Russia in Review

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for the week of June 15-22, 2012

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

06.18.12 meeting of Presidents Barack Obama and Vladimir Putin on sidelines of the G-20 summit in Mexico:

· Syria

o Obama said Russia and China have "not signed on" to any plan for the removal from power of Syrian President Bashar al-Assad but that they recognize the dangers of an all-out civil war in the country. (Reuters, 06.19.12).
o Putin agreed that a “political process” must be established in Syria, but said pressure on both sides is needed and suggested involving Iran in mediation. (Vedomosti, WP, NYT, 06.18.12).
o Bilateral statement by Obama and Putin: “We call for an immediate cessation of all violence and express full support for the efforts of… Annan, including moving forward on political transition to a democratic, pluralistic political system that would be implemented by the Syrians themselves.” (Whitehouse.gov, 06.18.12).

· Iran

o Bilateral statement by Obama and Putin said: “We agree that Iran must undertake serious efforts aimed at restoring international confidence in the exclusively peaceful nature of its nuclear program.” (Whitehouse.gov, 06.18.12).
o Obama said he and Putin "emphasized our shared approach" to Iran, and agreed there is still "time and space" for diplomacy to work in curbing the country's nuclear program. (WSJ, 06.19.12).

· Non-proliferation

o Bilateral statement by Obama and Putin said:
- § “Nuclear arms control and non-proliferation remain a special responsibility.”
- § “Recognize the achievements made through the Nuclear Security Summits.”
- § “Continue research on the feasibility of converting research reactors in the United States and Russia to low-enriched uranium fuel.”
- § “Agree to redouble bilateral efforts to improve nuclear security, counter nuclear smuggling, and combat nuclear terrorism, as well as to facilitate the beginning of negotiations…on a fissile material cutoff treaty.

(Whitehouse.gov, 06.18.12).

· Missile Defense:

o "I think the problem of the missile defense shield will not be solved regardless of whether Obama is re-elected or not," Putin said. Putin said the situation would change only if the United States agreed to build the missile defense system jointly with Russia and the European Union. (Moscow Times, RIA Novosti, 06.20.12).
o The bilateral statement: “Despite disagreements in our assessment, we agreed to continue joint search for ways to resolve controversial issues in the area of missile defense.” (Whitehouse.gov, 06.18.12).

· Terrorism

o Bilateral statement by Obama and Putin said: “We will continue to work together to counter financial support for terrorism, disrupt the possible connections between terrorist networks and criminal groups, prevent the spread of violent extremism, and improve transportation security, including by concluding bilateral agreements in this field.” (Whitehouse.gov, 06.18.12).

· Afghanistan

o Bilateral statement by Obama and Putin said:
- § “The United States and Russia continue to face a common threat from al Qaeda and other terrorist groups operating in and around Afghanistan.”
- § “We will explore opportunities to strengthen the Northern Distribution Network, to bolster regional security, and to expand cooperation as we fight terrorism and narcotics trafficking, taking advantage of the capabilities of the Collective Security Treaty Organization and the NATO-Russia Council to enhance law-enforcement training for the region.”
- § “The United States of America and the Russian Federation intend to increase cooperation in addressing the world drug problem.” (Whitehouse.gov, 06.18.12).

· Expansion of the Bilateral Presidential Commission

o Bilateral statement by Obama and Putin said: “We are pleased to announce a new Working Group on Military-Technical Cooperation.” Russian Presidential Aide Yury Ushakov told reporters in May that “two more groups are about to be formed: on military technical cooperation and on cyber security.” (Russia Today, 05.29.12, Whitehouse.gov, 06.18.12).

· Other issues

o Putin commented on the Magnitsky bill currently being considered in the U.S. Congress, saying Russia would block entry to a certain number of American citizens if the bill were passed. (Moscow Times, 06.20.12).
o "Our position is that we want the Jackson-Vanik amendment repealed. We want to establish permanent normal trade relations with Russia, because we believe that it is in the interests of American businesses, American workers and it will help create jobs in the United States. And we would like it to be done separately," said Deputy National Security Adviser Ben Rhodes. (RIA Novosti, 06.19.12)
o Putin and Obama invited each other to visit. (Vedomosti, 06.19.12).

