Russia in Review

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for the week of December 7-14, 2012

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

Nuclear security agenda:

The Obama administration has sharply reduced spending on a program to combat smuggling of nuclear and radiological materials through foreign seaports, and it has yet to disclose findings from a recently completed review expected to shape the effort's future. (GSN, 12.11.12).

Iran nuclear issues:

No significant developments.

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

Russia’s General Staff Chief Valery Gerasimov has said Moscow and NATO will map out a military cooperation plan during his visit to Brussels in January 2013. Gerasimov told reporters his Thursday meeting with General Knud Bartels, Chairman of NATO’s Military Committee, hinged on boosting military cooperation between Russia and the NATO. Gerasimov has warned "third parties" against getting involved in the Syrian conflict, but praised the parties on their progress in weeding out piracy, international terrorism and improving military medicine. The generals also discussed ballistic missile defence. (Voice of Russia, 12.13.12, NATO, 12.14.12.).
Five months after Moscow finalized an agreement with NATO to use Ulyanovsk's airport for transporting military equipment from Afghanistan, not a single flight has been carried out. National media have speculated that money is an issue and that the Volga-Dnepr company is demanding more payment than NATO countries are willing to spend. A senior representative of the alliance said both sides were testing how the hub could work in practice. (Moscow Times, 12.12.12).

Missile defense:

The Russian government said Tuesday that it would shut down operations at a major radar station in Gabala, Azerbaijan, after failing to reach an agreement on a new lease with the Azeri government. Military experts believe that the commissioning of the newer Voronezh-DM radar station near the town of Armavir in Russia's southern Krasnodar region may have made the Gabala installation redundant. The radar site could be turned into a resort, Azeri officials said. (AP, 12.10.12, New York Times, 12.12.12, Moscow Times, 12.14.12).
Commander of the Russian Strategic Missile Forces Sergei Karakayev said his force will put into service qualitatively new missile systems with the warfare, which will permit to penetrate any advanced missile defence system, by 2018-2020."The availability of a powerful liquid-fueled ICBM allows us the capability of creating a strategic high-accuracy weapons system with a conventional payload with practically global range, if the US does not pull back from its program for creating such missile systems," he said of the 100-ton ICBM. Karakayev also said a new solid-fuel ICBM is in the works. It was the first time when Russia announced creation of such an ICBM. Karakayev also said that RS-20 Voyevoda ICBM will remain in service until 2022.(Pravda.ru, Itar-Tass, Cihan News Agency, 12.14.12).
Russia's anti-missile defense system covering Moscow and Russia's central industrial regions will be augmented by unspecified new systems in the near future, Deputy Defense Minister Oleg Ostapenko said. (RIA Novosti, 12.11.12).
Under the Obama administration, requests for annual funding for the U.S. Missile Defense Agency have gone from a high of $9.2 billion in 2009 down to $7.8 billion requested for fiscal 2013, Senator Jon Kyl said. (GSN, 12.13.12).

Nuclear arms control:

No significant developments.

Counter-terrorism cooperation:

No significant developments.

Cyber security:

The Obama administration announced Thursday that it will refuse to sign a U.N. treaty under consideration at a major global telecommunications conference because of provisions that it says would give a U.N. stamp of approval to state censorship and regulation of the Internet and private networks. The provisions that the United States finds objectionable had been raised last week by Russia, China, the UAE and other countries. (Washington Post, 12.13.12.).
A new cyber security report by McAfee Labs says hackers may stage a massive fraud attack on 30 U.S. banks, and backs up an October report from cybersecurity firm RSA that said a Russia-based hacker nicknamed “vor v zakone” was recruiting for the “most substantial organized-banking Trojan operation seen to date.” (Washington Post, 12.13.12).

Energy exports from CIS:

An updated Russian proposal arguing that the functioning Nord Stream pipeline and the planned South Stream pipeline should receive special treatment because they straddle both EU and non-EU countries will be submitted during the Russia-EU Summit in Brussels next week. (Moscow Times, 12.14.12).

