Russia in Review

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

Nuclear security agenda:

The United States is open to Russia attending the upcoming 2016 Nuclear Security Summit despite its lack of participation in the preparatory meetings, US State Department Threat Reduction Programs Coordinator Bonnie Jenkins said. We are still interested in working with Russia, Jenkins explained, noting the importance of Russia’s role in securing nuclear material, containing chemical weapons and other issues related to countering the proliferation of weapons of mass destruction. (Sputnik, 03.30.15).
Russia's Strategic Rocket Forces are practicing their operational coordination as part of March 31-April 4 drills in the Orenburg region. As part of the exercises, radioactive, chemical and biological protection units "will decontaminate weapons and military hardware at the scene of a simulated terrorist attack during which potent chemical substances were allegedly used," the Russian Defense Ministry said. (Interfax, 03.31.15).

Iran nuclear issues:

Russian Foreign Minister Sergei Lavrov said Friday the chances of reaching a final deal on limiting Iran's nuclear program by the June 30 deadline are "very good.” “The result is encouraging,” Foreign Minister Sergei Lavrov said, adding that diplomats would have a lot of work ahead to ensure that a final deal was worked out by the June 30 deadline. In a separate statement the Russian Foreign Ministry said the deal would help the security situation in the Middle East, partly because Tehran would now be able to take more active part in efforts to solve conflicts there. (Dow Jones, Wall Street Journal, Reuters, 04.03.15).
The P5+1 group and Iran have yet to secure key solutions concerning sanctions relief, but, hopefully, the aspects agreed by them at the latest round of talks in Lausanne, Switzerland, will not be reviewed, Russian Deputy Foreign Minister Sergei Ryabkov has said. He said Russia is prepared to deliver fresh nuclear fuel to the reactors built by Russian specialists in Iran and collect spent fuel from these reactors. Ryabkov also said Russia is exploring the possibility of its cooperation with Iran as part of the Fordow project. (Interfax, 04.03.15).

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

Russia has threatened to use “nuclear force” to defend its annexation of Crimea and warned that the “same conditions” that prompted it to take military action in Ukraine exist in the three Baltic States, all members of NATO. According to notes made by an American at a meeting between Russian generals and US officials Moscow threatened a “spectrum of responses from nuclear to non-military” if NATO moved more forces into Lithuania, Latvia and Estonia. However, Russian presidential press secretary Dmitry Peskov described these reports as "a classic example of Russia's demonization." (Independent, Times, Interfax, 04.02.15).
Britain’s Royal Air Force has mounted its biggest air defense exercise over British skies in thirty years after a series of Russian nuclear bomber flights near UK skies. More than 30 aircraft, including 20 Typhoons and Tornado fighter jets as well as a range of ED-3, AWACS, Sentinal and Shadow surveillance aircraft took part in the mock attack-and-defense war-games over the North east of England, as well as ground-based command teams. (Express, 03.30.15).
Last year, Norway intercepted 74 Russian warplanes off its coast, 27 percent more than in 2013, scrambling F-16 fighters from a military air base in Bodo to monitor and photograph them. (New York Times, 04.02.15).
A recent poll by Russia’s Public Opinion Foundation has revealed that 54% of Russians believe “there is a real threat of a large-scale war between Russia and NATO countries.” Some 37% believe there is no such threat. (Kommersant, 04.03.15).

Missile defense/ Nuclear arms control:

Russian deployed strategic warheads counted by the New START Treaty once again slipped below the U.S. force level, according to the latest fact sheet released by the U.S. State Department. The so-called aggregate numbers show that Russia as of March 1, 2015 deployed 1,582 warheads on 515 strategic launchers. The U.S. count was 1,597 warheads on 785 launchers. (FAS Strategic Security Blog, 04.02.15).
U.S. Assistant Secretary of State Frank A. Rose said: “You might have heard Russia’s assertions which call into question the compliance of Aegis Ashore with the INF Treaty… The Aegis Ashore system cannot launch a cruise missile because the system does not include the necessary software, fire control hardware, and additional support equipment and infrastructure to perform that mission.” (State.gov, 03.30.15).

Counter-terrorism agenda:

Closing arguments in the case of Dzhokhar Tsarnaev are expected to begin on Monday, then the case goes to the jury. (NPR, 04.01.15).

