Russia in Review

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

Nuclear security agenda:

Rosatom’s sales of security systems will increase by 40 percent in 2015, totaling 14 billion rubles, according to Sergei Vlasov, director of the corporation’s department for scientific-technical development of the nuclear weapons complex. (Tass, 07.07.15).

Iran nuclear issues:

The presidents of Russia and Iran have discussed military and nuclear cooperation, as well as the fight against the Islamic State group. Vladimir Putin and Hassan Rohani met on July 9 in the Russian city Ufa. Kremlin spokesman Dmitry Peskov said Putin noted "positive dynamics" in the ongoing Vienna talks on Iran's nuclear program, and “expressed hope that the necessary compromise will be found in the near future.” (RFE/RL, 07.10.15).
Final agreement on settling the Iranian nuclear problem is within reach, Russian Foreign Minister Sergei Lavrov said at a briefing in Ufa. "We have come close to concluding not interim but final, comprehensive agreement. It is within reach and is based on the formula the Russian president approved in the framework of the Russian foreign policy concept," Lavrov said. Lavrov has earlier said that that around eight issues remained to be "finalized" before a nuclear deal between Iran and six powers is reached. (Reuters, 07.07.15, Interfax, 07.09.15).
The Russian side will oversee the development of the scientific and research center on the basis of the existing nuclear facility in Iran’s Fordow under an agreement between Tehran and a group of six world powers, a high-ranking source in a Western delegation said on Thursday. (Tass, 07.09.15).

NATO-Russia relations:

“The deterioration of the situation in Afghanistan, where a 10-year presence of the international military contingent has not brought any qualitative improvement of the situation, raises serious concern,” President Vladimir V. Putin of Russia said in a speech to heads of state, including President Ashraf Ghani of Afghanistan. “The situation is aggravated by the growing activity of the so-called Islamic State, a terrorist organization striving to extend its influence,” Mr. Putin said, according to a Kremlin transcript, at a gathering in Ufa, Russia, for a meeting of the Shanghai Cooperation Organization. (New York Times, 07.11.15).
When Vladimir Putin spoke to a meeting of Russia's Security Council last Friday he used a phrase which should have immediately caught the attention of anyone who has kept a close eye on the deteriorating relations between Russia and the West. Referring to the sanctions imposed on Russia over the crisis in Ukraine, Putin said: “We cannot expect a change in the hostile policies of some of our geopolitical opponents in the immediate future." (Russia Insider, 07.05.15).
Russia’s aggressive behavior and its nuclear arsenal make it the single greatest national security threat faced by the United States, Gen. Joseph F. Dunford Jr. said Thursday at a Senate hearing on his nomination as the next chairman of the Joint Chiefs of Staff. “If you want to talk about a nation that could pose an existential threat to the United States, I’d have to point to Russia,” he said. “And if you look at their behavior, it’s nothing short of alarming.” (New York Times, 07.09.15).
Gen. Ray Odierno, the U.S. Army chief of staff said it is “our responsibility to protect our NATO allies” adding that he wanted to see more large-scale, multinational exercises aimed at boosting defenses in Eastern Europe. (Wall Street Journal, 07.07.15).
Gen. Philip M. Breedlove, NATO's top military commander and the commander of all U.S. forces in Europe, said that NATO and U.S. Special Operations forces had begun working with countries with substantial Russian minorities, such as Estonia and Latvia, to help them prepare for potential subversion from the east. (Washington Post, 06.04.15).
The Pentagon, through a number of largely classified actions, is quickly working to beef up military equipment to counter the Russian military, U.S. Defense Department documents show. Sent to Congress this month, two documents ask permission to shift more than $4.8 billion in the current fiscal year’s budget. Although Russia is not mentioned in either document, several of the requested moves would affect U.S. military commands that defend U.S. territory or would be vulnerable to an attack by Moscow. (DefenseOne, 07.08.15).
While Americans celebrated the Fourth of July, four nuclear-capable Russian long-range strategic bomber aircraft cruised through the U.S. Air Defense Identification Zone, not far from the Alaskan and California coastlines. (Washington Times, 07.07.15).
Sophisticated Russian electronic-warfare systems and jamming technology are posing an acute challenge for allied forces training in Eastern Europe, U.S. Army officials said. (Wall Street Journal, 07.07.15).
“On the nuclear deterrence front, we likely have more cause for concern today than at any point since the Soviet Union collapsed,” said Rep. Mike Rogers, Alabama Republican and chairman of the U.S. House of Representatives’ subcommittee on strategic forces. (Washington Times, 07.08.15).
“Any conceivable strategic rationale for this cut to Army end-strength has been overturned by the events of the last few years from the rise of ISIL, Russia's invasion of Ukraine, the Ebola crisis, and more," Sen. John McCain , chairman of the Senate Armed Services Committee, said of U.S. Army plans to cut 40,000 troops by 2017. (Wall Street Journal, 07.09.15).

