S. dollar, the lowest level since the financial collapse of 1998, according to the RBC newspaper. The official ruble exchange rate against the European currency stands at 82.8.
The weakening of the ruble comes amid the continuing decline in the global prices for oil.
February futures for Brent crude are currently trading at $30.6 per barrel, according to RIA Novosti.
The ruble has lost more than 50 percent of its value against the dollar since 2014.
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#10
Interfax
January 13, 2016
Russian Finance Minister: Oil prices could continue to slide
Oil prices are likely to go on sliding in the near future, Russian Finance Minister Anton Siluanov said.
"Today there's a very tight balance on the oil market, we're seeing that nobody is cutting oil production. We're likely in the short term to see further decline in prices for this commodity," he said.
"Indicators for this commodity are unlikely to increase in the short term as the global economy declines and oil stocks remain high," he said in addition.
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#11
Wall Street Journal
January 13, 2016
Russia Mulls Budget Cuts and Bank Stake Sales
Low oil prices prompt Moscow to consider privatizing its top lenders
By ANDREY OSTROUKH and JAMES MARSON
MOSCOW-Russia's government is considering swingeing budget cuts and the sale of stakes in state companies as it grapples with a plunge in the price for crude oil, its main export, that the prime minister said could cause "prolonged stagnation."
Russian Economy Minister Alexei Ulyukayev said Wednesday that Russia would have to adjust to a "new normal" of low prices for crude, which will last for a "very lengthy" period. Finance Minister Anton Siluanov said the government would propose a 10% cut to spending from a budget that was based on an oil price of $50 a barrel, nearly $20 higher than the current level.
"We need to prepare for the worst scenario," Prime Minister Dmitry Medvedev said in a speech at an economic conference in Moscow Wednesday. "We need to live according to our means, including by reducing budget expenditures, decreasing spending on the state apparatus, the privatization of part of state assets."
The suggestion of potential state-asset sales-often touted in recent years, but hardly ever executed-shows how wide Russian officials are casting the net for ways to shore up a federal budget that receives half its revenue from the oil and gas sector. High oil prices had been the cornerstone of President Vladimir Putin's 15-year rule, allowing him to boost social spending and raise living standards. But the fall in the oil price and sanctions over the Kremlin's interventions in Ukraine brought about a 3.7% economic contraction last year, accompanied by a slide in real incomes. Officials say the economy will grow this year, but the World Bank forecasts a 0.7% contraction.
"Many became poorer; the middle class suffered. That's the most painful consequence of last year's economic blows," said Mr. Medvedev.
Still, there appear few threats to Mr. Putin's rule. His approval rating has risen above 80% in the last two years, pollsters say, since Russia seized Crimea and has presented itself as being under siege from the West.
Mr. Putin has said repeatedly that Russia's economic slide has bottomed out, but late last year he indicated that budget cuts could be necessary. Mr. Siluanov said spending reductions could be as high as 10%, or 500 billion rubles ($6.5 billion), to meet Mr. Putin's demand that the budget deficit be kept under 3% of gross domestic product. Mr. Siluanov, whose ministry has long pushed for tighter spending, said the government shouldn't rapidly increase borrowing.
Mr. Ulyukayev, the economy minister, said Wednesday that the government could sell stakes in the two largest state banks, Sberbank and VTB, in part to inject funds into them. The Russian banking system needs new funds, he said, as Western financial markets have remained closed to them due to sanctions.
Russian officials have in recent years repeatedly floated the idea of selling stakes in state giants such as oil producer OAO Rosneft, but the plans were never realized as officials said they shouldn't be sold on the cheap.
Mr. Medevedev described Russia's economic situation as "difficult, but manageable." He warned that a return to growth wasn't assured and that the government needed to act to stimulate investment and head off an "economic depression (that) could last for decades."
The slide of the oil price to just above $30 a barrel in recent days has hammered the Russian ruble, sending it to its lowest-ever closing level of 77 to the dollar Tuesday. The weakening currency spurred an increase in consumer prices of 12.9% last year, and analysts say further weakness limits the room for the central bank to cut interest rates to help drag the economy out of recession. The ruble recovered almost 1% Wednesday as the crude price edged upward.
Former Finance Minister Alexei Kudrin, a confidant of Mr. Putin, said Wednesday that Russia should raise the retirement age, something that the Kremlin has previously ruled out, and that the economy needed to grow by around 5% a year before social spending could be increased. Mr. Kudrin, a favorite of Western investors for his commitment to fiscal discipline and market reforms, was in talks late last year with senior officials on a possible return to a top government post, but such a move isn't imminent, according to a person familiar with the matter. A spokesman for Mr. Kudrin confirmed he had met with Mr. Medvedev at the end of last year to discuss economic issues, and said the former minister hadn't been offered a government post.
-Olga Razumovskaya contributed to this article.
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#12
www.rt.com
January 13, 2016
Russia prepares stress test as oil slides below $30
While US WTI crude briefly stumbled below $30 for the first time in 12 years, Russia's Urals blend is already below that mark trading at $27.14 a barrel. Given the new reality, the Kremlin has ordered stress tests with $25, $35 and $45 oil.
Russia's federal budget for 2016 relies on an average annual oil price of $50, which almost corresponds to the last year average price - $51.4 per barrel.
According to business daily Vedomosti, Russia's First Deputy Prime Minister Igor Shuvalov has instructed the ministries to work on different scenarios, both bearish and bullish.
The most recent collapse in energy prices from November means the Russian budget will lose 300 billion rubles (about $4 billion) in oil revenue in the first two months of 2016, according to the newspaper's ministerial source.
The updated macroeconomic forecast will be presented by Economic Development Minister Aleksey Ulyukaev later this month. In the meantime, the government has decided to cut spending by 10 percent.
According to Ulyukaev, Russia shouldn't fear collapsing crude prices.
"It seems to me that you don't need to be afraid that oil will cost $20 or $15. The logic of the markets says the lower something falls today, the more likely there will be a rebound tomorrow. It is not the biggest risk. The biggest risk is that oil prices could stay low for years or decades," he said at the Gaidar Economic Forum on Wednesday.
Also at the forum, Russian Finance Minister Anton Siluanov acknowledged that the budget had not yet adapted to falling oil prices.
He said that if the government fails to change the budget for the new economic situation, "then it will be the same as it was during the Russian crisis of 1998-1999, when the citizens paid with inflation for our failure to bring the budget into line with the new realities."
The current Central Bank shock scenario assumes oil prices of $35 per barrel as well as projected 2-3 percent GDP contraction and seven percent inflation. But the country's leading bank Sberbank has already begun to make a $25 stress test.
"We had a $30 scenario. But now it's irrelevant. In our business plan, it was the worst-case scenario, which became real at the beginning of the year," Sberbank CEO Herman Gref told the Interfax news agency.
Some analysts say there's a certain way to cut expenses - to cut military costs."The country in such a position cannot spend four percent of GDP on defense," said economist Vladimir Nazarov.
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#13
Reuters
January 13, 2016
Despite oil spending cuts in 2016, Mideast and Russia race on
BY RON BOUSSO
Oil companies could slash 2016 spending by around 20 percent in the face of a persistent downturn, with North America taking the brunt of the cuts while Middle Eastern and Russian firms are set to raise budgets as their fight for market share continues.
As the industry grapples with its worst downturn in three decades, the crisis that has seen thousands of jobs wiped out and more than $200 billion of projects scrapped last year shows no sign of abating as oil prices flirt with 13-year lows of $30 a barrel, down nearly 70 percent from June 2014.
Global oil and gas companies plan to cut spending on exploration and production by about 15 percent if crude prices trade in the $45-$50 range, but the cuts could be closer to 20 percent if prices hover at $40, Barclays said in its annual survey of 225 companies worldwide.
This year's spending cuts follow a 23 percent reduction last year. It will be only the second time since the survey started in 1985 that budgets have been pared for two consecutive years; the last time was 1987.
In real terms, capital spending is set to drop from $673 billion in 2014 and an estimated $520 billion in 2015 to $444 billion in 2016, according to the survey.
The average 2016 price for benchmark North Sea Brent crude futures was forecast at $52.52 a barrel, according to a Reuters survey of 20 analysts.
In North America, where the shale oil and gas boom had led to spectacular growth in production since 2008, the 2016 cuts are set to be the most painful at 27 percent, Barclays said.
While spending drops, lower service costs and efficiencies have led to a 20 percent decline in well costs, which could explain why North American shale production has been more resilient than some had expected.
The survey also showed that markets outside North America continue to hold up much better, with international spending set to fall by 11 percent this year.
MIDEAST, RUSSIA RESILIENT
National oil companies (NOCs), which represent 58 percent of international spending according to Barclays, are to respond differently to the downturn. Latin American, African and Asian NOCs are expected to cut spending by 13.5-18 percent this year.
But Middle Eastern NOCs are set to increase spending by 6 percent in 2016 even though the budgets of the oil-rich states often require much higher oil prices than those seen now.
Saudi Arabia, the world's top oil exporter which led the Organization of the Petroleum Exporting Countries' (OPEC) decision not to cut production despite falling prices, has a fiscal breakeven of $100 a barrel but its NOC Saudi Aramco is set to increase spending this year by 5 percent, Barclays said.
Similarly, spending in Russia and other former Soviet states is expected to increase by 3.6 percent in 2016, according to Barclays. For Russia, the sharp depreciation of the rouble currency helps oil companies that sell in dollars.
Outside North America, spending on offshore projects, which typically take three to five years to develop, is set to decline in 2016 by 20-25 percent to around $72 billion, after falling 16 percent last year.
International oil companies "were already struggling with project costs before the oil price collapsed, but with this downturn already lasting 18 months with no end in sight, exploration budgets have ground to a halt, offshore developments aren't being sanctioned, and rig contracts are being canceled for the first time in our memory", Barclays said.
But with most onshore oil production in the hands of NOCs or independent U.S. companies, international companies such as ExxonMobil and Royal Dutch Shell have little choice but to develop costlier deepwater production.
The dip in oil prices since the start of the year continued to send shockwaves through the industry. BP said on Tuesday it would slash 5 percent of its workforce this year.
Brazil's state oil firm Petrobras cut its investment plan for the third time in six months.
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#14
Ex-finance minister calls 10% budget spending cuts optimistic forecast for Russia
MOSCOW, January 13. /TASS/. Reduction of federal budget in 2016 by 10% is an optimistic forecast in case oil price keeps at $30-35 per barrel, the former Russian Finance Minister and the head of the Civic Initiatives Committee think tank Alexey Kudrin said in an interview with Russian News Service radio station on Wednesday.
Earlier on Wednesday Finance Minister Anton Siluanov said the country's budget could save up to 500 bln rubles ($6.5 bln) if spending was cut by 10%.
"Budget reductions are inevitable this year due to plunging oil prices. And they [prices] are most likely to keep low, probably $35 or $30, it's difficult to say now. But this means a considerable reduction, even compared with the level of that at the end of last year. 10% reductions is an optimistic forecast," he said.
According to Kudrin, social obligations will require additional spending in a down economy. Funds for them will be raised by greater reduction of certain items, he added.
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#15
Russia Direct
www.russia-direct.org
January 12, 2016
With fall of ruble, Russia's economy trying to find a new bottom
Debates: The expectations of Russian officials that the country's economy had reached its lowest point failed to come true in 2016, given the recent fall of the ruble and selloff on Russia's stock exchanges. So what can be done to resolve the economic situation? Russia Direct asked the experts.
By Pavel Koshkin and Ksenia Zubacheva
2016 has started with bad news for Russia, particularly on the economic front. Regardless of the rosy forecasts of the Russian authorities and their assumption that the economic crisis in the country had reached a bottom, the reality seems to be more gloomy and pessimistic, as indicated by the increasing economic woes exacerbated by the drop in oil prices and the fall of the Russian currency and main stock indexes this week.
Jan. 11-12, the first two days of trading after a winter holiday in Russia, saw increasing turbulence in Russia's stock exchange market, with the ruble having fallen to about 77 against the U.S. dollar and almost 84 against the euro following the decline of oil prices. Given that German Gref, the head of Russia's major state bank Sberbank, admitted that Russia has to prepare for the worst-case scenario - less than $30 per barrel of oil, there seems no reason to believe that 2016 will be easier for Russia than 2015, when Russia showed enough flexibility to withstand economic woes.
Last year Russia's economy survived two major shocks: the almost three-fold drop in oil prices and Western sanctions on the Kremlin for its policy in Eastern Ukraine, said Vladimir Mau, the rector of the Russian Presidential Academy (RANEPA), before the Jan.13-15 Gaidar Economic Forum, which brings together leading economists, officials and politicians.
However, despite the fact that Russia overcame the economic shocks in 2015, it does not mean that it overcame the worst part of the crisis, as indicated by a recent interview of Russia's former Finance Minister Alexei Kudrin. To understand why, Russia Direct got in touch with the country's leading economists, who give their views on what Russia should do to resolve the economic situation. In addition, the experts give their take on the impact of oil prices on the Russian economy and assess the Kremlin's economic policy.
Oleg Buklemishev, associate professor of Economics at Lomonosov Moscow State University (MGU):
The peak of the crisis is not over and it is not clear when it is going to happen. The problem is that any attempts to find "the bottom" during a crisis is something like pure numerical guesswork and a sort of role-playing. If Kudrin were Prime Minister, he would also claim that the crisis is over. There is nothing bad in such a tactic. It is a quite legitimate aspiration of the authorities to influence expectations, which in certain circumstances, might matter almost more than the real economic processes.
The price of oil is, of course, a very important factor, but it is not dominating. It seems to me that the major driver of the crisis now is the inability of business to believe in the best future. Officials try to influence these expectations, but without any results.
What is to be done to change the situation? The Russian authorities have to undertake real measures, which will clearly demonstrate that there is a shift in the country in the right direction. In particular, they have to stop forbidding [certain activities], or blaming others for their woes and numerous fortuities.
They have to admit their recent political mistakes, contribute to pacifying the conflict in Donbas and stop the bloodshed in Syria. They have to start fighting with corruption, shift the burden of their expenses from the military-defense sector to public welfare and start an equal dialogue with business.
Should we expect that the Kremlin's policy would change [in that way] - I don't think so. However, the time of abundance is over and the policy will change anyway: It is necessary either tighten the screws and impose total control over every economic activity or vice versa - the authorities could encourage and unchain business initiatives, non-governmental organizations, regions, municipalities and so on.
Today Russia can keep saving money for national wealth reserves, but the question is to what extent it will be reasonable. Because there is a political directive to save the reserves, the authorities will tread water and test the limits of tolerance to decrease expenses in different fields.
Christopher Hartwell, president of the Center for Social and Economic Research in Warsaw (CASE):
That was wishful thinking on the part of state officials who believed [that the lowest point of the economic crisis had been reached], because the Russian economy is intimately tied into the price of oil. So long as oil continues to drop, it will take the Russian mono-economy with it.
A new research note from German economist Christian Dreger at DIW Berlin and his colleagues around the world shows just how connected the Russian economy is to oil prices in the past two years, and there is no sign of it decoupling in the near future. If oil prices continue to fall, not only will there be problems in the federal budgets, but also regional governments will see an impending economic crisis (given that they rely so much on transfers from the center).
Christopher Hartwell, Center for Social and Economic Research:
Today it makes no sense to forecast where the bottom might be, the only thing to do is take the price signals that are everywhere and move to diversify the economy. Oil is becoming a drag rather than a driver, and Russia needs to develop other industries, exports and innovations.
The authorities really need to renew liberalization and get away from state-led development, which has only led to a bloated state and the aforementioned mono-economy. I am not optimistic that policies will change, however, because of the incentives that the oil economy creates. Too many people are vested in the current structure of the economy for it to be changed merely because it is having a very rough patch.
If the situation develops even further in the negative direction, Russia still has enough of a cushion to weather the storm at the federal level, if we're just talking about the government finances (although that cushion might be exhausted by this time next year).
However, when we look at the sub-national level, there is going to be a huge crunch - you cannot have massive public transfers in an environment where the government deficit and debt is ballooning. As for the Russian economy itself, the corporate sector is taking a beating and I don't think there are enough resources to really survive much longer... you need new entrants, new entrepreneurs unconnected with the state, fresh blood to reinvigorate the moribund economy.
But, again, I don't see that happening any time soon, as it doesn't benefit those in power. What is really needed is a change of mindset, the understanding that all trade is good, business is good, and markets need to be unfettered. Without that change, Russia's economy could be entering a fairly dark period, even though there have been the appropriate moves (especially by the Central Bank of Russia) to try and manage the crisis.
Evsey Gurvich, head of the Moscow-based Economic Expert Group in Moscow:
Unfortunately, the addiction of the Russian economy to oil prices has recently increased, while prices are in a zone of unpredictable vacillations. In summer 2015, all started believing that the price per barrel stabilized between $50 and $55. However, afterwards, a new wave of the drop in oil prices started, with inevitable implications for the Russian ruble and the country's GDP. So, the economic situation is likely to worsen.
Today the government does not have so many choices [of how to deal with the crisis]. First, the last half of the year showed that one should not overconfidently rule out certain developments of events, which could be seen unbelievable at first glance. After all, comparably recently, many were sure that the oil price would not drop below $90 per barrel, then they believed that it would not fall below $70 and so on.
Currently, it is necessary to be ready for any scenarios, even though they seem very fantastic. And this means that we shouldn't rely on the Reserve Fund (like it was in 2009) - that it will help to survive the storm and we'll come back to normal life.
Given a great deal of unpredictability in the global economy, definitely, it is impossible in the near future to return to an easy, fat and comfortable life, like it was the case during high oil prices. Thus, the government should urgently take measures to adjust the budget to $35-40 per barrel and re-think the plan of what it will do in the case of $25-30 per barrel. At the least, it will be necessary for this to cut expenses. Ideally, cutting expenses should be not even. It should target least effective fields.
Generally, there might be three scenarios for Russia's economy. First, executive and legislative power will not dare to take tough and unpopular measures of cutting governmental expense. In this case, we will depend primarily on external factors: If we are lucky and the oil prices won't fall below $40 per barrel, we will keep afloat; if oil will get cheaper to $30 or below and will be at this level several years, a deep crisis is likely to happen.
Second, the authorities will conduct all necessary measures of cutting expenses, but will conduct them "passively" and gradually. I mean those expenses, which are easier to cut fast. In this case, an intractable crisis will be possible to avoid. However, after the situation will stabilize, stagnation will replace the economic meltdown.
Third, at best there will be a serious invigoration of the economy, which will start with increasing effectiveness of budgeting. In addition, the authorities will conduct pending reforms of non-market sectors of economy (state and quasi-state ones): they will decrease excessive bureaucratic control, reform the system of governmental management and increase guarantees for property protection. Only in this case, we will have the opportunity for sustainable growth and decrease of painful dependence on external factors.
Stanislav Tkachenko, professor in the International Relations Department of St. Petersburg State University:
The scale of the current global economic crisis is becoming obvious only now. For Russia and most developing countries, it will be deeper and longer than the crises in 1998 and 2008. It might lead to imbalances in the financial, industrial, energy and currency markets.
