Russia in Review

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

Nuclear security agenda:

No significant developments.

Iran nuclear issues:

No significant developments.

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

Russia is carefully monitoring how NATO is reinforcing its military presence in Eastern Europe, and is ready to take action in response if necessary, Mikhail Ulyanov, director of the Russian Foreign Ministry's Department of Security and Disarmament Issues, said. (RIA Novosti, 01.13.15).
“Should Russia keep its door open for joint activities with the U.S. and its NATO allies if these activities are aimed at countering real threats to humanity: terrorism, drug trafficking, expansion of conflicts and so on? Without a doubt, yes. Without this [cooperation] we will lose our country’s status as a great power,” former Russian Prime Minister Yevgeny Primakov said. (RBTH/Kommersant, 01.15.15).
Former Soviet President Mikhail Gorbachev warned that tensions between Russia and European powers over the Ukraine crisis could result in a major conflict or even nuclear war. “A war of this kind would unavoidably lead to a nuclear war," he said. (Reuters, 01.10.15).
"Of course, according to Article 5, we will defend all of our member states, but we do not want to pursue policies against Russia, we desire political cooperation with [the] Russian Federation," German Chancellor Angela Merkel said. (Sputnik, 01.14.15).
NATO Secretary-General Jens Stoltenberg has called on Russia to withdraw its support for separatists in eastern Ukraine and use "all its influence" to make them observe a cease-fire agreement. Stoltenberg said NATO wanted cooperation with Russia, but that if ties between the alliance and Moscow are to improve, "Russia must want it" as well. “NATO does not seek confrontation with Russia. NATO aspires for a more constructive and cooperative relationship with Russia," he said. (RFE/RL, 01.14.15).
The new "high-readiness spearhead force" is in place for 2015, NATO Secretary-General Jens Stoltenberg said. (LA Times, 01.14.15).
NATO's top military commander, General Philip Breedlove, said that the defense alliance was looking at beefing up its exercises in the Baltic Sea region in response to a surge last month in Russian military maneuvers there. (Reuters, 01.13.15).
Russia is working to develop within a few years the capability to threaten several neighbors at once on the scale of its present operation in Ukraine, said Lieutenant-General Ben Hodges, commander of U.S. Army forces in Europe. The general said an attack on another neighbor does not seem like an immediate threat because Moscow appears to have its hands full in Ukraine for now. "Right now, without mobilizing, I don't think they have the capacity to do three major things at one time. They can do one thing, I think, in a big way without mobilizing. But in four to five years, I think that will change," Hodges said. (Reuters, 01.15.15).

Missile defense:

In response to efforts by NATO to extend air and anti-missile defense coverage over Europe, Russia’s new military doctrine enables the joint setting up of missile defense systems. The document says these efforts by NATO states are “undermining global stability and violating the balance of power in the nuclear-missile sphere.” (Defense News, 01.12.15).

Nuclear arms control:

Russia could revise its commitment to the New START treaty in response to 'unfriendly' U.S. actions, the head of the Department for Non-Proliferation and Arms Control of the Russian Foreign Ministry said Tuesday. Mikhail Ulyanov underlined that Russia's response could also involve revision of cooperation with Washington in the area of non-proliferation. (Journal of Turkish Weekly, 01.13.15).

Counter-terrorism agenda:

“ISIL poses a particular threat to Russia. To a significant degree it is analogous to the threat this organization poses to Western states, and I do not think that there are any fundamental differences here that could divide us and prevent us from cooperating as necessary to repel it efficiently," said director of the Russian Foreign Ministry's department of new threats and challenges Ilya Rogachev. When asked whether Russia was prepared to attend upcoming summit on terrorism in Washington if invited, he answered: "Let's wait a while."(RIA Novosti, 01.13.15).
"'Islamic State' is a structure that calls for a great deal more attention and a more serious reaction. Its emissaries have emerged not only in Syria and Iraq, where it has declared a so-called caliphate, but also in Libya and now in northern Afghanistan, which is a stone's throw from Central Asia," Russian Foreign Minister Sergei Lavrov told reporters on January 12 following talks with his Latvian counterpart, Edgars Rinkevics, in Moscow. (RFE/RL, 01.13.15).
Russian Foreign Minister Sergei Lavrov, who took part in the march in Paris on Sunday, said he had felt during contacts with the Western leaders that they are ready to change the situation in which cooperation on counterterrorism between Russia and the Western countries was frozen. “There is a need to adopt an adult approach to the priorities and threats that are now posed by terrorism,” he said. (Interfax, 01.12.15).
Russian Foreign Minister Sergei Lavrov has claimed that two Al-Qaeda-linked brothers thought to have carried out last week's terrorist massacre in Paris had trained and fought along the Islamic militants in Syria. (RFE/RL, 01.12.15).

