Russia in Review

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

Nuclear security agenda:

Russia submitted its annual declaration that contains data on its holdings of civilian plutonium. According to the declaration, as of the end of 2012 Russia had 50.7 tons of unirradiated, separated plutonium, 1.2 tons more than was declared in 2011. (IPFM Blog, 05.25.14).
The U.S. National Nuclear Security Administration marked on Thursday the 10th anniversary of the Global Threat Reduction Initiative. NNSA Administrator Frank G. Klotz said: “The threat to national and global security from state or terrorist acquisition of nuclear and radiological materials is far from gone, and our focus now is on addressing the substantial threats that remain.” (NNSA, 05.29.14).

Iran nuclear issues:

Russia plans to sign a contract with Iran this year to build two more nuclear reactors at its Bushehr power plant as part of a broader deal for up to eight reactors in the Islamic state, a source close to the negotiations said. (Reuters, 05.29.14).

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

A war game the North Atlantic Treaty Organization played recently in a Norwegian fiord about 650 miles from the Russian border has a familiar ring: Tensions between two countries explode into military conflict after one supports an insurgency in disputed territory. (Wall Street Journal, 05.30.14).
U.S. President Barack Obama announced plans to keep a robust U.S. force in Afghanistan next year but then withdraw it by the end of 2016. (WSJ, 05.29.14)..

Missile defense:

Georgia is not interested in hosting NATO antimissile systems on its territory, despite Russian claims to the contrary, said Zurab Abashidze, the Georgian prime minister's special envoy on Russian relations. (GSN, 05.28.14).

Nuclear arms control:

A provision in the Senate’s $514 billion fiscal 2015 defense policy bill would require the White House to more quickly notify lawmakers of violations by parties to existing arms control agreements, in particular the New START treaty. (The Hill, 05.26.14).
Republican lawmakers are demanding to know whether senior U.S. envoy Rose Gottemoeller in 2010 neglected to inform the Senate about concerns about Russian compliance with the Intermediate-Range Nuclear Forces Treaty. (GSN, 05.27.14).

Counter-terrorism cooperation:

U.S. officials have charged a Kyrgyz national with obstructing the investigation of the Boston Marathon bombing. (RFE/RL, 05.30.14).
U.S. President Obama on Wednesday outlined a plan to establish a multibillion-dollar fund to underwrite counterterrorism trainings with other nations. (GSN, 05.29.14).

Cyber security:

Former US National Security Agency contractor Edward Snowden told a US television interviewer on Wednesday he was not under the control of Russia’s government and had given Moscow no intelligence documents after nearly a year of asylum there. “The reality is I never intended to end up in Russia,” Snowden said. (New York Times, FT, 05.29.14).
If the U.S. special services had acted professionally, National Security Agency leaker Edward Snowden would be "rotting in jail," Russian President Vladimir Putin told the St. Petersburg International Economic Forum Friday. (The Moscow Times, 05.23.14).
Russia's media watchdog has drafted a resolution that would allow it to block foreign websites in the country for failing to register with the Kremlin's monitors. The proposed government resolution would cover all websites that allow their users to exchange messages with one another. (The Moscow Times, 05.27.14).

Energy exports from CIS:

Ukraine has agreed to pay $786 million of its $3.5 billion gas debt to Russia, the European Union Energy Minister Oettinger said in Berlin on Friday. The Energy Commissioner also said Russia was ready to continue negotiations on the gas price and supplies. Ukraine is ready to pay the total gas debt to Russia that now stands at $3.5 billion, in 10 days, if Russia agrees to cut the price to $268 per 1,000 cubic meters, Oettinger added. (Russia Today, 05.30.14).
On Wednesday, EU's energy chief Gunther Oettinger outlined proposals to increase the EU's energy security and reduce dependence on Russian gas. As part of the EU's longer-term energy policy, the European Commission will likely propose binding targets after the summer to improve energy efficiency across the continent, saying the move is vital to cutting energy consumption. (WSJ, 05.28.14).
Italy's Eni struck a landmark deal with Russia's Gazprom that abandons a 50-year old system of indexing gas supplies to oil prices, setting a precedent other European buyers may be able to use in negotiations. Sanford Bernstein analysts estimated the deal would lift the operating profit of Eni's Gas and Power division by 560 million euros this year alone. (Reuters, 05.25.14).
Russia has sufficient reserves to produce 600 million tons of oil every year for the next 30 years, Natural Resources and Environment Minister Sergei Donskoi said Wednesday. (The Moscow Times, 05.28.14).

