Russia in Review

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for January 23-29, 2016

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

Nuclear security:

• Chinese President Xi Jinping is expected to make his second visit to the United States in less than a year to attend the Nuclear Security Summit in Washington in March.  (South China Morning Post, 01.25.16).

Iran’s nuclear program and related issues:

• No significant developments.

Military issues, including NATO-Russia relations:

• Russia backs the proposal made by NATO Secretary General Jens Stoltenberg to hold a meeting of the Russia-NATO Council, Russia's Federation Council Deputy Speaker Ilyas Umakhanov said. When speaking at a press conference on Jan. 28, Stoltenberg revealed that NATO is considering holding another meeting of the Russia-NATO Council. Russian envoy to NATO Alexander Grushko also said that Moscow is ready for the resumption of the dialogue in the framework of the Russia-NATO Council. (Interfax, 01.28.16, 01.29.16).
• Russia's will to “change borders in the east" has helped reduce military spending cuts among the European members of the North Atlantic Treaty Organization, according NATO Secretary General Jens Stoltenberg. (Wall Street Journal, 01.28.16).
• In accordance with the Government Program, the effects of Finland's possible NATO membership will be assessed in connection with the preparation of a Report on Finnish Foreign and Security Policy. The Ministry for Foreign Affairs will lead the preparation of the Report. (Formin.finland.fi, 01.28.16).

Missile defense:

• Russian Foreign Minister Sergei Lavrov said the U.S. antimissile shield and NATO's expansion closer to Russia's borders were "destabilizing and short-sighted." (RFE/RL, 01.26.16).
• The U.S. military has stepped up discussions on converting its Aegis missile defense test site in Hawaii into a combat-ready facility that would bolster American defenses against ballistic missile attacks, according to sources familiar with the discussions. (Reuters, 01.22.16).

Nuclear arms control:

• No significant developments.

Counter-terrorism:

• An Egypt Air mechanic whose cousin joined the Islamic State militant group in Syria is suspected of planting a bomb on a Russian passenger plane that was blown out of Egypt's skies in late October. Sources familiar with the matter told Reuters on January 29 that the mechanic had been detained, along with two airport policemen and a baggage handler suspected of helping him put the bomb on board. (RFE/RL, 01.29.16).
• Tajik authorities say up to 1,000 nationals have joined Islamic State militants in Syria and Iraq, doubling the figure that officials previously provided. (RFE/RL, 01.25.16).
• Georgian officials have rejected Russian Foreign Minister Sergei Lavrov's claims that Islamic State militants are being trained in Georgia's Pankisi Gorge region. (RFE/RL, 01.26.16).
• Georgian Islamist militant Khvicha Gobadze has been killed in Syria, Georgian media reported, quoting the State Security Service. (RFE/RL, 01.25.16).

Cyber security:

• No significant developments.

Energy exports from CIS:

• Russia for the first time publicly embraced talking to the OPEC about jointly cutting global oil production by up to 5 percent to prop up collapsing oil prices. Russian Energy Minister Alexander Novak told reporters on January 28 in St. Petersburg that he is ready for such talks, sending oil prices soaring by as much as 8 percent to $36 a barrel in London trading and buoying stocks on exchanges from New York to Shanghai. Lukoil Vice President Leonid Fedun also said that Russia could work with the OPEC on removing supply from the market if a political decision was taken to cooperate. But Russia’s largest oil producer Rosneft on Friday played down prospects of a coordinated output cut with OPEC and described the sharp rally in oil prices on speculation of such a move as “idiotic” (RFE/RL, 01.29.16, Financial Times, 01.29.16, Bloomberg, 01.22.16).
• Russia’s production of crude and light oil called condensate is on track to reach 10.89 million barrels a day in January, up 83,000 barrels a day -- or the biggest monthly increase since September 2014. The Russian Energy Ministry forecasts that national oil production will remain at current levels through 2035, but the International Energy Agency expects Russian oil output to stop growing this year. By 2020, Russian oil production could fall to 10.5 million barrels a day, the IEA said, and sink to 9 million barrels a day by 2040. (Wall Street Journal, 01.24.16, Bloomberg, 01.28.16).
• Russian President Vladimir Putin explained that a shrinking Chinese economy and excessive fuel production are causing the price of oil to plunge. “China is our partner, our ally, we have very good relations with the Chinese, but unfortunately, you know, they have problems, their growth rates have been suffering,” Putin said. “Because of that, as the world economy shrinks, it affects the price of a barrel of oil. Fuel is not consumed as economists predicted,” Putin said. (Moscow Times, 01.26.16).
• In December 2015 Russia increased the volume of oil supplies to China to 4.81 million tons, which is 29 percent more than the year before. The report from China’s General Administration of Customs shows that Russia took first place on this indicator among all oil-exporting countries for the month. (Tass, 01.27.16).
• Gazprom Neft can make a profit on oil extracted from existing fields even if the oil price falls to $15 per barrel, chief executive Alexander Dyukov told state TV in December. (Wall Street Journal, 01.24.16).
• The Western sanctions could result in a loss of Russia’s Arctic and shale oil production of around 1 million barrels a day by 2035, according to IHS Energy. (Wall Street Journal, 01.24.16).
• Horizontal drilling last year made up about a third of all drilling in Russia, up from 11% in 2010. (Wall Street Journal, 01.24.16).
• The EC wants to oblige member states to ask for its approval before signing contracts with the energy giant. According to draft bills prepared by the Commission, governments intending to conclude agreements with the Russian state-controlled giant Gazprom will have to report about their intentions as well as the process of negotiations. (New Europe, 01.26.16).
• The first shipments of U.S. liquefied natural gas are expected to start arriving in Europe this spring. Russian officials say U.S. gas will be too expensive to compete. (Wall Street Journal, 01.24.16).

Bilateral economic ties:

• No significant developments.

Other bilateral issues:

• The Kremlin has described as “outrageous and insulting” comments by U.S. officials alleging that Russian President Vladimir Putin is corrupt. A White House spokesman said on January 28 that earlier remarks by a U.S. Treasury Department official alleging Putin is corrupt were a reflection of the administration's view. (RFE/RL, 01.29.16).
• “The US government has a goal — to dominate the world. It's possible that they want to achieve this goal through Russia's collapse, which will allow the U.S. access to its rich resources, which, in their opinion, Russia does not deserve to possess,” Russia's Security Council Secretary Nikolai Patrushev said. Patrushev also added that Moscow is not interested in a standoff with the West.  (Moscow Times, 01.26.16).
• The Russian foreign minister, Sergey V. Lavrov, said on Tuesday that while he wanted to see “reset’’ of Russia’s relations with the United States, Moscow would not budge on any of the issues that put it at odds with Washington. Mr. Lavrov said Russia was ready to cooperate with the West, but only on what it sees as equal terms. (New York Times, 01.27.16).
• Sen. John McCain said Wednesday he would join House Majority Leader Kevin to again introduce legislation to limit Russian-made engines that could be used in U.S. military and intelligence missions. (Washington Post, 01.28.16).
• Human Rights Watch’s 650-page report issued on January 27 surveys human rights practices. The report says the United States, the United Kingdom, and France have all made moves to increase state mass surveillance. On the other hand, the report criticizes countries like Russia, Turkey, and China for cracking down on civil society and independent media out of fear of popular movements. (RFE/RL, 01.27.16).

II. Russia news.

Domestic politics, economy and energy:

• Russia’s economy, facing renewed pressure from plunges in energy prices and the ruble, contracted the most since 2009 last year on oil’s decline and sanctions over the conflict in Ukraine that curbed access to international financing. Gross domestic product fell 3.7 percent after growth of 0.6 percent in 2014, the Federal Statistics Service said Monday on its website. (Bloomberg, 01.22.16).
• Industrial output in Russia shrank 3.4 percent in 2015 for the first time in six years, the Rosstat state statistics service said in a report Monday. (Moscow Times, 01.25.16).
• A total of 1.2 million passenger cars were produced in Russia last year, down 27.7 percent compared to 2014, according to a report published by the Rosstat state statistics service on Monday. (Moscow Times, 01.25.16).
• Retail sales in Russia dropped by 15.3 percent in December 2015 compared to the same period in 2014, the Rosstat state statistics service said Monday. (Moscow Times, 01.25.16).
• The Russian central bank held its key rate at 11% for the fourth successive board meeting, kept interest rates unchanged Friday, but said it could tighten monetary policy if inflation rises. (Wall Street Journal, 01.29.16).
• Russian President Vladimir Putin has not decided yet whether he will run for president in 2018, his press officer Dmitry Peskov said. (Interfax, 01.29.16).
• Vladimir Putin's approval rating dropped to 82 percent this month, compared to a record high of 89 percent in June 2015 and 85 percent in December 2015, Levada Center said in a report. The number of Russians who think their country is on the right track has also shrunk to 45 percent of the population — the lowest in more than a year, according to Levada. (Moscow Times, 01.28.16).
• In the annual ranking of the Corruption Perceptions Index compiled by Transparency International, Russia has risen from 136th to 119th place sharing this position with Azerbaijan, Guyana and Sierra Leone. All three countries received a similar score – 29 out of 100. This is Russia’s best result since 2012, when the organization moved to a 100-point rating system. In 2014, Russia came in 136th place, along with Nigeria and Lebanon. (Interfax, 01.29.16).

Defense and Aerospace:

• No significant developments.

Security, law-enforcement and justice:

• Russia's Investigative Committee says its probe into the murder of opposition politician Boris Nemtsov has been completed. A committee spokesman said that five detained suspects from Russia's North Caucasus region of Chechnya had been charged with "committing the contract killing" of Nemtsov as he was walking outside the Kremlin on February 27, 2015. (RFE/RL, 01.29.16).
• The death of a Russian whistleblower could have parallels with the murder of former Russian spy Alexander Litvinenko, a coroner has heard. A hearing ahead of a full inquest into the death of Alexander Perepilichny was told both men gave evidence to prosecutors in Europe before they died. (BBC, 01.28.16).

Foreign affairs and trade:

• Syria:
  • Syria peace talks are due to get under way in Geneva on Friday amid confusion over whether opposition groups will attend. Some opposition leaders have said they first want an end to air strikes and blockades by government forces. UN envoy Staffan de Mistura said he would open the talks by meeting the Syrian government's delegation. On Thursday, Riad Hijab, head of the opposition's Saudi-backed High Negotiations Committee declared that "tomorrow, we will not be in Geneva". The committee has earlier said its participation was also contingent upon an end to the siege and bombardment of rebel-held areas -- especially by Russia -- and the release of detainees.  (BBC, 01.29.16 Wall Street Journal, 01.28.16).
  • Russian Foreign Minister Sergei Lavrov said Russian actions in Syria have drastically altered the situation there, and claimed no one has ever supplied proof that Russian air strikes in Syria caused civilian deaths or struck the wrong militant groups. (RFE/RL, 01.26.16).
  • Russian Foreign Minister Sergei Lavrov denied reports that Russia had told Bashar Assad to step down or had offered him political asylum. When the Syrian leader visited Moscow in October, Mr. Lavrov said, ''we agreed that President Assad, in the course of the political process, will send a delegation'' to United Nations-sponsored peace talks ''and will be ready to consider political reforms.'' (New York Times, 01.27.16).
  • Russian President Vladimir Putin has told students in Stavropol that Russian air strikes in Syria will continue for as long as it is necessary to support Syrian forces loyal to President Bashar al-Assad. He said the only task of Russian forces in Syria is to help "people, help the legitimate leadership of Syria to combat terrorism, and to liquidate terrorists on Syrian soil."
  • (RFE/RL, 01.25.16).
  • Western-backed Syrian rebels on Tuesday suffered one of their most significant defeats since Russia's military intervention in Syria. After a month-long offensive backed by Russian warplanes, government forces and allied militias reclaimed control of the town of Sheikh Miskeen, strategically located at a crossroads commanding a southern supply route between the Jordanian border and Damascus. (Washington Post, 01.27.16).
  • The Russian Defense Ministry on Monday denied reports that Moscow is planning to establish a new airbase in the Syrian province of El-Kamashli, emphasizing that Russia's current base in Latakia is within range of all possible targets operating in the shattered Arab republic.(Moscow Times, 01.25.16).
  • The Syrian branch of the North Caucasus-based Emirate Caucasus terrorist organization has acquired shoulder-fired portable anti-aircraft missiles, according to a Russian national who travelled to Syria to join rebels there in 2013, but then returned to Russia only to be apprehended and tried. The man – whom Kommersant  has identified only by his first name, Islambek,  has told Russian law-enforcers that the arsenal of this branch are armed with Strela and Igla MANPADs, this Russian daily reported on Tuesday. Islambek believes there are about 1,500 Russian nationals in just one “rebel camp” located in Syria and operated under the aegis of Emirate Caucasus, according to Kommersant. (Belfer Center, 01.26.16).
  • Forces loyal to Syrian President Bashar al-Assad are reported to have retaken the key rebel-held town of Rabiya in the western coastal province of Latakia. The Syrian Observatory for Human Rights said the advance was backed by Russian air strikes and was directed partly by Russian officers. It would likely allow pro-government forces to push right up to the Turkish border, the monitor said. (RFE/RL, 01.24.16).
  • Syrian activists say at least 63 people, including nine children, have been killed in air strikes suspected to have been carried out by Russian warplanes in eastern Syria.  Russia is saying it is targeting the IS group and other extremists there. (RFE/RL, 01.24.16).
  • German Finance Minister Wolfgang Schaeuble said the European Union should forge closer ties with Russia to help resolve the civil war in Syria and reduce tension in the Middle East between Sunni and Shia Muslims. (Bloomberg, 01.22.16).
• Other countries:
  • French Economy Minister Emmanuel Macron met with French businessmen in Moscow on Monday and expressed hope that the implementation of the Minsk agreements would lead to an end to the conflict in Ukraine and the lifting of sanctions on Russia by the summer. (Moscow Times, 01.25.16).
  • Finland and Russia have agreed to step up cooperation along their shared border, through which a growing number of migrants are entering the European Union. According to the Finnish border guard, about 400 asylum seekers have come from Russia to Finland this month, compared with about 700 in the whole of 2015. Norway is also negotiating with Moscow over the return of migrants who cross the two nations’ Arctic border and seek asylum in the Scandinavian country even though they have permits to stay in Russia. Last year, 5,500 people crossed at the remote Arctic border. So far, Norway has returned 230 of the migrants. (RFE/RL, 01.27.16).
  • German authorities say a claim of rape by a 13-year-old girl from a Russian immigrant family in Berlin that had caused tensions between Russia and Germany was fabricated. A spokesman for the prosecutor’s office in Berlin said on January 29 that data from the girl’s mobile phone showed she had spent the night in question at a friend’s house. Russian Foreign Minister Sergei Lavrov has earlier called on Germany to provide all the details of its investigation and suggested German authorities might "cover up the reality for some domestic politically correct reason." (RFE/RL, 01.28.16, 01.29.16).
  • The speaker of the State Duma says Russia is ready to resume ties with Egypt in tourism and in civil aviation. (RFE/RL, 01.25.16).
  • In 2015, Russia allocated 10 loans, including several to countries from the Eurasian Customs Union. In 2016 there will be no loans to any countries, with Iran being the only possible exception. (Expert Online, 01.26.16).

Russia's neighbors:

• Ukraine:
  • "Those political forces that want to torpedo the Minsk agreements at any cost...and to block the constitutional process, must clearly understand the consequences of their actions," President Petro Poroshenko said. “They will lead to the resumption of the 'hot phase' of the conflict, including a full-scale -- and not local, as it has been so far -- conflict with Russia," he added.  (RFE/RL, 01.24.16).
  • Ukraine’s Prime Minister Arseniy Yatsenyuk has called for a referendum to be held on a new constitution for the country. Yatsenyuk said the constitution would be a “new agreement on redistribution of powers between authorities, an agreement on relations between the center and the country’s regions, an agreement on a new honest and fair judicial system, and on clear geopolitics.”
    (RFE/RL, 01.24.16).
  • Russian President Vladimir Putin has criticized Soviet founder Vladimir Lenin, accusing him of placing a "time bomb" under the state. Putin said Lenin’s government had whimsically drawn borders between parts of the USSR, placing Donbass under the Ukrainian jurisdiction in order to increase the percentage of proletariat in a move Putin called “delirious” (The Independent, RFE/RL, 01.25.16).
  • On the crisis in Ukraine, Russian Foreign Minister Sergei Lavrov said the West was encouraging the Ukrainian government in Kiev to drag its feet in fulfilling a peace agreement reached in Minsk, Belarus, in February 2015. Lavrov also said Russia would not negotiate the status of Crimea, which it annexed in 2014.''We have nothing to return,'' Mr. Lavrov said. ''Crimea is a Russian territory.'' (New York Times, 01.27.16).
  • The meeting between Russian presidential aide Vladislav Surkov and US Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland was useful, and this could become a full-fledged format of Russian-US contacts, US Ambassador to Russia John Tefft said Thursday. (Tass, 01.28.16).
  • In Davos, Ukrainian President Petro Poroshenko had a fight with Russian Vice Prime Minister Yuri Trutnev. The Russian and the Ukrainian delegations were sitting close to each other. Trutnev and Poroshenko were having a peaceful conversation that soon changed to higher tones. Soon afterwards, the two officials jumped up from their seats to lash on each other. Russian President Vladimir Putin was informed about the conflict. Putin asked Trutnev to be more careful. (Pravda, 01.28.16).
  • “Russia still has military troops inside of Donetsk and Luhansk — President [Vladimir] Putin said as much in one of his recent press availabilities — and we’d like to see them out of there,” Ambassador in Moscow John Tefft said. Moscow had long claimed that all Russian citizens fighting alongside separatist insurgents were volunteers. (Moscow Times, 01.29.16).
  • The National Bank of Ukraine said on January 28 that several unfavorable factors beyond the country's control forced the downward revision of its growth forecast from 2.4 percent to 1.1 percent. (RFE/RL, 01.28.16).
  • Ukraine's finance minister says the cash-strapped country expects to receive up to $10 billion from foreign sources this year, including the International Monetary Fund (IMF).  (RFE/RL, 01.26.16).
  • Ukraine's finance minister says there is still a chance to avoid a court battle with Russia over $3 billion of debt that Kyiv defaulted on in December. (RFE/RL, 01.23.16).
  • Lawmakers in Kyiv have approved draft legislation simplifying the process for foreigners to obtain Ukrainian citizenship if they have served in Ukraine's army.  (RFE/RL, 01.29.16).
• Other neighbors:
  • M1 Abrams tanks will take part in a joint American-Georgian military exercise slated to be held outside Tbilisi in May. (Sputnik, 01.21.16).
  • Georgia has welcomed a decision by the International Criminal Court (ICC) to open an investigation into alleged war crimes committed "in and around South Ossetia" during 2008, when Russia fought a brief war against Georgia over the breakaway region. (RFE/RL, 01.28.16).
  • IMF and World Bank officials are discussing a possible $4 billion emergency loan package to Azerbaijan. (RFE/RL, 01.28.16).
  • The head of Tajikistan's National Bank says legislation is being considered to introduce jail terms of up to nine years for what he called "illegal hard-currency exchange operations." (RFE/RL, 01.26.16).
  • Tajik President Emomali Rahmon has appointed his daughter as his chief of staff, the latest in a series of moves that appear aimed at consolidating power in his family for years to come. (RFE/RL, 01.27.16).
  • Foreign Minister Sergei Lavrov told Turkmen President Gurbanguly Berdymukhammedov that Russia was ready to cooperate more closely with Turkmenistan in fighting terrorism, drug smuggling, and organized crime. (RFE/RL, 01.28.16).
  • Moldova's new Prime Minister Pavel Filip called for calm from protesters demanding his resignation and said he will not step down but will fight to restore public confidence. Some 40,000 people took to the streets last weekend to demand early elections just days after a new government was sworn in -- the third such administration to take office within a year. (RFE/RL, 01.27.16).
  • The U.S.-based organization Freedom House says freedom ebbed in 72 countries around the world in 2015. A key finding of the report was that "fear of social unrest" led Russia, China, and "other authoritarian regimes to crack down harder on dissent." Turkmenistan and Uzbekistan also received special attention for joining a group of 10 other countries the authors regard as the "Worst of the Worst" as far as political rights and civil liberties are concerned. (RFE/RL, 01.26.16).
  • Azerbaijan comes under harsh criticism in Human Rights Watch’s 650-page report on human rights practices and trends in 90 countries worldwide.  (RFE/RL, 01.27.16).

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