Russia in Review

A digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for the week of March 4-11, 2011

I. U.S. Vice President Joseph Biden’s 03.08.11-03.11.11 visit to Moscow.

Ahead of the visit

Missile defense: Biden said that U.S. would like to reach an agreement with Russia on missile defense in 2011. He was echoed by National Security Council Senior Director for Russian and Eurasian Affairs Michael McFaul: “The vice president's trip will be an important marker to see where we're at. And we hope that at some time this year we have agreement on that.”
Focus on trade: McFaul said: “We see the vice president's trip as trying to expand into new dimensions of reset with a particular focus on … the business piece.”
McFaul rejected speculation in a report by Nezavisimaya Gazeta that quoted an anonymous State Duma source as saying Biden's visit was a show of support for Russian President Dmitry Medvedev to run for re-election next year.

(Sources: Moscow Times, Reuters, WhiteHouse.gov, 03.08.11).

03.09.11 meeting with Russian President Dmitry Medvedev:

Missile defense: The two leaders "exchanged views on missile defense and determined their positions on this issue," a Kremlin official said.
Trade: Medvedev said: "It seems to me that our economic relations significantly lag behind political progress." The United States accounted for just 3.8 percent of Russia's external trade last year.
WTO:

o Biden said the U.S. is working with other countries to smooth Russia's path to the WTO. “WTO accession was "the most important item on our agenda,” he said.

o Medvedev said: “I hope that this year, with the active support of the United States, these processes will be completed,” it is unacceptable for Georgia to politicize conditions for Russia joining WTO.

Jackson-Vanik Amendment: Medvedev pushed for the repeal of the amendment and Biden assured the White House will press hard to achieve this.
Praise for Medvedev: "For my entire career, when I sat with a Russian leader, I was sitting with one of the most powerful men in the world, and that's how we still think of you — I mean that sincerely.”

(AP, MT, Wall Street Journal, Itar-Tass 03.10.11).

03.09.11 visit to Skolkovo, the suburban Moscow equivalent of Silicon Valley:

Biden and Deputy Prime Minister Igor Shuvalov presided over the final signing of a $2 billion purchase of Boeing 777 airliners by the Russian airline Aeroflot.

o Separately Deere & Company announced on 03.10.11 it plans to double the manufacturing space at its Domodedovo production facility

Biden chaired a roundtable discussion with U.S. and Russian business leaders, where he spoke of lapses in the rule of law as impediments to business investments. Biden spoke of the need to tackle "endemic corruption."

(Wall Street Journal, AP, 03.10.11).

03.10.11 meeting with Prime Minister Vladimir Putin:

Visas: Putin proposed that Russia and U.S. abolish visas in a "historic" step to seal a revival in ties. Biden welcomed Putin's offer with the words "good idea," but essentially rebuffed it, saying “In case you haven't noticed, there's a real difference between president and vice president."
Putin has thanked the USA for facilitating Russian investment in American nuclear energy: "What's more (this growth is observed) both in the humanitarian sector and in very sensitive sectors such as nuclear energy: it all goes through the Committee on Foreign Investment where it finds support, which we are very glad about, and we are grateful to you for that,” Putin said.
WTO: Biden was seeking a clear commitment that Russia would adopt the legal reforms necessary to join the WTO. Biden told Putin that Washington had tried to talk Georgia out of blocking Russia's accession.

(BBC, AFP, AP, RIA Novosti, 03.10.11).

03.09.11-03.10.11 meetings with human rights activists and several opposition leaders.

WTO: "Biden basically said that in one way or another Russia's accession to the WTO could depend ... to some degree on how certain human rights issues are being dealt with," said Oleg Orlov, head of the Memorial rights group.
Biden discussed corruption, the state of Russia's legal system and ways to deal with the terrorism threat.
Putin: "At the end of the meeting, Biden said that in Putin's place he would not stand for president in 2012 because this would be bad for the country and for himself," opposition leader Boris Nemtsov wrote on his blog. Leonid Gozman, co-leader of the pro-business, Kremlin-linked Right Cause party, said Biden also told the opposition leaders that he had "looked into Putin's eyes and saw no soul" — and personally told Putin about his observation.

(RIA Novosti, AP, Moscow Times, 03.10.11).

