Russia in Review

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for June 20 - 27, 2014

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

Nuclear security agenda:

A recent U.S. congressional report sees growing difficulty ahead in quantifying progress in U.S. efforts to secure and eliminate weapons of mass destruction. Changing circumstances -- including some notable successes -- are the culprit, according to a June 13 report by the Congressional Research Service. (GSN, 06.26.14).

Iran nuclear issues:

Russia's U.N. envoy Vitaly Churkin announced on Wednesday that the next round of talks between Iran and six world powers will be a two-week marathon session. Churkin also sharply criticized the U.N. Panel of Experts on Iran, which monitors compliance with the Security Council's sanctions regime, saying "any information not backed up by concrete facts ... could have a negative impact on the conduct of negotiations of the group of six and Iran." (Reuters, 06.25.14).
Iran has announced that Russia's state nuclear power company will construct two more reactors at the Bushehr nuclear power plant. Behrouz Kamalvandi, spokesman for Iran's Atomic Energy Organization, said he expects the deal will be signed with Russian company Rosatom later this week. Nikolai Spassky, the deputy director general of Russia’s Rosatom State Atomic Energy Corporation, is to meet with officials at the Foreign Ministry and the Atomic Energy Organization of Iran on Monday. (RFE/RL, 06.24.14, Press TV, 06.27.14).

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

NATO countries, wary of antagonizing Russia, are unlikely to grant former Soviet republic Georgia a formal step towards membership of the alliance at a summit in September, NATO diplomats say. (Reuters, 06.20.14).
North Atlantic Treaty Organization foreign ministers have agreed in principle to offer "a substantial package to Georgia to help it come closer to NATO," the alliance's secretary-general said. (Wall Street Journal, 06.24.14).
NATO chief Anders Fogh Rasmussen has opened a meeting of alliance foreign ministers by noting Russia's use of "ambiguous" warfare in Ukraine while saying its door "remains open" to aspirant countries. Estonian Prime Minister Taavi Roivas urged NATO to establish a permanent presence in the Baltic state in response to Russia's actions in Ukraine, telling his allies to "open your eyes and stay awake". (RFE/RL, 06.25.14, Reuters, 06.22.14).
The White House has submitted to Congress a 2015 military funding request that includes $1 billion to support NATO allies in Europe in response to Russia's interference in Ukraine. (The Moscow Times, 06.27.14).

Missile defense:

America’s trouble-plagued missile defense system registered a success Sunday when a ground-based interceptor fired from Vandenberg Air Force Base destroyed a mock enemy warhead launched from the Marshall Islands. (LA Times, 06.22.14).

Nuclear arms control:

The House of Representatives refused to strip bill HR 4870 of a congressional requirement that the Department of Defense keep on "warm standby" status 50 Minuteman III missile silos that are slated for eventual elimination under the New Start arms-reduction treaty with Russia. (Washington Post, 06.22.14).
Scientists in the United States claim to have devised a novel technique to test the viability of nuclear warheads, a tool that could be useful for New START inspectors. The technique, currently in the early stages of testing, should also be able to test whether rogue states or groups claiming to have a nuclear bomb are telling the truth (AFP, 06.25.14).

Counter-terrorism cooperation:

Konstantin Morozov, a Russian friend of Tamerlan Tsarnaev, the deceased suspect in the Boston Marathon bombing, is accusing U.S. federal agents of unfairly imprisoning him in connection with immigration problems after he refused their request to wear a wire and secretly tape a conversation with a close friend who also knew Tsarnaev. (Boston Globe, 06.22.14).

Cyber security:

Russia's media watchdog has asked Twitter to block access to a dozen accounts it deems to be "extremist," the agency's head said, as Moscow seeks greater control over Internet sites based beyond its borders. (Reuters, 06.24.14).