Cyber security:

On Wednesday, President Barack Obama unveiled a sweeping new executive order handing himself power to sanction individuals and entities responsible for carrying out cyber attacks against U.S. targets. (Foreign Policy, 04.01.15).
A bounty of $3 million is up for grabs for information leading to the arrest of two cybercriminals believed to be in Russia, the U.S. State Department said Thursday. Roman Zolotarev and Konstantin Lopatin are wanted in connection with an international crime ring that committed credit card fraud and identity theft causing at least $50 million in damages. (The Moscow Times, 03.27.15).

Energy exports from CIS:

The twin state energy giants Gazprom and Rosneft brought Russia's oil output to a post-Soviet era record of 10.71 million barrels per day (bpd) in March, Energy Ministry data showed on Thursday. That topped December's high of 10.67 million bpd. Gas production was at 55.52 billion cubic meters (bcm) last month, or 1.79 bcm a day, versus 53.86 bcm in February, a decrease of 7 percent month on month. (Reuters, 04.02.15).
The head of Russian gas giant Gazprom has confirmed the signing of an agreement on gas supplies to Ukraine for the next three months. Gazprom CEO Aleksei Miller said Kyiv will pay $247.18 per 1,000 cubic meters of gas in the second quarter under the deal with Ukrainian state energy company Naftogaz. (RFE/RL, 04.02.15).

Bilateral economic ties:

Visa still needs one or two months to transfer processing of transactions made on its credit cards in Russia to a local payment system, but Mastercard will make an obligatory April 1 deadline, the head of the payment system said. (Reuters, 03.27.15).
U.S. energy major ExxonMobil has launched a court case against Russia at the Stockholm arbitration court in a tax dispute over a project in Russia's Far East, newspaper Vedomosti reported Thursday citing Russian Energy Minister Alexander Novak. Exxon claims that it overpaid $500 million in profit taxes on its 30 percent stake in the Sakhalin-1 oil and gas project because a 2009 cut in the rate of profit tax was not applied to the venture. (AP, 04.02.15).

Other bilateral issues:

Vladimir Putin will most likely deliver a speech at the 70th anniversary opening session of the United Nations General Assembly in New York in September, his spokesman said—an appearance that would mark the Russian president's first U.N. General Assembly speech in a decade. (Wall Street Journal, 03.31.15).
NASA said March 28 it welcomed a Russian commitment to continue operations of the International Space Station beyond 2020, but indicated there were no firm plans to work together on a successor space station. The agency responded to comments made by the head of Roscosmos, Igor Komarov, earlier in the day that suggested the two space agencies had not only agreed to extend operations of the ISS to 2024, but also to replace the ISS with a new station of some kind after 2024. (Space News, 03.28.15).
A Russian Soyuz rocket has docked with the International Space Station. The capsule was transporting NASA astronaut Scott Kelly, and cosmonauts Mikhail Kornienko, and Gennady Padalka. (RFE/RL, 03.28.15).
A U.S.-Ukraine team will fly an Open Skies mission in Russia and Belarus in the period from March 30 through April 4, head of Russia's National Nuclear Threat Reduction Center, Sergei Ryzhkov said. (Interfax, 03.30.15).

II. Russia news.

Domestic politics, economy and energy:

Amendments to Russia's 2015 budget that base the country's spending on an oil price of $50 per barrel and 3 percent fall in economic output passed their first reading in Russia's lower house of parliament on Friday. The amended budget passed on Friday foresees a deficit of 2.7 trillion rubles ($46 billion) this year, or 3.7 percent of gross domestic product (GDP), according to news agency Interfax. The current budget prescribes a deficit of 431 billion rubles ($9 billion), or 0.6 percent of GDP. (The Moscow Times, 03.27.15).
Under its new baseline scenario, the World Bank forecasts the Russian economy will contract by 3.8% in 2015—based on an average oil price of $53 a barrel—compared with its earlier forecast of a 0.7% contraction made in December. The new forecast reflects the assumption that the impact of Western sanctions will linger for a long time. (Wall Street Journal, 04.01.15).
Russia's reserves rose in the week to March 27 at the fastest pace in about one to one-and-a-half years, adding $7.9 billion due to swings in the value of its currency holdings and to reduced demand for dollars from Russian banks. (Reuters, 04.02.15).
Russia's two oil revenue-funded reserve funds slowed their losses to shrink by a combined total of 539 billion rubles ($9.5 billion) in March, according to Finance Ministry data released Thursday. (The Moscow Times, 04.02.15).
Russia's 30 biggest banks recorded losses of 22.8 billion rubles ($477 million) in the first two months of this year, according to data published by the Central Bank on Monday. (The Moscow Times, 03.31.15).
Gazprom's net profit, calculated under Russian Accounting Standards, fell 70 percent last year to 189 billion rubles ($3.3 billion), Russia's top natural gas producer has said. (Reuters, 03.31.15).
Russian services conglomerate Sistema said Thursday it made a $5.3 billion net loss in the fourth quarter of 2014 compared to a profit of $47.7 million a year earlier due to the loss of oil company Bashneft. (Reuters, 04.02.15).
A car-making venture owned by PSA Peugeot Citroën and Mitsubishi Motors Corp. will temporarily suspend production at its factory in Russia and cut jobs in response to a plunge in sales, the company said Friday. (Washington Post, 03.27.15).
Alexei Kudrin, Russia's former finance minister, has said that the funding of annexed Crimea will cost Russia $6-7 billion annually, and the total cost to Russia could even reach $150-200 billion in three or four years. (UNIAN, 03.31.15).
Russia's national operator for radioactive waste management has completed the design documents for an underground research laboratory to study the feasibility of final disposal of solid high-level radioactive waste and solid medium-level long-lived wastes in Zheleznogorsk. The waste would be stored at a depth of 450-525 m. (WNN, 04.01.15).
Russian emergency workers frantically plucked bodies from the freezing Sea of Okhotsk on Thursday after a refrigerated trawling ship sank in Russia's Far East, killing at least 56 of a crew of 132. (New York Times, 04.03.15).
Russian President Vladimir Putin has decreed the creation of a federal agency to oversee ethnic issues in the huge, multiracial country. (RFE/RL, 04.01.15).
The heads of major Russian companies co-owned by the state will not have to declare their income publicly. (RFE/RL, 03.31.15).
Vladimir Ashurkov, close associate of top Russian opposition figure Aleksei Navalny says he has been granted political asylum in Britain. (RFE/RL, 04.01.15).
Yukos announced on Wednesday that it had reached a final legal settlement with Rosneft. While the claims against Rosneft are settled, the claims against the government remain, including a recent $50 billion award that the Kremlin is appealing. As of Wednesday, Yukos shareholders in courts outside of Russia had managed to retain or recover about $4.4 billion from Rosneft and the Russian government. (New York Times, 04.02.15).
During the past 12 months, at least four Westerners have been fined, deported, or threatened with these penalties while conducting academic research in Russia due to alleged visa violations, according to court documents, interviews with scholars, and publicly available information .(RFE/RL, 03.31.15).
A British history student researching early 20th century archives in Russia has been accused of being a spy and ordered to leave the country. (Telegraph, 04.02.15).
Finnish businessman Seppo Remes who is one of Russia's most prominent foreign investors has been banned from entering the country for five years after authorities warned him that his work raised suspicions of espionage. (New York Times, 04.02.15).
Forty-five percent of those questioned by independent pollster the Levada Center said they definitely or to some degree thought that the sacrifices made by the Soviet people under Joseph Stalin's rule were justified in light of the country's rapid development. Two years ago, that figure stood at only 25 percent, according to the report. (The Moscow Times, 03.31.15)

Defense and Aerospace:

Russia has restored its forces in Crimea to full strength and intends to use its presence there to spearhead Russian interests into the Mediterranean Sea, Defense Minister Sergei Shoigu said. (Moscow Times, 03.301.15).
Russia's largest aircraft manufacturer will receive a 100 billion ruble ($1.7 billion) capital boost from the government to stimulate production of passenger airliners, President Vladimir Putin said Friday. (The Moscow Times, 03.29.15).