Bilateral economic ties:

Russia has said it is suspending pig imports from the U.S. due to concerns about outbreaks of the deadly Porcine Epidemic Diarrhea virus. (Reuters, 05.30.14).
Russian stalling on granting permission to U.S. factories to export pork to Russia is creating delays costing U.S. producers millions of dollars, the U.S. Meat Export Federation said. (The Moscow Times, 05.26.14).
As the Ukrainian crisis exploded in the first three months of the year, U.S. investment fund Templeton Institutional Funds sold its stake in Sberbank and watered down its exposure to other Russian blue chips like oil firm LUKoil and diamond producer Alrosa. (The Moscow Times, 05.29.14).
John Mack, the former chief executive of Morgan Stanley, is to step down from the board of Russia’s state-controlled oil group Rosneft. (FT, 05.29.14).

Other bilateral issues:

U.S. military officials and space-industry experts say it's high time the United States had an industrial base that produced rocket engines that can do what the Russian engines do. Congress is in the process of authorizing money for such an effort. (Washington Post, 05.30.14).
The United States has expelled Vladimir Letunov, suspected of sexually assaulting minors, to Russia on account of having violated the country's migration laws. (The Moscow Times, 05.29.14).

II. Russia news.

Domestic politics, economy and energy:

A total of 83 percent of Russian citizens approve of the activities of Vladimir Putin as president in May compared to 72 percent in April, Levada Center sociologists said. (Interfax, 05.29.14).
According to research conducted by the All-Russian Center for Public Opinion, 42 percent of the Russian population wants Russia to become "a great power, like the USSR was once." (Russia Today, 05.29.14).
ING and Deutsche Bank have launched syndication of a $700 million, five-year loan for Russian steel company Evraz, which is the first loan to launch since economic sanctions were imposed on Russia. (Reuters, 05.28.14).
On average, Russian government bonds issued in dollars now yield 4.5%, according to a Markit index. That is the lowest in three months and more than a percentage point below the highs hit at the end of April. (Wall Street Journal, 05.30.14).
Investment, historically already low compared with other emerging markets at just 25 per cent of gross domestic product, contracted by 0.3 per cent last year and slid another 4 per cent in the first quarter. (Financial Times, 05.29.14).
Sberbank, Russia's biggest bank by assets, reported an 18 percent slide in profits to 72.9 billion rubles ($2.1 billion) in first quarter and more than doubled its provisions for bad loans, hit by the Ukraine crisis, a falling ruble, and an economy flirting with recession. (Reuters, 05.29.14).
Mobile phone operator MegaFon had a 43 percent drop in first quarter net profit to 7.2 billion rubles ($208 million). (Reuters, 05.29.14).
VTB Bank, Russia's second-biggest lender, said Tuesday that the crisis in Ukraine cost the bank $525 million and caused profit to plunge by 98%, but expects things to improve in the second quarter. (WSJ, 05.27.14).
OAO Rosneft Chief Executive Igor Sechin said he supports the Russian government's plan to sell a 19.5% stake in the oil giant to the highest bidder, as long as the state retains control. (WSJ, 05.24.14).
Russia's economy is expected to avoid the worst case scenario following its incursion into Ukraine, according to a new report from Morgan Stanley. And a Bloomberg poll of economists found that risk that the U.S. and European Union will slap further sanctions on Russia over Ukraine is subsiding, but the threat of a recession still looms over Russia. (The Moscow Times, 05.29.14, Business Insider, 05.28.14).
A sweeping antismoking bill enacted in Russia last year has resulted in a 12% drop in cigarette consumption in what had been the world's second largest market, a legislator in charge of national health issues said Friday. (Wall Street Journal, 05.30.14).