Nuclear security agenda:

· Madelyn Creedon, assistant defense secretary, told a Senate panel last week that the United States is looking to extend the so-called umbrella agreement that allows the United States to do work under the Cooperative Threat Reduction initiative in Russia. “So far our very preliminary discussions have been positive,” said Creedon, who added that she believed that the agreement would ultimately be extended. (GSN, 06.20.12).

Iran nuclear issues:

· The third round of talks in Moscow between Iran and the so-called P5 +1 ended without an announcement for a fourth set of political discussions. Technical experts from each side will meet in Istanbul on July 3 to examine the fine points of what both sides are proposing in negotiations. At the talks Iran hinted that it might limit enrichment to below that level but wanted more relief from sanctions and for the major powers to declare that it has a right to enrich uranium. (CNN, NYT, 06.22.12).

o Russia speaks out against any unnatural deadlines and ultimatums at the talks on the Iranian nuclear program, Foreign Minister Sergei Lavrov said Friday. (Itar-Tass, 06.22.12).
o Russian Deputy Russian Foreign Minister Sergei Ryabkov said:
- § “The pace of the work should be stepped up, the positive dynamics should continue. This should be done instead of concluding that as the pace of progress is not high, the entire process should fold up. This would be an unpardonable mistake.” (Itar-Tass, 06.21.12).
- § “One of the complications of the talks that recurred at the Moscow round was the dispute as to under what conditions, in what framework and on what ground can Iran’s right to uranium enrichment be officially recognized by the international community.” (Itar-Tass, 06.20.12).

o Putin’s foreign policy aide Yuri Ushakov said: ""it is possible to consider the main result to be achieving an agreement on the need to continue talks." (BBC, 06.21.12).

o A source in the Russian delegation said: "The negotiations were extremely difficult and very tense. Unfortunately, the positions of the parties are still rather far apart." (Kommersant, 06.20.12).

· Rosoboronexport has not supplied Iran with technologies for building ballistic missiles, Russia’s Federal Service for Military-Technical Cooperation has said. Earlier Kommersant reported that a recent report by the U.S. National Intelligence Council to the Senate concluded that Rosoboronexport supplied technologies that the Iranians could use in strategic missiles. (Interfax, 06.20.12, Kommersant, 06.14.12).

NATO-Russia cooperation, including transit to Afghanistan:

· Rosoboronexport holds contracts with the United States government, mostly to supply Russian helicopters to Iraq, Afghanistan and Pakistan — and it was briefly labeled a minority-owned small business by the U.S. Army. This was in two actions, worth $378 million, that were part of a larger contract that has since grown to $960 million. (New York Times, 06.18.12).

Counter-terrorism cooperation:

· No significant developments.

Missile defense:

· President Obama “was really stating the obvious” when he told Russian leader Dmitri Medvedev that he'd have “more flexibility” to deal with Russia's concerns on missile defense after the election, the State Department's top arms-control official Rose Gottemoeller told Congress on Thursday. (The Hill, 06.21.12).

· Senator Carl Levin, chairman of the U.S. Senate’s Armed Services Committee on Thursday called a House initiative to deploy a missile defense site on the nation’s East Coast before 2016 “a replay of an old Cold War debate.” (GSN, 06.15.12).

Nuclear arms control:

· The Obama administration intends to pursue a deal with Russia enabling a significant decrease to the quantity of U.S. long-range deployed nuclear warheads to 1,000 weapons. Finalization and formal announcement of the plan could take place in the near future, possibly before July, senior U.S. government personnel said. (GSN, 06.20.12).

· Acting Under Secretary of State Rose Gottemoeller told the Senate: “When the (New START) Treaty is fully implemented, it will result in the lowest number of deployed nuclear warheads since the 1950s, the first full decade of the nuclear age.” (Senate Foreign Relations Committee, 06.21.12).

· Senator John Kerry said: “Those who say we should just walk away from New START – or who never supported it in the first place because of our differences with Russia – really have a fundamental responsibility which they have not fulfilled: which is explain to the American people how retaining more nuclear weapons than our military advisers say we need, and how having less insight into Russia’s strategic nuclear arsenal, how that would change Russia’s calculus toward Syria or its approach to human rights – or any other issue.” (Nukes of Hazard, 06.22.12).

