Russia in Review

I. U.S. and Russian priorities for the bilateral agenda.

Nuclear security agenda:

• No significant developments.

Iran nuclear issues:

• The U.N. Security Council scheduled a vote for first thing Monday morning on a resolution endorsing the Iran nuclear deal. (CBC News, 07.17.15).
• Russian President Vladimir Putin on July 17 held a meeting with the permanent members of the Russian Security Council, his press secretary Dmitry Peskov said. "[The attendees] touched upon the subject of the Iranian nuclear dossier and emphasized once again that the finalizing of the agreement became possible largely thanks to the leading role and constructive position of the U.S.," Peskov said. (Interfax, 07.17.15).
• Asked if Russian President Vladimir Putin of Russia was a help or a hindrance in concluding this deal, U.S. President Barack Obama said: “Russia was a help on this. I’ll be honest with you. I was not sure given the strong differences we are having with Russia right now around Ukraine, whether this would sustain itself. Putin and the Russian government compartmentalized on this in a way that surprised me, and we would have not achieved this agreement had it not been for Russia’s willingness to stick with us and the other P5-Plus members in insisting on a strong deal.’’ (New York Times, 07.16.15).
• U.S. President Barack Obama said: “I want to thank our negotiating partners — the United Kingdom, France, Germany, Russia, China, as well as the European Union — for our unity in this effort, which showed that the world can do remarkable things when we share a vision of peacefully addressing conflicts. We showed what we can do when we do not split apart.”(New York Times, 07.14.15).
• Russian President Vladimir Putin and U.S. President Barack Obama discussed by telephone on Wednesday the nuclear deal between Iran and six world powers and agreed it was in the interests of the world as a whole, the Kremlin said. "The President thanked President Putin for Russia's important role in achieving this milestone, the culmination of nearly 20 months of intense negotiations," the White House said in a statement. Asked if the fact the two recent telephone conversations between the presidents of Russia and the United States held over the past week could be seen as a thaw in Moscow-Washington relations, Kremlin press secretary Dmitry Peskov has said., "So far we can rather positively assess the very fact of dialogue." (Interfax, 07.16.15,Reuters, 07.16.15).
• Russian President Vladimir Putin said on Tuesday that the six powers that reached the Iranian nuclear deal made a firm choice in favor of stability and cooperation. “The world can now breathe a sigh of relief," Putin said in a statement on the Kremlin website. "Despite attempts to justify scenarios based on force, the negotiators have made a firm choice in favor of stability and cooperation." (Reuters, 07.14.15).
• U.S. President Barack Obama said: “In the agreement, we've set it up so we can override Iran's objection, and we don't need Russia or China in order for us to get that override. And if they continue to object, we're in a position to snap back sanctions and declare that Iran's in violation and is cheating.” (Washington Post, 07.15.15).
• "In the next five years deliveries of arms to Iran will be possible, under the conditions of the relevant procedures, notification and verification by the U.N. Security Council,” Russian Foreign Minister Sergei Lavrov said.  “We and China had been calling for (the arms embargo) to be among first restrictions to be lifted while the West wanted to keep the arms embargo for eight or even 10 years,” Russian Foreign Minister Sergei Lavrov said. (Kommersant, 07.15.15, Reuters, The Moscow Times, 07.15.15).
• Russia and Iran are holding talks over Russia supplying the Islamic republic with Sukhoi Superjet passenger planes, Russia's Transport Minister Maxim Sokolov said on Wednesday. (Reuters, 07.15.15).
• “Prices on oil have fallen even without the Iranian deal. We have been observing only an insignificant decline (of these prices). The market will par this,” a source in Russian state structures said in reference to increase of oil exports by Iran. “In the meantime Russia can not only boost cooperation with Iran in the military-technical sphere, but also to actively develop the trade and economic relations with it,” the source said. (Kommersant, 07.15.15.).
• Chairman of the Russian State Duma's International Affairs Committee Aleksey Pushkov dismissed suggestions that the agreement with Iran would harm the Russian economy by putting a downward pressure on oil prices. "In my opinion, this factor should not be overestimated too much. This is just three or four per cent of the global oil consumption. Russia should not be afraid," he said.  He also said that "the agreement (with Iran) practically rules out a military scenario in the Middle East” and those other countries of the region could no longer argue that they need to develop nuclear weapons. (BBC, 07.15.15).