Defense:

Russia could test its first hypersonic missile as early as 2020 as part of a government program to develop the new technology, a Russian defense industry official said. (The Moscow Times, 05.23.14).
Russia on Wednesday claimed to have the ability to take over the missile-maintenance work that Ukraine currently performs for it. (GSN, 05.30.14).

Security, law-enforcement and justice:

The Interior Ministry announced Thursday that it had detained 10 individuals from Dagestan who were planning to perpetrate a terrorist attack in the Moscow region on Victory Day. (The Moscow Times, 05.29.14).
The suspected leader of a cell of the Islamic Movement of Uzbekistan (IMU) in the Moscow region has been apprehended. (RFE/RL, 05.28.14).
The leader of Ingushetia has threatened to enact measures that would "punish" the relatives of members of illegal armed groups in the republic if they fail to persuade their loved ones to quit the Islamic insurgency. (RFE/RL, 05.28.14).

Foreign affairs and trade:

Russian President Vladimir Putin will meet face-to-face with Western leaders for the first time since annexing Crimea when he joins them on the beaches of Normandy next week to mark the 70th anniversary of the D-Day landings. Reports on Wednesday, based on statements by an aide to Mr. Putin, suggested that the French and Russian leaders would meet for dinner at the presidential palace. On Thursday, however, officials in France firmly denied that any plans had been made for a meal -- which might have upset French allies -- though they left open the possibility. Ukraine’s president Petro Poroshenko has also been invited to attend the commemoration ceremony. (New York Times, 05.30.14, FT, WSJ, 05.29.14).
Most US chief executives avoided the St. Petersburg forum, but European energy bosses, including BP’s Bob Dudley, Shell’s Ben van Beurden, Eni’s Claudio Descalzi, and Total’s Christophe de Margerie, all attended. BP confirmed its commitment to Russia after signing a $300m shale oil deal with Rosneft. Also at St Petersburg, Total and Lukoil signed a joint venture to develop the Bazhenov shale. (FT, 05.25.14).
Italian tire maker Pirelli has agreed with Rosneft to open more than 200 retail outlets at the Russian oil group's filling stations and cooperate in synthetic rubber production, Pirelli said in a statement Saturday. (Reuters, 05.25.14).
Russia is not preparing retaliatory steps to punish foreign companies for western sanctions over Moscow's involvement in Ukraine, President Vladimir Putin's top economic adviser Kremlin aide Andrei Belousov told an Austrian newspaper. (The Moscow Times, 05.27.14).
Russia has prepared a classified document setting out actions it would take if Western nations impose further sanctions on Moscow over its involvement in the crisis in Ukraine, President Vladimir Putin's top economic aide said on Friday (Reuters, 05.23.14).
Even if sanctions force Russia's economy to contract by 10 percent, the impact on Germany — its largest EU trading partner — would be minimal, knocking about 0.5 percentage points off 2014 growth, Deutsche Bank said. (Reuters, 05.23.14).
VSMPO-Avisma, the world's largest titanium producer, has warned Airbus it would be forced to pay penalties if the European aircraft manufacturer terminated a $4 billion contract with its Russian supplier whose parent company is run by Sergei Chemezov, who was made the subject of Western sanctions in late April. (Reuters, 05.26.14).
Although investment by Brazil, Russia, India, and China reached an all-time high of 313 projects, most FDI in Europe remains intra-regional, driven by companies with headquarters in one European country investing in another. (FT, 05.27.14).
Lithuanian President Dalia Grybauskaite has won a second consecutive presidential term for the first time in the country's history, with her anti-Russian platform striking a chord with voters. (Reuters, 05.26.14).
President Vladimir Putin said on Saturday that Russia is ready for talks with Japan over disputed Pacific Islands, but Japan may not be ready for negotiations. (Reuters, 05.25.14).