· The Obama administration insisted on Thursday that it is modernizing the nation's nuclear arsenal in the face of withering criticism from Republicans that it is moving slowly in anticipation of President Barack Obama's push for further reductions. (AP, 06.21.12).

Cyber security:

· No significant developments.

Energy exports from CIS:

· Total operations in Russia's arctic shelf might come to $250 billion-over $400 billion, the president of OJSC Rosneft, Igor Sechin, said at the company's annual shareholder meeting on Wednesday. (Interfax, 06.20.12).

Access to major markets for exports and imports:

· With Russia heading toward membership in the World Trade Organization, Senate Finance Committee chairman Max Baucus on Thursday said he plans a committee vote in July on normalizing trade relations in hopes of getting in place a policy by August. Mr. Baucus has already indicated that he plans to combine human-rights measures with trade normalization legislation. Attempting to keep things moving, the Senate Foreign Relations Committee on Thursday scheduled a vote for Tuesday on the Magnitsky bill. While House Ways and Means Committee Chairman Dave Camp (indicated Wednesday that he planned a straightforward, standalone Russian trade bill, but senators want conditions. (Dow Jones, 06.21.12).

· Moscow has warned the U.S. Administration that replacement of Jackson-Vanik Amendment with Magnitsky blacklist is “unacceptable,” Russian Presidential Aide Yuri Ushakov said on Sunday. (RIA Novosti, 06.17.12).

· Endorsement of the 'Magnitsky bill' by the U.S. Congress will have no effect on Russia-U.S. relations and Russia should not take retaliatory measures, Federation Council Vice-Speaker Svetlana Orlova said. (Interfax, 06.18.12).

· Over 130 MPs from the State Duma's opposition factions have appealed to the Constitutional Court in an attempt to hamper the ratification of Russia's entry into the World Trade Organization. (Russia Today, 06.20.12).

Other bilateral issues:

· "The nation which consistently opposes our actions at the United Nations has been Russia,” Mitt Romney said. "We're of course not enemies. We're not fighting each other. There's no Cold War, but Russia is a geopolitical foe in that regard." (CBS, 06.19.12).

· On Thursday, Vladimir Putin met with former Russian Foreign Minister Yevgeny Primakov and former U.S. Secretary of State Henry Kissinger on the sidelines of the St. Petersburg economic forum. (Interfax, 06.21.12).

II. Russia news.

Domestic Politics, Economy and Energy:

· President Vladimir Putin said Thursday that reforming Russia’s economy is his top priority. Putin also touched upon the unprecedented protests that accompanied his return to the presidency, arguing that while the government should be “open to dialogue,” he would not allow the opposition to weaken the centralized system he has built during his 12 years in power. (AP, 06.21.12).

· At $90, we feel more or less OK," First Deputy Prime Minister Igor Shuvalov, referring to the price for crude oil in Europe, now about $96 a barrel. (Wall Street Journal, 06.18.12).

· Russia is setting aside up to $40bn for this year and next to shore up the economy in case the crisis in the eurozone escalates and spreads. (Financial Times, 06.19.12).

· Capital flight makes up no more than 20 percent of the total amount of capital that is being taken out of Russia, First Deputy Prime Minister Igor Shuvalov said. (Interfax, 06.20.12).

· Russia's total foreign trade turnover increased in 2011 by 10.7 percent from around $243 billion to about $269 billion. At the same time its trade with the EU increased by even more, 14.6 percent. (Forbes, 06.21.12).

· Vladimir Putin has created a special presidential commission for the strategic development of the country's energy industry and appointed Igor Sechin as the commission's secretary in chief. (Financial Times, 06.15.12).

· The Russian government confirmed its plans to sell the stakes of the top 10 state-owned companies in 2012-2013. (RIA Novosti, 06.22.12).

· At a forum used by President Vladimir Putin to court foreign capital, sovereign wealth fund the Kuwait Investment Authority has struck a $500 million deal to invest alongside the $10 billion state-backed Russian Direct Investment Fund (RDIF).The RDIF fund also announced that it will launch a pre-IPO program with a consortium of investors—BlackRock, Goldman Sachs and Franklin Templeton. (Reuters, 06.21.12).

Defense:

· Russia's legislature this week received a draft law from President Vladimir Putin to create an organization similar to the U.S. Defense Department's elite scientific research arm. (GSN, 06.21.12).

