Russia in Review

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

Nuclear security agenda:

The U.S. National Nuclear Security Administration announced removal of 36 kg of spent HEU fuel from the VVR-K reactor operated by the Institute of Nuclear Physics Kazakhstan. The fuel was transferred in two air shipments to "a secure facility in Russia for permanent disposition", which is most likely the Mayak plant that will reprocess the fuel. According to NNSA, it "plans to work with Kazakhstan, Russia and the IAEA to return approximately 50 additional kilograms of HEU to Russia - thereby eliminating all HEU research reactor fuel from Kazakhstan." (IPFM, 01.08.15).
Machine-gun wielding battle robots are going to be tested in Russia's Astrakhan region for use by the country's Strategic Missile Forces. The testing is part of an initiative to deploy robots to protect the Defense Ministry's intercontinental ballistic missile launch sites by 2020. (Moscow Times, 01.02.15).
Stephen G. Burns has become the US Nuclear Regulatory Commission's sixteenth chairman. A veteran of the agency and an NRC commissioner since November, Burns has replaced outgoing chairman Allison Macfarlane. (World Nuclear News, 12.31.14).

Iran nuclear issues:

Russia warned that it may halt cooperation with the United States on Iran and Syria in response to a continuing stream of U.S. sanctions. One day after the Obama administration announced its latest penalties, the Russian Foreign Ministry spokesman, Alexander Lukashevich, said the sanctions “are putting in doubt prospects for bilateral cooperation on solving the situation around the Iranian nuclear program, the Syrian crisis and other acute international problems.” (LA Times, 12.30.14).
Iran denied on Saturday that it had reached an agreement with the United States to ship its surplus enriched uranium to Russia under new concessions aimed at clinching a comprehensive nuclear deal with six world powers. (Reuters, 01.05.15).

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

NATO poses no threat either to Russia or any other country, NATO Spokesperson Oana Lungescu told Interfax on Friday when asked to comment on the section of Russia's new military doctrine concerning NATO. (Interfax, 12.27.14).
Moscow says NATO continues to bear responsibility for the security situation in Afghanistan, even though the UN-mandated international security force ended its mission. Zamir Kabulov, Russian President Vladimir Putin's special representative for Afghanistan, said he saw signs the Taliban intends to "mount a major offensive" in Afghanistan in the spring. (RFE/RL, 12.31.14).
The Pentagon announced on January 8 that it is returning 15 bases that it now operates in Western Europe back to their host nations. The bases are in Britain, Germany, Italy, Portugal, Belgium, and The Netherlands. At the same time, the Pentagon says the United States is committed to bolstering troop rotations in the Baltics and Poland (RFE/RL, 01.08.15).
Poland expects the NATO alliance to step up its military exercises around the Baltic Sea after a flurry of activity by Russian warships and jet fighters in the area last month, Defense Minister Tomasz Siemoniak said. (Reuters, 01.09.15).

Missile defense:

No significant developments.

Nuclear arms control:

No significant developments.

Counter-terrorism agenda:

Russia “should be an ally in the fight against terrorism,” NATO Secretary General Jens Stoltenberg said. “That’s why we still strive for a more cooperative and constructive relationship with Russia. We think it is important that Russia, which is our biggest neighbor in Europe, and NATO are working together on important issues like fighting terror.” Stoltenberg also said the killings at the Charlie Hebdo newsroom in the French capital were an “attack on the free press, on free opinion and on our open societies.” (Bloomberg, 01.08.15).
Jury selection began on January 5 in the U.S. trial of Dzhokhar Tsarnaev, the surviving suspect in bombings that killed three people and wounded 264 at the Boston Marathon in 2013. (RFE/RL, 01.05.15).

Cyber security:

Symantec reported that the top three country sources of malware in 2013 were the United States (17 percent), China (9 percent) and India (5 percent). Alternatively, though Kaspersky also estimates that the United States is the leading source of malicious activity (25 percent), it ranks Russia second (19 percent), followed by the Netherlands (12 percent). (National Interest, 01.07.15).
At least three official German websites, including Chancellor Angela Merkel's page, were inaccessible on Wednesday after an apparent cyberattack. A group demanding that Germany sever ties with Ukraine and halt financial and political support for the government in the capital, Kiev, claimed responsibility for shutting down at least two sites, the chancellor's and the website of the Bundestag. (Wall Street Journal, 01.08.15).