Russia's neighbors:

The presidents of Russia, Kazakhstan and Belarus formally signed an agreement Thursday to create the Eurasian Economic Union. The Union has a combined $2.7 trillion economy and vast energy resources. The new codes of the union, scheduled for launch on Jan. 1, 2015, will give the citizens of member states equal employment and education opportunities. But many of the main objectives—such as creating integrated oil and gas markets and common regulatory and tariff polices—won't kick in until 2025. Kazakhstan President Nursultan Nazarbayev said that Armenia and Kyrgyzstan are set to join the Union by the end of 2014. (New York Times, WSJ, WP, 05.29.14).
The Ukrainian Central Elections Commission has processed 100% of electronic reports from territorial electoral commissions in the presidential election and found out that Petro Poroshenko has won the race with 54.7% of the vote. The leader of the Batkivshchyna party, former Prime Minister Yulia Tymoshenko, gained 12.81% of votes, independent MP, Radical Party leader Oleh Lyashko - 8.32%, MP, leader of the Civil Position party Anatoly Hrytsenko - 5.48%. (Interfax, Unkrinform, 05.29.14).
Ukraine’s central election commission said voting took place in only two of 12 districts in the Lugansk region, and seven out of 22 in the Donetsk region. (FT, 05.26.14).
Ukrainian president elect Petro Poroshenko has told senior European Union leaders he wants some time before committing to a major economic and political deal with the bloc. A number of the diplomats stressed that a June signature was still possible but others said more time could be needed. “It might be a question of a few more weeks," said one senior EU diplomat.(WSJ, 05.28.14).
Ukrainian President-elect Petro Poroshenko said the economic portion of a broad pact between the European Union and Ukraine should be signed directly after his inauguration. The inauguration is likely to take place in early to mid June. (WSJ, 05.29.14).
Ukraine's membership in NATO is off the table for now, but its future in the military alliance will depend on Russia's plan of action, the Ukrainian acting foreign chief said Monday. (RIA Novosti, 05.26.14).
Petro Poroshenko said that he intends to spearhead the creation of a new security framework that would replace the Budapest Memorandum. (RIA Novosti, 05.26.14).
President-elect Petro Poroshenko on Monday called for early parliamentary elections, with these expected in the autumn. Constitutional changes since the overthrow of Viktor Yanukovich mean the president has no longer has powers to pick the government, beyond the foreign and defense ministers. (FT, 05.26.14).
Asked while voting if his first trip as president would be to the EU or Russia, Petro Poroshenko responded “to Donbass”, the name given to Ukraine’s heavy industrial south-eastern region.(FT, 05.26.14).
Petro Poroshenko described re-engagement with Russia as his priority but declared that Ukraine and the international community would never recognize Moscow’s annexation of Crimea. He said a meeting with Moscow was likely to take place in the first half of June. (FT, 05.27.14, NYT, 05.27.14).
The inauguration ceremony for Petro Poroshenko has been scheduled for June 7, his press office said Thursday. Russian President Vladimir Putin has not been invited to the inauguration ceremony of Poroshenko and will be absent from the occasion, his spokesman said. Putin has earlier told his French and German counterparts Saturday that Russia will respect the outcome of Ukraine's presidential elections. Poroshenko is to meet U.S. President Barack Obama in Poland on June 3. (WSJ, 05.24.14, NYT, 05.26.14, Moscow Times, Kommersant, 05.29.14).
Russian president Vladimir Putin on Tuesday urged Ukraine to halt a military offensive against pro-Russia separatists in the east of the country after dozens died in heavy fighting around the industrial city of Donetsk. (FT, 05.27.14).
Russia's Foreign Minister Sergei Lavrov on Wednesday demanded that Ukraine immediately stop military action in eastern Ukraine and open "wide-scale dialogue" with those seeking to break away from Kiev's control. (WSJ, 05.29.14).