At the same time, one can see the local aspects of the current crisis: Increased efficiency of shale oil production and competitive capability of liquefied natural gas (LNG) and the scale of trading in oil futures. The crisis will intensify during the next several months and then it might end in some countries. It is not ruled out that Russia could see sustainable growth in the middle of 2017. The peak of the crisis is likely to be in summer 2016. So, the Russia government will have to focus on two directions.
First, it should withstand the increasing panic in the domestic market, including capital outflow and, particularly, the possible and likely attempt to sell off the Russian ruble and assets. Second, the authorities will have come up with a long-term strategy of economic reforms, including increasing investment to 28-30 percent, decreasing taxes on small business, introducing tax incentives and so on.
Russia will be able to cope with all economic woes in 2016 and 2017. The problem is to what extent the consequences of the crisis will be damaging for the population's social and economic well-being. This may determine the period of how long it takes the Russian economy to restore itself (by the way, it required almost 15 years for restoration after the collapse of the Soviet Union).
The danger is that decreasing living standards might drive the Russian authorities to reassess their approaches, dismantle all democratic institutions under the guise of stability, and stop fighting with corruption and improving effectiveness of governmental management. If it comes true, the crisis will linger on for three to five years.
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#16 Russia Insider www.russia-insider.com January 13, 2016 Russia's Economic Woes Are Just Beginning Holding one's breath for a 2016 recovery may be hazardous to health. Radical measures may be needed By Jacob Dreizin The author is a native Russian speaker and Washington, DC metro area resident with experience in the U.S. military, civil service, Congress, and the lobbying and contracting sectors. He holds an MBA and a Masters in International Relations and has lived for at least one year in six different countries. [Text with links here http://russia-insider.com/en/russias-economic-woes-are-just-beginning/ri12146] The Economy Analysis of Russia's short-to-medium term economic direction-both in the West and in Russia itself-almost invariably involves a narrow focus on the "headline" price of oil-as in, how will Russia do at $30/barrel vs. $50/barrel, what price will balance its budget, etc. (This is partly because Russia's economy is still rather opaque-Moscow's econometric data is neither as diverse nor as frequently updated as the West's-and partly because its business papers do not, for the most part, have the resources or expertise to do focused journalism, instead running mostly non-financial/economic content like any other outlet, or at best, press-release-based news on acquisitions, who is suing whom for unpaid electric bills, etc.) As usual, reality is more nuanced. First, we must understand that the oil price carried in the headlines is the cost of "front month" (i.e. nearest expiration) delivery of "Light Sweet Crude" (a.k.a. West Texas Intermediate-grade/WTI), Brent, or some other origin/type/blend of oil (depending on where you are in the world and what headlines you read), facilitated through a given futures market/clearinghouse such as the NYMEX (again depending on your location/focus.) This is not necessarily what Russia or any other major producer receives for its oil at a given time. Only someone fully engaged in Russia's energy sector would have any idea as to the structure of Russian oil exports, i.e. the average outstanding contract duration or the weighted average price of Russian oil delivered today. (It is likely that a substantial proportion of Russian oil was never sold at the triple-digit headline prices of mid-2007 to mid-2008 or perhaps even the 2011-2014 rally.) Given that as much as 90 percent of global oil is still sold through term contracts, large producers such as Russia have a built-in revenue buffer against a sharp, brief fall in the "headline" price. Likewise, Russia would not necessarily draw huge benefits from a short-term price spike. For this reason, arguing that a rise or fall to price X will have near-term effect Y is a fool's errand. It also follows that the effect of the oil crash on Russia's budget and economy must necessarily be felt with a lag. Thus, despite hopes that Russia will rebound when the "headline" price notches back fifteen or twenty dollars, it may be that the lag time has only just concluded-i.e., that Russia was getting by on more lucrative, mid- or even late 2014 contracts for June or December 2015 delivery (or whatever off-market arrangements it might have had with its partners such as BP) that have now run their course. If that is the case, then Russia has only recently entered the danger zone. Another point: Even in 2013, the last full year of the 2011-2014 three-figure rally, crude oil accounted for only around one-third of Russian exports. What else is there to Russia's economy besides oil-or gas, for that matter? Russia is also a major producer, processor (as applicable), and exporter of all base metals, phosphates, coal, industrial diamonds, lumber, etc. All of these goods fall within the broader "commodities" complex, which has been crashing through the floor for over a year. And if commodities as a whole are doing poorly worldwide, then (going by historical precedent) oil alone will not escape that trend. It may be $20, it may be $50, but it can hardly "break out" and regain its prior highs if the overall asset class is in the down phase of its cycle. Conversely, if oil stays depressed, then, given the historical correlation within its asset class, most of Russia's other resource exports (perhaps excluding gas, which seems to have its own dynamics) will stay down as well. So the problem goes beyond the conventional wisdom that Russia will face a revenue shortfall even with "headline" oil at $45 to $50 per barrel. There are good reasons to believe that the entire commodities complex will struggle for years to come. And all chatter about Saudi Arabia going into overdrive to put U.S. shale oil producers out of business misses the broader point of a global commodities rout. We are looking at a much broader, deeper phenomenon. Claiming that "Russia will be fine once the Saudis clean out the shale projects" is missing the forest for the trees. Which brings us to another problem: Russia's higher-value-added industries sell their wares chiefly to other commodities producers and/or to other developing states whose ability to finance the acquisition of Russian hydroelectric turbines, harvesters/combines, Sukhoi Superjets, nuclear power plants, etc. is severely constricted by the same global credit contraction (or even the mere fear of contraction) and carry-trade unwinds that are feeding into the commodities bust. Of course, Russia may (and often does) compensate for the poverty of many of its customers with "dealer financing", but its ability to do so depends on the availability of slush funds built up from years of-you guessed it-lush profits from oil and other resources. In this manner, the commodities bust hurts the order books of many Russian manufacturers that have nothing to do with resource extraction or processing. Because even the benefits of cheaper (in dollars) Russian manufactures due to the weak ruble may not be enough to offset the sharp winding-down of capital investment/spending and the credit cycle in countries that normally would have bought or considered buying Russia's value-added exports. So, sharply reduced demand for commodities overall, and fewer export orders for manufactured goods, could potentially rip through Russia's regions and devastate employment and income in a way that mere budget shortfalls from lower oil revenue (bad as they are) would not. In fact, that may very well be happening already (and we're not even getting into what the ruble crash and high interest rates have done to the Russian consumer.) The Budget This is not to say that Russia's state budget is not in trouble. There are just too many priorities now. The list of "special" items does not stop growing. There is Moscow's financing of the state salaries, pensions, gas/electricity, and armed forces of the Donetsk and Lugansk Peoples' Republics, totally "off-budget" and very spooky (think Area 51), which likely comes out to hundreds of millions of dollars per month. There is the fundamentally unwinnable Syrian intervention and arming/supplying of the Syrian army, also likely in the hundreds of millions of dollars per month. There is the assimilation of Crimea, to include compensation for savers who lost everything when Ukrainian banks simply closed their doors (although that is over and done with at this point); the construction of the Kerch Bridge as well as a massive new power plant and other energy infrastructure for the peninsula; rehabilitation of its roads, military housing, and naval yards; as well as bringing its state salaries and pensions in line with Russian standards, all at a time when Crimea is probably not bringing in much tax revenue due to a high degree of political and business uncertainty as well as periodic electric embargoes from Ukraine. This is certainly in the hundreds of millions of dollars per month. There is the (non-)construction of the ballyhooed Sila Sibiri (Power of Siberia) gas pipeline to China. Despite all the "eastward pivot" hype from the second quarter of 2014, this project has (besides some heroic photo ops) barely commenced, with the first major tenders not awarded until last September (and most of them cancelled two weeks ago, so nothing has been done), perhaps because Moscow was waiting on China to commit to paying for some of it. Which never happened. There are grants and subsidies to import substitution projects under way since 2014 (RI cited one little example last August), and now Prime Minister Medvedev is talking about tax breaks for the (domestic) tourism industry. There is the cost of housing/feeding and in some cases permanently resettling hundreds of thousands of war refugees from the Donbass and tens of thousands of benefits-eligible repatriants from other parts of Ukraine. There are the three billion dollars wasted on trying to save Yanukovich, and two-plus billion wasted on Turkey's Akkuyu nuclear plant (which was being built at Russian expense, but now seems to be dead in the heavy water), not to mention billions yet to be spent on buying the partial allegiance of perennially-bankrupt Lukashenko in Belarus (along these lines) and other friendly but nearly-failed states like Kyrgyzstan (now in a deep depression.) Moreover, Tajikistan-with its recent (failed) military coup and the Taliban now sitting on its border-will be lining up for the Moscow gravy train soon. And then there is the pending, unavoidable bailout of the regions. Like a body that experiences cold weather by freezing first in the extremities, some of Russia's weaker regions-which is, in fact, most of them-are starting to run out of money to pay their employees (medical personnel, teachers, local bureaucrats, librarians, etc.) Salaries are going into arrears or are being cut as much as 40 percent, and I'm talking in ruble terms, not adjusting for inflation. (Crank up your Google Translator and see here, here, here, here, here, here, here, here, here, here, here [this one refers to non-salary expenses], and here [no more money for adopted child payments], for starters. Then witness this tragedy, whereby little Tuva Republic [population about 310,000] owes its workers an astounding 748 million rubles, and another sad tale whereby coal stokers at district heating stations supporting the Zabaikalskii Krai town of Domna, home to families of Syria-deployed pilots from Domna Air Base, are threatening to turn down the heat due to not being paid or having enough safety equipment. Also see here, here, and here for reports of salary arrears to federal Emergency Situations Ministry personnel in the regions-not a good sign at all.) (And this at a time when 63 percent of Russian doctors and nurses are already making less than 20,000 rubles per month [or $267 at the current exchange rate.]) In short, regional tax revenues are evidently way down, and in the absence of U.S.-style "solutions" (e.g. state university tuition hikes offset by greater student loans) or reasonable private-sector credit, there is no way for most of Russia's oblasts, krais, and republics to deal with insufficient funds other than by going into arrears on salaries, contract payments, and other budget lines, then praying that things pick up soon or that Moscow steps in with a bailout (the latter hope stated rather bluntly by the governor of Altai Krai a few weeks ago.) This bailout will surely come, and it won't be cheap. In 2012, Russia's regions were tasked with meeting substantially expanded social goals and priorities, and they resorted to debt to make that happen. Russia's total regional debt-in the form of bank loans, bonds, guarantees of commercial debt, or loans from Moscow-grew from the 600-700 billion ruble range in 2008, to 1719 billion rubles as of January 1, 2014, to 2093 billion rubles as of June 1st, 2015. And the situation has most likely continued to deteriorate since then. Because the ongoing revenue problems must be making things much worse. Granted, this is not yet strongly felt in Moscow or St. Petersburg, nor is it an acceptable topic for the nightly news. But it is very much reminiscent of what happened in 2008-2009, and moreover, given that most of the pay arrears (per earlier links) arose only in the last few months (seemingly in line with the "lag time" I proposed earlier), the trend is accelerating. So we are potentially talking about a bailout in the ruble equivalent of tens of billions of dollars over just a few years. In fact, the bailout already started last year with a 310 billion-ruble federal appropriation to pay off some regional commercial debt, to include hard currency debt, replacing it with near-zero interest obligations to Moscow. So add that to the "special" budget items list. And if something can't be funded with tax revenues, that means dipping into Russia's Reserve Fund or National Welfare Fund, or raiding the Finance Ministry's general account at the expense of planned/regular outlays (or simply getting ahead of the budget plan as revenues falter), leading to outcomes such as those experienced by the unpaid Emergency Situations Ministry personnel. (This is probably the start of a trend, so watch closely.) Ultimately, they may start shaking down state enterprises for loose change, as in Greece. But how long can that last? After all, the state must hold something back, to support further regions that may break off from Ukraine, deal with natural or manmade disasters, or for other unforeseen needs. They can't blow it all. And they certainly can't go spending the Central Bank's reserves on domestic needs-those are required to stabilize (relatively speaking) the ruble, and to loan hard currency to importers (if it comes to that.) Also, little measures like doing away with cost-of-living-adjustments for those filthy rich "working pensioners"-when inflation is over ten percent-can't even begin to plug the holes that have been created (not to mention that the measure just cited takes full effect only in 2017.) Then there is the recent adjustment of the Finance Ministry's privatization revenues target for 2016 from 33.2 billion rubles to one trillion rubles. (Yes, you read that right.) Wearers of rose-tinted glasses might be interested to know that only countries facing catastrophic problems suddenly decide to sell off everything not bolted down and double-riveted. In play is not only the same roughly 20-percent stake in Rosneft that Moscow has talked of selling for over a year (you'd think they'd have found a buyer by now), but also pieces of Bashneft, Aeroflot, the state's stake in diamond-miner Alrosa, and even the Russian postal service (you couldn't make this up if you tried), among other concerns. Of course, the time to privatize is when you can get a good price for your assets, oil companies included, not when investors are running away from all of the world's oil companies. Or when both foreign investors and your own elites have been hauling money out of your country for almost two years. Not to mention that the desperate Saudis are also now looking at selling off part of their Saudi Aramco. So where is all the cash to buy this privatized stuff to come from? At best, we are talking about a shell game within Russia, probably involving Sberbank or some other state-dominated institution(s), not something that actually brings new money into the economy or stimulates growth in any way. Worse still, potential foreign financing avenues are now almost totally closed off. It is inconceivable that Western investors would now buy Russian state bonds at anything remotely approaching an acceptable (to Moscow) yield. The last thing Russia's Finance Ministry would want is to find out what happens if it even tried to hold an auction with foreign participation. As for "private clients" potentially doing off-market deals, last year's Great White Pivot Hope, China, burned through more than a half-trillion dollars of reserves last year ($108 billion in December alone) trying to control the value of its currency as well as prop up its stock market. And we know how that's going. So as well-loaded as it still is, if the Dragon has not yet offered Russia any charity, then it probably won't, going forward. Likewise, the Persian Gulf monarchies have their own problems (news of which has been reposted on this site more than a few times-see this, for example.) They are also on the other side of the Syria war from Moscow. Ever heard any follow-up on that Saudi plan to invest ten billion dollars in Russia? Didn't think so. People don't hand money to their own enemies. So Russia must rely on its own resources, which involves burning through its seed corn and then, if things haven't picked up... Well, that could be a problem. The Solution? One of the laws of the universe as we know it today is that while the U.S., Europe, and Japan can issue all the digital funny-money they want, with the market reaction always being "Yes! Give us more!", a country like Russia doing the same thing would experience hyperinflation and massive capital flight. But is there any way for Russia to bend this law? One of President Putin's key economic advisers, the outspoken economist, former politician and presidential candidate, and U.S. sanctions blacklist victim Sergei Glaziev, thinks so, and he has been talking to anyone who would listen-even obscure Internet TV/YouTube channels, which a man of his stature normally wouldn't bother with. By now, the outlines of Glaziev's plan are well-known within Russia. In the interests of building an authentic national "monetary-credit system", Glaziev basically calls for new money creation-20 trillion rubles over five years-to support low-interest loan-refinancing by the state, as well as "targeted", "goal-oriented" state loans in support of import substitution projects and other capital improvements, which would both stimulate economic activity and leave Russia much stronger in the long term. Firms taking these loans would commit to delivering to the state or its agents X volume of goods, material, or services over Y period, or provide some other demonstrable results, or else pay the state for the unmet balance. (Despite the general rule that companies don't do capital improvements when market demand is down-i.e. when there seems to be no hope of recouping those investments-, in Russia's case, the import substitution drive as well as the antiquated state of equipment in key sectors such as agribusiness supports Glaziev's claim that many firms are gasping for loans for productive use.) Glaziev portrays the alternative to his plan as, at best, a long period of credit starvation and economic drift. Yet the fact that he is going so far as to sell it on the Internet suggests that his real views on Russia's economy are even darker. Indeed, some of Glaziev's pronouncements and his demeanor have very much an "August 1941" feel. (Presenting to Russia's Security Council last year, he claimed that his plan is essential to preserving the country's existence.) To prevent capital flight while his plan is being executed, Glaziev calls for a host of complex restrictions on Russia's capital account, i.e. to fight speculators and the panic-stricken. However, the fines, rules, and restrictions he has proposed-including requiring all hard currency export earnings to be sold (for rubles) to the state-amount to neither a full nor an effective closure of the capital account. Rather, in my view, they would further corrupt the state and economy with a massive administrative burdern and unmanageable complexity, leaving the door open to Venezuela-style gaming of the system by importers, banks, airline companies, etc., which would lead to a fast bleeding of state reserves and drive the country into a black hole. If Russia is to go the capital controls route, then, with very few exceptions, no digital/bank money-in any amount-can leave Russia except for repayments of preexisting debt, payments for real goods imports (not services that can be faked-foreigners can be paid for these domestically), and repatriation of profits by foreign concerns or their previously-established, wholly- or majority-owned local affiliates. To limit corruption or favoritism, every transation would need to be referenced (by machines to the extent possible) against a single list of valid entities and be approved from one office within the Central Bank. As for money going into Russia-leave it alone! Interestingly, to my knowledge, Glaziev has not spoken of a fixed/official exchange rate (which worked so "well" in Venezuela, for example.) He seems to be willing to let the ruble find its own level. Note, it is rare for a country to institute capital controls without an enforced exchange rate. The beauty of this is that Russia would not waste resources defending the indefensible, which fixed rates tend to be-it would merely ensure that enough money stays within Russian borders for productive uses. But again, this would only work with a near-total lockdown of the capital account. And as no one knows what the ruble's "own level" would be once such measures are enacted, the whole thing is predicated on Russia having enough reserves going into it. (After all, today's Russia can't function without certain imports, which must be paid for in hard currency.) So this can't wait forever. If serious capital controls are to be implemented, then the sooner that happens, the more effective it will be. And it is clear that pissing away $100 billion of reserves for nothing-as Russia's Central Bank did in 2014, trying to defend the ruble which crashed anyway-does not set the stage for a successful move in this direction. The other issue concerns hyperinflation. We know from history that huge monetary emissions outside of the modern-day U.S./Europe/Japan almost always lead to very high price inflation if not outright financial or even political collapse (think Weimar Germany, Yugoslavia, the USSR in its last year, or Zimbabwe.) Glaziev claims that his "targeted" approach would not have this result. But-other than lectures on cash vs. debt-money, which miss the point that even debt-money can and often does inflate prices (just look at the U.S. housing bubble)-he is strangely vague on how or why it won't, i.e. why Russia will succeed where others have failed. Filling in the huge blanks, we might suggest a partial replay of the Soviet monetary reforms of 1930-1932, which created a multi-tiered money system, with a notional currency for state enterprises to trade between each other, a paper note-oriented currency to pay urban workers, and another notional one to compensate collective farm workers (beyond the subsistence produce allowances they were already receiving.) By allowing for enormous monetary emissions that did not lead to unmanageable inflation, it is likely that these reforms contributed substantially to the Soviet economic boom of the 1930s, which then enabled the country to fight Germany on near-equal terms. In other words, simply playing with the nature of money enabled the USSR to grow almost exclusively on its own resources, with almost no foreign direct investment or foreign loans (even if foreign technical expertise remained critical.) Yes, it sounds like science fiction, but it happened. (Incidentally, Nazi Germany pulled itself out of the Great Depression also using a tiered money system, although that involved just two tiers.) Yet even this would lead to catastrophe without some way to limit the flow of newly-emitted money (e.g. Glaziev's 20 trillion rubles) into the consumer economy, where it could inflate prices beyond anything seen in modern Russia to date. Today, with Russia's more market-oriented economy and total freedom of labor and movement (and no more state farms), this could involve just two tiers of money. Namely: The existing ruble would remain in place with no changes. The state would loan out (at low interest) "industrial" money to firms wishing to quantitatively expand or qualitatively improve their production, transportation, or other processes, establishing and maintaining its value by accepting it as payment for corporate taxes economy-wide, even from firms not themselves taking the loans. The state could give a discount (say, 10 percent) to federal and regional tax payments in "industrial" rubles, thereby raising their value against standard rubles, making them more desirable for companies to acquire. As companies maintain their "industrial" rubles on account with private banks, those banks could loan them to other companies on a fractional reserve basis, or keep them on account with the Central Bank, further establishing them in the economy. The state could also redenominate into industrial rubles some of the debt owed to it by the regions. Firms would continue to pay employees in standard rubles, while using "industrial" rubles to order materials or services from each other, or posting them as collateral for hard currency loans, or whatever other uses can be found, besides paying taxes. Once "industrial" rubles have been well-established, the state could use them pay for contract work (i.e. infrastructure and housing improvements) directly, rather than just loaning them out. The effect of diminished standard ruble revenues would be offset as the state collects "industrial" rubles through taxes or loan repayments, retires them, and replaces them with standard rubles to pay its salaries, pensions, etc. To keep price inflation in some kind of check, this retirement could take place on something other than a one-for-one basis, say, a three-for-two basis or some flexible ratio, responding to price levels in the economy. "Industrial" and standard rubles would not be directly/officially convertible by anyone other than the state, as that could be destructively inflationary. Nor would private individuals be allowed to maintain "industrial" ruble accounts. In fact, to prevent small companies from becoming de facto money-changers, firms with less than X annual revenues could be prohibited from holding "industrial" ruble accounts. Gresham's law should not be an issue, as the newly-emitted form of money would be more valuable due to the tax discount, even as people have no choice but to value and pursue standard rubles for their own daily needs. Another method for preventing loss of faith in Russia's currency-under this plan or independently of it-would be to bring in the gold factor. As discussed here, tying a modern currency directly to gold is a great way to lose all your gold very quickly. But Russia could issue a series of ruble bonds, tradeable on the Moscow market (with open participation), with a maturation of five or ten years, and with the face value paid either in rubles, or in a (fixed) quantity of Central Bank gold equal in value to the discounted ruble value of the bond at the time of issue-as per the bondholder's preference. Given Russia's not-insubstantial gold reserves and how much it still has in the ground, these bonds could come into demand internationally as a long-term instrument to hedge a fall in the gold price. The fact that they are ruble bonds only tradeable within Russia would hold up demand for the currency and support its value. Tying the gold option on the bonds to the discounted value would also ensure a lower yield. Of course, the Central Bank would have to figure out how to deliver upon redemption (perhaps under Swiss supervision, to avoid any Kolchak trains.) But that's just details. Yet even supporting the ruble is not enough. As of today, Russian farmers and industrialists engaged in import-substitution projects (and the bankers that increasingly turn them down for loans) just don't know if those projects will be justified by the exchange rate one or five years from now. Thus, Russia's Central Bank and/or its Finance Ministry could, without delimiting a "bottom" range, declare that while the ruble will not collapse in an uncontrolled fashion, neither will it be allowed to rise above X to the dollar within the next Y years. This would provide some peace-of-mind to those now engaged (or desiring to be engaged) in growing Russia's real economy and providing reasonably-priced, Russian-made goods to the nation's consumers, builders, etc. But of course, this is all highly speculative and esoteric. How much of it is likely to be effected before total catastrophe arrives (if ever)? It is always easier for politicians to nail-shut and brick-up the barn door after the horses have made it to the next valley (while shouting, "No one could have foreseen this!"), than to upset all the vested interests, cronies, rent-collectors, etc., by taking the proverbial "ounce of prevention." As for Glaziev, if he really thinks that Russia can substantially expand its money supply without a sterilization mechanism, even with capital controls, and not dig itself ten kilometers underground, I'd have to admit he is a quack. Which I hope he isn't. But at least his heart is in the right place. At this time, as in 1930-1932, original if not revolutionary solutions are needed, or else (if we are in a true, epochal commodities bust) Russia will likely sink into many years of extreme economic pain, increasing sociopolitical disorder and the repression that comes with it, and a crashing birth rate together with a rising death rate. In other words, more or less the 1990s all over again, except this time with a hostile relationship with the West. Sadly, one thing we can count on is that President Putin and Prime Minister Medvedev, being politicians, will not choose to take any potentially dangerous or radical action for as long as they feel (rightly or wrongly) that there is any choice left. If or when that happens, hopefully it will not be too late. (PS: Many readers must have some deep thoughts and ideas on this subject. If you think what you've just read has too many holes, the comments section would really like to hear your own detailed/unique solution, or at least a way to make Glaziev's plan work.) |
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#17
Pamfilova criticizes Kadyrov's words about non-system opposition
MOSCOW. Jan 13 (Interfax) - Russian human rights ombudsman Ella Pamfilova has criticized the statement made by Ramzan Kadyrov, the head of Chechnya, saying that representatives of the non-system opposition are "enemies of the people" who should face trial for sabotage.