Access to major markets for exports and imports:

President Barack Obama Friday signed legislation that sanctions alleged Russian human rights abuses, which outraged Moscow after being coupled with a bill granting it normal trade relations. The Russian foreign ministry issued a statement minutes after Obama formally signed the legislation in the Oval Office, saying the move amounted to "open meddling" in its internal affairs and was "a blind and dangerous position." (AFP, 12.14.12).
Russian health regulators announced formidable new barriers to the import of meat from the United States late on Friday. The new Russian regulation requires imported meat to undergo testing for and be certified free of ractopamine, which is added to animal feed in the United States to make meat leaner. (New York Times, 12.09.12).
Caterpillar is set to become one of the first foreign-listed companies to issue a rouble-denominated bond as Russia moves to open its capital markets. The world's largest maker of construction and mining equipment will raise as much as Rb5bn ($163m) through a three-year eurobond. (Financial Times, 12.13.12).
An investment group led by U.S. theater entrepreneur Paul Heth has acquired a controlling stake in Karo Film, one of Russia's leading cinema chains. (LA Times, 12.13.12).

Other bilateral issues:

Russian President Vladimir Putin has lashed out at the US's Magnitsky Act dubbing it "a purely political, unfriendly move,” welcoming the State Duma's initiative regarding the sanctions list against US nationals. On Friday, Duma passed the first reading of a bill "On Measures of Influence on Persons Involved in Violations of Russian Citizens' Rights" - Moscow's response to the US Magnitsky Act. (Russia Today, 12.14.12.)
Russian Foreign Minister Sergei Lavrov said the Magnitsky Act was aimed at undermining the "reset" in Russian-U.S. relations. (RFE/RL, 12.09.12).
Former Russian Prime Minister Yevgeny Primakov thinks that the Magnitsky Act will not have a serious effect on Russia-U.S. relations. (Interfax, 12.10.12).
More than twice the number of Russians approve of recent US legislation imposing sanctions on Russian officials deemed to have violated human rights than disapprove, according to a nationwide poll released this week by the respected Levada Center. (RIA Novosti, 12.08.12).
The recognition by the United States of Syria's opposition coalition as the legitimate representative of the Syrian people shows that Washington is gambling on a military victory by the coalition, Russian Foreign Minister Sergei Lavrov said. (RIA Novosti, 12.12.12).
"It is not just that we have maximum democracy, it is also a fact that other countries have not had it, and still don't. You know, if we take the countries that we perceive as paragons of democracy, for instance the USA, they do not have the same freedoms. They have no direct presidential elections, nor the multi-party system," First deputy head of the Kremlin administration Vyacheslav Volodin said. (RIA Novosti, 12.09.12).
Russian authorities have ordered the International Republican Institute to cease its work in the country on the grounds that it is funded by the U.S. Agency for International Development, a spokeswoman for the institute said. (Moscow Times, 12.14.12).
The US seeks to lift limitations on its LNG deliveries to Europe and strengthen competition in European energy markets. It is to break the EU's dependence on Russian gas, as "the Russians overplayed their hand", says US Senator Richard G. Lugar. (Russia Today, 12.13.12).
U.S. National Intelligence Council’s "Global Trends 2030: Alternative Worlds” projects that Russia will see its population fall by as many as 10 million people and will continue a slow decline in global influence. (LA Times, 12.10.12).
Washington warned Moscow that the activities of Mir Business Bank CJSC, sanctioned Iranian bank in Russia, could affect Russian banks that do business with the U.S., a Treasury official said. (Wall Street Journal, 12.11.12).
Concern expressed by U.S. Secretary of State Hillary Clinton over the danger of the "sovietization" of Eastern Europe and Central Asia suggests that she probably wants to continue her political career, a high-ranking source in Moscow told Interfax on Monday. (Interfax, 12.10.12).
A joint team from the United States and the Russian Federation concluded a 10-day inspection of foreign research stations, installations and equipment in Antarctica on December 8, 2012. A report will be jointly presented by the United States and Russia at the next Antarctic Treaty Consultative Meeting, to be held in Brussels, Belgium, in May 2013. (U.S. State Department, 12.10.12.)

