News

Russia in Review

May 26, 2016

Abstract

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for May 20-26, 2016

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

Nuclear security:

  • According to a new report by the U.S. Government Accountability Office,  the Pentagon is still using 1970s-era computing systems that require "eight-inch floppy disks." The report says the Pentagon is planning to replace its floppy systems -- which currently coordinate intercontinental ballistic missiles , nuclear bombers and tanker support aircraft -- by the end of 2017.  (CNN, 05.26.16).
  • More than five years after a tsunami struck Japan triggering one of the worst nuclear disasters in history, U.S. reactors and industry regulators haven’t done enough to prevent a similar catastrophe, according to a report from the National Academies of Sciences, Engineering and Medicine. (Bloomberg, 05.20.16).

Iran’s nuclear program and related issues:

  • Billionaire Vladimir Potanin has become the first major Russian investor to buy assets in Iran after the lifting of sanctions. Potanin's investment fund invested an undisclosed sum into Swedish firm Pomegranate, a shareholder in a number of Iranian Internet companies. (Moscow Times, 05.25.16).

Military issues, including NATO-Russia relations:

  • U.S. officials have told allies they will only provide one battalion to the North Atlantic Treaty Organization's force in Eastern Europe. Plans had been discussed for the U.S. to provide two battalions—approximately 2,000 soldiers—to the force that NATO is building to deter Russian aggression, alongside a battalion from Germany and Great Britain. (Wall Street Journal, 05.20.16).
  • Defense ministers from the Czech Republic, Poland, Hungary and Slovakia offered to send a joint military NATO unit to bolster defense in the Baltics next year. They’ll formally propose it at the North Atlantic Treaty Organization’s July 9-10 NATO summit in Warsaw. (Bloomberg, 05.25.16).
  • The Russian Security Council has warned that alleged American espionage activities on Russia’s borders are increasing the risk of an “emergency situation.” The statement comes after the Russian air force scrambled jets to intercept an American plane not responding to air traffic control while flying over the Sea of Japan on May 23. A US defense attaché has been summoned by Russia's Defense Ministry after an incident over the incident. (Moscow Times, 05.24.16, Russia Today, 05.23.16).
  • Swedish lawmakers formally backed an agreement Wednesday that allows the NATO to more easily operate on Swedish territory during training or in the event of a conflict or other crisis. "We will remain nonaligned," Defense Minister Peter Hultqvist said. "There will be no NATO troops on Swedish soil without an invitation." (RFE/RL, Wall Street Journal, 05.26.16).
  • Russian Foreign Minister Sergei Lavrov warned against NATO’s “continuously increasing” military capacity near Russia’s borders, saying that the steps were “shortsighted.” (Bloomberg, 05.25.16).
  • U.S. defense spending has grown 41% since Sept. 10, 2001. But in that time Russia and China have increased spending by 267%. The U.S. Marine Corps recently revealed that 70% of its F/A-18 jet fighters aren't flight-worthy. (Wall Street Journal, 05.23.16).
  • Montenegro itself does not represent a military threat to Russia but its accession to NATO will boost the military-political potential of the North Atlantic Alliance, Deputy Secretary of Russian Security Council Yevgeny Lukyanov told reporters on Monday. (Tass, 05.23.16).

Missile defense:

  • No significant developments.

Nuclear arms control:

  • The newly declassified data shows that the  U.S. nuclear weapons stockpile as of September 2015 included 4,571 warheads. That means the Obama administration so far has reduced the stockpile by 702 warheads (or 13 percent) compared with the last count of the Bush administration. The  reduction constitutes the smallest reduction of the stockpile achieved by any previous post-Cold War administration. (Federation of American Scientists, 05.26.16).
  • U.S. President Barack Obama said on Thursday that he was preparing to visit Hiroshima on Friday to emphasize that the world still faces the threat of nuclear war. Mr. Obama cited some of the successes of his efforts to slow and even reverse the proliferation of nuclear weapons, including the nuclear deal with Iran, a weapons treaty with Russia and the Nuclear Security Summit meetings. (New York Times, 05.26.16).