Missile defense:

"We are positive that unilateral and unrestrained expansion of missile defense systems by individual states or groups of states is damaging international security and destabilizing the international situation," says the Ufa declaration passed at the Shanghai Cooperation Organization summit in the capital city of Bashkortostan. (Interfax, 07.10.15).

Nuclear arms control:

No significant developments.

Counter-terrorism agenda:

Boston Marathon bomber Dzhokhar Tsarnaev filed a motion on July 6 demanding a new trial, less than two weeks after he was sentenced to death. Tsarnaev's defense team filed a preliminary motion for a new trial for his conviction and death sentence. The lawyers said they will file a detailed appeal by August 17. (RFE/RL, 07.07.15).

Cyber security:

Democratic presidential contender Hillary Clinton has said hacking by countries such as China and Russia posed a broad threat to U.S. security and business, and the federal government had not done enough to protect U.S. information. (Reuters, 07.08.15).
The Kremlin accused U.S. presidential contender Hillary Clinton on Wednesday of making unfounded and inappropriate remarks by including Russia among countries she said were sponsoring hacking.: "This is an absolutely inappropriate statement and an unfounded accusation,” Kremlin spokesman Dmitry Peskov. (Reuters, 07.08.15).
The United States will likely need to retain its historical oversight authority over the Internet's naming and addressing system for a little longer. The extension could last through next July or even longer, said Larry Strickling, head of the Commerce Department's National Telecommunications and Information Administration. (Washington Post, 07.09.15).
Lawmakers in the lower house of Russia's parliament have voted for a bill that critics say could be used to block information critical of the government or government officials. The State Duma voted overwhelmingly on July 3 in a third and final reading for the legislation forcing online search engines like Google to remove search results about a specific person at that person's request. (RFE/RL, 07.03.15).

Energy exports from CIS:

President of Ukraine Petro Poroshenko has said he is confident that transit of Russian gas through Ukraine will continue after 2019. (Interfax, 07.06.15).
Russia's plans to drop Ukraine eventually as a route for piping its natural gas to Europe have hit a snag after Russian gas exporter Gazprom called off a deal with Italy's Saipem to build a subsea link to Turkey. (Reuters, 07.09.15).
Ukraine will take about 21 percent more gas from Slovakia to boost deliveries to underground storage after the country suspended imports from Russia over a pricing dispute, transport monopoly Ukrtransgaz said on Friday. (Reuters, 07.10.15).
Ukraine expects to store enough natural gas for next winter despite cutting off imports from Russia and Russian flows crossing the country destined for Europe will not be disrupted, Energy Minister Volodymyr Demchyshyn said on Thursday. (Reuters, 07.02.15).
Ukraine has ordered state-run energy firm Naftogaz to create a fund worth $1 billion to finance the purchase, transport and storage of gas, the government said on Monday. (Reuters, 07.06.15).
Russia has the most to lose when Iran returns to the global energy market, according to a dozen analysts and executives at oil companies, banks and trading houses interviewed by Bloomberg. (Bloomberg, 07.05.15).
Turkmenistan has accused Russian state gas company Gazprom of failing to pay for deliveries of Turkmen gas since the start of the year. (RFE/RL, 07.08.15).