NATO-Russia relations:

• Among the guests invited to observe the North Atlantic Treaty Organization’s biggest military exercise in more than a decade will be the Russians. British Gen. Phil Jones said the number of countries who signed up for the NATO Response Force’s exercise, called Trident Juncture 2015, swelled. Currently some 36,000 troops from 30 nations are scheduled to take part. The last exercise of a similar size involved 40,000 troops and was held in Norway in 2002. (Wall Street Journal, 07.15.15).
• U.S. Air Force Gen. Paul Selva — President Barack Obama’s pick to be the next vice chairman of the Joint Chiefs of Staff — told the Senate Armed Services Committee on Tuesday that he “would put the threats to this nation in the following order: Russia, China, Iran, North Korea, and all of the organizations that have grown around ideology that was articulated by al Qaeda,” offering the same list delivered last week by Obama’s nominee to be the next chairman of the Joint Chiefs, Marine Corps Gen. Joseph Dunford. Russia takes the first prize because its military might presents an “existential threat to this country should they choose to be,” Selva said. (Foreign Policy, 06.14.15).
• White House spokesman Josh Earnest said the administration was mindful of Russia's destabilizing activity, but Gen. Joseph F. Dunford’s comment reflected "his own view and doesn't necessarily reflect the ... consensus analysis of the president's national security team." "The secretary doesn't agree with the assessment that Russia is an existential threat to the United States, nor China, quite frankly," U.S. State Department Deputy spokesperson Mark Toner said. "You know, these are major powers with whom we engage and cooperate on a number of issues, despite any disagreements we may have with them," he added. (Washington Post, 07.13.15, Reuters, 07.10.15).
• Head of the U.S. Army Gen. Ray  Odierno said he wants to put in position an additional brigade's worth of heavy equipment in Germany in what would supplement an earlier decision, announced by Defense Secretary Ash Carter, to build up smaller sets of equipment in Eastern Europe. While the equipment in Eastern Europe would be used regularly by smaller units for training exercises, the larger stockpile of heavy equipment in Germany would more likely be used for a crisis. That would allow a heavy brigade of some 3,500 soldiers to fly quickly to Europe. (Wall Street Journal, 07.11.15).

Missile defense:

• "We all remember when in April 2009 in Prague President [Barack] Obama said that if the Iranian nuclear issue was settled, there would be no need in creating an air defense system in Europe. That is why today we have drawn the attention of our US colleagues to this fact. We shall be waiting for the reaction,” Russian Foreign Minister Sergei Lavrov said. (Sputnik, 07.14.15).

Nuclear arms control:

• No significant developments

Counter-terrorism agenda:

• Kyrgyz authorities say that alleged militants killed and detained in Bishkek on July 16 were members of the Islamic State (IS) extremist group receiving support from Syria. The militants were planning several terrorist attacks, including one against the Russian military base at Kant, in Kyrgyzstan's north, and a terrorist attack during mass Eid al-Fitr prayers in Bishkek. (RFE/RL, 07.17.15).
• Forty-five foreigners have been arrested in Turkey after allegedly trying to enter Syria illegally to join the Islamic State militant group, Turkish media said. The Dogan news agency said the majority of the foreigners were Tajik nationals, but it didn't give exact figures.(RFE/RL, 07.13.15).
• Russian man Irek Hamidullin's charged with leading a Taliban attack against U.S. forces in Afghanistan has lost his bid to avoid trial in a federal court in Virginia. (RFE/RL, 07.14.15).
• Sixteen jurors were selected on July 13 on the first day of a U.S. trial of Uzbek refugee Fazliddin Kurbanov charged with supporting a terrorist organization. (RFE/RL, 07.12.15).