Speech at the Moscow State University

Missile defense: “We identified missile defense as a common project. I've talked extensively with your leaders on this issue. It will be difficult, but it will be a game-changer if we can get it done. It will say to the world, the two largest superpowers in the world are mutually developing the ability to have missile defenses, which I would argue would have an extremely important impact on dissuading so many of the countries who are contemplating becoming nuclear powers from doing so.”
Reset is working: Share of Russians with positive view of US went from 17% to 60% during Obama's stay in the White House. The reset "works for the entire world."
Georgia: “On the Caucasus -- we have a genuine disagreement not only with your leadership but with the vast majority of the Russian people over Georgia.”
Trade: Biden lamented the low level of trade between the United States and Russia. "The value of the goods that cross the U.S. border with Canada and Mexico every few days exceeds the annual value of our trade with Russia," he said. "We've got to do better, and I believe we can."
Business and investment in Russia are being held back by corruption, lapses in the rule of law and impediments to true democracy. “A country which -- a company which can be seized, or an owner imprisoned on a politician's whim; in which a lawyer like Sergei Magnitsky … can be arrested after accusing the police of fraud and then die in detention before being tried. No amount of government cheerleading or public relations or U.S. support or rebranding will bring wronged or nervous investors back to a market they perceive to have these shortcomings. Only bold and genuine change.” (Whitehouse.gov, 03.10.11).

(RIA Novosti, Wall Street Journal, 03.10.11, AP, Whitehouse.gov, 03.10.11).

No date announced of Obama’s visit to Russia this year, albeit both sides had confirmed Biden was to discuss this issue and Medvedev’s foreign policy aide Sergei Prikhodko said: “We would consider Joe Biden's visit to Moscow successful, if the parties could announce the date of Barack Obama's visit.”

II. U.S. and Russia priorities for the bilateral agenda.

Nuclear security agenda:

President Dmitry Medvedev has signed a new disciplinary code for employees of Russia’s nuclear complex into law. The new draft code introduces stricter obligations for the employees. The document also introduces penalties for violation of discipline that are stricter than those provided by Russia’s Labor Code. (Nuclear.ru, 03.11.11).
Representatives of the Russian nuclear regulatory body are getting a firsthand look at U.S. efforts to clean up nuclear waste at the highly contaminated Hanford nuclear reservation in eastern Washington state. The U.S. Department of Energy says the visitors toured several areas Thursday, including a mock waste tank. (Vedomosti, 03.05.11).
Bonnie Jenkins, coordinator of threat reduction programs for the State Department, said on Tuesday that prospects remain "very positive" for a possible extension of The Group of Eight industrialized nations' Global Partnership Against the Spread of Weapons and Materials of Mass Destruction. (GSN, 03.09.11).
A former head of Russia's Zvezda shipyard faces a charge of "large-scale embezzlement" for allegedly siphoning more than $210,000 from a Japanese-funded effort to dismantle retired Russian nuclear submarines. (GSN, 03.10.11).

Iran nuclear issues:

No significant developments.

NATO-Russia cooperation, including transit to Afghanistan:

President Medvedev approved an agreement letting the U.S. fly weapons and troops over Russia for efforts to secure, stabilize, and rebuild Afghanistan. Medvedev signed the measure today after lawmakers gave final approval on March 2. (Bloomberg, 03.10.11).
Russia and NATO are jointly developing a hi-tech integrated system aimed at detecting conventional explosives attached to suicide bombers' belts. The system, which is dubbed Standex, will be able to detect even low-yield bombs concealed under clothes and pinpoint location of the bombs. The technology of detection has been developed by Rosatom’s V.G. Khlopin Radium Institute in St. Petersburg. The first testing of the Standex system will take place in the Paris subway, maybe as early as this spring. Russia’s envoy to NATO Dmitry Rogozin said of the system: “we are on the brink of very interesting events, which pave way for real beginning of a strategic partnership with NATO.” (Kommersant, 03.11.11)
Russia has extended the agreement on the use of Russian An-124 Ruslan aircraft for airfreight in the interests of NATO as part of the SALIS program, Deputy Director of the Federal Service for Military-Technical Cooperation Vyacheslav Dzirkaln said. Furthermore, he said, it has been proposed that the fleet of Russian aircraft used in the interests of NATO should be increased through the inclusion of Il-76 aircraft. (Interfax, 03.07.11).

Counter-terrorism cooperation:

No significant developments.

Missile defense:

NATO Secretary General’s Special Representative James Appathurai said Russia wants guarantees that Phases 3 and 4 of missile defense deployment will not undermine its strategic deterrence capabilities. (Itar-Tass, 03.10.11).
U.S. State Secretary Hillary Clinton said that Washington intended to deploy elements of its ballistic missile defense system and F-16 fighters in Poland after all. (Kommersant, 03.05.11).
The United States could provide Russia with early warning information about incoming missile threats as part of a joint missile defense effort, U.S. Principal Deputy Defense Undersecretary James Miller said. He said NATO and U.S. radar technology could bolster Russia's capacity to eliminate missiles launched from Iran. (GSN, 03.04.11).
Russian permanent representative to NATO Rogozin said: "We have to come to an understanding whether we are together or we are absolutely not together by June. We will not tolerate a situation in which we would have to join an already finished system." He said the Russian president’s administration will create an interagency working group on cooperation with NATO on missile defense by March 18. (Itar-Tass, 03.09.11).
Russia will reciprocate the possible deployment of U.S. missile defense elements and Air Force units in Poland, Foreign Ministry spokesman Alexander Lukashevich told a Thursday press briefing in Moscow. U.S. plans to deploy missile defense elements in Poland could pose an additional obstacle to substantive international cooperation, Rogozin said. (Interfax, 03.10.11, GSN, 03.08.11).
A warship capable of detecting and shooting down ballistic missiles headed for the Mediterranean Sea on Monday as the U.S. started implementing its plan to protect Europe from a potential Iranian nuclear threat. (AP, 03.07.11).

Nuclear arms control:

No significant developments.

Energy exports from CIS:

No significant developments.

Access to major markets for exports and imports:

Georgia and Russia have been negotiations on Russia’s WTO bid in Geneva with Swiss mediation. Georgia’s Vice Parliamentary Speaker Georgi Tsereteli said Georgia will not allow Russia to join WTO at the expense of its own interests, making a reference to Russia's control over customs on the border of South Ossetia and Abkhazia, which Georgia claims as its own territory. (RIA Novosti, 03.09.11, New York Times, 03.07.11).
U.S. government is not involved in Russian-Georgian talks on WTO, McFaul said. (Foreign Policy, 03.04.11).
LUKoil is scouting for oil and natural gas investments in U.S. shale fields, said its president, Vagit Alekperov. (Bloomberg, 03.10.11.)

Other bilateral issues:

Director of U.S. National Intelligence James Clapper told a Senate committee on Thursday that China and Russia pose the greatest threat to the United States. (Foreign Policy, 03.10.11).
Despite stepped-up government efforts, Russia remains a major consumer of dangerous drugs and a favorite place for laundering drug-trafficking profits, a State Department's report has found. (Moscow Times, 03.05.11).
If convicted, suspected arms dealer Viktor Bout might be swapped for Andrei Khlychev, a former intelligence colonel sentenced in Moscow last Friday to 18 years in prison after pleading guilty to spying for the United States, Interfax reported Wednesday. But a Foreign Ministry spokesman denied such plans Thursday. (Moscow Times, 03.11.11).

III. Russia news.

Domestic Politics, Economy and Energy:

More than 3,000 regional elections will be held across Russia this weekend. All polls indicate that United Russia will lead the vote, but its results may slip below 50 percent for the first time in years. (Moscow Times, 03.11.11).
The Russian government is establishing a $10bn fund to co-invest with leading international private equity firms in an effort to attract foreign capital to the country and has asked Goldman Sachs informally to guide the project, according to people familiar with the matter. (Financial Times, 03.07.11).
The Russian government has been reaching out to the top Wall Street investment banks and private-equity firms in an effort to bring more high-profile, foreign money to companies and projects in the country. The initiative includes a steering committee, which has reached out for advice and guidance on Russia's economic development from the chief executive officers of major U.S. Wall Street powerhouses including Goldman Sachs Group Inc.'s Lloyd Blankfein, J.P. Morgan Chase & Co.'s James Dimon, and Bank of America Corp.'s Brian Moynihan. (Wall Street Journal, 03.08.11).
President Dmitry Medvedev signed a decree combining two major financial watchdogs in a move that is expected to simplify business regulation in Russia. (Reuters, 03.05.11).
Russia nearly doubled its number of billionaires this year, producing 101 of the 1,210 world's wealthiest people, compared with 62 last year, Forbes magazine said in its annual world billionaires ranking. The country ranked third by number of billionaires, coming after the United States and China. Moscow also won back its status as the world's billionaire capital, from last year's champion, New York. Novolipetsk Steel chairman Vladimir Lisin retained his crown as Russia's wealthiest person, growing his fortune to $24 billion from $15.8 billion in 2010. (Moscow Times, 03.11.11).
Russia is benefiting tangibly from the turmoil in the Middle East. Urals crude sold for $113 this week, up from $75 a year ago. Of that, $76.50 goes into the Russian treasury. At Monday’s closing price of $114, the price of each of those barrels of Ural crude, the country’s main export blend, has risen 24 percent since the beginning of the year. (Washington Post, 03.10.11, New York Times, 03.07.11).
LUKoil said it produced record free cash flow of $6.9 billion last year as it followed a plan to scale back output growth and keep more money. Net income in the fourth quarter rose 27 percent to $2.19 billion against the previous year. (Bloomberg, 03.11.11).
Chechen lawmakers have handed strongman leader Ramzan Kadyrov a new five-year term, unanimously approving the Kremlin nominee in a vote whose outcome was never in doubt. (Reuters, 03.09.11).
The Chamber of Commerce and Industry of the Russian Federation elected Sergei Katyrin as its new president Friday. Katyrin replaces long-serving Yevgeny Primakov, who refused to run for the post again. (Moscow Times, 03.05.11).
Foreigners coming to Russia for short visits might soon no longer be required to register with authorities. Legislation currently being debated in the State Duma says they only have to register when they stay longer than seven working days. (Moscow Times, 03.11.11).
The 2010 Russian heat wave that killed thousands and cut into that country's grain harvest was primarily due to natural variability, not human-spurred climate change, U.S. scientists said Wednesday. (Reuters, 03.09.11).

