Russia in Review

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

Nuclear security agenda:

“We … take into account another potential threat - the possible use of the CIS states’ territories, in particular, the Central Asian region, for the transit of nuclear materials and other dangerous substances, as well as technologies and equipment related to mass destruction weapons,” head of the CIS Anti-Terrorism Center Andrei Novikov said on Tuesday. (Tass, 09.09.14).
Large-scale antiterrorist exercises of the Commonwealth of Independent States will take place in Russia next September, head of the CIS Anti-Terrorism Center Andrei Novikov said on Wednesday. This year it was nuclear security in connection with threats of terrorist attacks with use of nuclear and radioactive materials. The exercises were held in two stages with the participation of security services of Russia, Belarus and Kazakhstan. (Tass, 09.10.14).
Kazakhstan and the United States have reached agreement to step up effort in the fight against nuclear and radiological material smuggling. "A multiagency delegation of U.S. officials met with their Republic of Kazakhstan counterparts in Astana on September 8-9 to advance U.S.-Kazakhstani mutual efforts to counter nuclear smuggling," the US Embassy in Kazakhstan says in a press release. (Interfax, 09.10.14).

Iran nuclear issues:

Russia’s President Vladimir Putin will meet with Iran’s President Hassan Rouhani in Dushanbe on Friday. Russia’s presidential aide Yury said two leaders would discuss progress with Iran's nuclear program, as well as the Iraq and Syria crises. Tehran said in June i+t expected to sign a deal later this year with Russia to build two new 1,000-megawatt nuclear reactors in Iran. On Sunday Bushehr Governor General Mostafa Salari announced that Atomic Energy Organization of Iran will build two new nuclear power plants in the Bushehr province in a seven-year timespan (FNA, 09.07.14, Reuters, 09.10.14, Tass, 09.12.14).
Moscow and Tehran are discussing plans for Russian companies to help construct power plants in Iran, in return for crude oil. "We are talking about construction of eight to 10 units for thermal power plants, 350 megawatts each, with a combined power output of up to 3 gigawatt," Russian Energy Minister Alexander Novak on Wednesday, on the sidelines of a Russian-Iranian business forum in Tehran. These projects are estimated to be worth $10 billion. (Moscow Times, 09.11.14, Russia Today, 09.09.14).
Russia and Iran will discuss launching production lines for Tupolev Tu-204 airliners in Iran as the two countries — both paid-up members of the West's Black List — boost their economic cooperation. (MT, 09.09.14).

NATO-Russia relations, including transit to and from Afghanistan:

Russian Foreign Minister Sergei Lavrov has taken a swipe at NATO, claiming the alliance has lost its identity and is using the specter of Russia to rally member states around a common enemy. (MT, 09.11.14).
The possibility to call a NATO-Russia Council meeting exists even amidst the Ukrainian crisis but so far Moscow sees no common topics for the dialogue, said Russia's Ambassador to NATO Alexander Grushko. (Interfax, 09.12.14).

Missile defense:

The Shanghai Cooperation Organization took a swipe at the United States on Friday, saying the development of unilateral missile defense systems would undermine global security. (Reuters, 09.12.14).

Nuclear arms control:

Russian and U.S. diplomats have traded mutual complaints over a landmark nuclear arms treaty, but pledged their adherence to it. The U.S. State Department said "both sides acknowledged the importance of the INF Treaty and reconfirmed their commitment to it," but added that the meeting failed to assuage the U.S. concerns. Russia's Foreign Ministry said it hasn't gotten satisfactory answers to its concerns but emphasized that "the parties reaffirmed the importance of preserving the treaty." “We would have liked our American colleagues to have formed their concerns more clearly and understandably, not in general, but concretely," said the Russian Foreign Ministry's arms control chief Mikhail Ulyanov, who represented the Russian side at the talks. The talks in Moscow were attended by U.S. Undersecretary of State for Arms Control and International Security Rose Gottemoeller. (RFE/RL, 09.12.14, Reuters, 09.11.14).

Counter-terrorism cooperation:

No significant developments.