"Such statements are not only pointless, but also harmful because they render a disservice to the country's president and cast a shadow on the country," Pamfilova told Interfax on Wednesday.
"It is obvious to all sensible people that only people who violate the law can face trial," Pamfilova said.
"If anyone's political activities, even the activities of our so-called non-system opposition, which is not numerous, take place in accordance with the Constitution, no one has a right to use an administrative, judicial or any other arbitrary approach to them," Pamfilova said.
Kadyrov earlier said that the non-system opposition is trying to destabilize the situation in Russia instead of looking for a solution to the crisis together with the country's administration.
"People who were previously never heard of are doing everything to become famous by opposing themselves to Russian President Vladimir Putin. Representatives of the so-called non-system opposition are trying to gain from the difficult economic situation. Such people should be treated as enemies of the people, as traitors. Nothing is holy to them," Kadyrov said during a meeting with journalists in Grozny before the Russian Press Day.
His statements were quoted on the website of the head of Chechnya and the government of Chechnya.
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#18
Bloomberg
January 12, 2016
A Fallen Russia Oligarch Sends Warning to Rest of Putin Insiders
By Irina Reznik
He was one of the most powerful men in Russia for a decade, an old pal of the president who oversaw a million workers and a rail network spanning 11 time zones.
But then Vladimir Yakunin was suddenly out, ending a career that included a stint as an intelligence officer at the United Nations in New York during the Cold War. Now Yakunin, 67, has some parting advice for the remaining members of what he dismissed as Putin's "so-called inner circle": know your place.
"This circle will continue to rotate," Yakunin said in his private office in Moscow during a 90-minute interview. Putin has yet to form a stable "ruling class like Russia had during czarist times," the former head of state-owned Russian Railways JSC said.
The comments are a rare public admission from a longtime insider of the fragility of wealth and influence in the opaque and seemingly ironclad system of control Putin has built over 15 years. With that system under unprecedented pressure from plunging oil prices and international sanctions, any step Putin takes to maintain his grip on power reverberates far beyond Moscow.
Berezovsky Warning
Some insiders are making the mistake of viewing their property and privilege as inalienable rights, but everything they have hinges on Putin's shifting views of what's good for Russia, according to Yakunin. He offered two examples from the president's first term to illustrate the dangers of overreach.
"Remember what happened to Boris Berezovsky and Vladimir Gusinsky," he said, referring to two post-Soviet oligarchs who lost their fortunes trying to influence Putin's Kremlin the way they did Boris Yeltsin's.
Yakunin's departure from the rail monopoly in August was the biggest shakeup in years within "the new politburo," the highest authority under communism, and presages more to come, according to Olga Kryshtanovskaya, a sociologist who's tracked the rise of the security services under retired KGB Colonel Putin.
"Rough resignations" by Putin loyalists are rare and Yakunin's rejection of the customary senate seat as consolation is even more so, she said.
The U.S. blacklisted Yakunin in its initial round of sanctions over the Ukraine conflict in March 2014 for being both "a close confidant of Putin" and an influential government official; Russian Railways carries more than a billion passengers and a billion tons of cargo a year.
Dacha Buddies
Yakunin and other members of Putin's St. Petersburg clique in the 1990s, including his chief of staff and fellow former spy Sergei Ivanov, constitute "the Russian leadership's inner circle," the Treasury Department said at the time.
"Yakunin and Putin were also neighbors in the elite dacha community on the shore of Lake Komsomolsk and they served as co-founders of the Ozero Dacha Cooperative in November 1996," it said.
Another Ozero founder, Yuri Kovalchuk, was also among the first 20 Russians sanctioned, as were three other St. Petersburg businessmen who became billionaires after Putin came to power -- Gennady Timchenko and the brothers Arkady and Boris Rotenberg.
The reasons Yakunin was kicked out of this exclusive club are disputed.
British Passport
He says publicly the decision to resign was his own and Putin approved it, but people familiar with the matter said the president felt betrayed when Yakunin's eldest son obtained citizenship from the U.K. when that country was penalizing Russia over Ukraine.
The Kremlin was aware of the issue and nobody objected, Yakunin said.
"My son has lived in the U.K. for five years and had the right to obtain citizenship," he said. "I made no secret of this from the country's leadership."
Putin's spokesman, Dmitry Peskov, declined to comment.
Kryshtanovskaya, the sociologist, said it may have just been a matter of mismanagement at Russian Railways. The company had become bloated, inefficient and plagued by accusations of corruption, so new leadership was needed, especially with the economy mired in a recession, she said.
Safeguarding Wealth
The man picked to replace Yakunin, Oleg Belozerov, is a 46-year-old logistics specialist and deputy transport minister from St. Petersburg who has longstanding ties to the Rotenbergs.
Evgeny Minchenko, who runs the International Institute for Political Expertise in Moscow, said Yakunin was simply outmaneuvered by more aggressive insiders whose business interests were being hampered by the rail monopoly.
Whatever the cause, Minchenko said one thing is indisputable: People close to Putin, who could extend his rule to a quarter century if he wins re-election in 2018, are increasingly focused on safeguarding their wealth and status to pass them on to their offspring.
Putin In-Law
Some are even joining Putin's family.
Kirill Shamalov, the son of Nikolay Shamalov, another co-founder of the dacha cooperative cited by the Treasury Department, married Putin's youngest daughter Katerina in 2013 and then became a tycoon in his own right, thanks mainly to a stake in a petrochemical company he acquired from Timchenko with financing from a state bank.
Still, nobody's position but Putin's will be secure until a governing elite like the one that existed before the Bolsheviks swept to power a century ago is fully formed, a process that may take decades, according to Yakunin.
"Trying to measure influence by proximity to political resources is a relic of the Soviet system," he said.
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#19
www.rt.com
January 13, 2016
Opposition parties draft bills banning civil servants' relatives from business activities
Russia's Communist and Liberal Democratic parties have prepared separate draft laws: one forbidding people whose relatives are engaged in business activities to assume official posts, the other banning children of civil servants from entrepreneurship.
The bill prepared by the populist nationalist Liberal Democratic Party of Russia (LDPR) and drafted by its leader Vladimir Zhirinovsky reads that from April 1 this year the spouses and adult children of senior state officials must stop any activities in the business sector. Zhirinovsky noted in a parliamentary speech that he did not consider such restriction infringement of anyone rights, as people who disagree with it are free to leave the civil service.
According to the Communist Party of the Russian Federation's (KPRF) bill, drafted by the head of its legal department MP Vadim Solovyov, Russian citizens cannot be appointed as senior state officials if their close relatives - spouses, children or siblings - are engaged in any form of entrepreneurial activity. The posts that fall under the limitation are described as "senior or head position in a state agency" and also in all cases when the official responsibilities of the official include overseeing or control over businesses of his or her relatives.
The sponsors acknowledge that the Russian Law on State Civil Service already contains certain provisions aimed at prevention of any conflicts of interest (the existing law bans civil servants and lawmakers to possess and run own businesses, but there are no restrictions concerning their relatives). They also said that in their opinion the existing measures were effective, but not full, and the current law required additional amendments.
Solovyov has earlier told reporters that the Communists' initiative had been prompted by the widely-advertised report disclosing the alleged ties between the relatives of senior officials in the Prosecutor General's Office with members of an infamous gang convicted of murdering a family of farmers in southern Russia. Almost immediately after this report was circulated, Prosecutor General Yury Chaika dismissed it as "slander" and "hatchet job" and said that the campaign against him had been ordered and sponsored by William Browder - a UK-based international investor who was sentenced to 10 years in prison in Russia for large-scale tax evasion.
In 2013, Russia introduced the law that forbids senior state officials from holding bank accounts abroad or owning foreign-issued shares and bonds. The restriction also extends to spouses and underage children. The law allows state officials to have real estate abroad, but orders them to declare it as well as the sources of the income used to buy that property.
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#20
Russia Beyond the Headlines
www.rbth.ru
January 13, 2016
What's new with the Russian army?
RBTH has investigated how public attitudes to army service have changed and what kinds of reforms to military training, procurement, research and military education have been carried out in the last three years.
VADIM MATVEYEV, TATYANA RUSAKOVA, RBTH
During the military campaign in Syria, the Russian armed forces has confirmed its standing as one of the best armies of the world, demonstrating a high level of technical potential and combat training. But as recently as 2008 before the conflict with Georgia began, no one was able to predict the readiness or effectiveness of the Russian Army.
The Russian Army was afflicted by a significant moral and material decline after the collapse of the Soviet Union. But over the last seven years, the Russian Army has been able to revive itself and become one of the most efficient armies in the world. Over the past year, Russia has played an active role in military operations and major training exercises, as well as continuing army reforms that began back in 2008.
Public attitudes
Military service in Russia has historically acted as a career boost. In Soviet times, the army was known as the Workers' and Peasants' Army and it acquired a certain prestige; compulsory service lasted just 2-3 years and was regarded as an obligation for men. With its opportunities to learn a trade, military service gave many - particularly those from villages - a start in life.
During the upheavals in Russia in the 1990s, however, serving in the military lost its value as the armed forces received little funding, new equipment was not purchased, practically no military training took place and many career officers resigned in order to support their families.
"In the 1990s, I remember that every officer, including me, tried to wear a military uniform as little as possible - it was embarrassing. The military officers then were losers - people who could not get a good job stayed in the army. So people attended military service in their civilian clothes," recalls Colonel Vladimir K.
This difficult period for the Russian Army lasted more than 10 years. Following Sergei Shoigu's appointment as Defense Minister, military pay increased significantly, with the monthly allowance being raised six-fold from RUB 12,000 or $170 to RUB 50,000 or $720 for a lieutenant. The housing issue has been addressed and most military members that had been waiting on a list for 20 years have been given housing.
The staging of military exhibitions is now open to the public. The revival of DOSAAF (Volunteer Society for Cooperation with the Army, Aviation and Navy), which trains young people approaching the conscription age in military occupational specialties and also develops and popularizes military sports, including target shooting and battlefield orientation, have also borne fruit. As a result, public attitudes to army service and a career in the military have started to change. Wearing epaulettes have become prestigious once again and military service, whether conscription or professional, have made a comeback as a sign of masculinity.
In a recent survey by the Russian Public Opinion Research Center, 64 percent of respondents said that the army was the best place for a young man to get a good moral and physical education, almost twice as many as the 33 percent that said as much in a similar survey in 1990 on the Soviet Army.
Another positive factor is that living conditions are also perceived as having improved significantly: 60 percent described them as "good," compared to just 18 percent in 1990.
Being employed by the military has become more prestigious in contemporary Russian society, although often it is used as a springboard for a career rather than a demonstration of an interest in military affairs.
"I don't want to connect my fate with military service in the future," says Vladimir P., a sergeant in the military commandant's office in Sevastopol. "I plan to start a career in government service or the FSB. They take people there that are just getting out of the army."
More often than not, the motivation is material.
"Like a lot of people, I was tempted by the high pay compared to civilian workers," says Anna Z., a lieutenant serving in a Moscow-based unit. "That was my main motive for joining the armed forces."
Apart from this revival of its social role and an increased interest in the military as a profession by young people, the Russian army has changed in many other ways over the last three years.
Military training
Under the previous Minister of Defense, Anatoly Serdyukov, it was decided that all of Russia's military units had to be in a constant state of combat-readiness. Since then, the percentage of professional soldiers has increased every year and their number should reach 425,000 by 2017. Having so many professional members of the forces requires the constant improvement of their theoretical knowledge and the development of combat skills at military training facilities. The introduction of new military equipment that requires appropriate training further complicates matters.
It is no surprise that large-scale training exercises and surprise inspections have become commonplace in the Russian military. According to experts, in his first year as Defense Minister in 2012 Shoigu intensified the training processes for military personnel. After seven different training exercises in 2010 to 2012, there were five surprise inspections of combat-readiness in 2013 alone for Russian army units in different regions of the country.
From 2013 to 2015, there were 20 surprise inspections and exercises involving foreign and Russian personnel. The quality of the skills learned can be seen in Russia's current anti-terrorist operations in Syria.
In general, the process of improving the combat readiness of Russia's forces covers several major factors: developing and improving individual abilities and the skills of personnel; improving the cohesion of the military authorities and their leadership methods; and organizing and supporting cooperation between the different types of armed forces.
In terms of scale, the most impressive stage of military training is the operational and strategic manoeuvres that involve 10,000s of personnel and 1000s of units of military equipment. They help Russia's military command to practice a modern form of personnel deployment for the future development of the army and navy.
Arms, equipment and apparel
Serdyukov had lobbied for the purchase of more foreign-made military goods, but Shoigu has reduced such purchases to a minimum since becoming Defense Minister. For instance an order for 1,775 Italian Iveco-LMV65 armored vehicles has been cancelled (although Russia still bought 358).
Additionally, steps have been taken to substitute imported components with Russian-made equivalents. The conflict with Ukraine has dealt a significant blow to Russia's defense industry, forcing the country to produce helicopter and ship engines domestically. Russia had been buying a considerable range of military products from its neighbor and the need to find alternatives naturally delayed the introduction of new equipment.
Even so, Russia intends to modernize 70 percent of its weaponry by 2020.
"Indeed, at a certain time we increased defense spending," said Prime Minister Dmitry Medvedev in an interview on December 9, 2015. "By that point the status of our military hardware was below par. Now we've brought this spending up to international levels."
As it stands, in 2015 half of the Russian army's military equipment is already new, so the target does not seem unreasonable.
For instance, Russia's army is already being equipped with the Ratnik infantry combat system, which includes the new AK-12 rifle. It now has more state-of-the-art Tornado-G multiple launch rocket systems, 120-mm Khosta self-propelled guns and Khrizantema-S self-propelled anti-tank missile systems. It is also getting the latest Iskander-M tactical ballistic missile systems.
