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Russia in Review

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Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for July 11-18, 2014

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

Nuclear security agenda:

  • Russian military will participate in an emergency response exercise involving a potential nuclear disaster. During the exercise, the military will place nuclear materials on board Pacific Fleet ships and test the modern model of the emergency response and elimination of nuclear accident effects, developed last year at the exercise “Emergency 2013.” (RIA Novosti, 07.14.14).

Iran nuclear issues:

  • The presidents of Russia and Iran have discussed the ongoing negotiations on Iran’s nuclear program and other international issues in a phone conversation on Friday, the Kremlin said in a statement. They also agreed on the need for a swift end to the military conflict in Gaza. (RFE/RL, 07.18.14, RIA Novosti, 07.18.14).
  • Iran and Russia are likely to sign an agreement on the construction of two more reactors at the Bushehr nuclear power plant, and also negotiate the possible construction of an additional six units on the territory of Iran, according to Iran’s ambassador to Russia. (Interfax, 07.17.14).

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

  • The pause in NATO's collaboration with Russia in fighting terrorism and drug trafficking because of Moscow's position on the Ukrainian crisis "punishes" primarily the people of the involved territories and points out the shortsighted approach of a range of Western countries, Ilya Rogachev, director of the department of new challenges and threats at the Russian Foreign Ministry, said. (RIA Novosti, 07.16.14).
  • U.S. Marine Gen. Joseph Dunford urged lawmakers on Thursday to back off plans to cut funding for Russian-made transport helicopters used by the Afghan military, arguing it would have a “catastrophic” effect on Afghanistan’s ability to conduct counterterrorism operations. (Stars and Stripes, 07.17.14).

Missile defense:

  • The U.S. Defense Department needs all four Capitol Hill defense committees to sign off on its request to redirect $187.5 million toward ballistic missile-defense activities. The majority of that amount -- $167 million -- would go to the Ground Based Interceptor program. (GSN, 07.16.14).
  • Raytheon Co. (RTN) will resume production of warheads for the Pentagon’s ground-based missile defense system by July 31 after the first successful interception of a dummy incoming missile since 2008. (Bloomberg, 07.11.14).

Nuclear arms control:

  • Members of the State Duma lower house of Russia’s parliament have proposed as a response to the expansion of US sanctions against Russia to unilaterally suspend the New START and the agreement on the Afghan transit. (Itar-Tass, 07.17.14).

Counter-terrorism cooperation:

  • No significant developments.

Cyber security:

  • A Russian hacker group has claimed responsibility for breaking into the servers of a U.S. technology news website and stealing its registered readers' data, but said that its goal was only to improve Internet security and get attention. (The Moscow Times, 07.15.14).

Energy exports from CIS:

  • Talks between the European Commission and Russia over the supply of gas to Ukraine have been postponed until next week. (Reuters, 07.17.14).
  • The European Union dealt a fresh blow to Russia's ambitions to increase its gas exports to Europe on Wednesday, postponing a much-anticipated decision on granting it full access to OPAL pipeline that transports Russian gas through Germany. (WSJ, 07.16.14).
  • Russia’s Bazhenov shale contains an estimated 10 times more recoverable oil than the famous Bakken formation in North Dakota and Montana. It could produce more oil than has so far been extracted from Ghawar - the super-giant field in Saudi Arabia that made the 20th century the age of petroleum. (Reuters, 06.16.14).

Bilateral economic ties:

  • The United Launch Alliance said the little-noticed provision, in the 2015 U.S. National Defense Authorization Bill, would bar the Pentagon from agreeing new contracts or extending contracts with any supplier that relied significantly on components from Russia. ULA’s Atlas V rocket relies on a Russian-supplied RD180 engine. ULA’s warning comes after William Shelton, commander of the US air force’s space command, warned the Senate armed services committee about the potential effect of an interruption in the production or supply of RD180 engines (Financial Times, 07.17.14).
  • The supply of Russian titanium to aircraft manufacturers Airbus and Boeing will not be affected by the deterioration of East-West relations over the Ukraine crisis, Russia's deputy trade minister said Tuesday. (Reuters, 07.15.14).
  • Weatherford International PLC has agreed to sell its land rig operations in Russia and Venezuela to Russia's state-controlled oil giant Rosneft for $500 million in cash. (WSJ, 05.14.14).
  • Russian homebuyers ranked ninth on the list of foreign citizens who followed the American dream to its most physical conclusion and purchased real estate in the U.S. in 2013, a recent study found. Russian buyers took 2 percent of all purchases by foreign citizens in 2012 and 2013. (The Moscow Times, 07.14.14).
  • Eugene Kadomskiy, a restaurant magnate with more than 70 places in Moscow and St. Petersburg, Russia, plans to open a 26,000-square-foot behemoth in a Times Square high-rise, with 600 seats on three levels. (New York Times, 07.16.14).