Cyber security:

• Russian President Vladimir Putin signed off Tuesday on the so-called “right to be forgotten” law, which requires search engines to remove Internet users' personal information from their results in certain cases, the Kremlin announced in a statement. (The Moscow Times, 07.14.15).

Energy exports from CIS:

• Gazprom is halving capacity for its Turkish Stream pipeline, which extends from Russia to Turkey and then to southern Europe. The Russian natural gas monopoly has cancelled a deal with an Italian contractor to lay Black Sea pipelines. (RBTH, 07.17.15).
• Russia and OPEC Secretary-General Abdullah al-Badri will discuss oil markets and the Iran situation in Moscow on July 30 amid sliding oil prices, Russian Energy Minister Alexander Novak said.( Reuters, 07.17.15).
• Russia says it is examining the possibility of direct supplies of energy to Greece in an effort to bolster the country's foundering economy. (RFE/RL, 07.12.15).
• India’s Essar Oil has signed a 10-year crude purchase agreement with Russia's largest oil exporter Rosneft, which will also take a 49% stake in the Indian refiner. The deal will meet roughly half of Essar Oil's import requirements and gives Russia a captive market for its crude exports in India for the first time. (Wall Street Journal, 07.16.15).

Bilateral economic ties:

• No significant developments.

Other bilateral issues:

• U.S. President Barack Obama said: “I do agree that we're not going to solve the problems of Syria unless there's buy-in from the Russians, the Iranians, the Turks, our Gulf partners.” (Washington Post, 07.15.15).
• Donald Trump said in a speech Saturday that if he ascends to the White House in 2016, U.S.-Russian relations will improve, as he and President Vladimir Putin would get along "very, very well." (Reuters, 07.12.15).
• Igor Girkin, the former commander of pro-Russian separatist forces in eastern Ukraine, has been formally accused in a U.S. lawsuit of orchestrating the shooting down of Malaysia Airlines Flight MH17. (RFE/RL, 07.16.15).
• The New York State Department of Financial Services (DFS) has asked Deutsche Bank for detailed information on possible money-laundering transactions by some of its clients in Russia that could exceed $6 billion in total, a source familiar with the matter said. (Reuters, 07.14.15).

II. Russia news.

Domestic politics, economy and energy:

• Russian President Vladimir Putin has signed a law adjusting Articles 5 and 102 of Federal Law on Elections of Deputies of the State Duma of the Federal Assembly of the Russian Federation, shifting the elections of the parliament lower house from December to September 2016. (Interfax, 07.15.15).
• Russia's Constitutional Court has ruled that officials can ignore judgments by the European Court of Human Rights if they are found to contravene the Russian Constitution. (RFE/RL, 07.14.15).
• Russian President Vladimir Putin signed on Wednesday a decree eliminating the Ministry for Crimean Affairs. (Interfax, 07.16.15).
• President Vladimir Putin on Wednesday approved a proposal by the prime minister to have the Federal Anti-Monopoly Service absorb the Federal Tariffs Service. (The Moscow Times, 07.15.15).
• Mutual funds investing in Russia and China were the top emerging equity performers in the first half of 2015. Moscow stocks rose 18 percent in dollar terms between January and June after last year's 40 percent drop, a rise that was driven mainly by oil’s 45 percent bounce in this period.(Reuters, 07.13.15).
• While the S&P 500 SPX, -0.09%   is up only about 2% this year, the Market Vectors Russia Index ETF RSX, -0.61%  is actually up more than 20% in the same period. (Market Watch, 07.16.15).
• Moscow has overtaken Paris to become the European capital with the most shopping center space. (Reuters, 07.13.15).
• Russian regions will need to cough up about 400 billion rubles ($7 billion) to service their commercial loans and bonds this year, according to ratings agency Standard & Poor's. Total regional debt, excluding federal aid, rose from 22 percent of the regions' income in 2009 (excluding federal aid) to 34 percent, or 2.4 trillion rubles ($42.3 billion), at the end of last year. (The Moscow Times, 07.15.15).
• A slump in real wages probably continued  in Russia for an eighth month in June, falling off at a pace unseen until recently during President Vladimir Putin’s 15-year reign, a Bloomberg survey showed. Data due this week will also show retail sales in Russia fell 8.9 percent from a year earlier, near the worst showing in 2015, according to the median of 19 estimates. (Bloomberg, 07.15.15).
• After years of little government action, Prime Minister Dmitry Medvedev has signed off on plans to raise traffic through the Northern Sea Route by 20 times to a staggering 80 million tons of freight annually by 2030. (The Moscow Times, 07.12.15).
• Only 13 percent of over 1,500 people polled by the All-Russian Center for Public Opinion Research said they would like to leave Russia. (Interfax, 07.13.15).