As well as an increase in the number of armored trucks and cars of various classes and functions, the army is getting modified BTR-82 and BTR-82A armored personnel carriers. A decision has also been made to go back to purchasing BMD-4m infantry fighting vehicles. The armored forces have been given tanks such as the T-72BA, T-80BA, T-80UA, T-80U-E1 and T-90A. In the near future, the forces should get the latest models based on the Armata heavy tank platform.
The country's air defense forces have been given the latest Triumph S-300V4 and S-400 surface-to-air missile systems.
The aerospace forces have the latest Sukhoi Su-34, Su-30 and Su-35 fighter aircraft and the Mil Mi-28N and Kamov Ka-52 helicopters. Some of them have shown their capabilities in military operations against ISIS in Syria. Air-to-surface missiles such as the Kh-29L and the Kh-101 have also proved their worth.
The navy is being provided with new types of vessels and submarines equipped with effective weapons systems, such as the well-known Kalibr cruise missiles used by Russia against ISIS. It also now has cutting-edge submarines equipped with Bulava ballistic missiles.
The scheduled replacement of ground-launched ballistic missiles is also under way. Russia's Strategic Missile Troops are being equipped with new Topol-M and Yars intercontinental ballistic missiles.
The defense industry and R&D
The Russian government allocates significant resources not only to providing the army with modern equipment and weaponry, but also to research and development.
At the end of 2013, a new federal law was passed establishing control mechanisms for the defense industry. Now, several agencies will simultaneously monitor how public funds allocated to new weaponry for the army are spent.
One of Shoigu's first steps as defense minister was to increase the number of employees working in equipment acceptance inspection to 25,000 in order to make cooperation between the military and the defense industry more effective. Representatives of the military at defense industry companies monitor product quality, which significantly reduces the number of complaints before the products are brought into service.
In early 2015, by presidential decree, chief designers were put in charge of work on creating strategically important systems. There will be no more than 20 such designers, but their status and responsibilities will increase. As such, Russia's defense industry has returned to something resembling a Soviet-era system of command: at the time chief designers heading the design offices made decisions concerning the direction of R&D in creating advanced technology.
Conscripts and professionals
The Soviet structure of the armed forces was completely dismantled as a result of the military reforms of 2008 under Serdyukov. The large divisions, which complicated the command structure, were replaced by mobile brigades that meet the requirements of modern warfare.
The army itself is becoming more professional and gradually moving away from universal conscription. There are already more professional members of the forces than conscripts.
However, Russia is not in a position to abolish conscription altogether. Its economy today cannot support a fully professional army and in any case the number of professional members of the forces is 400,000 less than the million proposed by the country's military leaders. Apart from the U.S., no country in the world today has the capacity to maintain a professional army of one million soldiers.
Unconventional methods are being used to increase numbers. For instance, following an idea from Shoigu, so-called "research squadrons" have been set up in the army. These are units where conscripts can engage in defense research while completing their military service. The Ministry of Defense expects that soldiers from these research squadrons will be more willing to sign professional contracts after completing their compulsory military service.
Military education
Military education is one of the best and most prestigious forms of education in Russia. This goes for both secondary military education (such as the cadet corps and the Suvorov and Nakhimov schools) and higher military education (including academies, military universities and advanced military institutes).
All of these academic institutions have their own specialization - air, sea, engineering or command. The military higher education institutions have one huge advantage over their civilian counterparts: graduates from a military higher education institution have two areas of expertise (military and civilian), making it easier for them to find work.
Young women can also enter military schools. For example, at the level of cadet education in Russia there is an elite boarding school for female Ministry of Defense pupils and some military higher education institutions allow women to study certain specialist military fields including communications, military medicine and certain command positions.
From 2010 to 2012 some military institutions temporarily ceased taking in new students because of the reduction in the number of officers in the armed forces, but they are now accepting them again.
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#21
Moscow Times
January 13, 2016
Russian-Chinese Trade Plummets in 2015
The volume of Chinese exports to Russia fell by 34.4 percent last year to $32.9 billion, the TASS news agency reported Wednesday, citing China's customs department.
Trade turnover between China and Russia dropped by 27.8 percent to $64.2 billion in 2015. The volume of Russia's exports to China declined last year by 19.1 percent to $31.4 billion, according to Huang Songping, a spokesman for the Chinese customs department.
"Last year was relatively challenging and difficult for international trade. We think this year is going to be the same in some ways," Huang Songping was quoted by the news agency as saying.
The future of Russian-Chinese trade will depend on the economic environment in the two countries and on the situation in the world in general, he said, according to TASS.
Russia started to expand economic cooperation with China after trade and investment between Russia and the West dropped sharply after sanctions were imposed on Russia by the U.S. and the EU over the country's involvement in the Ukraine conflict.
In 2014, trade turnover between Russia and China increased by 6.8 percent to $95 billion, according to TASS.
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#22
Russia Beyond the Headlines
www.rbth.ru
January 12, 2016
Press Digest: Trade wars continue between Russia and Ukraine
RBTH presents a selection of views from leading Russian media on international events, featuring reports on the continued worsening of trade relations between Russia and Ukraine, the effects that the weakened Chinese economy is having on Russia and an unexpected boom in domestic Russian consumption.
ANNA SOROKINA, RBTH
Kiev introduces retaliatory embargo on products from Russia
Starting this week, trade relations between Ukraine and the Russian Federation are completely blocked writes the centrist newspaper Nezavisimaya Gazeta. A mutual ban on imports has come into force.
It became known in December 2015 that the Russian Federation would introduce a trade embargo on Ukrainian products from January 1. The need for protective measures was motivated by the implementation of a free trade zone agreement between Ukraine and the European Union.
Ukrainian Prime Minister Arseniy Yatsenyuk promised a tough tit-for-tat response to Russia's actions. The Ukrainian government decided that beginning on January 10 the importation of some Russian goods, including meat, grain, baked goods, vodka and cigarettes would be banned. Supplies of household chemicals and some heavy industrial products are also affected by the ban.
Natalia Mikolskaya, Ukraine's trade representative, said that Kiev estimated the potential loss on the abolition of trade with Russia to be at a maximum of $600 million.
However, new restrictions on transiting through Russia from Ukraine, which became known on January 4, are a severe blow to Kiev. According to the Ukrainian government, Ukrainian suppliers face the possibility of being unable to perform contracts with Kazakhstan, Uzbekistan, Kyrgyzstan, Azerbaijan, Mongolia and China as a result of this decision.
Mikolskaya said that Kiev intends to appeal to the WTO. "Ensuring the freedom of transit is the responsibility of each country," she said.
In addition, Mikolskaya said that the Ukrainian side intends to hold consultations with the EU this week on the introduction of retaliatory measures against Russian transit options.
China falls and pulls down Russia
On January 11 prices continued to fall on the world's hydrocarbon market, the Svobodnaya Pressa news and commentary website reports. Experts attribute the continuation of the 2015 downward trend to unfavorable assessments of prospects for the Chinese economy.
The main reason for this is that China is the world's second-largest oil consumer after the United States. Accordingly, the economic condition of China has a direct impact on the level of demand on oil markets.
In the case of the continuation of the incipient decline, the oversupply problem for energy-exporting countries - including Russia - will worsen.
Alexei Panin, the deputy director general at the Center for Political Information commented on how it will affect the Russian economy.
"After an increase in confrontation with the West and the beginning of the sanctions war, we expected to redirect our economic ties to China and neighboring countries in the region," Panin says. "In other words, to make the notorious 'pivot to the East.'"
The greatest emphasis was on trade with China, the expert says. "However, the trade turnover between our countries not only did not increase last year, but even fell by a third. And the situation is similar throughout the Asia-Pacific region," says Panin.
But overall Panin doesn't expect too many agreed upon projects to collapse. "I don't think that the economic slowdown in China will lead to the freezing of joint energy projects," Panin says. He added that such projects are insignificant given the scale of the Chinese economy.
Shops instead of the seaside
Fewer and fewer Russians can afford travelling abroad. Many that used to go abroad for holidays stayed home on the eve of 2016, the RBK business daily reports. Domestic shops and restaurants profited as a result.
The outbound tourist flow from Russia decreased in 2015. According to the estimates of Rostourism, a federal tourism agency, it fell by 31 percent in the first nine months of the year. According to an online survey by the OMI online market research group commissioned by RBK, among the Russian population, only 1.9 percent of Russians have foreign trips planned compared to 2.9 percent at the end of 2014.
The fact that many Russians stayed home helped retailers to increase sales, says Sergei Sarkisov, co-owner of the Econika retail footwear chain. Even those that traveled around Russia "also walked through shopping centers," Sarkisov added.
According to the estimates of the internet service Momondo, the most popular domestic destinations during the holidays were Moscow, Sochi, St. Petersburg, Simferopol and Mineralnye Vody.
The number of people visiting Rio shopping centers in the Moscow Region during the January winter holidays increased by as much as 20 percent compared to the same period last year, said Zara Adzhemyan, a spokeswoman for the Tashir Group, a real estate firm that owns numerous shopping facilities.
"The biggest growth was shown by entertainment - cinema, children's play areas and restaurants," Adzhemyan said.
Cultural institutions have also been noticing a boom. The press service of the Tretyakov Gallery noted an unprecedented influx of visitors, although this might be due to an exhibition connected with the 150th anniversary of the birth of Russian painter Valentin Serov.
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#23
Washington Post
January 13, 2016
Afghan forces to receive Russian arms as Moscow seeks expanded role
By Michael Birnbaum
Michael Birnbaum is The Post's Moscow bureau chief. He previously served as the Berlin correspondent and an education reporter.
MOSCOW - Russia will ship small arms to Afghanistan next month, a top diplomat announced Wednesday, expanding Moscow's role as the United States winds down its military mission even as the Taliban and other militants appear to gain ground.
Russia is concerned that extremist factions in Afghanistan could increasingly spill over the northern borders into former Soviet Central Asian countries where Russia has a major military presence.
The decision also bolsters Russia's role a nation that was a Cold War-era ally and the scene of Moscow's disastrous military intervention in the 1980s.
[Russia shares intelligence with Taliban to undercut the Islamic State]
It comes at a time at which Russia is expanding activities outside its borders, conducting wide-ranging airstrikes in Syria and pushing for a bigger international role to resolve a series of conflicts in Afghanistan, Syria and elsewhere.
The shipment of small arms will take place in February, but Russia does not have further plans to ship other weapons, said President Vladimir Putin's special envoy for Afghanistan.
"For now this is quite sufficient," the diplomat, Zamir Kabulov, told the Interfax news agency.
The United States and its allies have withdrawn most of their military presence over the last year, leaving Kabul searching for new partners in its efforts to fend off the Taliban.
Russia has trained Afghan air force pilots in the years since a U.S.-led alliance toppled the Taliban following the Sept. 11, 2001, terror attacks. But Afghan officials in recent months have pushed Moscow to increase its aid.
Russia has sent arms to Kabul after being paid by intermediaries, including India and the United States. Last fall, a series of Afghan officials visited Moscow to request helicopter gunships and heavy weaponry.
In 2011, the Department of Defense signed a contract with Russia's arm sales agency, Rosoboronexport, to supply the Afghan military with Russian-made helicopters. The agency had been hit with Western sanctions after Russia's military incursion into Ukraine, but in November it was granted a U.S. exemption to maintain the helicopters.
Putin said in October that the situation in Afghanistan was "close to critical" and has signaled an openness to increasing his nation's role there.
But any significant escalation would come with extreme caution from Moscow, where memories of Afghanistan as a graveyard for Soviet troops remain powerful.
The 1979-1989 war there cost thousands of Soviet military lives, and was a factor in the collapse of the Soviet Union. The Soviet army battled insurgent forces that were backed by the West and attracted Islamists fighters such as Osama bin Laden.
Even now, military casualties are one of the most politically sensitive subjects in Russia.
Last month, Russia announced that it had begun limited information exchange with the Taliban in order to combat the Islamic State, which has a growing presence in Afghanistan. The unusual arrangement came as Russia grows increasingly concerned that the Islamic State could pose a domestic terrorism threat.
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#24
Russia has no plans for quasi-state in Syria, contrary to Erdogan's claims
By Tamara Zamyatin
OSCOW, January 13. /TASS/. Turkish President Recep Tayyip Erdogan's claims to the effect Russia's aim in Syria is to create a mini-state around Latakia province is nothing but a propaganda move expected to weaken Moscow's foothold at Syrian crisis settlement talks or an attempt to propose a way of partitioning the country, polled pundits have told TASS.
As he addressed Turkish ambassadors in Ankara on Tuesday, Erdogan alleged that Russia had plans for creating a small state around Latakia province, and for that purpose Moscow was dealing strikes against Syria's Turkomans populating the area in an attempt to oust them from that territory. Earlier, in September, Erdogan claimed that Syrian President Bashar Assad's aim was to create a dwarf state taking up a tiny 15% of what Syria is today and incorporating Damascus, Hama, Homs and Latakia - the territories populated by Alawites, Assad's coreligionists.
Alawites, who currently number one and a half million to three million, constitute about ten percent of Syria's population. They are compactly settled in strategically important coastal provinces of Tartus and Latakia. President Assad, his family and most members of his inner circle are Alawites.
"Erdogan's fantasies about Moscow's alleged plans for creating an Alawite state in Syria have nothing to rely on, but for the fact that Russia's air group is based in Latakia and been dealing strikes against the line Latakia-Tartus-Hama-Homs with the aim to recapture from the militants 375 kilometers of the strategic road Damascus-Latakia. But Russia is firmly committed to the principle of preserving Syria's territorial integrity. President Vladimir Putin explained this in very clear terms at the UN General Assembly session late last year," the senior research fellow at the Oriental Studies Institute under the Russian Academy of Sciences, Vladimir Akhmetov, told TASS.
He believes that the conspiracy theory about Moscow's plot to create an Alawite state in Syria, which some media in the West have been mulling lately and the Turkish president has been so quick to support is timed for the forthcoming round of the International Syria Support Group talks, due in Geneva on January 25. Russia plays a key role in the talks alongside the United States. "Erdogan's purely propagandistic move against the Kremlin is expected to strip Russia of support from other participants in the Syrian settlement talks and to weaken its positions in international affairs in general," Akhmetov said.
"Russia is not interested in Syria's territorial split. Even if some politicians in the Near and Middle East supported the idea of forming some new state-like entity around Latakia, that quasi-state would be unable to remain self-sufficient. And there is no reason why Russia should overburden is budget, already experiencing a deficit, with responsibility for several million people," Akhmetov believes.
"It is no less important to remember that nobody in the world will ever agree to recognize a new state in Syria, if it is established in an illegal way. The world community is hardly prepared to create such a precedent that would split the Arab world, where the curve of tensions between the Sunnis and the Shiites is already white-hot. Russia has no reason for spoiling relations with the Arab world and with Israel. In the final count, if the dismembering of Syria becomes a reality, the blame will be placed squarely on Russia. Nobody will take the trouble to recall who had started this turmoil that eventually brought the Islamic State into being," he added.
The president of the Middle East Institute, Yevgeny Satanovsky, suspects that Erdogan's claims about Moscow's alleged plans regarding creation of a mini-state of Alawites in Latakia as a proposal addressed to Russia: 'Feel free to get the Alawite lands, but let us have the territories of Syria's Turkomans.'
"If Bashar Assad were to choose between the risk of Alawites falling victim to genocide and the creation of a mini-state, he would possibly accept. But now the balance of power has begun to change in his favor with support from Russia's Air Group. In the meantime the real purpose of Russia's participation in the operation in the Middle East against international terrorism is not Latakia or the Alawites, but protection of its own security," Satanovsky said.
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#25
Washington Post
January 13, 2016
America may be doomed to cooperate with Putin
By David Ignatius, Opinion writer
Russia is emerging as an essential diplomatic and security partner for the United States in Syria, despite the Obama administration's opposition to Moscow's support for President Bashar al-Assad.
Russian-American cooperation on Syria now includes regular diplomatic, military and intelligence contacts. Moscow and Washington have evolved a delicate process for "deconfliction" in the tight Syrian airspace, where accidents or miscommunication could be disastrous.
Administration officials see working with Russia as the best of a bad set of options. An administration that has had trouble living with Russian President Vladimir Putin, especially after his actions in Ukraine, finds that it can't live without him in Syria. Washington's hope is that Putin will support U.S. efforts to negotiate a cease-fire because he concludes it's the only way to avoid a quagmire.
"While we remain skeptical of Russian interests and intentions in Syria, we also believe that they will be an essential part of any political solution to this conflict," one senior administration official explained Tuesday. "The degree of communication we have with them reflects that view."
Putin this week seemed to take a public step toward the U.S. position that Assad must go eventually. In an interview with the German newspaper Bild released Tuesday, Putin hinted that he might grant Assad asylum. He said granting asylum to National Security Agency leaker Edward Snowden "was far more difficult than to do the same for Mr. al-Assad." The Russian leader also said Assad "has made many mistakes in the course of the Syrian conflict."
Putin's reference to asylum was taken "very seriously" by the White House, a second administration official noted Tuesday. "I think he was sending a signal about where he stands" that was consistent with what Russian officials have been telling the United States in private, the official said.
Syria was also the subject of a phone call Monday between Secretary of State John F. Kerry and his Russian counterpart, Foreign Minister Sergei Lavrov. They talked about plans for a Jan. 25 U.N.-sponsored meeting in Geneva to organize a common opposition front. Kerry and Lavrov are likely to meet in Europe next week for more talk about the Syria negotiations, including how to keep Iran and Saudi Arabia on board.
Another Russian-American channel involves CIA Director John Brennan. His conversations include exchanges about Islamic State terrorists that threaten both countries, and crises such as the shoot-down of a Russian jet by Turkey in November.
Brennan explained the counterterrorism dialogue in November at the Center for Strategic and International Studies. "We've been exchanging information. I think it needs to be enhanced. But I am determined to continue to work with my Russian counterparts because of the importance that I think we each can bring to this issue in terms of our insights, our information, our data, and sharing it."
An important booster of Russian-American cooperation is Jordan's King Abdullah II. U.S. officials believe the monarch has sought a special relationship with Putin and hopes soon to coordinate military activities with Russia against the Islamic State. Already, there is a joint Jordanian-Russian military coordination center in Jordan; the Jordanians hope it could be the bridge to a cease-fire in the south between rebels and the Assad regime, and a coordinated assault on the Islamic State. So far, though, the Russians have continued pounding the anti-Assad rebels in southern and northern Syria alike.
For the past year, Jordanian officials have been discussing with their U.S. counterparts the creation of a forward operating base inside Syria that could be a rallying point for Sunni forces against the Islamic State. Described as a modern-day "Fort Apache," this base would be organized by special forces from Jordan and other Western and Arab coalition partners; U.S. officials, long skeptical of such a move, appear more supportive.
The crowded skies over Syria pose a special challenge. The United States and Russia have agreed on a memorandum of understanding that mandates "maintaining professional airmanship at all times, the use of specific communication frequencies and the establishment of a communication line on the ground," according to Lt. Col. Kristi Beckman, a spokeswoman at the U.S. Central Command . U.S. and Russian pilots operate at "safe distances," she said, and if Syrian planes are near, "it is standard practice for us to stand off until the airspace is clear."