Other bilateral issues:

  • The US and EU have this week bolstered sanctions against Russia over its alleged support for separatists fighting in Ukraine. The US has targeted major banks including Gazprombank, defense firms and energy companies including Rosneft. European Union leaders have also agreed to impose sanctions on Russian companies that help destabilize Ukraine and to block new loans to Russia through two multilateral lenders. (BBC, Foreign Policy, 07.16.14-07.17.14).
  • Russian President Vladimir Putin said: "Sanctions have a boomerang effect and without any doubt they will push U.S.-Russian relations into a dead end, and cause very serious damage." In conversation with U.S. President Barack Obama, Putin also expressed "deep disappointment" at "unconstructive decision" to impose new sanction. (BBC, Interfax,07.17.14).
  • Russian Prime Minister Dmitry Medvedev suggested on Thursday Russia could increase defense spending in response to "evil" new Western sanctions. "Any sanctions are evil," Medvedev said in televised comments at the meeting. "The international record shows that such sanctions have never been able to bring anyone to their knees." (MT, 07.17.14).
  • Russia has offered the United States its GLONASS station for differential correction and monitoring to be placed on the Alaskan coast opposite Russia's Chukotka peninsula. (Interfax, 07.16.14).
  • Moscow has dispatched a diplomatic mission to the U.S. territory of Guam to demand that a Russian lawmaker's son arrested on hacking charges be transferred from jail to a hospital, diplomats said. (The Moscow Times, 07.15.14).
  • According to a new survey from the Pew Research Center, Americans see Russia as the No. 1 future threat to the United States. Twenty-three percent of Americans give that distinction to Russia, while 19 percent say it's China and 16 percent say it's Iran. (Washington Post, 05.15.14).

 

II. Russia news.

Domestic politics, economy and energy:

  • An upsurge in international tensions and further sanctions slapped on sectors of the Russian economy over the country's annexation of Crimea from Ukraine would cost Russia 0.2 to 0.3 percent of the GDP this year, according to Russia's Finance Ministry. (The Moscow Times, 07.11.14).
  • Moscow shares fell on Friday morning, extending losses from the previous session, following the downing of a Malaysian passenger airliner in eastern Ukraine. The ruble-traded MICEX dropped 1.9 percent in the first minute after trading began and was down 1.53 percent at 1,419 points at 1:00 p.m. in Moscow. The dollar-denominated RTS fell 1.8 percent to 1,276 points by 1:00 p.m. (Reuters, 07.18.14).
  • In an effort to transform Russia's oil-dependent economy into a sustainable engine of growth, the government has unveiled a series of legal and financial measures aimed at fulfilling President Vladimir Putin's ambitious pledge to increase Russia's labor productivity 50 percent by 2018. (The Moscow Times, 07.14.14).
  • Moscow gained 242,000 square meters of new retail space in the first half of the year — more than the total volume that went on market in 2013 and the highest level since 2009. (The Moscow Times, 07.14.14).

Defense:

  • No significant developments.

Security, law-enforcement and justice:

  • Police in Russia's second-largest city, St. Petersburg, have arrested a Tajik citizen wanted for alleged membership in the Islamic Party of Turkestan. (RFE/RL, 07.15.14).

Foreign affairs and trade:

  • Leaders of the BRICS group of large emerging countries have named Shanghai as the headquarters of their new development bank and nominated India to provide its first president. (Financial Times, 07.15.14).
  • "We suggest to set up an energy association of the BRICS. Under its roof, one could set up a reserve fuel bank and an institute for energy safety," Russian president Vladimir Putin told the leaders of Brazil, India, China and South Africa. (Reuters, 07.16.14).
  • Russia will help build the third reactor of a nuclear power plant in Argentina, Russian leader Vladimir Putin said after meeting with the Argentine president, Cristina Fernández de Kirchner. (New York Times, 07.14.14).
  • Russia has written off $32 billion of Cuba's outstanding debt, which represents the main bulk of the funds the Caribbean republic obtained from the Soviet Union decades ago. The move came as Vladimir Putin arrived in Havana. (WSJ, 07.12.14).
  • President Vladimir Putin on Thursday denied media reports that Russia's Defense Ministry was set to reopen a Soviet-era spy post in Cuba that was once used to gather U.S. intelligence. (The Moscow Times, 07.17.14).
  • Russia has backed a UN Security Council resolution to authorize humanitarian access without Syrian government consent. (Reuters, 07.1.5.14).
  • Officials in the Russian aviation industry lashed out Monday at Britain's refusal to grant visas to some members of a state delegation to the Farnborough air show over Russia's actions in Ukraine. (New York Times, 07.15.14).
  • Russia's No. 2 airline, Transaero, has agreed to buy 20 planes from Airbus in a deal worth about 5.3 billion euros ($7.1 billion). (The Moscow Times, 07.17.14).