II. Russia news.

Highlights of President Vladimir Putin’s annual state-of-the-nation address to the Federal Assembly that he delivered on 12.12.12

Domestic policy:
Proposed to return to a mixed system of elections to the State Duma lower house of parliament and promised to consider allowing formation of electoral blocs by parties.
Recommended barring officials and other political figures from holding stocks and bank accounts outside Russia and said the government would begin to closely scrutinize officials’ foreign real estate holdings.
Called for a plan to scale down the role played by offshore companies in the Russian economy, noting that nine out of 10 major deals by Russian companies, including some in which the state has a stake, are not subject to Russian regulation.
Recommended a luxury tax on vehicles and properties favored by Russia’s superrich.
Reiterated promise to create 25 million new jobs and develop new incentives for teachers, doctors, engineers and others and build more housing.
Noted that in the past four years life expectancy in Russia has grown by almost 2.5 years and that for the first time since collapse of the Soviet Union the number of births exceeded the number of deaths for five months in a row.
Promised to liberalize procedures for obtaining Russian citizenship, but also vowed to bar those who have no foreign travel passports from entering Russia.
Promised to improve the business climate and stimulate "economic freedom, private property and competition."
Called development of Siberia and Far East a priority.
Proposed using $3.3 billion from rainy day funds to invest in bonds that would be used to build roads, bridges, ports and other infrastructure.
Sought to boost patriotic feelings by promising to honor heroes of World War I and restoring the historic names of old imperial regiments of the Russian army.
Called on Russians “not to lose ourselves as a nation,” urging them to look for guidance in Russia’s historic and traditional values — and not in Western political models.
Urged Russians to look further back, to Russia’s “single, uninterrupted thousand-year history.”
Asserted that Russia had chosen the path of democracy, but defined that as “the power of the Russian people with their traditions.”
- Foreign Policy:
- Promised that Russia would continue to push for “coordinated collective efforts” in dealing with global issues.
- “Russian democracy will not be forced on us from abroad. Direct or indirect foreign interference in our internal political processes is inadmissible. Those who receive money from abroad for their political activities and serve alien interests shouldn’t engage in politics in Russia.”
- Gave an implied warning to West over Arab uprisings. “Risks will prevail when each player carries out his own game, and if they are not relieved of the illusion that it is possible to manage chaos.”

(Kremlin.ru, RIA Novosti, Moscow Times, New York Times, AP, Wall Street Journal, Washington Post, 12.12.12).

Domestic Politics, Economy and Energy:

Russia may cut its investment in the sovereign debt of developed countries by $3.2 billion in 2013 and invest the money domestically, Finance Minister, Anton Siluanov said. (Wall Street Journal, 12.14.12).
Russian utility Rosenergoatom has signed a new contract with the Baltiysky Zavod shipyard for the completion of the first floating nuclear power plant. It is now scheduled for commissioning in 2016. (World Nuclear News, 12.12.12).
Russian President Vladimir Putin vetoed legislation passed by parliament on changes to the Skolkovo innovation hub, a project championed by Premier Dmitry Medvedev. (Bloomberg, 12.12.12).
Russia's economy grew at the slowest rate in three years in the third quarter - nine percent annually compared with a 5 percent growth a year ago. (Wall Street Journal, 12.10.12).
The number of Russians without a job has reached its lowest ever level - 5.2 percent, according to the country's Vice Premier Olga Golodets. (Russia Today, 12.11.12).
Gazprom will beat Exxon Mobil to earn $37.9 billion in 2012. (Bloomberg, 12.12.12).
Rosneft has signed an agreement to purchase 50 percent in Russia’s third-largest oil producer TNK-BP for $28 billion, having earlier acquired the other half from BP. (AP, 12.12.12).
Renault and Nissan have completed an agreement to take a joint controlling stake in Russia's AvtoVAZ. (Financial Times, 12.14.12).
Obesity has become a problem for over 25 percent of Russia's population. (Moscow News, 12.11.12).

Defense:

“Russian Defense Minister Sergei Shoigu has signed an order dismissing director of the ministry’s education department Yekaterina Priezzheva,” Shoigu's press secretary Darya Zatulina said. (RIA Novosti, 12.08.12).

Security and law-enforcement:

Four suspected militants and one police officer were killed during the special operations in Kabardino-Balkaria. Three people described as "militants" have been killed in Dagestan. (RFE/RL, 12.13.12).
Russia ranks highest in the world among upper-middle-income countries affected by terrorism and ninth overall, according to the Global Terrorism Index, a new report by Australia’s Institute for Economics & Peace. (RIA Novosti, 12.11.12).
Investigators on Thursday blamed Givi Targamadze, former head of the Georgian parliament's defense committee, with orchestrating the May 6 violence on Moscow’s Bolotnaya Ploshchad. (Moscow Times, 12.14.12).
Prime Minister Dmitry Medvedev slammed security forces as "jerks" for launching an early morning raid against a filmmaker. (AFP, 12.10.12).
Russian authorities have launched a new criminal investigation against opposition figure Aleksei Navalny. (New York Times, 12.14.12).
A Moscow judge has sentenced former police officer Dmitry Pavlyuchenkov to 11 years in prison for his part in the 2006 murder of Russian journalist Anna Politkovskaya. (AP, 12.14.12.)
New testimony that emerged Thursday deepened the intrigue surrounding the death of the former K.G.B. officer Alexander V. Litvinenko, offering “prima facie” evidence of Russian state involvement and indicating that he had been a paid agent of the British Secret Intelligence Service, MI6, lawyers at a preliminary inquest hearing said. (New York Times, 12.13.12).
Criminal cases on more than 16,500 corruption-related crimes by Russian officials were passed on to courts in the first nine months of 2012. (Interfax, 12.09.12).