For President Obama, the willingness to work with Putin is an act of foreign policy realism or desperation, depending on your point of view. Some would argue that in Syria, the two converge.
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#26
Russia to take no part in Nuclear Security Summit in Washington - Foreign Ministry
MOSCOW. Jan 13 (Interfax) - Nuclear Security Summits "have played their role" and their political agenda has been exhausted; Russia has stopped preparing for the 2016 Nuclear Security Summit in Washington DC, Russian Foreign Ministry spokesperson Maria Zakharova said.
"Our country has taken part in three Nuclear Security Summits, those held in Washington (2010), Seoul (2012) and the Hague (2014). The summits have played their role. Considerable progress has been made in the strengthening of nuclear security. However, the political agenda of these summit meetings has been exhausted by now," Zakharova said in her reply to the media question about the upcoming Nuclear Security Summit posted on the Russian Foreign Ministry website.
"There are no objectively pending breakthrough decisions requiring the involvement of chiefs of state and government in the field of international nuclear security cooperation," the Russian Foreign Ministry spokesperson said.
"As known, the President of the Russian Federation, Vladimir Putin, has decided to stop our participation in preparations for the 2016 summit," Zakharova said.
At the same time, "Russia unwaveringly supports the strengthening of physical nuclear security," she said.
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#27
Wall Street Journal
January 13, 2016
U.S. Presses Forward with Missile Defenses, Despite Russia Concerns
By JULIAN E. BARNES
A senior American arms-control negotiator on Tuesday criticized Russia's military buildup and defended the development of NATO's missile defenses, despite objections from Moscow.
Frank Rose, the U.S. assistant secretary of state for arms control, was critical of Russian military build up in Kaliningrad, the Russian exclave bordering Poland and Lithuania. He also warned Moscow against putting nuclear weapons in Crimea, saying such a move would be "inappropriate and illegal."
"We are very concerned about numerous activities Russia is involved with including in Kaliningrad and that is having an impact on our thinking," Mr. Rose said.
Moscow in recent days has talked about its effort to modernize its strategic missile forces, including bringing five new regiments online this year. Those efforts have worried American officials in the U.S. and Europe, who have repeatedly criticized what they say is a military build up in Kaliningrad, Crimea and elsewhere.
"We don't want to get in an action-reaction cycle with Russia" Mr. Rose said. "But let me be clear the United States will do what is necessary to protect our allies and friends in Europe."
While Mr. Rose praised Moscow's cooperation with the New START treaty he repeated Washington's allegations that Russia has violated the Intermediate Nuclear Forces treaty with its missile tests.
Mr. Rose said the U.S.-built anti-ballistic missile radar in Romania should be active this spring, further expanding the U.S. and NATO missile defense system. Last year the U.S. added a fourth and final missile-defense-capable destroyer to its base in Rota, Spain to increase its ability to protect Europe.
Asked about Mr. Rose's comments, a Russian official noted that Russian President Vladimir Putin has continued to raise objections to the missile defense system. This week Mr. Putin said again that with the Iranian nuclear deal, the stated rationale for the system has disappeared. "Apart from NATO's expansion eastwards, the anti-ballistic missile system has become an issue in terms of security," Mr. Putin said in an interview with the German newspaper Bild.
Mr. Rose repeated the U.S. contention that the missile defense system being deployed by NATO countries could not intercept Russian warheads and that Iranian ballistic missile development meant the technology is still needed.
"The Russians know our missile defense capabilities don't have the ability to intercept their ballistic missiles," Mr. Rose said. "Their long-term concern is that in future, absent legally binding constraints, we will develop systems that could potentially negate their deterrent."
Mr. Rose said the U.S. could not agree to any constraints on its system.
"They need legally binding limitations on US and NATO missile defenses. and the U.S. has been very, very clear, we cannot accept that," he said.
Nevertheless, despite tensions between Russia and the U.S., he rejected the idea that further advancement of the system could deepen mistrust between Brussels and Moscow.
"I don't think the deployment of these systems is destabilizing," he said. "Limited numbers, limited capabilities."
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#28
www.rt.com
January 13, 2016
Russia concerns won't restrict NATO missile defense - US official
NATO will carry on setting up missile defense sites across Eastern Europe despite Russian calls to limit them, a senior US State Department official said, citing a "threat posed by North Korea."
"We are not going to agree to limitations on our systems because we need to have the flexibility to deal with the dynamic and evolving threat," Frank Rose, deputy assistant secretary of state for arms control, told journalists at NATO HQ in Brussels on Tuesday.
"The key Russian concern ... is that in the future, absent legally binding constraints, we will develop systems that could potentially negate their strategic deterrent," Rose added.
Rose admitted Russian officials had repeatedly voiced concerns about the kinds of weapons brought in to Europe by the US, such as ground-based and sea-based missile defense interceptors. Continuing to build up the missile defenses in Europe off Russia's borders, NATO insists North Korean ballistic missiles are likely able to reach the US.
"North Korea has large numbers of ballistic missiles and they test them often," Rose said. While there is considerable doubt that last week's detonation by Pyongyang was a fully-fledged test of a hydrogen bomb, Washington already warned North Korea is seeking technology to build an intercontinental nuclear-armed ballistic missile.
Moscow has repeatedly argued that the secretive country possess insufficient technological know-how to develop strategic weapons capable of reaching the US.
NATO's ballistic missile defense, in place since 2010, has been a source of tension between Moscow and the US-led alliance.
Previously, Washington has announced plans to set up ballistic missile defense (BMD) sites in Central and Eastern Europe, most notably its ground-based Aegis Ashore system. It early December, an Aegis Ashore facility passed an interception test off the coast of Hawaii.
The Aegis Ashore Missile Defense Test Complex, owned by Lockheed Martin and located southwest of Kauai, Hawaii, at the US Navy's Pacific Missile Range Facility, fired a Standard Missile-3 Block IB, at a target launched by a C-17.
A week later, an Aegis Ashore system went online at Romania's Deveselu airbase, comprising SPY-1 radar and vertical-launch SM-3 long-range interceptor missiles.
Despite NATO's ongoing missile defense build-up, Russia's supreme military commanders note no existing US missile shield can withstand a potential Russian attack by intercontinental ballistic missiles.
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#29
Antiwar.com
January 13, 2016
The Biggest Threat
It's not ISIS
By Justin Raimondo
Justin Raimondo is the editorial director of Antiwar.com, and a senior fellow at the Randolph Bourne Institute. He is a contributing editor at The American Conservative, and writes a monthly column for Chronicles. He is the author of Reclaiming the American Right: The Lost Legacy of the Conservative Movement [Center for Libertarian Studies, 1993; Intercollegiate Studies Institute, 2000], and An Enemy of the State: The Life of Murray N. Rothbard [Prometheus Books, 2000].
The headlines are filled with the latest alleged threat posed by ISIS - a band of savages thousands of miles away that, at most, has the capacity to inspire the crazies in our midst to acts of relatively smalltime violence.
Relative, that is, to the real threat of violence, which emanates from our own "defense" policies as formulated in Washington, D.C. - the very real and growing threat of nuclear war.
That ominous possibility, which hung over us during the cold war era - and spiked during the truly scary Cuban missile crisis, when the fate of the world hung on a very thin thread - never really went away. For as long as the US and the other members of the nuclear "club" possess these weapons, the chance that they might someday be used still exists. And those chances have increased lately due to the new cold war with Russia, started and ramped up by the War Party over Ukraine and the Russian decision to take out the Syrian terrorists. Ongoing arms talks have been stalled due to the radical breakdown of Russo-American relations, and joint efforts to trace and secure "loose nukes" - weapons and materials that may have been "lost" in the post-Soviet chaos - have ground to a halt.
As NATO sends troops and heavy weaponry to Eastern Europe and conducts massive military exercises within spitting distance of the Kremlin, plans to "modernize" and upgrade the US nuclear arsenal in Europe and Turkey are proceeding apace. The B61 nuclear bomb is being outfitted with flexible fins, which will enable it to hit targets with more precision: also, the upgrade means that the impact - the nuclear yield - can be adjusted. These weapons are due to be shipped to bases in Europe and Turkey in 2024 - making the use of nukes more "thinkable," as this New York Times piece puts it.
In response, Russian defense minister Sergei Shoigu announced yesterday that "Russia will create three new military divisions on its Western flank in 2016 and bring five new strategic nuclear missile regiments into service."
The miniaturization of nukes is a trend that encourages what was previously considered monstrous: "preemptive" nuclear strikes by the US. Gen. James Cartwright, former vice chairman of the joint chiefs of staff, has raised the horrific scenario of military officials seeing smaller scale nukes in a new light, asking "Does it make them more usable?"
Surely the answer is yes.
It isn't just us peaceniks who are raising questions about the Obama administration's "modernization" plan. The growing list of opponents includes:
Andrew C. Weber, former assistant secretary of defense.
Philip E. Coyle III, former chief of nuclear weapons testing at the Pentagon.
Steve Fetter, former assistant director at-large of the Office of Science and Technology Policy.
William J. Perry, former defense secretary during the Clinton administration.
President Obama campaigned on a platform of reducing - and eventually ending - US dependence on nuclear arms as the linchpin of US defense policy. Yet what we have gotten is merely a quantitative reduction, with an accompanying qualitative ramping up of our nuclear strike force in terms of its sheer deadliness - and the likelihood of it being used.
The cost of the "modernization" program - which is even now racing through Congress with almost no opposition - is measured in the trillions of dollars. And the fact is that we don't need this nuclear "triad" - a throwback to the dawn of the nuclear age, when intra-bureaucratic infighting between the three branches of the military resulted in nukes for all. Intercontinental ballistic missiles are a relic of the cold war era: a commission headed by Gen. Cartwright recommended scrapping them entirely. Bill Perry concurs. "We're on the brink of a new arms race," says Perry.
In short, the world is rapidly becoming a much more dangerous place. And it's not because of ISIS, or the "terrorist threat" - it's due to our policy of global intervention, which requires a "forward stance" that includes rattling the nuclear saber.
With over 7,000 nuclear weapons in our arsenal, many of them stationed in a ring around Russia extending from Turkey to the Netherlands, Belgium, Italy, and Germany, it is clear that America's nukes are not defensive in nature. They are one more way we threaten those who defy Washington's will. Under George W. Bush, US nuclear doctrine clearly stated that first use is not out of the question: under Team Bush, nukes could've been launched to make sure we won what seems like a losing war - say, in Afghanistan, for example. President Obama has supposedly revised this policy, but the movement toward nuclear "modernization" renders his promise less credible. And who is to say what a future President might do - say, President Trump or President Cruz? The latter has stated he wants to see if sand can glow in the dark - do we want a "modernized" nuclear force as long as he and his ilk have a chance at the White House?
Why do we have over 7,000 nukes in our arsenal - enough to destroy the world several times over? Why are the contracts for "modernization" speeding through the procedural hoops faster than anyone can keep track of them?
The answer is that Washington is the epicenter of an aggressive empire that seeks to impose its will on every continent, and those 7,000-plus nukes are arrows in its quiver. They are meant to terrorize recalcitrant countries whose leaders don't ask "How high?" when Washington says "Jump!" They cement our status as the self-appointed enforcer of "world order." And they fatten the wallets of the armaments industry, which uses its considerable resources to lobby for yet more weaponry in spite of our fragile financial condition.
Obama's pledge to reduce and eventually abolish nuclear weapons was worse than a fraud - it was a lie. We are seeing that now as he presides over the development of a whole new generation of nuclear arms. The new arms race is proceeding apace under a bipartisan consensus: together the two wings of the War Party are leading us to the day when nuclear weapons will actually be used, either deliberately or due to a tragic miscalculation.
Will Americans wake up before it's too late?
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#30
The National Interest
January 12, 2016
U.S. Air Force Fears Russia's Lethal S-400 in Europe
By Dave Majumdar
Dave Majumdar is the defense editor for the National Interest.
The U.S. Air Force is worried about Moscow's deployment of advanced integrated air defenses in Kaliningrad, the Russian exclave between Poland and Lithuania.
Moscow started to deploy new the Almaz-Antey S-400 Triumf in the isolated Baltic Sea exclave as early as 2012, according to Russian media. While Europeans expressed qualms about the deployment early on, it was not until late 2015 that the U.S. military openly voiced its concern about the positioning of those advanced weapons systems. Weapons like the S-400, after all, are potent enough to render huge swaths of neighboring Poland and Lithuania into de facto no-fly zones for conventional non-stealthy aircraft if a conflict were to break out.
"It is very serious," Gen. Frank Gorenc, commander of U.S. Air Forces in Europe told the New York Times this week. "Obviously, we continue to monitor it. They have every right to lay that stuff out. But the proliferation and the density of that kind of A2/AD [anti-access/area denial] environment is something that we're going to have to take into account."
According to Gorenc, Russian forces have deployed a layered integrated air and missile defense system in the Kaliningrad exclave of Russia. The weapons-which Gorenc didn't specifically identify-are "layered in a way that makes access to that area difficult." Gorenc is likely referring to Russia's Voronezh-DM phased array VHF-band early warning radar, S-400 battalion, S-300s missiles and the other air defense systems that Moscow is thought to have positioned in the Oblast. With the S-400's 250-mile range, Russian forces could engage aircraft flying over as much as a third of Polish airspace.
Russia has also deployed sizable ground forces in Kaliningrad, including three fully manned Russian combat brigades-one elite naval infantry brigade and two motor rifle brigades. Those mechanized infantry forces are backed up by an artillery brigade armed with as many as fifty-four big guns. Air power is provided by the 7054th Air Base-which hosts a variety of fighters, strike aircraft and helicopter gunships. The total complement is more than 10,000 troops.
Moscow might have also permanently deployed nuclear-capable 9K720 Iskander-M ballistic missiles with a roughly 310-mile range with the Kaliningrad-based 152th Missile Brigade. The weapons-which are highly accurate with a circular probability of less than fifteen feet-come in at just below the limits set by the Intermediate Nuclear Forces Treaty. However, some reports suggest the weapons have an actual range of 435 miles.
While the military forces in Kaliningrad might serve to intimidate Russia's neighbors during peacetime, from Moscow's perspective, the deployment is likely viewed as defensive. With the demise of the Soviet Union, Kaliningrad is isolated from the rest of Russia's territory. The only direct access to the enclave is via the sea or a potentially vulnerable rail-link that crosses through Belarus and Lithuania. Thus during wartime, Kaliningrad would be extremely vulnerable to attack.
It's likely, then, that Russia is effectively fortifying the exclave in the off chance of a NATO attack on Kaliningrad. In that case, the military forces deployed there would have to hold out until Russian forces from the 'mainland' can relive those troops-which would have to come through Belarus and then punch through Lithuania.
Paul Saunders, executive director of The Center for the National Interest-the foreign policy think-tank that publishes this magazine-said that Russia's fortification of the Kaliningrad exclave was predictable following NATO's eastward expansion.
"The Russians explicitly threatened to deploy Iskander ballistic missiles to Kaliningrad following NATO's eastward expansion. At the time, that was dismissed as a lot of bluster," Saunders said. "It turns out, of course, it wasn't just a lot of bluster."
In response to the Russian air defenses in Kaliningrad, the U.S. Air Force is working on developing tactics, techniques and procedures to deal with those systems in the near term. Longer term, the U.S. Air Force is likely to permanently deploy a substantial number of stealthy Lockheed Martin F-35 Joint Strike Fighter to the region. Indeed, the service has already started periodic deploy the stealthy Lockheed F-22 Raptor air dominance fighter to Europe to counter any future threat.
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#31
Russia Beyond the Headlines
www.rbth.ru
January 13, 2016
Why Vladimir Putin won't go to Davos
The Russian delegation at the Davos Forum will be headed by Yury Trutnev, a deputy prime minister and the Presidential Plenipotentiary Envoy to the Far East. According to experts, this means that Russia will primarily focus on the presentation of Asian projects at the forum. Neither the president nor the prime minister will travel to Switzerland.
ALEXEI LOSSAN, RBTH
The Russian delegation at the World Economic Forum, to be held in Davos, Switzerland from January 20-23, 2016, will be headed by Yury Trutnev, a deputy prime minister and the Presidential Plenipotentiary Envoy to the Far East. Trutnev was previously in charge of conducting an economic forum in Vladivostok.
This information was confirmed to the Russian business daily Vedomosti by Natalia Timakova, a spokeswoman for Russian Prime Minister Dmitry Medvedev.
According to experts, this decision indicates that the main theme for the Russian delegation in Davos will be the "pivot to the East," an approach to increase the cooperation between Russia and Asian countries, which was enunciated in 2014.
"Russia is ready to demonstrate to investors from Asia its readiness for the joint development of various projects primarily in the Far East, since this region corresponds to their economic interests," said Georgy Vashchenko, head of Russian stock market operations at the Freedom Finance investment company.
According to Vashchenko, projects in the energy, oil and gas and aviation sectors are most likely to be discussed.
It became known in early January 2015 that one of Russia's largest steel corporations, Norilsk Nickel, will sell 13.33 percent of its Bystrinsky deposits - Russia's largest reserves of copper - to Highland Fund, a consortium of Chinese investors, for $100 million.
Main objectives
Timakova told Vedomosti that in Davos Russia will promote the Asia-Pacific agenda and the Far Eastern Economic Forum. This will form the bulk of Trutnev's work there.
As part of the review session on Russia, a discussion on macroeconomics and low oil prices, new trade and investment associations in Asia and Russia's role in the international security system are planned.
The panelists will include the Central Bank's chief, Elvira Nabiullina and former Finance Minister Alexei Kudrin, who is widely regarded as a strong advocate for liberal reforms in Russia.
According to Anatoly Vakulenko, an analyst at the Finam investment holding company, Russian proposals will be addressed not only to Chinese investors, since China has already had ample opportunity to get acquainted with the Far Eastern projects and investment opportunities connected with them.
Therefore, the proposals will be directed primarily to European and possibly Middle Eastern investors, Vakulenko added.
The possibility of cooperation
In 2015, the forum's Russian delegation was headed by First Deputy Prime Minister Igor Shuvalov and by Deputy Prime Minister Arkady Dvorkovich the year before that.
The forum's organizers sent invitations to Russian President Vladimir Putin and Prime Minister Dmitry Medvedev, but they have not participated in the forum over the last few years.
However, the forum is regularly attended by heads of state and government. In 2009, the Russian delegation in Davos was led by Putin, who was the prime minister at the time, and by Medvedev in 2013.
According to Vashchenko, the government deliberately distances itself from the Davos forum, as recently "it has been unduly used only as a platform for the criticism of Russia's foreign and domestic policy by foreign participants from Western countries."
German Chancellor Angela Merkel also declined to participate in this year's forum.
In any case, according to Vakulenko, "members of the delegation are likely to emphasize the notion that the policy of economic sanctions against Russia has proved to be ineffective, causing quite serious damage to the European economy and still failing to force Russia to change its political course."
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Who is Yury Trutnev?
Yury Trutnev was appointed deputy prime minister and the presidential envoy to the Far East in 2013.