Cyber security:

Russia’s Federal Security Service has never tried to recruit former NSA contractor Edward Snowden although the FSB approached him in the transit area of Moscow’s Sheremetyevo airport in 2013, WikiLeaks spokesperson said. Earlier on Monday, Associated Press quoted WikiLeaks staffer Sarah Harrison as saying that Russia’s FSB attempted to recruit the former NSA contractor, but he did not accept the offer. (Sputnik, 01.12.15).
Russia’s Federal Security Service has completed an investigation into the alleged hacking of a hospital web site by supporters of the Islamic State terrorist organization to conclude that IS hackers have intended to hack a site in France, but mistakenly targeted the site of a hospital in Russia’s Chelyabinsk region. (Gazeta.ru, 01.14.15).
Russia's culture minister is calling for a "patriotic Internet" to combat Western spin and win the "war for the minds" of Russians. (Washington Post, 01.16.17).

Energy exports from CIS:

Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey, a surprise move that the European Union’s energy chief said would hurt its reputation as a supplier. Gazprom plans to send 63 billion cubic meters through a proposed link under the Black Sea to Turkey, fully replacing shipments via Ukraine, Chief Executive Officer Alexey Miller said during the discussions. (Bloomberg, 01.14.15).
Hungarian oil and gas company MOL Nyrt said on Tuesday that it has experienced disruptions in the supply of diesel fuel flowing through a pipeline from Russia via Ukraine. The company didn’t disclose the nature of the disruption. MOL said only that its “Russian partner fulfills its long-term contractual obligations.” (Wall Street Journal, 01.13.15).

Bilateral economic ties:

MasterCard, Inc. has reached an agreement with Russian authorities to process its payments in Russia, the central bank said Monday. MasterCard and Russia’s national payment system agreed to gradually move the processing of the U.S. company’s transactions within Russia under the roof of its Russian. The Bank of Russia will act as a settlement office. (Wall Street Journal, 01.12.15).
The Brooklyn Nets are available on the open market. Russian billionaire Mikhail Prokhorov has made it known that the team is up for sale, according to league sources. (ESPN, 01.13.15).

Other bilateral issues:

The crew of the International Space Station was restricted to the Russian half of the station early Wednesday after signs of a possible ammonia leak. In the meantime, a shipment of U.S. food destined ISS has been held up by Russian customs due to the ban, which is part of Russia's retaliation for Western sanctions over its interference in Ukraine. Russia will decide on its future involvement in the ISS project in 2020-2024 in May. (New York Times, 01.14.15, Interfax, 01.13.15, RFE/RL, 01.15.15).

The CIA has declassified 99 documents demonstrating its role in the publication of the great Russian novel “Doctor Zhivago,” by Boris Pasternak. The documents are available on the agency’s website. (RBTH, 01.16.15).

II. Russia news.

Domestic politics, economy and energy:

More than half of Russians would prefer to keep President Vladimir Putin at the country's helm after the 2018 elections and believe there is no other politician capable of replacing him, according to a poll released Thursday by the independent Levada Center. (The Moscow Times, 01.15.15).
Russian President Vladimir Putin says nongovernmental organizations should help achieve "common national goals" and not oppose the government. (RFE/RL, 01.15.15).
Russia will have to cut budget spending this year as revenue declines due to Western sanctions and a fall in the price of oil, the country’s finance minister said Wednesday. Anton Siluanov said that his ministry plans to cut budget costs by 10% across all sectors except for military spending. Mr. Siluanov said that Russia has a $180 billion shortfall in revenues due to the drop in oil prices. A shortfall in revenues created by Western sanctions is expected to be between $40 billion and $60 billion, Mr. Siluanov added. (Wall Street Journal, 01.14.15).
Russian Economy Minister Alexei Ulyukayev said that "the global economy will never again be what it used to be in 2000-07 and the situation in Russia will never be the same. It will be much more complicated. It already is much more complicated.” (Reuters, 01.14.15).
Inflation hit 11.4 percent for the year in Russia. "The peak in inflation will probably be in March-April, I hope at a level of 15-17 percent,” Deputy Economy Minister Alexei Vedev said. (Reuters, 01.14.15, The Moscow Times, 01.11.15).
Russia's central bank replaced its head of monetary policy after President Vladimir Putin criticized the failure of emergency measures to halt ruble's decline. Dmitry Tulin, a former central bank official, will take on Ksenia Yudaeva's role as first deputy governor in charge of monetary policy, (Bloomberg, 01.14.15).
Russia's Finance Ministry sold $1.3 billion in forex market interventions. The Jan. 12 accounts included operations made on Dec. 30 and on Jan. 5, 6, 8 and 9. (Reuters, 01.13.15).
The World Bank expects Russia's economy to contract by 2.9 percent in 2015, it said in a report on global economic growth, cutting its forecast from December when it expected a 0.7 percent contraction. (Reuters, 01.14.15).
Fitch Ratings announced on January 9 it had lowered its rating for Russian government debt to BBB-, just one notch above junk level. Russian officials and experts warned Wednesday that an expected decision by Standard and Poor's to deprive Russia of its investment-grade credit rating could cost the country up to $30 billion. Standard and Poor's said on Friday that it planned to complete a review Russia's sovereign credit rating by the end of January, after earlier saying it expected to make a decision by mid-January. (The Moscow Times, 01.15.15, Reuters, 01.16.15, RFE/RL, 01.10.15).
Russian net capital outflows probably doubled last year and oil is down 20% since the beginning of the year. The government may resort to currency restrictions if the pace doesn’t ease in 2015, according to a Bloomberg survey of economists. Russian officials are divided over whether to impose capital controls, according to Russia’s former finance minister, Alexei Kudrin. (Bloomberg, 01.16.15, Wall Street Journal, 01.13.15).
If oil stays at its current price through this year, Russia's gross domestic product will likely shrink more than 6.5 percent, analysts at the Gaidar Economic Forum said Thursday. The head of LUKoil said Friday that the price of crude could dive to $25 per barrel. Oil prices may have further to fall and a rebound could take some time, despite increasing signs that the downtrend will end, possibly in the second half of this year, the West's energy watchdog said on Friday. "How low the market’s floor will be is anybody's guess. But the sell-off is having an impact," the International Energy Agency said in its monthly report. (Reuters, 01.16.15,The Moscow Times, 01.16.15, 01.15.15).
Russian banks have urged the Central Bank to sharply cut interest rates to prevent a wave of corporate bankruptcies and collapsing demand for loans. The regulator hiked interest rates to 17 percent last month. (Reuters, 01.12.15).
Russia’s automobile market shrank by 11% in 2014 from the previous year to 2.3 million cars. New car sales in Russia will drop 24.2 percent this year after falling more than 10 percent in 2014, the Association of European Businesses lobby group said. (Tass, 01.12.15, The Moscow Times, 01.15.15).
Russians who went abroad on New Year vacations spent 40 percent less this year than they did in 2014, according to a survey of transactions by VTB24 bank customers. (Interfax, 01.15.15).

Defense:

Despite Russia's economic troubles, the Defense Ministry will continue to focus on its ambitious 20 trillion ruble ($350 billion) rearmament plan in 2015, Defense Minister Sergei Shoigu said on Tuesday. Shoigu said the army is expected to receive 700 new armored vehicles, 1,550 vehicles of various other types, 126 airplanes, 88 helicopters and two brigades of Iskander-M missiles in 2015. The navy should receive two refurbished submarines and five surface vessels. (The Moscow Times, 01.13.15).
Russia will add a new branch to its armed forces later this year with the creation of an Aerospace Force, the country's top general has said. "The Aerospace Force will be created by merging two types of the currently existing armed forces — the Air Force and the Space Defense Force," chief of General Staff General Valery Gerasimov said. (The Moscow Times, 01.14.15).
Russia will reinforce its military groupings in 2015 on the Crimean Peninsula, the exclave Kaliningrad Region and the Arctic, Russian General Staff chief Valery Gerasimov said Tuesday. The Black Sea Fleet's seaborne aviation divisions have procured Sukhoi Su-30 supersonic multirole fighter jets and Orlan unmanned aerial vehicles. (RFE/RL, 01.13.15, Interfax, 01.13.15).
Russian paratroopers will conduct exercises in 20 foreign countries this year. Russian paratroopers plan to train with special units throughout the former Soviet region, Europe, North Africa, South America and Southeast Asia (The Moscow Times, 01.12.15).
Five Russian plants scrapping chemical weapons resumed operation on January 14 after maintenance. (Interfax, 01.15.15).

Security, law-enforcement and justice:

A shocking new video by the Islamic State group that emerged on social media on January 13 appears to show a child militant shooting dead two men identified as “Russian agents.” Russia said it has no information as yet confirming that two men who appear to be executed the video. (RFE/RL, 01.14.15, 01.15.15).
German authorities have taken two men into custody following a series of police raids that were part of an investigation into a small group of militants suspected of "preparing a serious act of violence against the state in Syria" and money laundering. The group was made up largely of Turkish and Russian nationals from Chechnya and Dagestan. (RFE/RL, 01.16.15).
Turkish media reports said on January 14 that two natives of Russia's North Caucasus region of Dagestan have been questioned by police over a suicide bombing in Istanbul last week. Reports said the Dagestan natives were among six people suspects detained on January 13 in connection with the January 6 bombing in which a female attacker killed one police officer and wounded another. (RFE/RL, 01.14.15).
A dozen protesters barged into a mosque calling for worshipers to march to the French Embassy in Moscow — presumably in connection to a wave of terrorist attacks in Paris last week — and then severely beat a congregant who tried to soothe them. (The Moscow Times, 01.15.15).
The Chechen Republic parliament has submitted to the State Duma a bill tightening punishment of terrorists and their accomplices from amongst family members (Interfax, 01.12.15).
Prosecutors in central Russia have opened an investigation into the beating of a journalist in what constitutes the second attack against a publication known for its reporting on corruption cases. Sergei Vilkov, who writes for magazine Obshchestvennoye Mnenie, or Public Opinion, said he was beaten on Tuesday by two men. (The Moscow Times, 01.15.15).
Anti-corruption campaigner and leading Russian opposition figure Alexei Navalny was taken in for questioning on Friday, escorted by a dozen police who he said had intercepted him outside his Moscow apartment building. (AP, 01.16.15).

Foreign affairs and trade:

Russia's foreign minister says he expects the prospective Syria peace talks in Moscow to be a success despite reports about some key opposition groups' refusal to attend. Secretary of State John Kerry has earlier endorsed Russia’s decision to convene a meeting in Moscow between representatives of the Syrian government and opposition. Moaz al-Khatib, the former leader of the main opposition Syrian National Coalition says he has rejected a Russian invitation to peace talks. (AP, 01.16.15, New York Times, 01.15.15, RFE/RL, 01.10.15).
Russian President Vladimir Putin will not attend ceremonies marking the 70th anniversary of the liberation of the Auschwitz concentration camp in Poland on January 27, although the Russian leader attaches great importance to all commemorative events, Putin's press secretary Dmitry Peskov said. (Interfax, 01.13.15).
Russian President Vladimir Putin has held talks in Moscow with his Venezuelan counterpart about declining global oil prices. (RFE/RL, 01.15.15).
There is no chance that Russian President Vladimir Putin will be invited to the next meeting of G7 leaders, German Chancellor Angela Merkel, who will host the summit, has said. (Reuters, 01.16.15).
The European Parliament condemned Russia on Thursday as a ‘‘potential threat to the European Union itself’’ even as its foreign policy chief sought to resume dialogue with Moscow to help end the conflict in Ukraine. (AP, 01.16.15).
Russia's Foreign Ministry slammed the European Union's plan to create a Russian-language television channel in Europe as an attack on free speech. (Moscow Times, 01.13.15).
The crew of the first Mistral-class helicopter carrier, the Vladivostok, may go to Saint Nazaire, France, for the vessel in March, the Main Headquarters of the Russian Navy said. Russia won't take action against France for failing to deliver the first of two Mistral-class warships until February, a senior defense official said. (The Moscow Times, 01.14.15, Interfax, 01.13.15).
Iranian officials say Russian Defense Minister Sergei Shoigu is expected to visit Tehran on January 19-20. Ruslan Pukhov, the head of the Moscow-based Strategies and Technologies Analysis Center, said Shoigu's visit to Tehran was aimed at resolving disputes related to the arms trade between Russia and Iran. (RFE/RL, 01.15.15).
North Korea’s Kim Jong-un sent a special envoy to Moscow to ask Russia to sell him Sukhoi Su-35 fighter jets. (Foreign Policy, 01.09.15).
Nearly half of Russians (47 percent) believe that the country's foreign policy should center on stronger relations with China in the long-term period, Levada Center said. CIS countries ranked second (12 percent), Western Europe came third (8 percent) and the United States (4 percent). (Interfax, 01.13.15).