Bilateral economic ties:

No significant developments.

Other bilateral issues:

Russian President Vladimir Putin said in a congratulatory message to U.S. President Barack Obama on July 4 that U.S.-Russian relations were "the key factor in ensuring stability and security in the world, despite the differences" between the two countries. But he added that the two countries must have a dialogue based on "equality and respect" of each country's interests." (RFE/RL, 07.04.15).
Russian authorities have taken a step toward banning 12 foreign organizations, including Open Society Foundations, the National Endowment for Democracy, the International Republican Institute, the National Democratic Institute for International Affairs, the MacArthur Foundation, the Charles Stewart Mott Foundation, and the Education for Democracy Foundation, under a new law meant to rid the country of "undesirable" outfits deemed a threat to its security. (The Moscow Times, 07.03.15).
Russian government property in the United States could be seized after former shareholders of the Yukos oil company sought recognition of a multibillion dollar compensation award in U.S. courts. (RFE/RL, 07.04.15).
The U.S. Justice Department has won the right to impound $300 million that it claims was paid in bribes by two major Russian telecoms firms to a close relative of Uzbek President Islam Karimov. (The Moscow Times, 07.10.15).

II. Russia news.

Domestic politics, economy and energy:

President Vladimir Putin says Western efforts to split Russian society with economic sanctions have failed to yield expected results. Addressing the Russian Security Council on July 3, Putin said the West wants to punish Russia for its independent course. (RFE/RL, 07.03.15).
According to a new Levada Center opinion poll, 70 percent of Russian citizens believe that Russia should not make any sanctions-related concessions, even though a third of the population has admitted that sanctions are a problem. (RBTH, 07.10.15).
More than 40 percent of Russians would be willing to forgo the right to free speech and the freedom to travel abroad if Russian authorities would guarantee "decent" salaries and pensions, a poll released Tuesday by independent pollster the Levada Center revealed. But it was a close race, with 49 percent of respondents voicing the opposite preference. (The Moscow Times, 07.07.16).
Net capital outflow from Russia fell in the second quarter to $20 billion from $21.9 billion in the same period of the last year, according to estimated balance of payments data published by the Central Bank on Thursday. (Reuters, 07.09.15).
Russia's mortgage market shrank 41 percent between January and May year-on-year despite government efforts to support the industry. (The Moscow Times, 07.08.15).
The head of Russia's second-largest bank VTB, Andrei Kostin, has predicted that 500 Russian banks will be shut down over the next 5 years time. (The Moscow Times, 07.07.15).
Fitch Ratings agency maintained its relatively high rating for Russia on July 3 but said worsening tensions with the West darken the outlook for its economy. (RFE/RL, 07.04.15).
Mayak processing plant has signed a cooperation agreement with the Russian nuclear industry's self-regulatory organization to help it "ensure high standards of construction" at its nuclear facilities, they said in a joint statement yesterday. (WNN, 07.07.15).
The Dynasty Foundation, a leading private donor and benefactor of Russian science and education that was branded a “foreign agent,” has announced its closure. (RFE/RL, 07.08.15).
Committee Against Torture, prominent Russian human rights group that was branded a "foreign agent" in January and has come under attack in Chechnya says it is closing. (RFE/RL, 07.09.15).
A wave of dawn raids was carried out Tuesday at staff homes and the offices of Golos, a respected Russian election-monitoring NGO. (The Moscow Times, 07.07.16).