In September 2015, he conducted the first East Economic Forum in Vladivostok, which resulted in more than 80 large investment contracts worth over 1.3 trillion rubles ($17.2 billion).
Trutnev previously worked as an aide to the Russian president, and headed the Ministry of Natural Resources from 2004 to 2012. This ministry is responsible for issuing licenses for the development of oil fields in Russia, among other tasks.
In 2009 and 2012, he was listed as the richest member of the government, earning 155 million rubles (about $5 million according to the exchange rate at the time) and 210 million rubles ($7 million at the time), respectively.
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#32 Russia Direct www.russia-direct.org January 12, 2016 Ranking of Russian Studies programs in the US 2016 to be released in March Spread the word: Our new Russian Studies ranking for 2016 is in the works, with a release scheduled for March 2016. By Alexey Khlebnikov The Russia Direct team has started working on its second annual Ranking of Russian Studies programs in the U.S. We intend to attract more attention to the issues that Russian Studies programs are experiencing in the U.S. We truly believe that Russian Studies programs in the U.S. need a boost, which can lead to a deeper understanding of Russia by Americans. The ongoing crisis in relations between Moscow and Washington stems, in part, from the lack of expertise and interest in the field within the U.S. political establishment and broader American society. Our first Ranking of Russian and Post-Soviet Studies in the U.S. was released in April 2015 and received positive feedback from U.S. and Russian scholars, politicians and professionals working in the field. We also received comments that helped us to improve the methodology of the ranking, part of our process of continual improvement. Our evaluation methodology includes two surveys as key parameters - the Reputation Survey and the Employers' Survey. The Reputation Survey is distributed among international experts and scholars to value the reputation of a program under consideration while the Employers' Survey measures the employment opportunities for recent graduates, based on the survey distributed among potential employers. We urge members of the relevant audience to take these two short surveys. If you are an educator, Russian Studies scholar or expert, fill out this survey: https://www.surveymonkey.com/r/CQRLS35If you are a potential employer for Russian Studies graduates, fill out this survey: https://www.surveymonkey.com/r/2KL9WHPAdvertise with us This year we are offering an opportunity for universities and research centers to advertise with our Ranking. For more information and rates, please visit our advertising page here: http://www.russia-direct.org/about-us/advertising-and-research#media-kit |
#33 Russia Beyond the Headlines www.rbth.ru January 12, 2016 What's so Russian about Russian food? Blogger offers cultural insights to the country's cuisine. ALEKSANDRA EFIMOVA, SPECIAL TO RBTH [Photos here http://rbth.com/blogs/leadership._inspiration._achievement/2016/01/12/whats-so-russian-about-russian-food_558755] On a recent trip to Russia, I picked up three cookbooks dating back to the 1800s that were originally written for housewives of that time. Although updated for the modern cook, these books still show their roots, including such valuable information as how to choose and clean the best rabbit for cooking! Perusing these books I was reminded of how strongly the kitchen is at the center of the Russian lifestyle and point of view. People often ask me, "What is Russian food like?" and that's an interesting question. Russia is a vast country, with 11 time zones and multiple climates from northern to southern, from forest to seacoast, from flatlands to mountains, so there is a lot of variety in cuisine. An even more interesting question might be, "What is Russian eating like?" because across all those time zones and climates, in the most rural and the most cosmopolitan areas of the country, there is a common focus and attitude toward preparing and eating food. Russia's national drink isn't vodka - it's tea I remember from my childhood in St. Petersburg that eating was central. No matter how many family members or guests were in the house, they all seemed to end up in the kitchen. To this day, I'm not sure how they all fit; the kitchen in the first house I remember was only five square meters in size (about 50 square feet). Our next kitchen was a couple of square meters larger, but still very small, and it's hard to believe how many people would squeeze into such a tiny area. But squeeze into it they did, because the kitchen is truly the heart of the Russian home. Everyone gravitates to the kitchen and they can sit for hours around the table, enjoying a meal together but also sharing conversation, stories, jokes and songs. The table would also be filled with a fabulous amount and variety of food. Special-occasion meals in Russia are generally served family style both in homes and in restaurants, where you are typically seated at a table already set with cold appetizers such as Olivier salad (Russian potato salad), green salads, cold cuts, herring and salmon and pate sandwiches. Next come hot appetizers and always at least one soup, rich in vegetables such as beets, cabbage, carrots or tomatoes and followed by hot main courses. As a child, it seemed to me that the food just kept coming and the table just kept expanding - I don't remember dishes ever leaving the table and we would often go back to delicious morsels from previous courses. It seemed that there was only one real rule: remove the herring and beets before bringing in the Napoleons and cakes for dessert. Despite the vastness of the country, there are certainly some foods that are distinctively Russian. The beet soup borscht, for example, can be found throughout most of Russia, although with regional variations. My grandmother's version was much lighter than the thick Siberian version, in which you could probably stand up a spoon. Soups in general are universal throughout Russian cuisine. I can only remember a few days a year when we didn't have soup at our house, and these were only when it was very hot outside (at least we thought so, although it was probably only about 75 degrees Fahrenheit). Vareniki (known as pierogi in Polish) remain very common - a dumpling filled with just about anything such as meat, eggs and onions, apples, cottage cheese, in sour versions served with soup and sweet versions for dessert - as are golubtsy (stuffed cabbage rolls), pelmeni (another kind of dumpling), various stroganoffs (thick cream sauce usually with mushrooms) and complex dishes such as chicken Kiev. Bread is universally present and eaten with almost every meal. Most common is black bread, based on rye flour, and this bread was traditionally given as a welcome greeting to guests arriving in a Russian village or home. "Breaking bread together" is how Russians build relationships and it has also made the difference between survival and starvation during many eras of world history (such as the siege of Leningrad in World War II). Cuisine in the more cosmopolitan areas of Moscow and St. Petersburg was influenced by Russia's admiration of elements of the culture of European countries such as France, Italy and Belgium. Peter the Great and his successor Catherine the Great wanted St. Petersburg to be a window to Europe. This influence was reflected in smaller ways, such as court dress and cuisine, and larger ones, such as the magnificent architecture of the city. The fall of the Soviet Union brought a second wave of outside influence to the Russian table, but in a significantly different way. In the 17th and 18th centuries, European elements were integrated into the Russian way of eating. In the post-Soviet 20th and 21st, it's more a matter of expanding options, with new restaurants and recipes featuring other European, Asian, Indian and Middle Eastern dishes, alongside traditional Russian foods. In both cases, most of the effects can be seen in the cities, while the rural areas tend to stay closer to tradition. Regardless of era or region, there is something special about eating in Russia. Overall, the food is healthy and delicious and cooked with love and attention, which takes time. Typical dishes require effort and attention, for selecting and preparing ingredients and putting them together with care, often according to a time-honored family recipe. Considering the amount of time spent around the table, the number of dishes served, and the constant presence of bread and other starches, I'm sometimes asked how Russians stay fit. I do think that the food is healthy, partly because it's close to nature with few, if any, artificial additives or processes. Portions tend to be small, like little tastings of a variety of flavors, rather than a large amount of one dish. Also, like many European countries, Russia's largest meal is at midday, allowing the body to digest food more thoroughly before sleep. It probably helps that dinners are eaten slowly, with time taken to socialize between bites and courses. And it certainly takes plenty of carbohydrates and fats to stay warm in the cold temperatures that Russia experiences throughout the year. As an American with Russian roots, I love to prepare and serve beautiful meals and share them with wonderful friends, whether those meals feature typically Russian dishes or not. Spending time over the dinner table - and continuing to converse over a leisurely cup of hot tea - has its own Russian flavor, of congeniality and interaction mingled with the complex tastes of food enjoyed together.
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#34 The Calvert Journal http://calvertjournal.com January 20, 2016 Grand designs: can a Stalinist propaganda park become an appealing public space? VDNKh, a vast Soviet-era exhibition space in the north of Moscow, is undergoing major regeneration. Could it be the next Gorky Park-style success story, or will the ghosts of the past prove too strong? By Anya Filippova and Mark Boyarsky [Photos here http://calvertjournal.com/articles/show/3568/vdnkh-moscow-stalinist-renovation-urbanism-public-space] The illegal shish kebab stalls have been swept away, replaced by ritzy street food stalls. New asphalt has been laid down and the green spaces landscaped. Now work has begun on restoring the historic facades of the pavilions at The Exhibition of Achievements of the People's Economy, better known as VDNKh, a Soviet-era exhibition space. The project is the latest undertaking of the Moscow City Administration, which has set its sights on revamping the capital's public spaces following the successful transformation of Gorky Park in 2011. That renovation offered a space for contemporary urban recreation for the first time in Moscow, inviting Muscovites to feel like Europeans in their own city. The move was wildly popular and led to the renovation of several other parks including most recently, VDNKh, and with it a new brand identity. VDNKh is spread over 237 hectares, making it bigger than Monaco. Since it first opened in 1939, the exhibition space has been repeatedly rebuilt, expanded, reshaped and renamed. The idea behind the project was to create a space for a series of pavilions, one for each republic of the USSR and for each major industry. The republics' pavilions served as exhibition spaces, housing, for example, a greenhouse for growing plants and trees indigenous to that region. VDNKh was a shrine to Soviet achievements and visiting the exhibition space became something of a tradition: just like pilgrims, people travelled to the temple-like pavilions from all corners of the USSR bearing gifts. Built on a grand, monumental scale - like everything Soviet - VDNKh was a city within a city with its own local infrastructure. The exhibition grounds became home to some of the most important works of monumental art in the USSR: the famous Worker and Kolkhoz Woman by Vera Mukhina and Boris Iofan, the pavilion of the Ukrainian Soviet Socialist Republic and the Friendship of the People's Fountain, whose 16 maidens immortalised the 16 republics of the USSR. Today, the 29 surviving pavilions of VDNKh are classified as historical monuments. In 1992 VDNKh was renamed VVC (The All-Russian Exhibition Centre) before gradually falling into decline and becoming one of the shabbiest spaces in post-Soviet Moscow. The wind would howl across its ghostly squares and every so often the semi-derelict pavilions would host some random event like a honey fair or fur exhibition, more likely to scare off Muscovites than to draw them in. The exhibition space remained in this condition until 2011, when the federal authorities passed responsibility for it over to the Moscow administration. Once management changed hands, the exhibition's old name was restored by public consensus, with 90% of Muscovites voting in favour of VDNKh. With the old name began a new chapter - one in which approximately 3 billion roubles ($46 million) were invested. In the blink of an eye, the scattered kiosks vanished from the grounds of VDNKh and work began on sprucing it up, with food cafes designed by the Kleinewelt Architekten bureau and white cubes bearing the Cyrillic letter Б (B) indicating book exchange points. Two people with impeccable reputations for cultural management were invited to work on the conceptual development of the site: Ilya Oskolkov-Tsentsiper, the founder of Afisha magazine and the former director of Strelka Institute for Media, Architecture and Design, and Yury Saprykin, a famous Russian journalist and public intellectual. Their conceptual framework for developing the space is that of a museum town with the infrastructure of a park. The underlying theme hasn't changed - the celebration of achievements in industry, technology, science and culture - but now entertainment has been added to enlightenment. The pavilions will be turned into modern exhibition spaces, while the grounds will become a park. The people behind the new VDNKh have set themselves the task not only of making the territory a place of recreation but also of restoring the cultural significance of one of the USSR's most hallowed spots. It seems that one of the golden rules for renovating Moscow public spaces is to also design a new logo, and VDNKh is no exception. The task was given to Dima Barbanel, who heads the Masterskaya design group. One senses in Masterkaya's work an attempt to approach the Soviet past with a modern design key. The new style draws on the graphic heritage of the 1930s, 1960s and 1980s, which the designers judged to be the most important decades for VDNKh. Each letter of the logo, and the new brand identity as a whole, take us back in time. However the new VDNKh team will endeavour not only to preserve the site's rich history, but also to move away from the association of VDNKh exclusively with the era of the Soviet Union. Even if the new curators of VDNKh want to shrug off its Soviet past, doing this isn't as simple as it might seem. Their project has already been dubbed an example of "hipster Stalinism". But the stylish cafe and the famous cycling paths, having become a metaphor for the new urbanism in Moscow, cannot eclipse the original concept of VDNKh, which in atheistic Soviet consciousness superseded and replaced the idea of a religious institution. It is possible to argue that the revival of the Exhibition Centre is an attempt by a new empire to remake the sacred seat of the old Soviet empire in its own image. Others see the project as a way of using leisure to divert the attention of the young, active and often liberal population away from events taking place on the political scene. The spectrum of criticism ranges from common scepticism to irrelevant conspiracy theories, but even if the darkest assumptions turn out to be true, the new VDNKh will still be a welcome gift for Moscow. Modern public space of this magnitude will diversify the urban landscape and become one of the most visited places in the city. In short, it is something that Moscow needs. Modern public space of this magnitude will diversify the urban landscape and become one of the most visited places in the city Already however, during the process of renovation, Russia has again lived up to its reputation as a Hall of Mirrors, in which even the best intentions turn into theft and scandal. In December it came out that the construction of the largest artificial ice rink in the world (57.3 km2), a big feature of the the new VDNKh, had cost around 784.5 million roubles ($12 million). Such enormous expenditure aroused the interest of Moscow's famous anti-corruption whistleblower Alexei Navalny. The blogger expressed doubts that the rink could pay for itself within three years - the time frame given by the administration of the VDNKh. But then, as he rightly observed, perhaps with a touch of irony, the main task of the rink is not to draw in revenue, but happiness. Even an impressive budget cannot save the rink from another characteristic Russian misfortune - bad organisation. In the first weekend after the rink's opening, about 250,000 people paid a visit. But many of them, having stood outside for hours in the ticket queue, weren't able to go on the ice. According to eyewitnesses, the crowd storming the entrance recalled a sight still unforgotten by many - a deficient Soviet grocery shop on New Year's Eve. It seems as though the past overshadows even the most modern and technologically advanced part of the new project. The curators of the new VDNKh are going to have to work very hard in order to remove the negative context of the word "Soviet", which still seems to cling to this place. |
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#35
Gazeta.ru
December 29, 2015
Head of Russian watchdog interviewed on tightening control over media, internet
Interview with Aleksandr Zharov, head of Roskomnadzor, Russia's Federal Service for the Supervision of Communications, Information Technology, and Mass Communications, by Svetlana Babayeva and Yevgeniy Shipilov: You have to write about everything. The question is in what context
What will the Russian authorities do with messengers [instant messaging applications]? Why is control of the media getting tighter? Have legal bans helped cut the number of drug addicts and suicides? Why have some media started using DA'ISH instead of ISIL, and will the rest be forced to follow suit? What will happen to Wikipedia? Why has the president decided that he needs an aide for the Internet? Aleksandr Zhukov, head of the Federal Service for the Supervision of Communications, Information Technology, and Mass Communications (Roskomnadzor), has answered these and other questions in an exclusive interview with Gazeta.ru.
"Can you imagine Roskomnadzor inspector interrupting a broadcast?"
[Gazeta.ru] Journalists today are like mine disposal experts. Media outlets feel as if they are in a minefield: So many restrictions have been introduced on coverage of various subjects. What is the need for such tough regulation of the media?
[Zharov] The question "why" should probably be addressed, above all, to the authors of the laws. Roskomnadzor does not initiate legislation. As for tough regulation, I would not agree with you here. Our legislation is fairly liberal compared with that of other countries and with the powers of their supervisory bodies as far as, for example, the seizure of media material during broadcasts is concerned.
[Gazeta.ru] Can you give at least one example of a civilized country whose laws are tougher than ours?
[Zharov] When one of the cable channels in New York started showing the film 08-08-08, which is about Georgia's attack on South Ossetia and Abkhazia, an FBI agent turned up at the studio 30 minutes after the film started, produced his ID, seized the material, and left. At that point, viewers' screens went blank. We know that in the United States, FBI agents, as well as police, have unlimited powers. Can you imagine a Roskomnadzor inspector turning up at the offices of a media outlet and interrupting a broadcast? I can't.
[Gazeta.ru] Nevertheless, looking at the US media, there is an impression that they have more opportunities as far as coverage and publication of material is concerned. We are passing so many laws that even lawyers are not quick enough to keep track of them.
[Zharov] The number of laws is indeed increasing. This is primarily due to the fact that the media environment itself is changing. Fifteen years ago, when I started working with the media as a government employee (I was press secretary at one of the ministries), there were print media, television, and radio. People may have heard of the Internet at the time, but they had hardly seen it.
Today - and you know this better than me - only multiplatform media can survive. So, since the methods of distributing content have changed, new approaches to regulation are required. This started with the decision of the Supreme Court plenary session of 15 June 2010 to introduce regulation of comments on media forums. This was essentially a response to the appearance of the new interactive function of the media.
All subsequent laws - and we are not living in a vacuum - have reflected both the international situation and the internal features of life in our country. Issues concerning digital sovereignty, which are not being discussed by Russia alone, have led, for example, to tougher rules for foreign ownership of the media.
On 1 January, as you know, a law regulating [limiting] foreign ownership of Russian media outlets to 20 per cent enters into force. This figure can be explained: The [foreign] owner will not be able either to block decisions by the majority shareholder or to influence editorial policy.
"This would have been enough for entire city and entire region"
[Gazeta.ru] But there are also some strange restrictions: You cannot describe drugs, publish cartoons, or write about suicides. We do not even know if we are allowed to say this while asking you this question.
[Zharov] You are allowed to say this. (smiles) Yes, this was the first law making it possible to restrict the dissemination of information without the decision of a court.
It concerned what in my understanding is absolute evil - child pornography, incitement to suicide, and the promotion of distribution and use of drugs.
The number of online stores specializing in the distribution of drugs has fallen drastically. Working together with the Coordination Centre for Top-Level Domains .RU and .RF [in Cyrillic] and experts from the Federal Drug Control Service [FSKN] who are responsible for this, we have made sure that several hundred such shops have simply disappeared from the Internet. The setting up of a new store involves marketing efforts. This is understandable because a store is a brand that needs developing.
[Gazeta.ru] Are there any statistics showing how this has reduced drug use? According to information from other agencies, the situation is deteriorating, rather than improving.
[Zharov] I cannot give you statistics for drug use. You have to approach the FSKN for that. For me, it is clear that a determined addict will always get to the deadly stuff. There are ways of bypassing blocks: Content can be accessed through VPN [virtual private network] services, anonymizers, and so on. But at the end of the day it is not our job to work with people suffering from drug addiction. It seems to me that our job is to create barriers for young people who fortunately do not yet suffer from this affliction and to limit the chances of them reaching such websites. Together with the FSKN specialists, we estimate that there are currently around 5,000 Russian-language websites which our users can access and which still sell drugs online. This is a large number.
[Gazeta.ru] And what stops you blocking them?
[Zharov] They are migrating and changing names, IP addresses, and domains. There is one step between a website being created and blocked. Clearly, our work has to be conducted in parallel with the work of law-enforcement agencies, which identify and detain such people. We are moving along a difficult path: Drug use is a global problem and does not just exist in Russia.
[Gazeta.ru] State Duma member [Irina] Yarovaya has proposed that we go further and bar the media from even mentioning the names of drugs. Do you agree with this initiative?