Counter-terrorism:

  • "We did not come to terms with our American partners right away, we had to overcome their doubt, reasoning or even resistance in order to shift from information exchange to coordination of efforts in the fight against terrorism. These practical issues are now being discussed between our defense agencies," Russian Foreign Minister Sergei Lavrov said. (Interfax, 05.24.16).
  • Russia's National Anti-Terrorism task force has found over 40 kilograms of homemade explosives in a hide-out in North Caucasus region. An ISIS-linked group is believed to have been operating at the base in Ingushetia. (Moscow Times, 05.24.16).
  • Russian authorities have arrested two Tajiks suspected of recruiting fighters for the ISIS group in Syria. (RFE/RL, 05.23.16).
  • Russia's counterterrorism agency says it has arrested four suspects in Ingushetia that it says are linked to the ISIS group. (RFE/RL, 05.21.16).

Cyber security:

  • No significant developments.

Energy exports from CIS:

  • Russian President Vladimir Putin has overseen the first shipment of oil from a new terminal in the Russian Arctic. The terminal, dubbed “Vorota Arktiki” (Arctic Gate), will handle more than 8.5 million tons of crude per year at full capacity. (Moscow Times, 05.25.16).
  • State energy company Rosneft is to sign a new deal supplying Greece with oil. (Moscow Times, 05.26.16).

Bilateral economic ties:

  • Global Nuclear Fuel Americas and Russian nuclear fuel company TVEL have agreed to work together to introduce Russian-designed pressurized water reactor fuel into the USA.  (World Nuclear News, 05.24.16).

Other bilateral issues:

  • A Russian banker has been sentenced to 2 1/2 years in prison after pleading guilty to conspiracy charges in what U.S. prosecutors have described as a Cold War-style spy ring. The defendant, 41-year-old Evgeny Buryakov, also received a $10,000 fine in the case on May 25. (RFE/RL, 05.26.16).

II. Russia news.

Domestic politics, economy and energy:

  • Russia’s ruble extended its position as the best-performing emerging-markets currency this year. The currency of the world’s biggest energy exporter advanced 0.4 percent against the dollar to 65.267 by 10:57 a.m. on May 26 in Moscow, taking its gain this year to almost 13 percent.  Brent crude rose to $50.17 per barrel, the highest intraday level since Nov. 4.(Bloomberg, 05.25.16).
  • “The economic growth will not resume by itself. The GDP dynamics will hover around zero unless we find new growth points,", President Vladimir Putin said at the meeting of the Presidium of the Economic Council on Wednesday, adding that the GDP dynamics will stay at zero level without new growth points found.(Tass, 05.25.16).
  • “We have reached the last stand,” former Finance Minister Alexei Kudrin said. “My goal is to show that there won’t be economic growth if we don’t reform institutions.” (Bloomberg, 05.23.16).
  • Russia on Tuesday tapped international debt markets for the first time since the West applied sanctions two years ago. But Moscow raised just over half of the amount expected as a number of global portfolio managers didn't participate in the bond sale. Russia's finance ministry said it sold $1.75 billion of so-called Eurobonds amid demand of $7 billion. The bonds were sold to yield 4.75% after initial indications of 4.65% to 4.9%. Russia hailed the sale as a triumph in the face of sanctions and “unprecedented pressure” from U.S. and European Union governments, but the chief of Russia’s state-appointed bond organizer also blamed political interference from the U.S. and Europe for curtailing demand for the sale. Russia could tap the global capital markets again later this year, officials said on Wednesday (Wall Street Journal, 05.25.16, Bloomberg, 05.25.16).
  • Wages in Russia adjusted for inflation fell 1.7 percent in April from a year earlier after growing in the previous two months for the first time since 2014, the Federal Statistics Service in Moscow said on Monday. Two-thirds of executives at Russia's largest companies saw pay rises in 2015 despite the country's economic crisis, the RBC news website reported Monday. (Bloomberg, 05.22.16, Moscow Times, 05.23.16).
  • Economic problems, declining economic growth and an increase of the national debt were named as Russia’s biggest internal threats by 44 percent of Russians surveyed by the independent Levada Center pollster. (Moscow Times, 05.23.16).
  • Sberbank PJSC reported a fourfold jump in first-quarter profit.  Net income rose to 118 billion rubles ($1.8 billion) from 30.6 billion rubles a year earlier. (Bloomberg, 05.25.16).