Defense and Aerospace:

Russia will design two new classes of nuclear-powered submarines as part of President Vladimir Putin's 20 trillion ruble ($356 billion) rearmament campaign through 2020.Though the designs have not yet been named, one will be classified as an "underwater interceptor" and the other an "aircraft carrier killer," the head of the state-owned United Shipbuilding Corporation's state defense order department, Anatoly Shlemov, said. (The Moscow Times, 07.05.15).
Russia's Defense Ministry has grounded its fleet of Su-24 fighter-bombers after one crashed Monday. Last week saw a MiG-29 fighter jet crash during training near Krasnodar in southern Russia, prompting the Defense Ministry to ground Russia's fleet of over 200 MiG-29 aircraft. (The Moscow Times, 07.06.15).

Security, law-enforcement and justice:

On July 1, the official Twitter feed for Vilayat Dagestan, one of the al Qaeda-affiliated Islamic Caucasus Emirate’s so-called “provinces,” identified Muhammad Abu Usman as ICE’s emir. Salahuddin Shishani, the former emir of the Jaish al Muhajireen wal Ansar who now leads a group of jihadists from the Caucasus in Syria, swore allegiance to the new leader of the Islamic Caucasus Emirate. (Long War Journal, 07.06.15, 07.10.15).
A Moscow court on Tuesday arrested the former financial director of state-run technology firm Rusnano on suspicion of embezzling 220 million rubles from the company in partnership with its former director, who is already under house arrest, news agency RBC reported. Former Rusnano chief Leonid Melamed was placed under house arrest last week as part of an investigation into large-scale embezzlement at Rusnano (The Moscow Times, 07.07.16).
Former billionaire Sergei Pugachyov, once dubbed the Kremlin's banker, is suing Russia for $15 billion over what he describes as the state's illegal appropriation of his assets. (The Moscow Times, 07.02.15).

Foreign affairs and trade:

Russian President Vladimir Putin hosted regional leaders at a summit of the Shanghai Cooperation Organization (SCO) on July 10. SCO leaders signed a document starting the procedure of accession for India and Pakistan. Wrapping up the one-day summit, the leaders also signed a declaration on the results of the gathering, in which they reiterated their readiness to continue working on creation of a Development Bank and Development Fund within the SCO and supported China's proposal to create a Silk Road economic belt across the SCO member-states. The document also called for establishing peace in Ukraine through implementation of the Minsk agreement. Putin said the SCO members had agreed to add Belarus to the list of observer states and that "Azerbaijan, Armenia, Cambodia, and Nepal are joining the SCO family as dialogue partners." (RFE/RL, 07.10.15).
Members of the BRICS on Thursday said there should be no “political approaches” and “selective application” in dealing with terrorism and insisted that all countries should adhere to their obligations of fighting against the menace, a statement that could apply to Pakistan. At a summit meeting in Ufa, the grouping, which includes Russia, China, Brazil and South Africa, also condemned terrorist activities of the Islamic State of Iraq and Levant and associated terrorist groups. (Hindu, 07.10.15).