Defense and Aerospace:

• The share of modern weapons currently in service in the Russian military ranges, depending on the branch of the armed forces, from 30.5 percent to nearly 78 percent, according to military figures Russian President Vladimir Putin quoted during this week's video conference. (The Moscow Times, 07.17.15).
• The Russian military is failing to meet its plans for this year on re-equipping its armed forces with modernized weapons because of Western sanctions over the conflict in Ukraine and a decline of domestic industries, a deputy defense minister told President Vladimir Putin. (The Moscow Times, 07.17.15).
• Russia is already working to relaunch production of the powerful Soviet-designed Tupolev Tu-160 supersonic nuclear bomber. (The Moscow Times, 07.10.15).
• The Military Council of Russia’s Strategic Missile Forces has met to review results of 2014-2015 inspections of safety of nuclear weapons at RVSN units. "The results of the checks showed that the command of forces, large units and military units provides for the fulfillment of current requirements to ensure the safety of nuclear weapons at all stages of maintenance," the press service and information department of the Defense Ministry said in a statement. (RIA Novosti, Interfax, 07.15.15).
• Russian President Vladimir Putin has signed a federal law On the State Corporation for Space Activities Roscosmos. (Interfax, 07.13.15).
• Russia has disposed of over 90 percent of its chemical weapons stockpiles since starting the process in 1997, making it the world leader in chemical weapons reduction, Russia's senior chemical weapons control official told news agency Interfax on Monday. (The Moscow Times, 07.13.15).
• A section of a Russian military barracks has collapsed, killing 23 soldiers, near the Siberian city of Omsk, officials say.(BBC, 07.13.15).
• A Russian Tu-95 “Bear” strategic bomber crashed during routine training in Russia's Far East on Tuesday, marking the second loss of a Tu-95 bomber and the sixth loss of a Russian military aircraft in a little over a month.  (The Moscow Times, 07.14.15).
• The Defense Ministry says it is investigating four soldiers on suspicion of having gone AWOL from their base in southern Russia, but denied reports that the number of troops who had allegedly fled the base to avoid being sent to fight in Ukraine had reached several dozen. (The Moscow Times, 07.13.15).

Security, law-enforcement and justice:

• Russian President Vladimir Putin has signed an order reducing the maximum number of staff on the Interior Ministry payroll by 110,000, or about 10 percent, according to a document posted on a government website on Monday. (Reuters, 07.13.15).
• Ilya Goryachev, leader of an ultranationalist Russian gang was found guilty Tuesday of five murders, organizing an armed extremist group and weapons possession. (The Moscow Times, 07.14.15).
• Ilya Ponomaryov, a lawmaker in the lower house of parliament, the State Duma, has been placed on the international wanted list in connection with the Skolkovo Foundation embezzlement case, an investigator said in the Basmanny District Court in Moscow on Friday. (RAPSI, 07.17.15).