[Zharov] I do not think it would be right to ban the use of drug names in the media or in literature. Clearly, this would create problems when writing critical articles on this subject. However, articles can be different.... You are aware of our constant battles - they are now discussions - with Wikipedia where we argue that methods of synthesis of drugs as well as methods of their use should not appear in articles that are available to the general public. This is supported by the story, which you will certainly have heard of from the media, about a young man who made 23 kg of synthetic drugs by following the instructions of a Wikipedia article.
This would have been enough for his entire city and for the entire region. It is a scary story.
"Guys, let us remove this"
[Gazeta.ru] Perhaps there is a certain logic here as far as drugs are concerned: Potential high-risk groups may see an exciting recipe and decide to make it. But the opposite appears to be true of the situation with suicides: On the contrary, we need to be raising this subject in order to save those who have just started thinking about it, by telling them, guys, you will not achieve anything by doing this. But we cannot do even that now.
[Zharov] You can do everything! Pay attention to what Roskomnadzor has been doing: We have not issued a single warning to media outlets over suicides. If we see that a media outlet has published an article that, in our opinion, may act as an incitement to suicide, we would give them a call and say: Guys, let us remove this. We do not bludgeon anyone on the head. Besides, let me remind you that before this law was passed, there was a subculture, with websites describing the beauty of taking your own life. This was aimed (as someone who used to deal with public communications and PR, I can say this exactly) at an audience from a certain age group: 11-to 15-year-old teenagers.
[Gazeta.ru] A high-risk group.
[Zharov] Yes. Because of their children's mentality, they do not yet understand that taking their own life is something final, permanent. They see it more like a game: Cool, let me try it. With the help of Rospotrebnadzor [Russia's Federal Service for Consumer Rights Protection], we have largely managed to purge these types of websites. They probably can still be found in closed groups on social networks, but you will be unable to find them in the public domain.
Rospotrebnadzor specialists tell us that, thanks to this, suicide numbers have been falling. In the first nine months of 2015, according to Rosstat [Russia's Federal State Statistic Service] figures, the number of suicides fell by 7 per cent compared with the same period in the previous year, which is 1,700 lives. This is a steady trend. These are saved lives.
But media outlets are right when they write about a socially vulnerable person, for example a cancer patient, who commits suicide because he cannot get relief for the terrible pain he suffers.
[Gazeta.ru] That is precisely why the portal Orthodoxy and the World was blacklisted.
[Zharov] You should be writing about everything. The question is in what context. It seems to me that there is no need at all to describe the suicide method in detail. Because hundreds, if not thousands, of people could be in a similar situation. For some of them, such an article could serve as an incitement. Not every type of pain would be palliated even if a treatment were available. So, after reading such an article, a person in this condition may say that this is indeed a solution.
ISIL or DA'ISH
[Gazeta.ru] You have said that technologies for content distribution have been changing in the world. In this connection, here is a question about ISIL: When mentioning an organization banned in Russia (for example, ISIL or the Right Sector), all media outlets are obliged to specify that it is banned. This "obligation" for journalists has become the butt of jokes while the organizations themselves do not care. Perhaps this should be abandoned?
[Gazeta.ru] I believe that they can feel this. First, Roskomnadzor always underscores that it is enough to specify just once in brackets that the operation of such an organization is banned. Second, it is possible to write DA'ISH, instead of ISIL, and not to write anything next to it. Third, there is an existing legal requirement: Under Article 4 of the media law, references in reports to public associations and religious organizations deemed extremist should be accompanied by a note making this clear.
How did they use to mark hardened criminals in the centuries gone by? They used to brand them. Remember the beautiful Countess de la Fere [character in "The Three Musketeers" by Alexandre Dumas]: "In the count's park, there is a black pond where the lilies bloom...." [line from a Russian film adaptation of "The Three Musketeers"] Countess de la Fere, otherwise known as Lady Winter, otherwise known as Milady, had a convict's brand in the shape of a lily. It was critical to her that no one saw the lily because otherwise everyone would realize that she was not a noble lady, but a criminal.
We are living in an information society. Our adversaries from terrorist organizations are living in the same information society and are occasionally very good at utilizing network marketing to promote their ideology. For example, good-looking young men, judging by their avatars, would ask young women to be friends with them, would marry them, and would then whisk them away to some place in Syria and use them as suicide bombers. Terrorist goals are disguised with ideas of purification of the soul and all the good things in the world, catching out fragile young people. In this situation, we say: When you specify at the very beginning of an article that the operation of the organization Islamic State is banned on Russian Federation territory, this changes the way a person would perceive it.
[Gazeta.ru] Perceptions can hardly be changed by one impersonal phrase. If you follow the same logic, it would be better if Roskomnadzor and other agencies issued monthly reminders urging people to be vigilant and not to succumb to this because it would ruin their lives. This could be distributed widely through the media.
[Zharov] I still think that only a few people would read information from Roskomnadzor and other agencies while millions read articles about ISIL and other terrorist organizations. After all, this is a topical issue. And this formula is working.
[Gazeta.ru] So, if we use DA'ISH, there is no need to specify that the organization is banned. Will the media be obliged to use this acronym?
[Zharov] There was and is no obligation. Have you noticed that not just the media, but also news aggregators have started using DA'ISH alongside ISIL? It seems to me that quantity is turning into quality. The acronym DA'ISH appeared in 2013. It sounds similar to an Arabic word meaning "something bringing death and destruction." As far as I know, it was Arab and then Western politicians that started using it.
Just like the motto "Je suis Charlie," the name DA'ISH came to us from the Western press. This seems to me a brilliant solution.
Within the acronym ISIL, there are two words that are key: "Islamic" and "state." Traditional Islam does not incite mass murder of people and is not a terrorist religion. The second word is "state." It means that a global caliphate is being built. The words "Islam" and "state" disappear from the term DA'ISH, so it loses the effect of a propagandist mantra.
[Gazeta.ru] But Islamic State as an organization is not being mentioned in the media in a positive light.
[Zharov] When I read in an article the note "Islamic State, an organization banned on Russian Federation territory," I understand that this is a terrorist organization. But when an article refers to a state based on the religion of Islam, if I am not someone on top of the news agenda, this may evoke various associations. It means that we are at war with a state and that Islam is bad. DA'ISH removes both of these connotations.
"No one is saying that messengers need to be blocked"
[Gazeta.ru] This leads to another important theme in this context. Since it emerged that terrorists use messengers to coordinate their activities, the Russian authorities have become concerned about the issue of their regulation. What are you planning to do in 2016?
[Zharov] Let me remind you that Roskomnadzor has no power of legislative initiative, but, of course, we have been discussing this theme. These are essentially short message services that duplicate the services of a telecommunications operator and work "over" the telecommunications operator's network.
Here is my iPad, which has a certain telecommunications operator's SIM card and which has various messengers installed on it.
[Gazeta.ru] Which ones do you use yourself?
[Zharov] Until recently I used Telegram. But Mr [Edward] Snowden's statement that Telegram keeps absolutely all messages that have ever existed on its servers has made me a little uneasy. That is because, sooner or later, Mr [Pavel] Durov [Russian entrepreneur who founded Telegram] will share this data with, let us say, some Western intelligence services by giving them access to his service's codes.
I did not like that. There are several other small messengers I use. I do not use major ones. So, the technology that messengers use makes it possible to provide a service to our citizens without investing in the creation of infrastructure. Here are some figures: In 2005, our "big four" mobile communication operators - Beeline, MegaFon, MTS, and Tele2 - lost between R15bn and 20bn, or 25 per cent of their revenue from SMS services.
[Gazeta.ru] How much did we pay them in SMS charges....
[Zharov] But, you see, this is just the beginning, and many services were starting like this! To start with, they were free, but they will, of course, stop being free later because they need to make money. By the way, now our operators are themselves creating similar applications. MTS has already said that it has created a messenger that will be bundled with their core mobile services. Other telecommunications operators are also working on this.
[Gazeta.ru] Let the operators create their own alternatives, which will be included in their packages. But this does not mean that you need to block those that have already created working technologies.
[Zharov] Mr Jan Koum, founder [cofounder] of WhatsApp, says that all telecommunications operators in the world lost a total of 33bn dollars in 2014 as a result of customers no longer sending text messages and using WhatsApp instead. It is clear that messengers are significantly eating into communication operators' market share while not being regulated at all. For example, our law does not allow telecommunications operators to send bulk text messages. Now all this spam - and, being a user, I do feel this - is migrating to messengers.
[Gazeta.ru] We have also started feeling this.
[Zharov] Let us move on. Speaking of the fight against terrorist organizations, they have been using a wide array of services for confidential communication. And these are not just messengers. These are social networks and various forums, including online gaming forums, for example on PlayStation or World of Tanks. And this is probably the most difficult communication environment for intelligence services.
The Paris terrorists exchanged information through online gaming forums, saying "I am attacking Paris." It is very difficult to work out whether people are playing or a real terrorist attack is being prepared.
[Gazeta.ru] That is the thing. Perhaps this should be the job of the intelligence services. They, rather than Roskomnadzor, should be analysing the vast amounts of information and indentifying suspicious links. But, instead, we are just blocking everyone and that is it.
[Zharov] No one is saying that messengers should be blocked. There has been a proposal to put them within a legal framework. In other words, if you, esteemed messaging service, use the networks of our telecommunications operators, you should sign an agreement with the operator, so that you can at least be identified. Let us say, God forbid, there has been a terrorist attack and the terrorists have been using particular telecommunications services.
With the help of SORM [system for intelligence and search measures] equipment, which is installed on the networks of all telecommunications operators, intelligence services should be able to gain access to this information. But today, in the case of messengers, this would be impossible because there is no agreement stipulating that, if necessary, a telecommunications operator would allow the law-enforcement authorities to gain access to information enabling them to fight terrorists. It seems to me that this would be absolutely normal. And, finally, there should be a ban on bulk messaging. We saw what happened one and a half months ago when a couple of widely used messengers were used to bulk message false information about 18 suicide bombers heading from Kazan to Moscow.
[Gazeta.ru] Yes, this spread widely.
[Zharov] This was just before the weekend. How many people were scared, cancelled their plans, and stayed at home! The prerogative of bulk messaging should stay with authorized bodies such as the Ministry for Emergency Situations, the Ministry of Internal Affairs, and so on. So, there are no proposals to switch off messengers, read citizens' correspondence, and so on. Believe me, Roskomnadzor and especially the intelligence services have other things to do instead of reading your correspondence.
[Gazeta.ru] But they will read it when they need to.... There have been so many discussions about whether or not Skype should share encryption algorithms if the company wants to work in Russia and so many concerns about storing data in Russia. For Western companies, this could be unacceptable.
[Zharov] I can only judge by analogies. The majority of multinational companies intend to comply with the financially onerous law on the storage of personal data of our citizens on Russian Federation territory. Perhaps Russia is a complex country in terms of its national character, but 140 million potential users of a service form a major market. That is why I am convinced that messengers for whom this is a serious commerce will have no problem signing agreements with telecommunications operators.
[Gazeta.ru] Have you met, for example, with representatives of WhatsApp or Viber to discuss this?
[Zharov] No, we have not. We regularly meet with those whom we regulate. That is we fairly regularly meet with representatives of Twitter, Facebook, and Google. We have not met with representatives of messengers because, I repeat, there is no law or even draft law concerning these services.
"Everything is leaking, and you should be able to understand what you are using"
[Gazeta.ru] So, you are still considering tackling messengers. This is at a time when anonymous hackers from the Shaltay-Boltay group claim that they have even managed to hack into your email account. Perhaps, you should focus your efforts on this, especially as you are not alone who has suffered....
[Zharov] I will not comment on email. It is a personal email account. I do not want to discuss whether or not it was hacked. This was not work email, contrary to what was announced.
[Gazeta.ru] Especially so. Perhaps that is where the efforts should be channelled?
[Zharov] I do not think so. Courtesy of Mr Julian Assange and various "leaks" websites, where reputable and disreputable anonymous entities regularly leak various people's allegedly personal information, this has become a question of personal information security. Everything is leaking, and you should be able to understand what you are using, what risks this is fraught with, and which information can be transmitted via electronic communication channels and which information should not. For confidential information, if we speak of state information, there are closed communication channels, and for personal information, there are personal meetings.
It is absolutely certain that email should not be used for personal and confidential stuff. This has always been clear to me, and I stick to this principle. Should citizens who leak information be caught? Yes, they should if they leak information that concerns state and military secrets. This is definitely a crime.
[Gazeta.ru] There is a Criminal Code article for that. But it seems that no one has tackled the [Shaltay-Boltay] anonymous hackers.
[Zharov] In the leaked email correspondence, as far as I know, there were no state secrets. In this case, a citizen whose email or messenger was hacked and leaked is entitled to go to court and defend his honour and dignity.
No one has done so. This means that no one is particularly concerned about the leaks.
[Gazeta.ru] The anonymous hackers' website is currently accessible only through anonymizers. Generally, what is the state's position on anonymizers? You are reported to be sending conflicting signals. On the one hand, there is no need to deal with this because 95 per cent of users do not know how to use it anyway, but, on the other hand, you are still planning to block all of this.
[Zharov] This is impossible to block. Besides, it is not easy to create a good VPN service, anonymizer, or turbo programme allowing blocks to be bypassed through traffic compression. This requires financial investment. These are usually paid services. This is a commercial service that specialized companies provide absolutely legally to banks and other organizations that, due to the nature of their activity, need to control traffic so that it is not tracked by criminals.
[Gazeta.ru] Why do banks need anonymizers?
[Zharov] Security. This involves financial transactions. If all of this were done in open traffic, it would be possible to connect to it and steal money. Speaking of the so-called "makeshift" anonymizers, there are a huge number of them, and it is absolutely pointless to block them. In order to block an anonymizer, between several hundred and several thousand IP addresses need to be blocked, but you are a step away from another 10 similar "makeshift" things appearing.
What should be done about this? In my opinion, we need to consider placing the encryption of anonymizers used by a particular country - and I am not just talking about Russia - under the control of the intelligence services.
At least, they should be certifying them. Because if state information starts leaking through an anonymizer, the intelligence services should be able to exercise control.
This issue remains unregulated, and it is not in Roskomnadzor's remit. In our view, nothing fundamental needs to be done because 95 per cent of citizens reaching a website that has been blocked will simply leave. However, our opponents do talk about the "Streisand effect."
[Gazeta.ru] What does the singer have to do with this?
[Zharov] This is a well-known old story: Barbra Streisand's house was photographed together with other sites on the California coast. The information appeared on an infrequently visited website. She demanded through the courts that the photographs be removed from the website, which immediately led to the news spreading all over the Internet.
The Streisand effect is always present when we block some major website. But this does not last long. This is normal human curiosity: People come, read the news, then lose interest, and leave. In each case where we blocked popular torrents, the number of visits, using bypass methods, would first peak and then fall sharply.
"Looks like a film series, and we are taking part in it"
[Gazeta.ru] You are saying that the majority of messengers will agree to cooperate because they will want to stay on the Russian market. However, Telegram owner Pavel Durov is reported to have already said that he is not going to disclose encryption algorithms to anyone. What will you do in such cases? Especially as you already have similar disputes with Wikipedia.
[Zharov] I have a great deal of respect for Mr Durov as a creator. Of course, he is a very bright mind and a very clever person, having created a successful social network, VKontakte, and a successful messenger, Telegram. However, I do not particularly welcome his position as a businessman. When Mr Durov was in charge of VKontakte, it was a pirate website through and through.
[Gazeta.ru] Users used to like it.
[Zharov] Since Russia started regulating online distribution of pirated content, the new leadership of VKontakte has been actively changing this situation and showing that money can be made not just by stealing content, but also by making deals with copyright owners and sharing the profits with them. As for Durov's position on Telegram, we will see. There are a huge number of messengers in the world.
When WhatsApp was recently blocked in Brazil, a significant proportion of its audience immediately switched to its competitors, such as Telegram. That is why in a situation of legal regulation, it makes no sense to be stubborn - there is always someone there waiting to replace you.
As for Wikipedia, this is a completely different story. It is indeed an important and very unusual resource, which is horizontally formed, that is created by users themselves. To be honest, I also use Wikipedia and believe that it indeed brings together significant intellectual resources, with a lot of important information that is updated.
I would divide the problems we have with Wikipedia into two parts. The first one is our interaction with the noncommercial partnership Wikipedia.ru and its management. In my opinion, they engage in political activity when they say: Not a step back; we will not remove any information and will not talk about anything.
That is a flawed position. You always have to talk. At least, we are open to dialogue. Addressing Wikipedia, I say: Let us discuss what needs to be done about articles on drugs. We have talked with all regulatory bodies - the FSKN, Rospotrebnadzor [Russian state consumer rights watchdog], the General Prosecutor's Office. They are all ready to meet with Wikipedia editors, with us hosting such meetings, to discuss each specific case where there are complaints. They would listen and possibly make their complaints more specific or withdraw them, which is what happened in the case of the FSKN's demand for the removal of descriptions of drugs synthesis where they are based on publicly available scientific sources and do not contain direct instructions for the production of drugs. Or they would try to persuade editors that specific words in a specific article, in the opinion of experts, could cause harm and should therefore be removed.
This primarily concerns detailed descriptions of methods of drug use, including a "street" dose and its effects. Publicly available articles should not carry such instructions. That is the principled position of FSKN experts, which, by the way, is in line with one of the basic rules of Wikipedia itself, referred to as "NonInstruction" in the slang of Wikipedians. I think that this is a normal position.
The second part are the processes taking place within Wikipedia itself. Its Russian-language part is edited by around 3,000 people, of whom 150 are high-level editors actively taking part in the discussion of issues sensitive to Wikipedia and capable of influencing decision making.
But this group of 150 people is non-uniform in its views and positions on specific issues. So, within this group there appeared a person who approached us and, amid that scandal with 23 kg of drugs, said: Guys, let us discuss this. I would like to set up a separate project within the Wikipedia community called Social Responsibility and I am ready to organize this together with you.
Then, his supporters and opponents appeared. The opponents blocked him, causing him to lose his right to edit articles. Then, they went through a private arbitration process, and his supporters came to his defence. This looks like a film series, and we are taking part in it.
And all of this is happening because we want to have a dialogue with Wikipedia, rather than act like a man with a rifle saying: Remove it or I will shoot you.
[Gazeta.ru] What stage is the film series at now?
[Zharov] Editors of Wikipedia have written a letter to its founder, Jimmy Wales, in which they presented both sides of the story and said: O, great Jimbo Wales, which is what they call him, tell us what we should do, whether or not we should collaborate with Roskomnadzor? We will see what he writes and will act accordingly.
Attack by kettles
[Gazeta.ru] All data in Russia involves another issue that concerns not just foreign companies, but also us. This is storage security. We know how confidential data is sold, and how stories are made public before being removed. This raises concerns: The state keeps demanding new data, but it cannot provide and guarantee the security of this data.
[Zharov] I would not generalize in this way. I am sure that the state can guarantee personal data security. Speaking of Roskomnadzor, we have a single information system containing a great deal of various information - licences, beneficiaries, [and] data from telecommunication companies and the media. We have found an extremely secure data processing centre that has withstood a significant number of DDoS attacks. Only a limited number of people are authorized to access it with the use of fingerprint control.