Russia's neighbors:

  • The Russian and Ukrainian governments both sharply denied any responsibility for apparent surface-to-air missile strike that ripped the Boeing 777-200 from the Eastern Ukrainian sky Thursday afternoon, killing the 298 people aboard. Oleg Tsarev, one of the leaders of the breakaway Donetsk People’s Republic, said the rebels did not shoot the plane down either. (New York Times, Time, 07.17.14).
  • During a late cabinet meeting Russian President Vladimir Putin said, “Definitely, the country over whose territory this happened bears the responsibility for this horrible tragedy.” Mr. Putin, without saying what might have caused the crash, said that “this tragedy could have been avoided” had Ukraine not resumed combat operations in the southeast. (New York Times, 07.17.14).
  • U.S. President Obama said Friday that the United States believed that a Malaysian jetliner was shot down by surface-to-air missiles from an area inside Ukraine that is controlled by Russian-backed separatists. Obama learned about the plane crash while on a telephone call on Thursday morning with President Vladimir V. Putin who had initiated the conversation to talk about the sanctions imposed Wednesday and the broader Ukrainian crisis. (New York Times, 07.18.14).
  • Ukrainian President Petro Poroshenko blamed pro-Russian separatists and those he called their Russian masters for the downing of the Malaysian airliner with 298 people on board. (Washington Post, 07.18.14).
  • Speaking to reporters in Berlin, Chancellor Angela Merkel of Germany said there were “many indications” that the Malaysian airliner “was shot down.” But Ms. Merkel studiously declined to answer repeated questions about whether she would support tougher sanctions against President Vladimir V. Putin of Russia. In Britain, Prime Minister David Cameron summoned a meeting of the high-level crisis response committee known as Cobra, which debates matters of national security. (New York Times, 07.19.14).
  • A preliminary U.S. intelligence assessment indicates that a Malaysia Airlines plane that crashed Thursday in eastern Ukraine was shot down by an antiaircraft missile fired by pro-Russian separatists, a U.S. official said Friday in Washington. The attack was likely carried out using an SA-11 surface-to-air missile system, or a similar class of weapon, according to the assessment, the official said. But Russian defense ministry said the route and crash site of d Malaysian Boeing 777 jet falls within the zone targeted by two Ukrainian air defense squadrons operating an S-200 long-range air defense system and three squadrons operating a Buk-M1 medium-range air defense system. (Washington Post, RBTH, Gazeta.ru, 07.18.14).
  • Four Ukrainian military planes have been shot down since June. Two of those incidents appear to have almost certainly have been caused by rebels, apparently demonstrating that they have the ability and willingness to shoot down a plane. But the other two were shot down at a high altitude, like the MH17 flight was, and it's not nearly as clear that was responsible. (Vox, 07.17.14).
  • In Moscow, Russian Foreign Minister Sergei Lavrov said Friday that the international community could not expect Russia to get the pro-Russian rebels in eastern Ukraine to lay down their arms. (Washington Post, 07.18.14).
  • During their meeting in Brazil over the weekend Vladimir Putin and German Chancellor Angela Merkel agreed the situation in east Ukraine was "deteriorating." (RFE/RL, 07.13.14).
  • Russia has threatened Ukraine with "irreversible consequences" after a man in Russia was killed from a shell fired allegedly from Ukraine. (RFE/RL, 07.13.14).
  • More than 22,000 Ukrainian refugees are currently taking refuge in temporary shelters in Russia, Emergency Situations Ministry spokesman Alexander Drobyshenko said. (The Moscow Times, 07.13.14).
  • Russia said it will allow members from the Organization for Security and Cooperation in Europe to monitor two checkpoints on its border with Ukraine. (RFE/RL, 07.15.14).
  • Months of talks aimed at easing Russian fears about a new political and economic deal between the European Union and Ukraine will continue into September, representatives of the three parties agreed Friday.(WSJ, 07.12.14).
  • Ukraine's interior minister has announced firing 585 police officers in Donetsk who are accused of siding with pro-Russian rebels. (The Moscow Times, 07.15.14).
  • A "fact sheet" released by the U.S. State Department said Washington had "no evidence that Russia’s support for the separatists has ceased." NATO said Russia had increased its soldiers on the frontier to some 10,000-12,000, up from less than 1,000. (RFE/RL, 07.15.14).
  • The International Monetary Fund Friday gave the green light to the next tranche of bailout funding for Ukraine, but warned that fighting in eastern Ukraine risked capsizing the emergency financing. (WSJ, 07.18.14).
  • Ukrainian President Petro Poroshenko and Polish Prime Minister Donald Tusk have discussed plans to form a joint military brigade including the two countries and Lithuania. (RFE/RL, 07.15.14).
  • The U.S. Congress passed a bill, whereby Moldova, Ukraine and Georgia can obtain the status of allies of the U.S. without a NATO membership. The bill grants these countries with an ally status without a NATO membership, during which each of these states will meet the specified criteria for the transfer of defense systems to them or providing them with the defense sector services. (CIHAN. 07.17.14).
  • Russia has announced a ban on imports of fruit from Moldova due to what the Kremlin says is numerous violations with supplies. (RFE/RL, 07.18.14).
  • Armenian officials say they expect their country to join the Russia-led Eurasian Economic Union (EES) in October. (RFE/RL, 07.18.14).
  • Authorities in the breakaway region of Nagorno-Karabakh claim their forces have succeeded in a special operation aimed at "neutralizing saboteurs" from Azerbaijan. They also say they have "serious grounds" to believe that the Azerbaijani "saboteurs" are responsible for killing an ethnic Armenian teenager whose body was found on July 15.  (RFE/RL, 07.16.14).

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