Cyber security:

The Russian branch of global Internet giant Google is investigating the reported leak of some 5 million passwords of Gmail account users. (RFE/RL, 09.10.14).
Swiss officials are debating whether fugitive U.S. whistleblower Edward Snowden could receive asylum to testify in state investigations into foreign espionage against Switzerland. (RFE/RL, 09.08.14).

Energy exports from CIS:

Russian oil production, a major source of government revenue, may decline slightly next year, having risen steadily since 2009, the Energy Ministry said Monday. The ministry said oil production in 2015 was seen at 525 million tons (10.54 million barrels per day) compared to an expected 525.3 million tons this year. Last year's oil output, which generates 40 percent of state revenues, stood at 523.3 million tons, a post-Soviet high. (Reuters, 09.08.14).
“Sanctions … have already had an impact on production of hard-to-recover reserves. As a rule, our oilmen use foreign technologies and try to adapt them to our conditions," Russian Natural Resources and Environment Minister Sergei Donskoi said. Large-scale output of unconventional oil in Russia is some five to 10 years away, although some fields have started production even if they are not currently economically viable. (Reuters, 09.10.14).
Poland resumed deliveries of natural gas to Ukraine on Friday after a halt earlier in the week due to low gas imports from Russia. Gazprom has insisted that it was supplying unchanged volumes but Poland's state-controlled PGNiG SA said earlier this week deliveries were 20-24% below contracted levels on Monday and Tuesday and 45% below order on Wednesday. (WSJ, 09.12.14).
Austria's energy regulator E-Control and oil and gas company OMV AG Friday both said gas shipments to the alpine state from Russia were down 15% from previously ordered volumes. (WSJ, 09.12.14).
Russia is supplying 10% less natural gas to Slovakia than contracted on Thursday, the country's gas distributor SPP said after its Polish peer reported a deficit of 45% in deliveries from OAO Gazprom. (WSJ, 09.11.14).
Novatek, Russia's largest independent gas producer, has been granted a license to export liquefied natural gas, or LNG, marking the next step on Russia's gradual liberalization of a market dominated by state-owned giant Gazprom. (Moscow Times, 09.07.14).
By signing into law a bill allowing foreign companies to buy equity stakes in the country's outdated gas network, Ukrainian President Petro Poroshenko on Monday opened its gas transit infrastructure to potential Western investors, but kept the door firmly shut on Russia's Gazprom. (MT, 09.08.14).
European Union authorities could step in to manage the flow of gas between member states if failure to resolve the conflict in Ukraine by winter results in Gazprom halting supplies of Russian gas to Europe, according to a draft EU planning document leaked to the media. (MT, 09.10.14).

Bilateral economic ties:

In the last six months, demand among Russians for residential real estate in the United States has seen a serious decline, with requests plummeting by nearly 50 percent, according to international real estate company Knight Frank. (RBTH, 09.10.14).

Other bilateral issues:

The United States hit Russia's largest bank, a major arms maker and the arctic, deepwater and shale exploration activities by its biggest oil companies with new sanctions on Friday to punish Moscow for intervening in Ukraine. The sanctions target companies including Sberbank, the country's largest bank by assets, and Rostec, a conglomerate that makes everything from Kalashnikovs to cars, by limiting their ability to access the U.S. debt markets. They will also bar U.S. companies from providing goods or services to help five Russian energy companies conduct deepwater, Arctic offshore and shale projects. (Reuters, 09.12.14).
Although Russian officials did not announce any specifics in response to Western sanctions, they have previously threatened to ban flights by Western airlines over Russian airspace, potentially closing off an enormous stretch of territory and forcing costly detours for long-haul flights between Europe and eastern Asia. Andrey Belousov, a senior economic aide to President Vladimir Putin , said Thursday that another response might be to ban imports of automobiles to Russia, which is a huge market for used cars from Europe and Japan. (NYT, 09.12.14).
Russian and Syrian officials on Thursday indicated they would challenge Washington's strategy after President Barack Obama outlined a strategy to combat Islamic State militants. Russia has warned that US air strikes against militants in Syria would be a "gross violation" of international law. The Russian Foreign Ministry has already issued a stern warning that attacks in Syria without UN Security Council authorization would be acts of aggression. (National Interest, 09.11.1, WSJ, 09.12.13).
U.S. Secretary of State John Kerry has said Moscow should back, rather than hamper, American efforts to eliminate the jihadist group Islamic State. "I would hope that Russia will come to see that ISIL really represents a threat to them, too," Kerry said Thursday of Russia's response. (Reuters, 09.12.14).
New U.S. Ambassador to Russia John Tefft said on Monday he would seek to promote U.S. interests in Moscow and help his government better understand Russia's goal and perspectives. Tefft paid a visit on Monday to the Russian Foreign Ministry and presented deputy Foreign Minister Sergei Ryabkov with copy of his credentials. (WP, Tass, 09.09.14, Tass, 09.08.14.
U.S. President Barack Obama said: It is America that has rallied the world against Russian aggression, and in support of the Ukrainian peoples’ right to determine their own destiny.” (WP, 09.11.14).
"I do worry about President Putin's view that Russia should dominate its border and intimidate people beyond its borders," Former US secretary of state Hillary Clinton said in a speech in Mexico City. (WP, 09.06.14).
U.S. information technology giant Hewlett-Packard, or HP, was fined $58 million after pleading guilty to bribing Russian officials in order to secure a lucrative contract, the U.S. Department of Justice said in a statement Thursday. (MT, 09.12.14).
Russia's food safety agency has launched 80 administrative cases against companies and individuals as a result of sanitary control checks on McDonald's restaurants across the country. (RFE/RL, 09.10.14).
The U.S. on Wednesday threw its weight behind efforts to ensure that the sale of two French warships to Russia, the first of which has been delayed due to international concerns about the Ukraine crisis, is called off permanently. (Reuters, 09.10.14).

II. Russia news.

Domestic politics, economy and energy:

President Vladimir Putin and Prime Minister Dmitry Medvedev agreed on a major reshuffling of government agencies on Monday that would see the Regional Development Ministry abolished and state defense procurement agencies merged with the Defense Ministry. (MT, 09.08.14).
Russia is set to harvest the largest wheat crop in six years thanks to favorable weather this year and has already harvested 50 million tons from 62 percent of the planned area, according to Agriculture Ministry data. (Reuters, 09.08.14).
Russia's tax authorities boosted the revenues handed over to the federal government in the year to Sept. 1 by 18 percent, or about 600 billion rubles ($16 billion), to 4.1 trillion rubles ($111 billion), compared to the year before. (MT, 09.10.14).
For 8th week running Russia's Finance Ministry said Tuesday it was canceling its weekly treasury bond auction due to "unfavorable market conditions." Deputy Finance Minister Sergei Storchak said on Aug. 20 that borrowing costs were too high to make bond issuance attractive, because of a "political margin." (Reuters, 09.09.14).
The ruble tumbled to a record low of 37.938 against USD after the Bank of Russia decided to keep interest rate at 8, blaming accelerating inflation on Western sanctions. (WSJ, 09.12.14).
Russia's Gazprom reported a 41 percent fall in first-quarter net profit after cutting prices for gas deliveries to Ukraine, and the gas producer faces more pain this year due to its unresolved dispute with Kiev. (Reuters, 09.11.14).
Sales of new cars in Russia dropped in August at the fastest rate so far this year, the Association of European Businesses, said on Monday. The trade group's data for August showed that sales of new cars and light commercial vehicles in Russia, which is home to more than 140 million people, declined 26% from a year earlier to 172,015 vehicles. (WSJ, 09.09.14).
The sanctions prevent Russian banks from raising capital in Western markets, but with government funding supplied instead, Sberbank and VTB reported a rise in corporate loans of 9 and 13 percent respectively in the first six months of the year. The entire sector's profit was down 10 percent to 592 billion rubles ($16 billion) in the first eight months of the year. (Reuters, 02.12.14).
Any further Western sanctions that may aim at technology for Russia's modernizing oil refineries could lead to gasoline shortages, Yury Zolotnikov, a deputy head of the oil refining department at the Russian energy ministry said. (Reuters, 09.12.14).
Russian travel agencies say 40 to 60 percent fewer European and U.S. holiday makers came to Russia in the first half of this year than in the same period of 2013, while three times fewer Russian tourists went abroad. (MT, 09.09.14).
Major Russian airlines have hired 200 foreign pilots under a recent change to the rules. (RBTH, 09.09.14).
Dozens of people have laid flowers and lit candles at the site of a bomb blast that ruined a Moscow apartment building and killed 92 people 15 years ago. (RFE/RL, 09.09.14).
Russians may give their President Vladimir Putin soaring approval ratings, but more than half of the country's inhabitants take no interest in politics or even dislike it, the independent Levada Center pollster said in a survey released Thursday. (MT, 09.12.14).
Psychiatrists from Moscow's Serbsky Center of Social and Judiciary Psychiatry said Russia has lost a million people to suicide in the last 20 years. . (RFE/RL, 09.09.14).