Energy exports from CIS:

Russian state-run energy giant Gazprom finalized a deal on Tuesday to build the Austrian branch of its massive South Stream gas pipeline to Europe. The deal was signed between the executives of Gazprom and Austrian oil and gas group OMV during President Vladimir Putin's visit to Austria on Tuesday. Also on Tuesday, Gazprom CEO Alexei Miller said that he is holding "constructive" talks with the European Commission about winning European Union approval for the pipeline. (The Moscow Times, 06.24.14).
Bulgaria did not breach EU law when it signed deals for the construction of the Russian-led South Stream gas pipeline, the government has said, dismissing Brussels' objections to a project that has spurred tensions between Moscow and the West. (Reuters, 06.26.14).
The EU's energy chief, Gunther Oettinger, said he would resume efforts to bring the two sides together for new talks by mid-July. But during a visit to Brussels, Ukraine's Energy Minister Yuri Prodan signaled that Kiev wouldn't settle its debts until they had agreed upon a price. (Wall Street Journal, 06.26.14).
Gazprom sees no impact from a proposal by Kiev to allow gas transit facilities to be leased on a joint venture basis with participation from firms in the European Union or United States, Deputy Chairman Alexander Medvedev said Friday. (Reuters, 06.27.14).
Turkmenistan and South Korea have signed a $4 billion agreement to build natural gas-processing plants in the Central Asian nation. (RFE/RL, 06.22.14).

Bilateral economic ties:

U.S. healthcare firm Abbott Laboratories is to buy Russian drugmaker Veropharm for up to $495 million, establishing a manufacturing presence in a country where the firm has been operating for nearly 40 years, Abbott said Tuesday. (Reuters, 06.24.14).

Other bilateral issues:

A Russian State Duma committee is preparing legislation that would require foreign Internet payment systems such as PayPal and WebMoney to pay hefty security deposits to continue operating in Russia. (The Moscow Times, 06.26.14).
International payment systems Visa and MasterCard could get a reprieve until Oct. 31 on a security deposit of up to $2.9 billion that the Russian government has demanded they pay if they are to continue operating in Russia. According to a draft bill by the Finance Ministry published Wednesday, payment systems operating in Russia can be freed from the obligation to pay a security deposit on one condition: they will need to stop providing information about money transfers carried out in Russia to clearing centers abroad.(The Moscow Times, 06.25.14).
The Obama administration has developed three options for further action, according to government officials: banning any interactions with some of Russia's largest banks; cutting off technology transfers to Russian energy and defense firms; and shutting down business with Russian defense companies. Whether Europeans will comply remains an open question. (New York Times, 06.25.14).
The U.S. Chamber of Commerce and National Association of Manufacturers are preparing a newspaper ad saying that potential sanctions on Russian energy, defense and financial sectors might hurt U.S. businesses and workers. (USA Today, 06.26.14).
The State Duma on Friday passed legislation allowing Russian banks to pass information on their U.S. clients to the U.S. tax service, as demanded by FATCA, a law that drags banks around the world into the U.S. fight against tax evasion. (Moscow Times, 06.22.14).
Russia's food safety watchdog is ready to discuss resuming U.S. pig imports and is also drawing up veterinary certificates for the supply of stud pigs from the European Union to Russia. (Moscow Times, 06.24.14).
The Obama administration’s embrace of targeted killings using armed drones risks putting the United States on a ‘‘slippery slope’’ into perpetual war, according to a report by a bipartisan panel. Using an example of a current crisis, the report said that Russia could use armed drones in Ukraine under the justification that it was killing anti-Russian terrorists and then refuse to disclose the intelligence that served as the basis for the strike. (New York Times, 06.237.14).

II. Russia news.

Domestic politics, economy and energy:

The approval rating of President Vladimir Putin climbed from 83 percent in May to 86 percent in June, according to the Levada Center. The disapproval rating shrank from 34 percent to 13 percent. (Interfax, 06.26.14).
Two-thirds of Russians hope that Vladimir Putin will retain the presidency beyond the end of his third term in 2018, according to a poll conducted by the Kremlin-friendly Public Opinion Foundation.(The Moscow Times, 06.25.14).
Russian GDP grew by 1.1 percent in the first five months of this year, according to estimates by the Economic Development Ministry. Economic Development Minister Alexei Ulyukayev says this trend will continue until the end of the year. (Interfax. 06.27.14).
Russia’s Micex stock index is down 1.9% year to date, but it’s up about 24% since its low in mid-March, when the crisis in Ukraine was in full blast. (Wall Street Journal, 06.27.14).
The ruble on Tuesday strengthened to 34 rubles to the dollar for the first time since January. (The Moscow Times, 06.24.14).
Russia's existing 33 nuclear power units, with a total rated capacity of 24.25 gigawatts (GW) generate about 16 percent of all power in the country. Yet, this is far from the limit of the country's ambitions. Ten more power units are currently under construction (including two reactors on the floating nuclear power station Akademik Lomonosov) with a total rated capacity of 9.2 GW. (RBTH, 06.24.14).
Russia is unlikely to ban major companies from holding accounts at foreign banks as part of a new law, as some media reports have suggested, according to First Deputy Prime Minister Igor Shuvalov. (Reuters, 06.26.14).
Russia's No.2 oil producer LUKoil has delayed a Eurobond placement to autumn due to rising costs of funding stemming from West-imposed sanctions over Russia's actions in Ukraine, LUKoil President Vagit Alekperov said. (RFE/RL, Reuters, 06.26.14).
President Vladimir Putin signed a law on Monday simplifying the process for foreign journalists and IT specialists to work in Russia, a statement on the Kremlin’s website said. (Moscow Times, 06.23.14).
Last year Russia recorded its first year of natural population growth since the Soviet Union collapsed in 1991, with the number of births exceeding the number of deaths by 24,013. The trend continued through the beginning of this year. (Moscow Times, 06.21.14).
The number of addicts in Russia has stabilized for the first time in decades, the country's drug agency head said Wednesday, but figures showing a sharp spike in the incidence of HIV suggest the battle against drug abuse is far from over. (The Moscow Times, 06.26.14).

Defense:

A pilot batch of new-generation Armata tanks will be put in service in Russia's armed forces in January or February next year, Oleg Bochkaryov, deputy chairman of the government's Military Industrial Commission, said. (Interfax, 06.22.14).
Russia has lost contact with one of three military satellites responsible for detecting intercontinental ballistic missile launches. (The Moscow Times, 06.25.14).
The Voronezh-DM early-warning radar in the Kaliningrad region reportedly began "experimental combat duty" and is expected to achieve full combat readiness in about three months, in September-October 2014. (Russian strategic nuclear forces blog, 06.25.14).
The inaugural test launch of Russia's Angara rocket -- its first new design of a space vehicle since the Soviet era -- was canceled on June 27 minutes before blastoff. (RFE/RL, 06.27.14).

Security, law-enforcement and justice:

Police in Russia's North Caucasus Republic of Daghestan say they killed two suspected militants in separate incidents on June 26. (RFE/RL, 06.26.14).
A group of St. Petersburg neo-Nazis received lengthy prison sentences on Tuesday for a series of crimes that included killing foreigners and burning homeless people alive. (The Moscow Times, 06.24.14).
Aleksandr Matusov, a reputed Russian crime boss wanted for his alleged involvement in scores of killings and other criminal activities has been arrested in Thailand. (RFE/RL, 06.25.14).
Prosecutors in Russia have asked a court to sentence the former mayor of Makhachkala, to 13 years in jail for involvement in plotting a missile attack against a plane carrying the head of the Russian Pension Fund's branch in Dagestan.(RFE/RL, 06.26.14).
Mikhail Khodorkovsky’s former Yukos Oil Co. partners said they’re confident of winning damages in a more than $100 billion case against Russia over the bankruptcy of the crude producer. A tribunal at the Permanent Court of Arbitration in The Hague is expected to issue a ruling by the end of this month or soon after. (Bloomberg, 06.20.14).

Foreign affairs and trade:

Russian oil giant Rosneft, whose chief executive was put on the U.S. sanctions list, signed a deal worth at least $1.5 billion with its longtime partner BP PLC. (Wall Street Journal, 06.27.14).
OAO Gazprombank is selling euro-denominated bonds today, becoming the second Russian issuer to tap markets for a benchmark-sized Eurobond since President Vladimir Putin’s annexation of Crimea. (Bloomberg, 06.26.14).
Gazprom is considering issuing bonds in Asian currencies and is “ready in principle” to receive payment from China in renminbi. (Financial Times, 06.26.14).
The European Union said it is prepared to help Russia comply with new air-cargo security rules that take effect July 1 and have caused a dispute that could ground airfreight between the two markets. (Wall Street Journal, 06.24.14).
After months of delay, Syria exported the last of its known supplies of chemical weapons components on Monday for destruction overseas. (New York Times, 06.24.14).
In the Forsa poll for the Internationale Politik magazine's latest edition due on Friday, 74 percent of Germans oppose NATO having permanent NATO military bases in eastern Europe as requested by Poland and the Baltic states while only 18 percent supported it. (Reuters, 06.25.14).
New York's top state court on Thursday reinstated Canadian oil company Norex Petroleum's $1 billion lawsuit claiming that two billionaires used armed soldiers and corrupted Russian court proceedings to gain control of a Siberian oilfield. (Reuters, 06.27.14).
Iraqi Prime Minister Nouri al-Maliki said second-hand fighter jets, recently purchased from Russia and Belarus, should help stop Islamic militants from overtaking the country. (UPI, 06.26.14).