Defense and Aerospace:

  • No significant developments.

Security, law-enforcement and justice:

  • Quoting law enforcement officers, the Russian Rosbalt information portal reported Thursday that “thousands” of migrants working in markets and shopping centers on the outskirts of the city are ready to take up arms. (Moscow Times, 05.26.16).
  • More than 700 billion rubles ($10.5 billion) was transferred illegally from Russia into offshore accounts in 2015, the Russian Interior Ministry announced Friday. (Moscow Times, 05.20.16).
  • Russia will pass legislation making it a criminal offense to use illegal drugs to boost performance in sports, Russian Sports Minister Vitaly Mutko said on May 24. The Russian Olympic Committee said on May 24 that it had been informed by the International Olympic Committee that rechecks of samples from the 2008 Beijing games showed 14 of the country's athletes had returned positive tests. (RFE/RL, 05.25.16).

Foreign affairs and trade:

  • Syria:
    • In an unusual announcement Wednesday, Russia said it would halt air raids against Syria's al-Qaeda affiliate, Jabhat al-Nusra, to give other rebel factions a chance to distance themselves from the extremist group. (Washington Post, 05.26.16).
    • The deputy head of Russia’s National Security Council, Yevgeny Lukyanov, accused the United States of operating with double standards in Syria after Washington denied reports that it agreed with Moscow to begin joint bombing of the al-Nusra extremist group, an affiliate of terror network al-Qaida in Syria. “There are shades of national interests everywhere,” Lukyanov said. (Moscow Times, 05.23.16).
    • "Some predicted it would be another Afghanistan or something else. That will never happen. This is a targeted, limited military plan," Russian Security Council Deputy Secretary Yevgeny Lukyanov said of Russia’s involvement in Syria. "We are not Syrians. We are not going to fight for Syria there. They have to resolve their issues themselves,” he said. (Interfax, 05.24.16).
    • The Pentagon now holds periodic video conferences with Russian officials on their separate airstrikes in Syria but has said repeatedly that the communications are limited to flight safety. "We don't have any plans to expand that," one official said. (Washington Post, 05.21.16).
    • The Russian military has denied a claim by the Islamic State group that it has destroyed several Russian helicopter gunships and other equipment at a base in Syria. A wave of coordinated bombings in Syria claimed by the Islamic State killed at least 78 people Monday in the usually calm coastal area where Russian troops are based, Syrian state media reported (AP, 05.24.16, Washington Post, 05.24.16).
  • Other countries:
    • Russian Security Council Secretary Nikolai Patrushev and Secretary of the Central Political and Legal Affairs Commission of the Chinese Communist Party Meng Jianzhu agreed at their meeting in Grozny on May 23 to hold a new round of Russian-Chinese strategic security consultations in Beijing in September. (Interfax, 05.24.16).
    • The Kremlin said on May 23 that Vladimir Putin will meet Greek President Prokopis Pavlopoulos and Prime Minister Alexis Tsipras during the May 27-28 visit to discuss economic ties as well as energy and transport projects. (RFE/RL, 05.23.16).
    • A Portuguese and a Russian were arrested in Rome over the weekend on suspicion of espionage, the European Union's judicial cooperation unit Eurojust said on May 24. Portuguese media said the arrested Portuguese citizen worked for the national SIS intelligence service and was suspected of being a double agent who was passing sensitive information about NATO and the EU to Russia. (RFE/RL, 05.25.16).