The group of five major emerging economies known as BRICS launched a development bank on Tuesday. The countries' national banks also signed a deal Tuesday to create a $100 billion reserve fund by the end of July that can be tapped in financial emergencies. (Wall Street Journal, 07.07.15).
Russia's annual trade turnover with China is on track to hit $200 billion by 2020, Russia's trade minister has said. (The Moscow Times, 07.08.15).
President Vladimir Putin has said Russia and China can overcome their difficulties by working together. Welcoming the Chinese leader, Putin said, "Combining efforts, no doubt we will overcome all the problems before us." (RFE/RL, 07.08.15).
"China and Russia have many times pointed out that they are not going to create a military union in any form, while military cooperation of the two countries proceeds in line with basic norms of the international law and is not directed against or affects the interests of other countries," Chinese Ambassador to Russia Li Hui said. (Interfax, 07.06.15).
India and Russia are in the final stages of talks for Delhi to lease another nuclear attack submarine from Moscow. A new Economic Times report said that in contrast to previous Indo-Russian submarine deals, under the “Chakra 3” project, Russia will build India a customized submarine. (National Interest, 07.09.15).
Moscow is just an observer on Greece's debt crisis but wants the euro to trade normally because part of Russia's foreign exchange reserves is denominated in euros, Prime Minister Dmitry Medvedev said on Friday. (Reuters, 07.10.15).
After months of negotiations, Russia and France have prepared a draft agreement on compensation for the failed Mistral warship deal. (The Moscow Times, 07.10.15).
Russia's Atomproekt has completed the draft design and working documents for a demonstration unit to separate tritium from contaminated water at the Fukushima Daiichi nuclear power plant in Japan. Construction of the facility is expected to start early next year. (World Nuclear News, 07.09.15).
Russia expects to increase its share of the global market in products for the front-end of the nuclear fuel cycle by 10% in the next 15 years, thanks to the integrated nature of Rosatom's subsidiaries, according to the head of Techsnabexport (Tenex).(World Nuclear News, 07.02.15).
Russia is seen as the frontrunner to win the right to build South African nuclear power plants that may be worth as much as $100 billion. (Bloomberg, 07.05.15).
VSMPO-Avisma has signed three long-term agreements with Britain's Rolls-Royce for the period of 2016-2025, the Russian titanium producer said in a statement. (Interfax, 07.08.15).
A Saudi Arabian sovereign wealth fund will invest $10 billion over the next five years, largely in the Russian economy. (The Moscow Times, 07.07.15).
Russia vetoed a U.N. Security Council resolution Wednesday commemorating the 20th anniversary of the Srebrenica massacre of 8,000 Bosnian Muslim men and boys and recognizing it as an act of genocide. (Washington Post, 07.09.15).
Russia said it will oppose a draft United Nations resolution establishing an international tribunal to prosecute those who shot down Malaysian Flight MH17 over Ukraine. (RFE/RL, 07.10.15).