Russia's neighbors:

Ukraine, Georgia, and Moldova signed key economic and political accords with the European Union in Brussels on Friday. The heart of the Ukraine-EU agreement is a comprehensive trade deal that eliminates 98 per cent of EU tariffs and 99 per cent of Ukrainian ones. Exporters in Ukraine could earn up to €500m a year in additional revenue as Brussels lifts trade barriers, according to officials from Ukraine and the EU. EU-commissioned independent studies forecast that the free trade agreement will result in a 4.3 per cent increase in Georgia’s GDP and a 5.4 per cent boost in Moldova. (AP, RFE/RL, 06.26.14-06.27.14).
Shortly after signing the EU agreements with Ukraine, Moldova, and Ukraine, Deputy Foreign Minister Grigory Karasin said that Ukraine and Moldova will face "grave consequences" after signing a free-trade agreement with the European Union. Russia has also said it is likely to respond with trade barriers without seeking approval from Belarus and Kazakhstan, its partners in the Customs Union. Russian steelmakers and dairy producers have been among those lobbying for protection once Ukraine's free trade agreement with the EU comes into force. In 2012, 5.2 percent of Russian exports went to Ukraine, making it the fourth biggest market for Russian exports, according to the European Commission's Directorate-General for Trade. Ukraine sends 24 percent of its exports to Russia, worth $15 billion a year. Russia is on track to reduce its imports of Ukrainian defense technology and hardware by 95 percent by the end of 2015. (The Moscow Times, 06.24.14, 06.26.14, 06.27.14, Reuters, 06.25.14, 06.26.14).
German chancellor Angela Merkel said the EU-Ukraine free trade agreement will come into force after EU, Ukraine and Russia will conduct “technical negotiations … to find solutions that will accommodate Russia’s concerns.” Kiev is prepared to hold consultations with Moscow on Ukraine's European integration bid, Ukraine's Prime Minister Arseniy Yatsenyuk said. Ukraine's economic development minister Pavel Sheremeta has said that he expects a "trade war" with Russia to break out after Kiev signs the trade section of an association agreement with the European Union. (Moscow Times, RIA Novosti/Vesti.ua, 06.24.14, RIA Novosti, 06.25.14).
Over 50 percent of the Ukrainian population support Ukraine's joining the EU, while around a quarter of the population favour joining the [Russia-led] Customs Union, according to a nationwide survey of public opinion made available in Kiev on 26 June. (Interfax, 06.26.14).
The EU has set Russia a deadline of Monday to take concrete steps towards implementing a peace plan in eastern Ukraine, including the return of Ukrainian border posts seized by pro-Russian fighters , or risk sanctions against entire sectors of its economy, such as energy, finance and defence. EU leaders will also meet again sometime from July 16 to 18 to judge whether Russia has taken sufficient steps to calm tensions with Ukraine. (Wall Street Journal, Financial Times, New York Times, 06.27.14).
Russian President Vladimir Putin said on Friday a long-term ceasefire was needed in Ukraine to allow talks between the Kiev government and representatives of eastern regions where rebels are waging an armed insurgency. Putin also blamed the months of crisis in Ukraine on Western leaders, saying they had forced Kiev to choose between Russia and the European Union. (New York Times, Reuters, 06.27.14, 06.26.14).
Ukrainian President Petro Poroshenko told European Union leaders on Friday that he was extending a cease-fire in eastern Ukraine for three days. Russian Foreign Minister Sergei Lavrov said Russia would welcome a three-day extension of a ceasefire in east Ukraine but it must not simply delay an "ultimatum" for separatists to lay down their arms. (Reuters, 06.27.14).
Pro-Russian separatists in eastern Ukraine said they had agreed to fresh talks before a one-week ceasefire expires Friday. The talks will aim at extending the truce, Andrei Purgin, a leader of the self-proclaimed Donetsk People's Republic said Thursday. (DPA, 06.26.14).
Earlier this week the presidents of Russia, Germany, France and Ukraine held a four-way phone call to discuss the situation in Ukraine. Also in a phone call with Mr. Putin late on Monday, U.S. President Barack Obama repeated his appeal to Russia to “halt the flow of weapons and materiel across the border into Ukraine.” (Reuters, 06.26.14).