Defense:

Russia will continue to build up its military might with large-scale weapons purchases in order to meet any threat, particularly from the United States and NATO, President Vladimir V. Putin said on Wednesday. Mr. Putin cited the United States’ continued development of a missile defense system in Europe and Alaska as a major threat facing Russia, but not the only one. “There are other things that bother us…military space exploration continues, the issue of the use of non-nuclear strategic weapons is being studied, and so on and so on,” he continued. “A lot of threats are emerging. Recently, as you know, there was a decision made to expand NATO forces in Eastern Europe.” (NYT, 09.10.14).
A high-placed Defense Ministry official says that Russia may be forced to match the US Conventional Prompt Global Strike doctrine, which prescribes that a non-nuclear US missile must be able to hit any target on Earth within one hour. “Russia is capable of and will have to develop a similar system,” Deputy Defense Minister Yuri Borisov said during a public discussion of the Russian rearmament program for the decade of 2016 through 2025. (Russia Today, 09.11.14).
President Vladimir Putin has signed a decree taking direct charge of a committee that oversees Russia's defense sector. (RFE/RL, 09.10.14).
President Vladimir Putin has ordered snap checks of troops' combat readiness in Russia's Far East. The snap checks were also meant to test the ability of local branches of the trade, communications and transportation ministries to work during wartime conditions. (Reuters, 09.11.14).
Defense Ministry spokesman Igor Konashenkov said the submarine "Vladimir Monomakh" test-fired a Bulava missile from the White Sea and that the missile hit a testing ground in Kamchatka. (RFE/RL, 09.10.14).
Two Russian strategic bombers conducted practice cruise missile attacks on the United States during a training mission last week that defense officials say appeared timed to the NATO summit in Wales. (Free Beacon, 09.08.14).
Canadian officials say Russian military planes buzzed a Canadian ship involved in an ongoing military exercise nearby in the Black Sea. (WP, 09.10.14).
The Russian armed forces are setting up a permanent base for the Northern Fleet on the New Siberian Islands in the Arctic Ocean. Russia will move military units to Kotelny Island and a motorized rifle brigade to Alakurtii to coincide with deployments to the Franz Josef Archipelago and Novaya Zemlya. (MT, 09.08.14, Interfax, 09.06.14).

Security, law-enforcement and justice:

Russian intelligence agents have detained a man in Moscow suspected of being a militant from the Islamic State (IS) extremist group currently active in Syria and Iraq. (RFE/RL, 09.10.14).
No significant developments.

Foreign affairs and trade:

The European Union tightened economic sanctions against Russia on Friday, imposing additional restrictions on oil companies and extending asset freezes and travel bans to 24 more individuals. The measures, aimed at Russia’s financial, energy and defense sectors, will be reviewed by diplomats before the end of the month and could be revised swiftly if a cease-fire holds. (NYT, 09.12.14).
Russia's Foreign Ministry said Thursday that the European Union had shown itself to be against the peace process in Ukraine by imposing a new set of sanctions against Moscow. (Reuters, 09.11.14).
President Vladimir Putin told the summit of Shanghai Cooperation Organization that Russia, which assumed the group's rotating presidency, will seek to boost the SCO's role in preserving regional stability. It is hoped that during Russia's chairmanship, the process of its expansion will get real outlines, Putin said. Chinese President Xi Jinping said China will provide a $5 billion loan to finance joint SCO projects. (Interfax, 09.12.14, RFE/RL, 09.12.14).
Chinese President Xi Jinping said: "China stands for resolving the Ukraine crisis through political means, and calls on all parties in Ukraine to open an inclusive dialogue as early as possible.” "Relevant parties need to get to the bottom of the matter and fundamentally sort out and resolve the problem," Xi told Putin during a meeting in the Tajik capital Dushanbe on the sidelines of a Shanghai Cooperation Organisation summit. During the meeting Putin expressed hope that a new gas pipeline connecting Siberia with China will be built swiftly. China is ready to invest 400 billion rubles ($10.7 billion) in the construction of a high-speed railway linking Moscow with Kazan (RFE/RL, 09.12.14, Reuters, 09.12.14, MT, 09,09.14).
The Shanghai Cooperation Organization has backed a cease-fire deal agreed for eastern Ukraine last week and called for talks to continue until the conflict is resolved. (RFE/RL, 09.12.14).
Iran is seeking full membership in the Shanghai Cooperation Organization, Iranian Ambassador to Uzbekistan, Ali Mardani Fard, said Wednesday. (RIA Novosti, 09.11.14).
Russia's government green-lighted a joint venture between the state railway companies of Russia, Belarus and Kazakhstan that aims to grab up to a 2 percent share of container traffic between China and Europe currently worth a $1 trillion a year. (Moscow Times, 09.07.14).
Russian Foreign Minister Sergei Lavrov will attend an international conference on Iraq in Paris next week. (RIA Novosti, 09.12.14).
Border guards from Russia and China have carried out joint anti-terrorist drills on Russia's southern frontier, in what participants have hailed as an example of the positive working relationship between the two countries. (MT, 09.08.14).
A strange incident near the Russian-Estonian border on Friday ended with an Estonian intelligence officer in Russian custody. Estonia's president and prime minister, among other officials, said the officer had been kidnapped at gunpoint from their territory and forced across the border in a blatant violation of sovereignty. The Russian Federal Security Service said the officer was in Russia and engaged in a clandestine operation when he was detained. The European Union has demanded that Moscow release immediately an Estonian security officer who Estonia says was abducted on the border and taken into Russia last week. (NYT, 09.06.14, Reuters, 09.11.14).

Russia's neighbors:

Russia will introduce import tariffs on Ukrainian goods as of Nov. 1 if Kiev proceeds with a trade pact with the European Union, Economy Minister Alexei Ulyukayev said. (Reuters, 02.12.14).
The EU will offer Russia more time to adjust to a European trade pact with Ukraine, diplomats say. Diplomats say Russian President Vladimir Putin has told EU leaders that a political solution to ending the Ukraine conflict depends on addressing concerns about the trade deal. (Reuters, 09.10.14).
Ukraine is expected to ratify an association agreement with the European Union on Tuesday. Ukrainian President Petro Poroshenko said it would be impolite for the European Union not to move to the next step, known as “accession partnership” and designed to steer toward membership. (NYT, 09.12.14).
Ukrainian President Petro Poroshenko is scheduled to meet with President Obama in Washington on Dec. 18, and has said he would be seeking a security alliance with the United States outside the framework of the Atlantic alliance. (NYT, 09.12.14).
A law on sanctions that may be imposed against Russia comes into force in Ukraine this Friday. (Tass, 09.12.14).
"There is no military solution for this crisis," Ukrainian President Petro Poroshenko told E.U. and Ukrainian lawmakers and businessmen at a conference in Kiev on Friday. "To keep the country united, we need some decentralization of power," he said, adding that security and foreign policy must stay in the hands of the central government. “We are ready to provide significant steps including the decentralization of power, including the special status for certain districts in the Donetsk and Luhansk region for economic freedom,” Mr. Poroshenko said. Poroshenko’s offer of "special status" within Ukraine for the breakaway eastern regions of Donetsk and Luhansk is insufficient, says Aleksandr Karaman, deputy prime minister of the so-called Donetsk People's Republic. (RFE/RL, 09.11.14, WP, 09.12.14, NYT, 09.07.14).
The number of people confirmed killed in the Ukraine conflict has risen above 3,000 if the victims of the MH17 plane crash are included, a senior United Nations human rights official said on Monday. (Reuters, 09.08.14).
Malaysian Prime Minister Najif Tun Razak says a Dutch investigation suggests Malaysian Airlines flight MH17 was shot down by a ground-to-air missile on July 17 over eastern Ukraine. Investigators have recovered 25 pieces of metal from baggage and bodies, which could lead them to the missile believed to have torn apart the airliner. (Reuters, 09.12.14, RFE/RL, 09.09.14).
Russian Defense Minister Sergei Shoigu has blamed Ukraine for the downing of the Malaysian airliner in eastern Ukraine. "The catastrophe happened in the air space belonging to Ukraine, which bears full responsibility for what happened," he said. (MT, 09.10.14).
Ukrainian border guards have begun the construction of a ‘wall’ on the border with Russia. (RBTH, 09.10.14).
President Petro O. Poroshenko of Ukraine said on Wednesday that , 70 percent of Russian forces had withdrawn from Ukrainian territory, a move that he said augmented the chances for a lasting cease-fire in the southeast. The situation has “radically changed,” he said. (NYT, 09.10.14).
Russian Foreign Minister Sergei Lavrov says he hopes that talks would start soon on the status of eastern Ukraine. (RFE/RL, 09.09.14).
Amnesty International said Wednesday it had documented evidence of war crimes by both sides in the conflict between Ukrainian forces and pro-Russian separatists in eastern Ukraine. (Reuters, 09.10.14).
Despite appeals from the Ukrainian armed forces, the United States has so far provided only a modest package of nonlethal assistance to the Kiev government, and much of it has yet to arrive. (NYT, 09.10.14).
The United States, Ukraine and other nations will be conducting joint military exercises in the Black Sea this week. (WP, 09.08.14).
A senior aide to Ukraine's President Petro Poroshenko said Kiev has agreed on the provision of weapons and military advisers from U.S., France, Italy, Poland and Norway, but four of the five, including US, swiftly denied such a deal had been reached. (Reuters, 09.08.14).
Kazakh President Nursultan Nazarbaev has told visiting Iranian President Hassan Rouhani he hopes the dispute over Tehran's nuclear program will be resolved. (RFE/RL, 09.09.14).
Authorities in Kyrgyzstan have detained a Tajik national they say intended to join militants in the Palestinian territories. (RFE/RL, 09.12.14).
Uzbek prosecutor-general's office has said a person named "Karimova G." is a suspect in a case against an organized criminal group. Russia's RIA Novosti news agency cited an unnamed source in Uzbek government that mentioned Karimova G. is Gulnara Karimova -- the eldest daughter of Uzbek President Islam Karimov. (RFE/RL, 09.08.14).
Iranian President Hassan Rouhani has helped inaugurate a power generating unit at an Iranian-funded hydroelectric plant in Tajikistan. (RFE/RL, 09.09.14).
United States and Georgia moved Sunday to expand their defense relationship — including the possible sale of U.S. Black Hawk helicopters to the former Soviet bloc nation at the crossroads of Eastern Europe and Asia. Speaking on September 7 in Tbilisi after talks with Georgian Defense Minister Irakli Alasania, U.S. Defense Secretary Chuck Hagel called NATO’s September 4-5 summit in Wales “an important milestone in Georgia’s efforts to join” the alliance. (RFE/RL, 09.08.14, AP, 09.07.14).
Georgia is preparing to send military helmets and bulletproof vests to Ukraine as part of what it calls a humanitarian aid shipment.. (RFE/RL, 09.09.14).
The Council of Europe's human rights chief has harshly criticized Azerbaijani authorities over what he says is the deterioration of human rights and basic freedoms in the oil-producing Caspian Sea country. (RFE/RL, 09.08.14).
A U.S. citizen of Azerbaijani origin, Said Nuri, has been deported from Azerbaijan after what he called days of intimidation and harassment. (RFE/RL, 09.12.14).

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