Russia's neighbors:

Ukraine hopes to receive the second tranche of loans from the International Monetary Fund in August provided parliament passes reform laws required under the bailout package, including legislative changes to the banking system and energy sector, according to Deputy Finance Minister Artem Shevalev. (Reuters, 07.09.15).
Ukraine’s Deputy Finance Minister Artem Shevalev said some progress had been made in the negotiations with Ukraine’s creditors, but more needed to be done to broker a deal and the ministry had not ruled out calling a moratorium on payments if necessary. He said that if a moratorium is introduced, Ukraine would stop servicing all its sovereign external debt, including a $3 billion eurobond held by Russia. (Reuters, 07.09.15).
Ukraine will finish 2015 as the biggest loser in global growth, according to forecasts of economists surveyed by Bloomberg. (Bloomberg, 07.01.15).
Ukrainian officials have listed 342 companies they want to sell this year. The enterprises employ 1.3 million people from a working population of 20 million. (Wall Street Journal, 07.01.15).
Ukrainian military spokesman Oleksandr Motuzyanyk told reporters on July 5 that give Ukrainian soldiers have been killed and three injured by a land mine in the restive east. (RFE/RL, 07.05.15).
Pro-Russian rebels have withdrawn from front-line villages near the strategic port city of Mariupol. (RFE/RL, 07.03.15).
The number of Russian volunteers among Donbass rebels does not exceed 2 per cent, Vladislav Deyneho, the authorized representative of the self-proclaimed Luhansk People's Republic at the contact group, has said. (RIA Novosti, 07.02.15).
Foreign Minister Sergei Lavrov said in Moscow on July 3 that the Kyiv authorities have “routinely demonstrated their inability to come to an agreement." Lavrov said proposed changes to Ukraine's constitution did not honor a "single requirement" of the peace deal signed in Minsk in February. Kremlin spokesman Dmitry Peskov said on July 2 that Ukrainian authorities are violating a peace agreement signed in Minsk in February by putting together constitutional changes that did not take rebel leaders' opinion into account. Separatists in eastern Ukraine have also complained they had not been consulted over Ukrainian President Petro Poroshenko's proposed constitutional changes, and announced plans to hold local elections in October, sparking criticism in Kyiv. (RFE/RL, 07.02.15, 07.03.15).
U.S. and Ukrainian officials are making plans to expand the training of Ukrainian military forces at a training base in Ukraine, but a final decision on increasing the training is up to the White House. On a visit to the training base in Ukraine, Gen. Ray Odierno, the U.S. Army chief of staff, said it was clear the Ukrainian government wanted the U.S. to expand its training, but declined to say whether he would support stepped-up instruction. (Wall Street Journal, 07.09.15).
Gen. Joseph F. Dunford Jr. said Thursday at a U.S. Senate hearing on his nomination as the next chairman of the Joint Chiefs of Staff that it would be reasonable for the United States to provide weapons to Ukraine to help it combat Russian-backed separatists. “Frankly, without that kind of support, they are not going to be able to defend themselves against Russian aggression,” he said. (New York Times, 07.09.15).
The OSCE Parliamentary Assembly has approved a resolution condemning Russia’s “unilateral and unjustified assault on Ukraine’s sovereignty and territorial integrity.” (RFE/RL, 07.08.15).
Russian investigators have rejected a request by jailed Ukrainian pilot Nadia Savchenko to be tried by a jury. (RFE/RL, 07.07.15).
The trial of Ukrainian pilot and parliament member Nadia Savchenko, who has been jailed in Russia since July 2014, may start within weeks, her lawyer said. (RFE/RL, 07.03.15).
Russian peacekeepers will have no access issues in Transnistria under a precise rotation mechanism, Moldovan Deputy Prime Minister for Reintegration Victor Osipov said. (Interfax, 07.07.15).
India and Kazakhstan on Wednesday inked five key agreements including a defense pact to enhance military cooperation and a contract for supply of uranium. (Hindu, 07.08.15).
Kazakhstan is planning to introduce visa-free travel for citizens of countries in the Organization for Economic Cooperation and Development (OECD) from the start of 2017. (RFE/RL, 07.09.15).
Russia is negotiating with Armenia to supply the latter with advanced Iskander-M missiles. Russia has also granted Armenia a $200 million loan to buy weapons and help modernize its armed forces. (EurasiaNet, 07.05.15, RFE/RL, 07.02.15).
The Russian Cabinet of Ministers has approved the project on intergovernmental agreement with Armenia on early notification of nuclear accidents and exchange of information in nuclear and radiation safety. (BBC/Gazeta.ru, 07.07.15).
Georgian troops are conducting joint military exercises Agile Spirit 2015with NATO countries at an airbase near the capital, Tbilisi. Some 220 U.S. Marines are taking part, while platoon-level contingents from Lithuania, Latvia, Romania, and Bulgaria are also participating. (RFE/RL, 07.08.15).
Sixteen U.S. senators have written to Azerbaijan’s President Ilham Aliev expressing their concern about the “diminishing space” for civil society and press freedom in the country. (RFE/RL, 07.08.15).
Turkmen President Gurbanguly Berdymukhammedov has dismissed several senior cabinet members, including officials in charge of economic affairs, citing corruption and "serious shortcomings," state media reported on July 10. (RFE/RL, 07.10.15). State Department officials have defended the provision of armored vehicles to Uzbekistan against criticism that it is irresponsible to reward a government with such a poor record of treating its citizens. (EurasiaNet, 07.06.15).
The lack of progress in fighting corruption in Armenia, Azerbaijan, Georgia, Moldova and Ukraine is hampering democratic progress and undermining greater economic and political cooperation with the EU, said Transparency International (TI). (Reuters, 07.03.15).

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