Russia's upper house of parliament has voted overwhelmingly to revoke authorization for Russian military intervention in Ukraine. Vladimir Putin announced that he had asked the council to withdraw the authorization before going into talks with officials in Austria on June 24. (RFE/RL, 06.25.14).
More than 100,000 Ukrainians have fled for neighboring Russia and tens of thousands more have been displaced within the country as the government fights a pro-Russian insurgency, the United Nations refugee agency said on Friday. (Wall Street Journal, 06.27.14).
Ukraine's border service said late Tuesday it had once again abandoned a border post in the Luhansk region after heavy clashes with rebel fighters. As of Friday, rebels controlled three border crossings in that region. Rebels also shot down a Ukrainian helicopter carrying technicians who had been installing equipment to monitor violations of a peace plan in Ukraine's rebellious east, killing all nine people on board. (Reuters, 06.25.14, Wall Street Journal, 06.26.14, Vesti.ua, 06.27.14).
Four monitors for the Organization for Security and Cooperation in Europe (OSCE) who were abducted in May by pro-Russian gunmen in eastern Ukraine have been freed.(RFE/RL, 06.27.14).
Separatists in Luhansk and Donetsk announced on June 26 that they have elected Oleh Tsaryov as speaker of a new unelected parliament uniting the unrecognized people's republics of the two Ukrainian regions. The two regions also announced they would form a confederation called the "union of people's republics." (RFE/RL, 06.27.14).
Ukrainian Foreign Minister Pavlo Klimkin met with U.S. Secretary of State John Kerry at the NATO headquarters in Brussels on Wednesday. Klimkin briefed Kerry on Ukrainian President Petro Poroshenko's peace plan and won full support from him. (Interfax, 06.25.14).
A spokesman for Russian President Vladimir Putin says a comment by a senior Russian official who called Ukrainian President Petro Poroshenko "a Nazi" does not represent the Kremlin's official position. (RFE/RL, 06.27.14).
NATO has endorsed new funding for Ukraine's defense in the form of “trust funds” to help with logistics and cyber defense, as well as command and control, according to NATO Secretary General Anders Fogh Rasmussen. And on Monday, the foreign ministers of the 28-member European Union said they would send a training mission later this summer to help Ukraine reform its police force and to implement the rule of law (Russia Today, 06.26.14, New York Times, 06.24.14).
At their meeting on Monday, the European foreign ministers imposed a ban on importing goods made in Crimea and the port of Sevastopol. (New York Times, 06.24.14).
On Friday, the U.S. Treasury Department imposed sanctions on seven Ukrainian separatists, including Vyacheslav Ponomaryov, the self-proclaimed mayor of Slovyansk, and Denis Pushilin, the leader of the self-proclaimed Donetsk People’s Republic. (New York Times, 06.21.14).
Russia's Foreign Ministry has announced that as of January 1, 2015 citizens of the Commonwealth of Independent States, excluding member states of the Customs Union and the Eurasian Economic Union (EES), will no longer be able to use only their national identification documents, known as "internal passports," to enter the Russian Federation. (RFE/RL, 06.26.14).
Azerbaijani troops have shot dead a soldier from the separatist Nagorny Karabakh forces in the latest outbreak of violence along the disputed region’s volatile frontline, the rebel defense ministry said on Wednesday. (AFP, 06.26.14).
Russian Foreign Minister Sergei Lavrov has held talks in Yerevan with his Armenian counterpart, Edvard Nalbandian, on Armenia's integration into Eurasian Economic Union (EES) structures. (RFE/RL, 06.23.14).
Tajik authorities say they have arrested two suspected members of the Pakistani Taliban during a police search operation. (RFE/RL, 06.24.14).
Prominent Belarusian human rights activist Ales Bialiatski was released from prison on Saturday in a move seen as a gesture from the authoritarian leader of Belarus to improve relations with the West. (Wall Street Journal, 06.21.14).

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