Defense:

The leadership of the Russian Defense Ministry has instructed the Navy's Main Staff to start moving to St. Petersburg. (Interfax, 03.10.11).

Security and law-enforcement:

Twin blasts rocked northern Moscow on Friday in an attack that left no casualties but appeared part of a campaign against targets linked to the powerful Federal Security Service (FSB). The two bombs -- one left on top of an outdoor garage and the other left in a metal garbage container -- went off outside a building housing FSB employees and their families, police sources said. They said the explosives were similar to the small bomb that went off on Wednesday outside a bus stop near an FSB training centre in Moscow. Wednesday's blast has been claimed by North Caucasus-based terrorist group Riyadus Salikhin Martyrs Brigade founded by late Shamil Basayev. (AFP, RIA Novosti, 03.11/11).
The State Duma on Wednesday passed the first reading of presidential amendments to the Criminal Code and the Code of Administrative Offences that should step up the fight against corruption in Russia. The amendments introduce a 100-fold fine for large bribes. As the main penalty for bribery, the amendments impose a fine of 12 to 50 times the bribe or imprisonment of up to three years. (Itar-Tass, 03.10.11).
President Medvedev on Monday signed the federal law on amendments to the Criminal Code, which cancels imprisonment for certain crimes, and also abolishes the lower limit of punishment. The amendments to the Criminal Code ease punishment for petty crimes and partly for crimes of medium severity. (Itar-Tass, 03.09.11).
Prime Minister Putin on Friday expressed confidence that Russian society would be able to shield itself from those who are trying to use the Internet "for destructive purposes." (Interfax, 03.04.11).

Foreign affairs:

The Russian state arms trader Rosoboronexport is ready to hold talks with Iran on the delivery of weapons which are not subject to UN sanctions, and are not on the list, approved by the Russian president. (Interfax, 03.10.11).
Russia's foreign minister Sergei Lavrov warned world powers on Thursday against meddling in the affairs of Libya and other African countries, saying military intervention would be unacceptable. (Reuters, 03.10.11).
Russia will ban all weapons sales to Libya, the Kremlin said in a statement on Thursday, effectively suspending billions of dollars worth of arms contracts with the government of Muammar Gaddafi. (Reuters, 03.10.11).
The Russian state arms trader Rosoboronexport is ready to hold talks with Iran on the delivery of weapons which are not subject to UN sanctions, and are not on the list approved by the Russian president. (Interfax, 03.10.11).
The Russian state arms export monopoly Rosoboronexport plans to sell up to $9.5 billion worth of weapons abroad in 2011. (Interfax, 03.09.11).
Tokyo's outspoken Governor Shintaro Ishihara says his country, which suffered history's only nuclear attack, should build nuclear weapons. "All our enemies: China, North Korea and Russia – all close neighbors – have nuclear weapons. Is there another country in the world in a similar situation?” he said. (The Independent, 03.08.11).

Russia's neighbors:

The Armenian and Azerbaijani presidents have held talks in Russia on the disputed Nagorno-Karabakh region amid heightened tensions in recent months. Armenian President Serzh Sarkisian, Azerbaijan's Ilham Aliyev, and Russian President Dmitry Medvedev released a statement stating their intention to "resolve all controversial questions in a peaceful manner" after meeting in Russia's Black Sea resort of Sochi. (RFE/RL, 03.05.11).
The Belarusian prosecutor at the Minsk trial of two Russian citizens accused of taking part in "mass unrest" in December has asked the judge to fine each defendant around $6,000. (RFE/RL, 03.11.11).
U.S. Vice President Joseph Biden urged Moldova to fight corruption and implement pro-Western democratic reforms, saying Friday that Washington would offer support to Europe's poorest country as it seeks to move closer to the EU. (AP, 03.11.11).
Donald J. Trump signed a deal to develop two towers in Georgia for $300 million. (New York Times, 03.10.11).
Kazakh President Nursultan Nazarbaev will make a working visit to Moscow on March 17. (RFE/RL, 03.09.11).