Foreign affairs:

Russia expressed its “deep regret” over North Korea’s long-range rocket launch on Wednesday and called on Pyongyang to refrain from further action which could increase tension in the region. Russia is ready to discuss a possible resolution of the UN Security Council in retaliation to North Korea’s launch of the space rocket, spokesman for the Russian Foreign Ministry Alexander Lukashevich said on Friday. (RIA Novosti, 12.12.12, Itar-Tass, 12.14.12).
Russia’s Foreign Ministry on Friday denied that a top diplomat said Syrian President Bashar Assad is losing control of his country, a statement that had been interpreted as signaling a shift in Russia’s assessment of the situation. Deputy Foreign Minister Mikhail Bogdanov, the ministry’s point man on Syria, was quoted on Thursday as saying that “there is a trend for the government to progressively lose control over an increasing part of the territory,” adding that “an opposition victory can’t be excluded.” (AP, 12.14.12).
EU Trade Commissioner Karel de stopped short of saying the EU-Russia row needed to be resolved at the EU-Russia summit next week, but said it would be "an important meeting" in the process, and reiterated the EU's threat of WTO action. (Reuters, 12.13.12).
Guy Verhofstadt, former Belgian prime minister and the leader of the Alliance of Liberals and Democrats in Europe, said that there is cross-party support for a Magnitsky list in the European Parliament and that this proves that the EU is less divided on the issue than in months past. (Moscow Times, 12.10.12).
Russia will put investment financing and debt reduction at the top of the G20's financial agenda next year, Deputy Finance Minister Sergei Storchak said on Thursday. (RIA Novosti, 12.13.12).
A Royal Navy petty officer who offered nuclear submarine secrets to MI5 agents posing as Russian spies has been jailed for eight years. (BBC, 12.12.12).

Russia's neighbors:

Since the formation of a special nuclear police unit in Georgia in 2005 with U.S. help, 15 investigations have been launched in Georgia and dozens of people arrested. Four of the previously undisclosed cases, and a fifth — an arrest in Turkey announced by officials there — occurred this year. One from last year involved enough cesium-137 to make a deadly dirty bomb, officials said. Also, Georgian officials see links between two older cases involving highly enriched uranium, which in sufficient quantity can be used to make a nuclear bomb. (AP, 12.10.12).
Ukraine's parliament has approved Mykola Azarov, President Viktor Yanukovych's nominee, for a second term as prime minister. (RFE/RL, 12.13.12).
Ukrainian government has declared it reasonable for Energoatom to raise a loan of EUR 600 million from EBRD and Euratom to implement a comprehensive program to improve the safety of Ukrainian nuclear power plants. (Interfax, 12.12.12).
In a report commissioned by the government of Ukraine, a team of American lawyers has concluded that important legal rights of the jailed former prime minister, Yulia V. Tymoshenko, were violated during her trial last year on charges of abusing her official power, and that she was wrongly imprisoned even before her conviction and sentencing. (New York Times, 12.12.12).
Georgia's recently-appointed special representative for Russia, Zurab Abashidze,, will hold talks with Russian Deputy Foreign Minister Grigory Karasin in Geneva in what will become the first direct diplomatic talk since ties were severed after they fought a brief war in 2008 (AFP, 12.14.12).
The head of Kazakhstan’s space agency said Monday that Russia’s lease of a launch facility in the Central Asian nation, the only site worldwide currently being used to get astronauts to the International Space Station, may be suspended. (AP, 12.10.12).
Kyrgyzstan's parliament has ratified an agreement for a Russian military base to remain on Kyrgyz territory for 15 years, with an option for a five-year extension. (RFE/RL, 12.13.12).