"The Ukrainian people have repeatedly demonstrated their desire to choose their leaders without interference and to live in a democracy where they can determine their own future free of violence and intimidation," President Barack Obama said. Obama also cited the international coalition he had mobilized to counter Russia’s aggression in Ukraine as an example of how to use American muscle without putting its soldiers at risk. (NYT, Reuters, 05.29.14).
European Union leaders praised Ukraine’s presidential election and vowed to support the country’s new leader. (RFE/RL, 05.28.14).
U.S. Defense Secretary Chuck Hagel said that the U.S. Department of Defense knows that “thousands of Russian troops have been pulled back and are moving away.” But he added that “we also know that there are still thousands of Russian troops still there that have not yet moved.” And U.S. Assistant Secretary of State Victoria Nuland said: “We have now seen Russian troops that were on the border surrounding Ukraine begin to move back to their bases.” (New York Times, 05.31.14, State.gov, 05.27.14).
U.S. Assistant Secretary of State Victoria Nuland said: “ What we all underestimated, even though we were talking about it and thinking about it, was the ability of the Russian Federation to exact its own economic retribution on Ukraine.” (State.gov, 05.27.14).
Ukraine's president-elect Petro Poroshenko has vowed to stamp out a simmering rebellion by pro-Russian separatists in the east and end what he called a "war being waged against our country." He has also likened the rebels to Somali pirates and promised that he will raise the pay for Ukrainian soldiers participating in combat from $50 a month to $83 per day. (Foreign Policy, 05.28.14, (RFE/RL, 05.30.14, WSJ, 05.29.14).
Scores of heavily armed paramilitaries stormed the Donetsk headquarters of Ukraine’s pro-Russia separatists on Thursday, kicking out rebel leaders and announcing a new order in the self-declared Donetsk People’s Republic. The commandos insisted they were also separatists, who despised the Kiev “junta” and wanted to see eastern Ukraine either staying independent or becoming part of Russia. While most of the men said they were from the Donetsk region, some appeared to be speaking Ossetian. (Financial Times, 05.29.14).
A Ukrainian military helicopter carrying 13 servicemen and a general was shot down by pro-Russia rebels on Thursday, as fighting intensified in the eastern stronghold of Slavyansk. The dead general was identified as Serhiy Kulchytskiy, who had formerly served in the Soviet army and was in charge of combat training for Ukraine's National Guard. (FT, WP, 05.29.14).
At the Donetsk Kalinin morgue on Thursday, more than 30 coffins had been prepared to transport Russian citizens who had been killed in the Donetsk airport strike back to Russia. (FT, 05.29.14).
The prime minister of the self-declared Donetsk People’s Republic, a separatist group that controls this eastern region of Ukraine, said on Tuesday that about 50 pro-Russian militiamen had been killed the day before in heavy fighting with Ukrainian forces for control of a crucial airport in Donetsk. (NYT, 05.28.14).
Separatists in Luhansk said early Friday that a group of four international observers from the Organization for Security and Cooperation in Europe who had been detained earlier in the week by separatist forces had been released. However, OSCE said the group was still unaccounted for, and added it had lost contact with a second group of four international monitors in the Luhansk region Thursday evening. (Wall Street Journal, 05.30.14).
Up to 1,000 coal miners rallied on Wednesday in support of armed pro-Russian separatists who are battling Ukrainian forces in defense of their self-proclaimed "Donetsk People's Republic," or DNR, in eastern Ukraine. (Reuters, 05.28.14).
Outside a regional hospital in Donetsk, fighters confirmed that some of them were among 32 Chechens who had joined the rebel side a week ago. They said 16 Ossetians from the Caucasus had also joined the rebels. Chechnya’s regional leader said he had not sent any fighters into eastern Ukraine but that some may have gone themselves on “personal business.”(WP, 05.29.14, FT, 05.27.14).