Russia's neighbors:

A shell or rocket fired at an army checkpoint in southeastern Ukraine on Tuesday gutted a passenger bus and killed 10 people in one of the deadliest attacks on civilians since a precarious cease-fire in the conflict was negotiated in early September. The attack, which Ukrainian officials said was a result of a rocket fired by pro-Russian separatists, coincided with the collapse of plans for a peace summit meeting in Astana, Kazakhstan The death toll in the bus attack rose 12 on Wednesday. (New York Times, Interfax, 01.14.15).
Leaders of a Russian-backed rebel movement in eastern Ukraine claimed on Friday to have captured the Donetsk city airport, a symbolically important and long-sought prize, although central government officials denied this was the case. If the claim is true, it would signal the first significant territorial advance by the rebels since the signing of the cease-fire pact. (New York Times, 01.16.15).
Ukraine's parliament voted on Thursday to refresh its front-line forces and resume partial conscription after a top security official warned that Russian forces backing separatist rebels had sharply increased military activity in the east. (Reuters, 01.15.15).
Russia is concerned that a rotation by Kiev of front-line forces in eastern Ukraine could undermine peace efforts, Foreign Minister Sergei Lavrov said on Friday. He has also warned that the government in Kiev was seeking a military solution of the conflict. "We are checking information that the (Ukrainian) military is preparing another attempt to solve the problem by force. This would be a catastrophe," Lavrov said. (Alliance News, 01.12.15, Reuters, 01.16.15).
The European Union could significantly scale back sanctions and resume discussions with Russia on issues from visa-free travel, cooperation with the Moscow-led Eurasian Economic Union and the crisis in Libya, Syria and Iraq if Russia moves to end the crisis in eastern Ukraine, according to an EU discussion paper. The paper was prepared by the EU’s foreign-policy arm. (Wall Street Journal, 01.13.15).
Russian President Vladimir Putin and German Federal Chancellor Angela Merkel discussed the situation in Ukraine over the phone on Thursday, Russian Foreign Minister Sergei Lavrov said. The White House says President Barack Obama and Merkel have discussed their concern about increased violence in eastern Ukraine. Obama and Merkel spoke Thursday. (RBTH, 01.16.15, AP, 01.15.15).
Ukrainian President Petro Poroshenko has said that if Donbass holds elections according to Ukrainian law, the region could be granted the status of a free economic zone. (Interfax, 01.13.15).
The U.S. will provide $2 billion in new loan guarantees for Ukraine as part of an expanded international bailout package to help the war-torn country avoid economic collapse, the Treasury Department said Tuesday. (Wall Street Journal, 01.13.15).
Ukraine needs "financial mobilization" and further help from foreign backers to survive the economic crisis, Finance Minister Natalia Yaresko said Friday. Economists have warned the country could face a drastic debt restructuring, unless international lenders beef up existing loan offers to plug an estimated $15 billion funding gap. (Reuters, 01.16.15).
Central bank data on Monday showed that Ukraine’s international reserves shrank by 24% on the month in December to $7.533 billion as of Jan. 1, 2015. The need for an extra bailout from abroad may increase if Russia asks for an early redemption of a $3 billion loan. In a move suggesting that Moscow is turning up the pressure to repay the debt, Russia’s Finance Minister Anton Siluanov said that Russia is quite likely to request an early redemption. The timing couldn't be worse. Ukraine is set to hand over $19 billion over the next three years in debt payments. (Business Insider, 01.16.15, Wall Street Journal, 01.12.15).