Security, law-enforcement and justice:

Upward of 1,500 militants from the North Caucasus are fighting alongside the Islamic State (IS) group in Syria and Iraq, the Kremlin's presidential envoy to the North Caucasus Federal District has claimed. Sergei Melikov claimed that "at least five" militants who returned to the North Caucasus after fighting in Syria had been killed during counterterrorism operations in 2014. Melikov singled out Dagestan as being the most vulnerable of the North Caucasus republics, because of its many remote and hard to reach settlement. (RFE/RL, 03.26.15).
On March 30, a Russian Interior Ministry official announced that out of more than 1,500 Russian nationals who are participating in overseas armed conflicts, over 300 criminal cases have been opened against those suspected of involvement in "international terrorist organizations" like IS. (RFE/RL, 03.30.15).
Turkish officials say authorities have detained four Russian citizens who were trying to cross into Syria illegally. (AP, 04.02.15).
A Daghestani man found in an apartment raided by police in an antiterrorism operation on March 31 is an accomplice of the Islamic State (militant group, Russia's National Antiterrorism Committee has said. "According to preliminary data, the previously convicted Shakhban Gasanov, born in 1990, was hiding in the apartment. After he was released from prison in October last year he went into hiding and led the 'Kizlyar' gang, and then swore allegiance to the Islamic State international terrorist organization," NAC said.(RFE/RL, 03.31.15).
Two suspected members of the pan-Islamic political organization Hizb ut-Tahrir al-Islami have been detained in St. Petersburg in a joint effort by the FSB and the police of the St. Petersburg and Leningrad region. (The Moscow Times, 04.02.15).
The chief suspect in Russian opposition politician Boris Nemtsov's killing has denied his guilt, saying he confessed under pressure and was not at the scene of the crime. Zaur Dadayev told the Moscow City Court on April 1 that he had an alibi proving he is not guilty. An earlier confession of Dadayev is not confirmed by a direct witness to the crime. (RFE/RL, 04.01.15, RBTH, 03.27.15)
A former Russian civil servant was sentenced on Thursday to nine years in prison for an alleged plot to blow up President Vladimir Putin's motorcade with a bomb placed in a radio-controlled toy helicopter. (The Moscow Times, 04.02.15).
Former member of Russia's lower house of parliament Mikhail Glushchenko has signed a plea bargain over the murder of fellow lawmaker Galina Starovoitova in St. Petersburg more than 16 years ago. (The Moscow Times, 03.27.15).
Police have detained Nikolai Sandakov, deputy governor in the Ural Mountains region of Chelyabinsk, a news report said, just weeks after bribery charges were brought against another Russian governor in the Far East. (The Moscow Times, 03.27.15).
A court sanctioned the arrest of Alexander Reimer, former head of Russia's federal prison authority, on suspicion that he embezzled billions of rubles while holding the position.(The Moscow Times, 03.31.15).
Twenty-one people died in Russian police custody last month, including two who had been subjected to police violence. (The Moscow Times, 04.01.15).

Foreign affairs and trade:

Russia has become the latest country to announce it will join the China-led Asian Infrastructure Investment Bank, to be based in Beijing. Russian Deputy Prime Minister Igor Shuvalov made the announcement on March 28 at an international forum in China. (RFE/RL, 03.28.15).
Russia will promote the BRICS New Development Bank and the Contingent Reserve Arrangement, President Vladimir Putin said on the occasion of the beginning Russian presidency in the group. Russia's contribution to the capital of the BRICS bank will amount to $2 billion. (Interfax, 04.01.15).
China plans to invest 300 billion rubles ($5 billion) in the construction of a high-speed railway from Moscow to Kazan. Of this sum, 250 billion rubles will come in the form of 20-year loans from Chinese banks. (RBTH, 04.01.15).
Chinese Foreign Minister Wang Yi will visit Russia from April 6-8 to discuss contacts between the two countries' presidents, Russia's Foreign Ministry said Thursday. (Reuters, 04.02.15).
More than a million tourists from China visited Russia in the past year, a number that the Russian and Chinese governments plan to increase to 5 million. (RBTH, 03.30.15).
Russian President Vladimir Putin and Greek Prime Minister Alexis Tsipras plan to discuss economic ties and the European Union's sanctions against Moscow when they meet for talks next week, a Kremlin spokesman said Friday. (Reuters, 04.03.15).
Kremlin spokesman Dmitry Peskov said on Tuesday Russia was not seeking to buy political influence in the European Union member state Hungary through a $11 billion nuclear deal, defending Moscow's cooperation with Budapest as mutually beneficial. (Reuters, 03.31.15).
Czech President Milos Zeman has confirmed his plans to visit Moscow to participate in the celebrations of the 70th anniversary of the World War II victory over Nazi Germany. (RFE/RL, 03.30.15).
Russian Foreign Minister Lavrov is scheduled to meet with his Slovak counterpart Miroslav Lajcak during a two-day official visit to Bratislava commemorating the 70th anniversary of the liberation of the city by the Soviet army at the end of World War II. (Sputnik, 04.03.15).
Russian arms exports have tripled in the past eleven years, from $5 billion to $15.3 billion in 2014, Director of the Federal Service for Military-Technological Cooperation, Alexander Fomin said on Friday. (Interfax, 03.27.15).
Poland plans to bring charges against two Russian air traffic controllers over a plane crash in 2010 that killed 96 people, including then-Polish President Lech Kaczynski. (RFE/RL, 03.27.15).
Expanded Australian economic sanctions on Russia's arms, petroleum and financial sectors as well as a ban on Australian business activity in Crimea came into force on March 31. (The Moscow Times, 03.31.15).