Foreign affairs and trade:

• Russian President Vladimir Putin Russia called for an end to the use of punitive financial and economic sanctions around the world, saying they should be ''excluded from the international economic vocabulary.'' (New York Times, 07.11.15).
• Russia says President Vladimir Putin has lambasted his Finnish counterpart over Helsinki's barring of Russian officials. (RFE/RL, 07.15.15).
• Russian leaders are hoping to sell rocket engines to China as part of a wide-reaching effort that includes increased cooperation on space matters between the two countries, according to Russia’s state-run media. “These above all include rocket engines,” Dmitry Rogozin, the deputy prime minister of Russia said. “China is especially interested in it.” (Space News, 07.16.15).
• Russia says a London bank account held by its state-owned media behemoth Rossiya Segodnya has been “closed” by British authorities in a move it linked to Ukraine-related sanctions imposed by the EU.  (RFE/RL, 07.13.15).
• Russian Trade Minister Denis Manturov said Wednesday that Russia intends to sell Thailand more than $160 million worth of weapons in exchange for an amount of rubber valued at around the same price. (The Moscow Times, 07.15.15).
• Plans to build a Russian nuclear reactor in Finland suffered a setback on Thursday after the government said its probe into the ownership of a Croatian investor pointed to Russia. (Reuters, 07.16.15).

Russia's neighbors:

• Ukrainian parliament gave preliminary approval to a law that would give greater autonomy to areas in eastern Ukraine held by Russia-backed separatists. The bill, which would amend the constitution to give local governments greater autonomy from Kiev, has to be approved by the constitutional court and sent back to parliament for approval by at least 300 votes before coming into effect. The law didn't specify what powers the rebel-held areas in Donetsk and Luhansk regions would be given, and separatists and the Kremlin have accused Kiev of not doing enough. U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland met with a number of Ukrainian parliamentarians in Kyiv on July 15 to try to persuade them to support the bill. French President Francois Hollande and German Chancellor Angel Merkel have also called on Ukrainian President Petro Poroshenko to ensure partial self-rule for the pro-Russian separatist east. (RFE/RL, 07.10.15, Wall Street Journal, 07.17.15, Kyiv Post, 07.16.15).
• Ukrainian lawmakers have voted to call local elections on October 25. But the bill passed on July 17 by the Verkhovnaya Rada said the elections would not be held in the Crimean Peninsula, which Russia annexed in March 2014, or in rebel-held eastern districts. (RFE/RL, 07.17.15).
• U.S. officials concluded Malaysia Airlines flight MH17 was struck by a missile and shot out of the sky. A final report from investigators has yet to be released but CNN has learned new details from the draft investigative report for the July 17, 2014 incident. Dutch accident investigators say, evidence points to pro-Russian rebels as being responsible for shooting down MH-17, according to a source who has seen the report. Five countries have asked the UN Security Council to establish an international tribunal to prosecute those responsible for the downing of the airliner.  (The Moscow Times, 07.14.15, CNN, 07.15.15.)
• Russian President Vladimir Putin says he won't accept a proposal for the U.N. Security Council to set up a criminal tribunal over the downing of Malaysia Airlines Flight 17. He said a “thorough and objective" international investigation had to finish before countries took any decisions on how to punish those guilty of the crime. The Russian Investigative Committee  said it has information that MH17 was shot down above Donbass with air-to-air rocket and experts suppose it was not Russian-made. (RFE/RL, 07.16.15, Interfax, 07.16.15, Wall Street Journal, 05.17.15).
• Kyiv said on July 15th Russian-backed rebels have launched one of their fiercest attacks in the Ukraine’s east since the signing of a February deal on a cease-fire, killing eight Ukrainian soldiers and wounding 16 over the preceding 24 hours.  Ukraine’s president will hold a conference call on Friday with the leaders of Russia, Germany and France after violence intensified in his nation’s easternmost regions. (RFE/RL, 07.15.15, Bloomberg, 07.17.15).
• The fighting broke out between police and members of Right Sector the paramilitary group in the Ukrainian town of Mukachevo, near the borders with Poland and Slovakia. Mustafa Nayyem, a member of Parliament, told the local news media that Right Sector was involved in cigarette smuggling, and that a fight with rivals for control of the illegal cigarette business set off the shooting. Two policemen were hurt Tuesday in explosions at two police stations in the western Ukrainian city of Lviv, the Interior Ministry said, linking the cases to a deadly weekend standoff between Right Sector, and the police (New York Times, 07.13.15, 07.15.15).
• The United States could begin training regular Ukrainian Army troops starting as soon as November, according to Lt. Gen. Ben Hodges, the commander of U.S. Army Europe. Hodges said that 15 wounded Ukrainian troops would be coming to the United States for continuing medical care after sustaining wounds at the front. (Washington Post, 07.13.15).
• When asked how much warning the U.S. would have if Putin did try and attack, U.S. Lt. Gen. Ben Hodges’s answer was blunt. “The amount of indicators or warning that we'd have is not sufficient to let us know well ahead of time," Hodges said. "[The Russians] have demonstrated an ability to move very quickly. (Washington Post, 07.13.15).
• An indictment against jailed Ukrainian pilot and parliament member Nadia Savchenko has been sent to the Donetsk Town Court in Russia's Rostov region. (RFE/RL, 07.13.15).
• In a joint statement, Ukraine and a committee of four creditors who hold about $9 billion of the country's debt said Thursday they made progress in negotiations to restructure the country's debt but gave no further details. Ukraine is inching closer to a July 24 deadline for $120 million in coupon payments. Ukrainian officials say that skipping the payment would be a “technical default" and just a minor bump in the road for an already hard-hit economy. (Wall Street Journal, 07.14.14, RFE/RL, 07.16.15, Wall Street Journal, 07.16.15).
• During his visit to the United States on Monday Ukrainian Prime Minister Arseniy Yatsenyuk reassured U.S. President Barack Obama that his embattled government was making important progress in overhauling the country's troubled economy and meeting the terms of a shaky cease-fire with Russia. (New York Times, 07.14.15).
• "Russia’s trying to undermine the stability and the sovereignty of Ukraine by any means it can, including its attempt to create conditions that will cause Ukraine to economically collapse,” U.S. Vice President Joe Biden told U.S. and Ukrainian officials and business leaders in Washington on July 13. (RFE/RL, 07.14.15).
• Rosatom has rejected Ukrainian Prime Minister Arseniy Yatsenyuk's claim that the Russian company failed to honor agreements on construction of a nuclear fuel fabrication facility and completion of units 3 and 4 at Khmelnitsky nuclear power plant. (World Nuclear News, 07.10.15).
• The Ukrainian Foreign Minister has declared the acting consul of the Russian Federation in Odessa persona non grata. (RBTH, 07.17.15).
• Ukraine and the United States begin the final stage of joint disposal of solid missile fuel of intercontinental ballistic missiles RS-22 at the Pavlograd chemical plant in eastern Ukraine's Dnepropetrovsk Region. (Interfax, 07.16.15).
• Canadian Prime Minister Stephen Harper announced a free trade agreement with Ukraine July 14 as its Prime Minister Arseniy Yatsenyuk visited Quebec. (RFE/RL, 07.15.15).

• Georgian authorities have expressed concern over recent demarcation activities by Russian troops in Georgia's breakaway region of South Ossetia that appear to leave a 1,605-meter portion of the strategic Baku-Supsa oil pipeline outside Tbilisi's control. The EU has warned of increased tensions amid claims that Russia has redrawn a section of Georgia's de facto border with South Ossetia. (RFE/RL, 07.14.15,BBC, 07.17.15).
• Azerbaijan told hospitals to be ready for war and started what it called “intense” military exercises, raising the risk of an escalation in its conflict with Russian ally Armenia over the breakaway region of Nagorno-Karabakh.  (Bloomberg, 07.16.15).
• Armenia has made public parts of the proposed constitutional changes that would transform the current national political system into a parliamentarian form of government. (RFE/RL, 07.16.15).
• A closed uranium mine was pinpointed as the culprit behind the outbreaks of a mysterious sleep-inducing disease that has plagued the residents of two villages in Kazakhstan since 2013. (Russia Today, 07.11.15).

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