The conflict in eastern Ukraine is costing the country $10 million a day according to President Petro Poroshenko. Poroshenko said his country needs a total of between $13 billion and $15 billion in funding in 2015 and 2016. (Wall Street Journal, 01.12.15).
Interpol issued a worldwide directive on Monday seeking the arrest of Viktor F. Yanukovych, the former president of Ukraine, and other former senior officials including Mykola Azarov, who was prime minister, on charges of embezzlement and misappropriation of public funds. (Wall Street Journal, 01.13.15).
Relaxed residence rules, earlier granted to citizens of Ukraine, will be scrapped in Russia in 2015. (Interfax, 01.11.15).
Tension is high in Armenia following clashes between police and protesters demanding the handover of a Russian soldier accused of murdering six members of an Armenian family near Russia's military base in the former Soviet republic. At least 15 people were injured in the clashes on January 15 outside the Russian consulate in the city of Gyumri, the site of the Russian base and the home of the family that was massacred on January 12. (RFE/RL, 01.16.15).
Kazakhstan is conducting military drills simulating a response to a would-be separatist threat amid jitters over the Ukrainian crisis. The Defense Ministry said Friday the three-day exercise was prompted by "geopolitical changes," but didn't elaborate. Under the scenario, Kazakh troops thwart an incursion by "extremists, terrorists and separatists" disguised as arriving refugees. (AP, 01.16.15).
A court in Kazakhstan has sentenced five men to prison terms ranging from 18 to 20 months after convicting them for being members of a banned Islamic group called Tablighi Jamaat. (RFE/RL, 01.15.15).
Kazakhstan's government says nearly 1 million ethnic Kazakhs have returned or moved to Kazakhstan since it gained independence in the Soviet collapse of 1991. (RFE/RL, 01.15.15).
Uzbek President Islam Karimov appears set to extend his 25-year rule in the tightly controlled Central Asian nation following his nomination for reelection. At a joint session on January 15, Karimov's Liberal Democratic Party of Uzbekistan and the Movement of Entrepreneurs and Businesspeople nominated him as a candidate in the March 29 presidential election. (RFE/RL, 01.15.15).
Uzbek President Islam Karimov says his country will never join any "alliance similar to the U.S.S.R." (RFE/RL, 01.13.15).
Two officials in Uzbekistan say dozens of managers at industrial facilities who are allegedly associated with President Islam Karimov's embattled daughter, Gulnara Karimova, have been sentenced to lengthy prison terms. (RFE/RL, 01.13.15).
A Kyrgyz man suspected of sending 60 fellow citizens to fight alongside Islamist militants in Syria has been questioned by investigators in the southern city of Osh. The 21-year-old suspect, a native of Osh, had confessed that he used an apartment he rented in Istanbul, Turkey, as a transit base for the recruits. (RFE/RL, 01.13.15).
As the Russian currency sinks, the amount guest workers are able to remit, usually in dollars, falls too. Remittances to Uzbekistan fell by 9% in the third quarter of 2014 compared with a year earlier, according to central-bank statistics in Russia. One analyst believes remittances to Tajikistan are a fifth lower than a year earlier. (The Economist, 01.17.15).
The Belarusian parliament has approved Andrey Kobyakov as the country's next prime minister after his formal introduction to the legislature on January 15 by President Aleksandr Lukashenka. (RFE/RL, 01.15.15).
Belarusian President Aleksandr Lukashenka has vowed to improve ties with the West, which are badly strained, and warned Russia not to oppose the effort. (RFE/RL, 01.15.15).
Georgian authorities say a man from the South Caucasus nation has been killed fighting in eastern Ukraine. (RFE/RL, 01.15.15).

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