Russia's neighbors:

Over half of draftees mobilized during the fourth wave of Ukraine's mobilization campaign are unfit for military service because of mental and nervous disorders, the press service of the Petro Poroshenko Bloc said on Tuesday. (Tass, 03.31.15).
Ukrainian President Petro Poroshenko has claimed that about 80 percent of national security officials working under Kiev's former pro-Moscow administration were recruited by Russia's FSB, a news report said. (The Moscow Times, 03.27.15).
The International Monetary Fund has not decided whether Russia's $3 billion holding of Ukrainian debt should be classified as "official" debt, an IMF spokesman said Thursday, taking back an earlier statement. (Reuters, 03.27.15).
The United States plans to send soldiers to Ukraine in April for training exercises with units of the country's national guard. The training will begin April 20 at a base in western Ukraine near the Polish border and would involve about 290 American paratroopers and some 900 Ukrainian guardsmen. (AP, 03.31.15).
U.S. Deputy Secretary of State Antony J. Blinken said: “The most critical step in that (Minsk-2) plan is the last step – the restoration of Ukraine’s international border. Until that is done, this crisis will not be resolved.”(State.gov, 03.26.15).
Belarussian President Alexander Lukashenko has appealed to the United States to become “openly” and “immediately” involved in resolving the crisis in Ukraine, saying that it would be impossible to attain stability in the region without a more significant U.S. role. (The Moscow Times, 04.01.15).
A study by the Washington-based IntelCenter has listed Ukraine as the world’s ninth most dangerous country. The study is based on terrorist and rebel activity. (RFE/RL, 04.01.15).
Uzbekistan's Central Election Commission says incumbent President Islam Karimov has easily won reelection in a vote criticized by international observers and denounced by opponents abroad. (RFE/RL, 03.30.15).
A group of Uzbeks in northern Afghanistan, claiming to be from the Islamic Movement of Uzbekistan (IMU), says it is pledging allegiance to the Islamic State extremist group. (RFE/RL, 03.30.15).
Foreign Ministers from Collective Security Treaty Organization held talks in Tajikistan's capital, Dushanbe, on April 2. (RFE/RL, 04.02.15).
Russia is ready to deliver about 70 billion rubles (approximately $1.23 billion) worth of military-technological assistance to Tajikistan in the upcoming years. (The Moscow Times, 04.03.15).
Senior diplomats of the Russian-dominated Commonwealth of Independent states have gathered in the Kyrgyz capital, Bishkek, to discuss ways to increase cooperation. (RFE/RL, 04.03.15).
The Russian government on Friday approved a bill to create a Russian-Kyrgyz development fund to the tune of $1 billion, with $500 million to come from Russia's federal budget. (The Moscow Times, 03.27.15).
The United States has officially asked Swedish authorities to freeze more than $30 million in assets tied to investigations into possible bribery and money laundering involving Uzbek officials. (RFE/RL, 04.01.15).
Belarusian President Aleksandr Lukashenka says his country will never be part of Russia despite what he portrayed as the imperialist designs of politicians in the former Soviet republic's giant neighbor. Lukashenka said Belarus will fight "to the last man" against any invader. (RFE/RL, 04.02.15).
Moldova's president will not take part in a military parade in Moscow to celebrate the end of World War II, a sign of tensions with Russia. (AP, 04.01.15).
The defense ministers of Georgia, Turkey, and Azerbaijan converged in Tbilisi on April 2 to discuss military cooperation. (RFE/RL, 04.02.15).

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