· "Russia pays $120 million a year to Kazakhstan for renting the Baikonur space center, from which rockets are regularly launched into space," the source said. "And now we are being forced to pay nearly three times as much for renting the outdated Gabala Radar Station, which requires thorough modernization. Who will agree to this?" a high-ranking source at the General Staff of the Russian armed forces said. (Interfax, 06.20.12).

· Russia's Deputy Prime Minister Dmitry Rogozin said on Tuesday he was in favor of development of the PAK DA long-range bomber for the country's air force, just hours after saying the project was unnecessary, in apparent contravention of President Putin's call last week for domestic aerospace industry to develop just such an aircraft. (RIA Novosti, 06.19.12).

· Candidates for the positions of commanders of strategic missile regiments in Russia have undergone lie detector tests. The testing is part of the Russian Armed Forces Personnel Reliability Program designed for all categories of servicemen, including drafted soldiers. (Interfax, 06.21.12).

Security and law-enforcement:

· Russian Security Council Secretary Nikolay Patrushev said that in 2012 Russian citizens were trained for sabotage in the Libyan Republic and had participated in combat actions on the side of "Fatah al-Islam." Upon returning to the Russian Federation to carry out acts of sabotage and terrorism within the territory of Kabardino-Balkariya, they formed a group and actively maintained contact with international terrorist organizations. This year a member of a bandit group, a citizen of the Republic of Libya was convinced to voluntarily plead guilty. (Krasnaya Zvezda, 06.01.12).

· Rights group Amnesty International has warned that the threat to security for many residents of Russia's North Caucasus region comes as much from law-enforcement agencies as it does from armed groups. (RFE/RL, 06.21.12).

· A Russian court on Wednesday convicted two professors of a St. Petersburg university of handing over Bulava missile secrets to China. (AP, 06.20.12).

Foreign affairs:

· Russian Foreign Minister Sergei Lavrov said that Iran should take part in an upcoming international conference on Syria slated for June 30. (FARS, 06.22.12).

· Russian Foreign Minister Sergei Lavrov lashed out at Britain on Thursday for pressuring a Russian-operated ship heading to Syria with 3 refurbished helicopters and other weapons to turn back, saying that Moscow won’t abide by European Union sanctions against its Arab ally. (AP, RT, 06.21.12).

· Russia’s chief arms exporter said Friday that his company was shipping advanced defensive missile systems to Syria that could be used to shoot down airplanes or sink ships if the United States or other nations try to intervene to halt the country’s spiral of violence. (New York Times, 06.15.12).

· The Russian Black Sea Fleet's large amphibious assault ships, the Nikolai Filchenkov and Tsezar Kunikov, are preparing to depart for the Mediterranean Sea to fulfill special tasks at the Syrian port of Tartous. (Interfax, 06.19.12).

· Syria and Russia on Tuesday denied a report by the Iranian Fars news agency that Russian, Chinese, Syrian, and Iranian troops would conduct large-scale joint military exercises in Syria within the next several weeks. (Al Arabiya, 06.19.12).

· When Vladimir Putin visits Israel next week, the world may want to pay attention: The Iranian nuclear program will top the agenda. (AP, 06.21.12).

· At the G-20 summit Russia pledged $10 billion to the International Monetary Fund. (Wall Street Journal, 06.19.12).

· The agenda of the next G20 summit due in St. Petersburg in the fall of 2013 will be based on scenarios of global economy development, Vladimir Putin said. (Interfax, 06.20.12).

Russia's neighbors:

· Troops from Afghanistan, Kazakhstan, Kyrgyzstan, Tajikistan, and the United States are taking part in the Regional Cooperation 2012 maneuvers in Kyrgyzstan, which are scheduled to run until June 29. (RFE/RL, 06.18.12).

· A day after the presidents of the United States, Russia, and France issued a joint statement calling for a peaceful settlement to the more than 20-year war between Armenia and Azerbaijan over the disputed territory of Nagorno-Karabakh, the two enemies publicly blamed each other Tuesday for failing to resolve the conflict. (New York Times, 06.19.12).

· Ukraine’s president, Viktor F. Yanukovich, said he wanted to pardon Yulia V. Tymoshenko, the country’s jailed former prime minister and his main political rival, but did not have the legal authority to do so. (New York Times, 06.15.12).