Mayor of Donetsk Aleksandr A. Lukyanchenko, said at least eight people with Russian passports were among the wounded rebels who had been taken to the city's hospitals. He said the Russians were from Moscow and from the Chechen cities of Grozny and Gudermes in Chechnya. (NYT, 05.28.14).
Ukraine’s national security chief has accused Russia of waging a “hybrid war” in eastern Ukraine. (FT, 05.29.14).
Ex-boxing champion Vitali Klitschko, who claimed victory Sunday in Kiev's mayoral vote, said that the Maidan protests have fulfilled their task and barricades in downtown Kiev must be dismantled. (RIA Novosti, 05.26.14).
A Ukrainian anti-aircraft battery fired warning shots to prevent an incursion on Saturday by Russian helicopter gunships from the Crimea peninsula. (Reuters, 05.25.14).
Two senior police officers were shot on Tuesday in the eastern Ukrainian city of Horlivka, Ukrainian news reports said, weeks after the men refused to pledge their allegiance to separatist authorities in the region. (The Moscow Times, 05.27.14).
The Ukrainian Interior Ministry has confirmed the death of an Italian photographer near Slavyansk in Donetsk region but knows nothing about a French journalist or their Russian interpreter. (Interfax, 05.25.14).
Chechen Republic head Ramzan Kadyrov claimed to have personally negotiated, on orders from Russian President Vladimir Putin, the release by the Ukrainian authorities of journalists Oleg Sidyakin and Marat Saichenko. (RFE/RL, 05.26.14).
Hundreds of demonstrators occupied the presidential headquarters of Abkhazia, a breakaway enclave of Georgia, on Wednesday, demanding the resignation of the region's leader and the dismissal of the government. The uprising prompted the Kremlin to dispatch two high-level officials, Vladislav Y. Surkov, a longtime political counselor to President Vladimir V. Putin, and Rashid G. Nurgaliyev, the deputy chief of Russia's Security Council. (New York Times, 05.29.14).
Kazakh President Nursultan Nazarbayev has ratified a decree to create a joint anti-aircraft defense system with Russia, boosting the military alliance between the two post-Soviet republics. (The Moscow Times, 05.27.14).
German Chancellor Angela Merkel has said the lessons of two world wars have led her to take a firm stance against Russia's annexation of Ukraine's territory of Crimea. (RFE/RL, 05.29.14).
Moscow and Astana are expected to sign a memorandum on the construction of the first nuclear power plant in Kazakhstan. (RFE/RL, 05.28.14).
A court in Kazakhstan’s largest city, Almaty, has sentenced a man on charges of terrorism and appealing for jihad in Syria. (RFE/RL, 05.28.14).
Two Azerbaijani officers and one soldier from the breakaway Nagorno-Karabakh region were reportedly killed in the latest border clash. (RFE/RL, 05.28.14).
Some 500 local residents of Azerbaijani background rallied in Georgia’s Gardabani, on May 29, demanding an investigation into an attack against ethnic Azerbaijanis by dozens of ethnic Georgians on May 28. (RFE/RL, 05.29.14).
Turkmenistan's Foreign Minister Rashid Meredov has paid an unscheduled visit to Afghanistan following the deaths of three Turkmen border guards. (RFE/RL, 05.29.14).
President of Belarus Alexander Lukashenko has announced plans to introduce legislation prohibiting farm laborers from quitting their jobs and moving to the cities. (FT, 05.29.14).
Belarusian President Alexander Lukashenko ordered the country's agroindustrial complex to adopt a "military approach" to the harvest of crops Tuesday. (The Moscow Times, 05.28.14).
Kyrgyzstan's economy minister says Russia will allocate $1.2 billion to help Bishkek join a Moscow-led customs union. (RFE/RL, 05.30.14).
A session of the Council of Prime Ministers of the Commonwealth of Independent States (CIS) has started in the Belarusian capital, Minsk. (RFE/RL, 05.30.14).
The U.S. State Department has offered a reward of up to $1 million for information leading to the disruption of the financial mechanisms of a network reputedly run by a Kyrgyz crime boss. (RFE/RL, 05.30.14).

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