The fact is that DDoS attacks are regularly launched at our unified register of prohibited information. We block websites, but then attacks on us start. The latest attack was very serious. It involved tens of thousands of objects attacking us. And the attack came from domestic kettles and fridges.
[Gazeta.ru] Sorry?
[Zharov] In order to achieve their objectives, attack organizers use a large number of computers. And a computer, in this case, can be, for example, a fridge or a kettle connected to the Internet. So, these appliances start sending out bulk requests for a cloud service that ensures the operation of the system that is under attack.
[Gazeta.ru] ...so kettles have attacked Roskomnadzor.
[Zharov] This is currently a global problem. The Internet of Things is springing its surprises, which are not always positive. And the best computer brains are thinking about how to create a defence.
[Gazeta.ru] Do you have the resources to hire specialists who can repel all this?
[Zharov] Our resources are limited, but we have several very strong specialists.
"National project for development of Internet has appeared"
[Gazeta.ru] At a recent meeting with representatives of the Internet community, the president said that he would appoint an adviser for the Internet. Why would the president need an adviser for the Internet when there are agencies and ministries?
[Zharov] This is what happened: Internet community leaders had a discussion with the president and presented to him a set of issues that, in their opinion, require the president's intervention. And it is clear that if the esteemed leaders of the Internet community raise such issues, it means that the industry's communication with the state is not 100-per-cent effective. The president suggested: You choose who among you will act as such a communicator, and I will appoint him as my adviser. They chose German Klimenko. I think that this is good because he is an Internet entrepreneur. He has created effective products that are popular. He is recognized in the Internet community and is a businessman. So, one of the representatives of the community will hold a state post. I think that everybody will benefit from this - both the industry and the state.
[Gazeta.ru] What kind of benefit do you have in mind?
[Zharov] A programme for the development of the Internet has been written, and "roadmaps" have been created in various areas - "Internet plus society," "Internet plus medicine," "Internet plus education," "Internet plus media," and so on. Now all of this will have to be implemented.
In 2004, when the president launched national projects, a government official responsible for each project was appointed. Now, a national project for the development of the Internet in all sectors of the economy has effectively appeared. And the task of the president's adviser is to prove that he is the person who can do this.
"They do not consume information the way we do"
[Gazeta.ru] You have mentioned the economy. All of the media can feel what is happening in the economy. For almost two years they have been asking the authorities to make concessions on advertising and again allow them to advertise, in particular, beer and prescription medicines.
[Zharov] The media face a number of challenges, and the falling advertising revenues are just one of the indicators of what is happening. A return to prescription medicine and beer advertising would be a palliative measure. It may well generate revenue again for a year or two, but the problem needs to be addressed in a more fundamental way.
This concerns what we discussed at the start of the conversation: The number of methods for distributing content - not just the media, but content in general - is increasing. The share of the media in the information pie being consumed by each citizen is decreasing while the share of user-generated content is growing. That is why media face a major challenge - how to retain their share of the audience in order to continue to survive under the advertising model. Another aspect is the monetization of content, that is paid distribution. Piracy should be fought while paid models of media distribution should be developed.
[Gazeta.ru] But you have said yourself that there is a huge amount of information, and new vehicles of information keep appearing. Why should consumers pay when they can get an alternative free of charge, albeit of inferior quality?
[Zharov] I think that a person receiving information wants it to be authoritative. But authoritative information can only be provided by media that stake their existence and reputation on distributing authoritative information, which is why they have legal services.
I think that within five to seven years all media consumption will switch to the screen. Of course, print media will remain as a vintage media and will be distributed in places where people have enough time to read - cafes, planes, trains, and so on. But the majority of people will consume a certain synthetic media through the screen - they will be reading, watching, as well as listening.
That is why our media are now facing a major challenge as they need to adapt to the demands of the audience that will determine consumer preferences in the near future. The millennium generation will be 20 in five years' time and 22 in seven years' time. They will be entering active life more and more, so their information consumption model will become dominant.
That is why it is quite logical that the media will have to operate under a mixed model. It should be a mixture of advertising and paid services, with adequate fees.
That is why the talk of some advertising being reinstated seems to me more like a last-ditch attempt to delay the passing of and outdated model of content distribution.
[Gazeta.ru] But under the new model, media outlets will find themselves in a more disadvantageous position because their operations are restricted by law. There is quite a lot of information on the Internet that media outlets are unable to publish because they risk receiving a warning from Roskomnadzor. It means that you are not putting us in a competitive environment.
[Zharov] You have finally found the scapegoat - Roskomnadzor! Listen, guys, I think that if you do not promote extremism, use obscene language, write about the beauty of drugs and suicide, and put child pornography in your articles, Roskomnadzor will not punish you for anything else.
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#36
Gazeta.ru
January 11, 2016
Website sees Gryzlov's "sudden" visit to Kiev as "symbolic step" by Kremlin
Vladimir Dergachev and Yelizaveta Mayetnaya, 'Match has entered endgame.' Why Gryzlov flew to Kiev for talks with Kuchma
Boris Gryzlov, Russia's representative in the trilateral contact group for Donbass, arrived unexpectedly in Kiev for a meeting with Leonid Kuchma, his Ukrainian counterpart. Officially the visit is interpreted as being in preparation for the talks in Minsk on 13 January. Meanwhile, Gazeta.ru's source has reported the cancellation of the DNR [Donetsk People's Republic] and LNR [Luhansk People's Republic] ministers' secret trip to Moscow - something that may be connected with Gryzlov's visit to Kiev.
Gryzlov's visit to Kiev was sudden - with no prior announcements. The special flight of the Rossiya government aviation detachment was detected by the Ukrainian Liveuamap portal. It turns out that the Russian flight landed at Boryspil Airport on 11 January. The country's State Aviation Service later confirmed to the Interfax-Ukraine agency that the service had received an official letter from the Ukrainian Foreign Ministry with regard to receiving the special flight. Ukraine had earlier banned regular and transit flights to the country's territory by aircraft of Russian airlines.
Gryzlov's arrival in Kiev occurred two days ahead of the contact group's session in Minsk planned for 13 January. The trip can be called a precedent because, since the Ukrainian revolution in 2014, Russian officials have preferred to conduct official talks with their Ukrainian counterparts on neutral territory in Minsk or by telephone. Earlier, however, Ukrainian media had regularly reported unofficial visits to Kiev by Vladislav Surkov, the Russian president's aide.
Gryzlov met in Kiev on 11 January with his old acquaintance Leonid Kuchma, ex-president of Ukraine and the country's representative in the trilateral contact group tasked with settling the situation in Donbass.
"Leonid Kuchma met in Kiev today with Boris Gryzlov, Russia's representative in the trilateral contact group. During the talks Leonid Kuchma and Boris Gryzlov discussed the preparations for the trilateral contact group's session in Minsk that will take place on 13 January," Darya Olyfer, the Ukrainian politician's press secretary, reported on Facebook.
It is interesting that prior to the conversation with his Russian counterpart Kuchma had met with Martin Sajdik, the OSCE's representative in the trilateral group - also on the question of the upcoming session.
Ukrainian President Petro Poroshenko distanced himself from the Gryzlov-Kuchma meeting. On the afternoon of 11 January he chaired a meeting in Ternopil, where he announced the submission of a draft law on a new wave of mobilization following an appeal from the General Staff.
Gryzlov's visit to Kiev is a symbolic step by the Kremlin, agreed with Kiev, Gazeta.ru's source close to the course of the talks over Donbass said.
"On the one hand Moscow is showing that it still has an entry to Ukrainian politics, and through Gryzlov the Kremlin has demonstrated Russia's good will, a direct connection with Ukraine, and a new stage in Russian-Ukrainian relations. Even though Kiev is conducting talks through Kuchma, thanks to President Poroshenko's trip to Ternopil it has demonstrated that their president will not hold separate talks with Russia. Such scenarios are usually implemented with the assistance of Mikhail Zurabov, Russia's ambassador to Ukraine, who still retains his post thanks to friendly ties with Poroshenko," the source explained.
Another interlocutor connected with the talks believes, conversely, that Gryzlov's visit to Kiev is a show of weakness on Moscow's part. He wonders why the State Duma's ex-speaker and Kuchma could not meet in Minsk. In the source's opinion, regardless of what Gryzlov takes to Minsk - a new package of proposals, an ultimatum - the Russian representative's trip to Ukraine will unequivocally be perceived as a concession.
According to Gazeta.ru's information, Gryzlov paid an unofficial visit to Minsk after the New Year. This was a technical trip, on which he got acquainted with the delegations' representatives, but Kuchma was not at that meeting. Therefore it can be assumed that at the meeting in Kiev the sides really were "feeling" for starting positions for the talks.
Gryzlov's visit may also be connected with another important event in the self-proclaimed republics of Donbass, Gazeta.ru's source in the DNR said. According to him, a secret visit by a delegation of DNR and LNR ministers to Moscow was cancelled on the eve of Gryzlov's flight to Kiev.
"A meeting between a number of ministers of the two republics and representatives of the Russian regime was to have taken place in Moscow on 13 January. Following their visit to the capital, the ministers were to have travelled around various Russian regions to set up bilateral economic relations. However, the ministers' visit was cancelled the day before - precisely against the background of the news of Gryzlov's arrival in Kiev. This may have been connected with the fact that Ukrainian intelligence would quickly have learned about the ministers' arrival in Moscow. This would have been an additional irritant in Gryzlov's talks in Kiev," the source argued.
Vadym Karasyov, director of the Kiev Institute of Global Strategies, believes that there is nothing sensational about Gryzlov's visit to Ukraine: "Surkov used to come here even during the worst times. Considering Gryzlov's present post, he is Putin's trusted man, which means that the Russian president wants to end the business of Donbass on his own terms."
In the expert's opinion, in Donbass now "everything is moving towards the finale": "It can be said that the match has entered the endgame: All world players are interested in seeing, at last, the end of the situation in eastern Ukraine - something they have stated repeatedly of late, because this is a thorn in everyone's flesh."
Karasyov believes that the visit was conceived for the sake of a meeting with Poroshenko. However, there are no official reports that this meeting took place, although the chronology makes this possible. Gryzlov's flight arrived in Kiev in the morning, whereas Poroshenko flew to Ternopil in the afternoon.
"Boris Gryzlov's appointment itself was a response to Poroshenko's dissatisfaction with the too low status, in his opinion, of Russia's representatives participating in the Minsk talks. Thus, the appointment of Gryzlov, someone close to Putin, was meant to lend them different political weight," a source familiar with the course of the talks said.
"I am well acquainted with Boris Gryzlov, and my opinion concerning his appointment is that it raises the level of Russia's representation in the trilateral contact group," Leonid Kuchma declared right after Gryzlov's appointment in December. Gazeta.ru's sources and experts made roughly the same interpretation of the cadre sideways move.
The visit of Boris Gryzlov, the Russian Federation's plenipotentiary representative in the contact group, to Kiev means that the scale of secret diplomacy has increased, Stepan Havrysh, former first deputy head of the Ukrainian National Security Council, told the 112 Ukrayina television channel.
According to him, "Gryzlov did not fly to the foreign ministry, he flew to the president (Poroshenko - Gazeta.ru) personally with messages that we know nothing about, and nor do we know what proposals really are being heard from Putin today or which bargaining schemes are operating here."
Frozen conflict
Despite Gryzlov's visit to Kiev and optimistic comments about the strengthening of Russia's negotiating position thanks to the new figure in the contact group, predictions regarding Donbass remain depressing just the same. Gazeta.ru's interlocutor close to the contact group in Minsk predicts a freezing of the conflict.
"Talks are taking place in Minsk with regard to lifting the blockade, removing checkpoints, and ensuring citizens' free movement across the line of contact. The situation is still being hampered by uncontrolled formations on both sides, which will gradually be 'recycled.' The International Red Cross has been involved in matters of looking for missing people and mass burials. Germany is responsible for reinstating the banking system. But matters are, all the same, moving towards a freeze. The main achievement of the Minsk talks is the halting of the big war, but in the final analysis this is a smouldering conflict for long years to come. To judge by the course of the talks, a freeze suits everyone - Russia, Ukraine, and the West," the source argued.
The sides are maintaining confrontational rhetoric. Vladimir Putin said in an interview with the German publication Bild that fulfilment of the Minsk agreements "is now assuming the nature of a theatre of the absurd." This is "because the main thing that must be done to implement the Minsk agreements lies with the present Kiev authorities. Moscow must not be required to do what Kiev should do," Putin declared. "For example, the most important thing in the entire settlement process, the key question is a question of a political nature, with constitutional reform at the centre. This is Point 11 of the Minsk agreements. This directly states that constitutional reform must be carried out, but it is not in Moscow that these decisions must be made!"
During his trip to Ternopil Ukrainian President Petro Poroshenko, unruffled, accused Moscow of wrecking the agreements.
"We clearly emphasize that all the Minsk points must be fulfilled. In connection with the Russian Federation's failure to fulfil its part of the obligations we firmly raise the question of tying down all the steps envisaged in the Minsk agreements to a specific date in 2016," he declared.
German Chancellor Angela Merkel in turn commented on the situation in her traditionally restrained and optimistic manner. "I hope that we will make progress in the 'Normandy-format' talks between Russia and Ukraine over the next few months. I am in optimistic mood," Merkel said when addressing the Chamber of Commerce and Industry in Magdeburg last week.
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#37
DPR supports Poroshenko's proposal to set specific deadlines for Minsk agreements
DONETSK. Jan 13 (Interfax) - The self-proclaimed Donetsk People's Republic (DPR) is ready to accept a proposal to tie specific points of the Minsk agreements to specific dates.
"We are ready to accept all these things, but we understand that changes to the Ukrainian Constitution imply a certain amount of time. First they should implement their clauses, and then we'll see how we implement ours," DPR leader Alexander Zakharchenko told reporters on Wednesday.
He accused Kyiv of failing to implement the Minsk agreements and expressed doubt there will be any result from the Wednesday meeting in Minsk of the Trilateral Contact Group which mediates the conflict in eastern Ukraine.
"The year of 2015 is gone, the year when was supposed to dot all the i's. Judging by the timeline of the events, Ukraine has not only categorically failed to abide by even those clauses that were spelt out in Minsk. Ukraine is now trying to twist everything, first by raising the issue of reaching the border [taking control over the border], but without making the constitutional reform and assigning a special status to Donbas. And most importantly, what it says there is that everything should be agreed on with the leaders of the DPR and LPR [Luhansk People's Republic]. How Poroshenko is going to do this, I don't know. My understanding is that this Minsk [meeting] is yet another fiasco, but we'll see what its results will be," Zakharchenko said.
It was reported that Ukrainian President Petro Poroshenko called for specific deadlines to be set for the Minsk agreements.
"We stress that all clauses of the Minsk agreements must be implemented, which is why, given that Russia stopped honoring its part of the obligations, we insist that in 2016 all steps envisioned by the Minsk agreements should be tied to a specific date," Poroshenko told reporters on Monday.
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#38
Putin's Power Failure: He's had Time and Resources to Transform Russia but has Failed to Do So, Inozemtsev Says
Paul Goble
Staunton, January 12 - Vladimir Putin has had the time and resources "to transform Russia if not into the next China then into a new Emirates by laying the foundations for economic growth over several decades," Vladislav Inozemtsev says. But he didn't do so and as a result, these years for Russia were and remain "lost."
The Moscow economist says that "the country is being ruled by a man who talks a lot but does practically nothing concrete," having relied "for more than a decade" on income from rising oil and gas prices. And how, he says, Putin can't even come up with plans to stimulate business or inspire citizens (rbc.ru/opinions/economics/12/01/2016/5694b0229a79473841558e1f).
Inozemtsev outlines the reasons for this damning conclusion in an essay on the RBC portal today, reasons that are especially compelling because most of them are not the opinions of this or that opposition commentator but rather are facts and figures published by the Russian government itself.
Putin has been in power for 16 years now, the economist says, and as a result, he and Russia enter his 17th year in even worse shape than anyone could have imagined. Average pay in Russia if converted into dollars is now at the level of 2005. GDP has been falling and will continue to fall. And 280 billion dollars of capital has fled abroad over the last three years.
The only thing going up is the military budget. It has increased in ruble terms by 7.5 times and in dollars by 4.4 times; and at the same time, "the bureaucracy has finally been converted into a ruling class with hundreds of new heraldic devices." Russia now is involved in two wars, which have alienated its neighbors and led to sanctions from the major powers.
For most of his 16 years in power, Putin benefitted from rising oil and gas prices; but instead of using the earnings to transform Russia, he and his regime took the money for themselves and left Russia and the Russian people in even worse shape than many of them had been before he came to power. Now with oil prices falling, all that is becoming clear.
Russia is producing less gas now than it did in 1999, even though Qatar over the same period has increased its output by more than seven times. Two years ago, Rosneft bought TNK-BP for 55 billion US dollars, but now Rosneft itself is evaluated as being worth only "about 34 billion.
The only place where there has been any real growth as opposed to growth as a result of rising prices for raw materials has been in the non-state sectors. Under Putin, it has been the state rather than anything else that has been "the brake."
Countries that experience a sudden burst in income either from rising world prices for their raw materials or because of increased production almost invariably invest in infrastructure, almost all countries that is except for Putin's Russia, Inozemtsev points out. Over the last 16 years, Russia hasn't put in place a single kilometer of contemporary high speed rail.
During the last two years, it has built 1200 kilometers of new roads annually, "four times less than was the case in 2000," the first year of Putin's power. In a similar war, Gazprom figures show that the country has managed to increase the level of gasification of Russian villages by 0.1 percent to 65.4 percent over the last 16 years.
At that rate, Inozemtsev says, "the task of complete gasification will be fulfilled at the start of the 22nd century." Russian ports are handling fewer goods than they did earlier, and cargo on the Northern Sea Route today is lower by a lot (130,000 tons as against 460,000 tons) than it was when Putin came to office.
What has Putin offered Russians? "Only beautiful promises," which keep being repeated each year and whose fulfillment is pushed off ever further into the future.
Putin has made the country more dependent on petroleum exports. In 1999, oil, oil products and gas formed 39.7 percent of all exports. By 2014, they made up 69.5 percent. But those who live by oil prices can die from them as well, especially if the economy is dependent on export earnings to make its way rather than on domestic production.
But despite all the money that poured into Russia for a time because of this oil and gas boom in exports, "no industrial transformation took place in Russia: in the course of all the Putin years, it was and remains the only one of the emerging markets where the growth of industrial production lags behind the rate of GDP growth."
Putin's Russia is overwhelmingly dependent on imports in many sectors, and "if our 'partners' want to achieve the complete collapse of the Russian economy, it is sufficient for them to prohibit the import into the country of these supplies." Meanwhile, pensions, education and health care have all been cut back or allowed to deteriorate.
And in foreign policy, the 16 years of Putin have not brought much to celebrate. His actions have transformed Ukraine from a friend to an enemy and driven away most of the former Soviet republics. He has begun a military operation in Syria only to discover that it will take more money than Moscow has.
This is not a record anyone should be proud of or that Russia can afford to see continued for much longer.
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