Russia's neighbors:

  • Ukraine:
    • Washington will maintain economic sanctions against Russia over its support of armed separatists in eastern Ukraine and its annexation of Crimea and is hopeful that the European Union will do the same, Daniel Fried, coordinator for sanctions policy at the State Department, said Monday. (AP, 05.23.16).
    • German Chancellor Angela Merkel has announced that it is “too early” to discuss lifting the European Union's sanctions on Russia, the Reuters news agency reported Thursday. (Moscow Times, 05.26.16).
    • EU Council President Donald Tusk says he is "quite sure" that the bloc will renew its economic sanctions against Russia over its actions in Ukraine "in the next two or three weeks without huge discussions." "It will be more difficult than it was last year to find a common position on this issue," German Foreign Minister Frank-Walter Steinmeier told the Baltic News Service. (RFE/RL, 05.26.16).
    • The European Union's decision on whether to extend economic sanctions against Russia for its actions in Ukraine should be transparent and discussed openly, Hungary's foreign minister said Wednesday. Foreign Minister Peter Szijjarto said after meeting Russian counterpart Sergey Lavrov that Hungary will not accept an "automatic" decision regarding the sanctions currently in place until the end of July. (AP, 05.25.16).
    • The leaders of Russia, France, Germany, and Ukraine spoke by telephone on May 24 about ways to settle the conflict in eastern Ukraine. The Kremlin said Russia offered proposals which it "coordinated" with Russia-backed separatists on holding elections in the Donbas region and granting amnesty to combatants in the conflict. The Kremlin also said the leaders discussed giving the OSCE mission additional powers. After the call, the leaders issued a statement "recalling their commitment to the Minsk peace accords.(RFE/RL, 05.24.16).
    • Soldier deaths in the separatist conflict in eastern Ukraine jumped to the most in a year as the latest cease-fire unravels and after President Petro Poroshenko warned the security situation is deteriorating. Ukraine said on May 24 seven of its servicemen have been killed and nine others wounded in the country’s east over the past 24 hours. (Bloomberg, RFE/RL, 05.24.16).
    • Ukrainian President Petro Poroshenko said Monday that “Russian aggression” killed more than 10,000 Ukrainians and injured more than 20,000 during the war in eastern Ukraine, the Interfax Ukraine news agency reported. (Moscow Times, 05.23.16).
    • Jailed Ukrainian pilot Nadiya Savchenko has been released by Russia as part of an unexpected prisoner exchange between the two countries, with suspected Russian servicemen Aleksandr Aleksandrov and Yevgeny Yerofeyev sent back to Moscow in return. Savchenko was then appointed to the Ukrainian parliament's Committee on National Security and Defense (RBTH, 05.25.16, Moscow Times, 05.26.16).
    • A law firm in Australia has filed a compensation claim against Russia and President Vladimir Putin on behalf of victims of Malaysian Airlines flight MH17, shot down in 2014. (RFE/RL, 05.22.16).
    • The National Bank of Ukraine announced on May 26 that the key policy rate was cut to 18 percent from 19 percent. (RFE/RL, 05.26.16).
    • An investigation by Deutsche Welle has shown that the use of shell companies in tax havens is not unusual for Petro Poroshenko. One example of that can be found in the starch factory in the German city of Elsterau. With revenues of around six million euros and nearly 100 employees, it is just a side project in the larger business empire the Ukrainian president has built. (Deutsche Welle, 05.23.16).
  • Other neighbors:
    • Tajik election authorities say voters have approved constitutional amendments that eliminate the term limit for President Emomali Rahmon and lower the age of eligibility to become president from 35 to 30 -- a change that could position Rahmon's 29-year-old son, Rustam Emomali, for an early succession. (RFE/RL, 05.23.16).
    • The International Monetary Fund will focus on Moldova's financial system in reviewing Chisinau's request for a loan after the disappearance of more than $1 billion from Moldovan banks. (RFE/RL, 05.24.16).
    • RFE/RL journalist Khadija Ismayilova walked free from an Azerbaijani prison and vowed to keep on working after the country's Supreme Court reduced her sentence from 7 1/2 years in custody to a suspended term of 3 1/2 years. (RFE/RL, 05.25.16).

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For more information on this publication: Please contact US-Russia Initiative to Prevent Nuclear Terrorism
For Academic Citation:Russia in Review.” News, , May 26, 2016.