Energy exports from CIS:

Russia's oil output hit a post-Soviet record high in 2014, Energy Ministry data showed on Friday. Output reached an average of 10.6 million barrels per day (bpd) in 2014, up 0.7 percent, helped by small non-state producers. (Reuters, 01.02.15).
Russian gas giant Gazprom announced on December 29 it had purchased all of its foreign partners' shares in the abandoned South Stream gas pipeline project. (RFE/RL, 12.29.14).

Bilateral economic ties:

U.S. Commerce Department officials say that while U.S. exports to Russia are up by about 1 percent in 2014 from last year, imports from Russia are down by about 13 percent. (Washington Post, 12.27.14).

Other bilateral issues:

U.S. President Barack Obama's administration has been working behind the scenes for months to forge a new working relationship with Russia, despite the fact that Russian President Vladimir Putin has shown little interest in repairing relations with Washington or halting his aggression in neighboring Ukraine. (Bloomberg, 12.31.14.).
Russian President Vladimir Putin has said in a New Year's message to U.S. President Barack Obama that Moscow is looking for equality in bilateral relations next year. Putin reminded Obama of the upcoming 70th anniversary of the allied victory in World War II, and said that should serve as a reminder of "the responsibility that Russia and the United States bear for maintaining peace and international stability." Moscow is anxious for those bilateral relations to advance, but only as long as there is "equality and mutual respect." (AP, 12.31.14).
"You'll recall that three or four months ago, everybody in Washington was convinced that President (Vladimir) Putin was a genius," U.S. President Barack Obama said. "And he had outmaneuvered all of us and he had, you know, bullied and, you know, strategized his way into expanding Russian power. “And today, you know, I'd sense that at least outside of Russia, maybe some people are thinking what Putin did wasn't so smart." (Washington Post, 01.05.15).
The United States has sanctioned four more alleged Russian rights abusers, including two law enforcement officials linked to the case of whistleblower Sergei Magnitsky. The U.S. Treasury Department said on December 29 that senior Russian prosecutor Viktor Grin and Andrei Strizhov, a senior investigator with Russia’s top investigative agency, have been sanctioned under the so-called “Magnitsky Act.” (RFE/RL, 12.30.14).
“I believe the adoption of the U.S. federal act in support of Ukraine and imposing sanctions on us is a problem for decades. But it's a question how material this is going to be for us. The volume of our relations with the U.S. is not very large," said Russian Economic Development Minister Alexei Ulyukayev. (Interfax, 12.27.14).
U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov have discussed the situation in Ukraine and the various crises in the Middle East. (RFE/RL, 01.02.15).
Dmitrij Harder, a Russian national who was the head of a Pennsylvania consulting company, was indicted on charges he paid $3.5 million in bribes to an official for a development bank in London to win financing for clients. (Businessweek, 01.06.15).

II. Russia news.

Domestic politics, economy and energy:

Russian President Vladimir Putin praised the “return home” of Ukraine’s Crimea in a televised New Year’s address to the nation Wednesday, saying the event “will remain a very important epoch in domestic history forever.” He also praised Russia’s progress in the past year, saying that Russia not only hosted the Winter Olympic Games in Sochi, but also triumphed in them. (Wall Street Journal, 12.31.14).
Russian President Vladimir Putin has expressed his condolences to those affected by an attack on the offices of French satirical newspaper Charlie Hebdo on Wednesday that claimed at least 12 lives. Russia's Muslim leaders have condemned the terror attack on Charlie Hebdo but appeared to spread the blame for the mass shooting by suggesting the publication was guilty of the "sin of provocation." (Moscow Times, 01.08.15, 01.07.15).
The dollar and euro were slightly lower against the ruble in early trading on the Moscow Exchange on Friday. The dollar was averaging 59.82 rubles/$1 after the first minute, 48 kopecks below the close on Thursday, but 3.58 rubles above the official exchange rate. The Russian currency fell over 10 percent on Monday as Brent tumbled to $50 per barrel this week. (Reuters, 01.08.15, Interfax, 01.09.15).
Russia’s gross domestic product shrank 0.5 percent on the year in November after showing growth close to zero in the preceding month, data from the economy ministry showed Monday. It was the economy’s first contraction over a 12-month period since late 2009. The economy grew by 0.6 percent in the first 11 months of this year, the data showed. (Wall Street Journal, 12.29.14).
The Bank of Russia said Tuesday it had spent an additional $11.9 billion in December in an attempt to stem the ruble's decline, making the total sale of foreign-exchange holdings during the past year the equivalent of around $82.5 billion. Russia's stock index has nearly halved since the start of 2014, and so has the value of the ruble. One dollar bought 32.03 rubles a year ago, compared with 63.65 Tuesday. (Wall Street Journal, 01.07.15).
Russia needs to reassess its military spending amid slowing economic growth and reduced access to global capital markets as falling oil prices have hit the domestic economy hard, Finance Minister Anton Siluanov said. (Wall Street Journal, 12.26.14).
Russia's state-controlled VTB bank has received the first tranche of a $2.6 billion bailout from the Russian government. The government said it would support Yamal LNG, the Arctic gas project of Novatek, with Rbs150bn. Separately Gazprombank, the country’s third-largest lender, said the government had bought Rbs39.95bn in preferred shares. The government also decided to raise the capitalization of Russian Railways by buying Rbs50bn in additional preferred shares in the state company. (RFE/RL, 12.30.14, FT, 12.32.14).
The cost of insuring Russia’s bonds against non-repayment for five years jumped 72 basis points this year to 547, according to data compiled by Bloomberg. That makes the nation’s debt the fifth-riskiest globally, above speculative-grade countries including Lebanon, Egypt and Portugal. It now costs about $574,000 a year for five years to insure $10 million of Russian government debt, according to Markit. It cost less than $250,000 at the start of November. Standard & Poor’s has signaled last month it may drop the country below investment grade within 90 days. (Bloomberg, 01.09.15, Wall Street Journal, 01.08.15).
Brazil and Russia’s membership of the BRICs may expire by the end of this decade if they fail to revive their flagging economies, according to Jim O’Neill, the former Goldman Sachs Group Inc. chief economist who coined the acronym. (Bloomberg, 01.08.15).
Russian Emergency Situations Ministry will set up another two rescue centers in the Arctic, Emergency Situations Minister Vladimir Puchkov has said. (Interfax, 01.05.15).
Rosenergoatom connected unit 3 of the Rostov nuclear power plant, near Volgodonsk, to the grid on December 27th. Construction of the VVER-1000 pressurized water reactor started in 2009. (WNN, 12.29.14).
The flow of migrants to Russia has fallen 70 percent over the first week of January compared to the same period last year, the head of Russia's Federal Migration Service said. (Moscow Times, 01.07.15).

Defense:

Russia named NATO's military buildup near its border as the main military threat and raised the possibility of using precision conventional weapons as a "strategic deterrent," according to the nation's new military doctrine signed by President Vladimir Putin on December 26th.The new doctrine maintains the provisions of the previous, 2010 edition of the military doctrine regarding the use of nuclear weapons. It says Russia could use nuclear weapons in retaliation to the use of nuclear or other weapons of mass destruction against it or its allies, and also in case of aggression involving conventional weapons that "threatens the very existence" of the Russian state. But for the first time, the new doctrine says that Russia could use precision weapons "as part of strategic deterrent measures.” (AP, 12.26.14).
Russian President Vladimir Putin has issued a decree enabling foreign nationals to serve in the Russian military. (RFE/RL, 01.06.15).
Russian Deputy Prime Minister Dmitry Rogozin attended a ceremony that saw the second of Russia's new Borey-class 955 nuclear submarines set off for active service. The "Vladimir Monomakh," capable of carrying 16 of Russia's Bulava Intercontinental Ballistic Missiles, left the northern port of Severodvinsk on December 26. (RFE/RL, 12.26.14).

Security, law-enforcement and justice:

Russia's Supreme Court has ruled that the Islamic State militant group and Al-Qaeda's Syrian affiliate, Jabhat al-Nusra, are terrorist groups and banned them in Russia. (RFE/RL, 12.29.14).
In recent weeks, several individuals and factions belonging to Vilayat Dagestan, a subgroup of the Caucasus Emirate militant Islamist group, announced that they had switched allegiance from the Caucasus Emirate to the IS group. The pledges of allegiance to IS represent the first cases in the Russian Federation where local militants have designated themselves members of the extremist group -- previously, militants traveled to Syria to join IS. (RFE/RL, 12.29.14).
A special representative of Russian President Vladimir Putin has said that the Islamic State militant group in Syria and Iraq poses a serious security threat to the Middle East and beyond. Special presidential representative Aleksandr Zmeevsky said that Russia strongly condemned the fact that militants from many different countries -- including Russia -- were fighting in the ranks of Islamic State, a phenomenon for which he blamed the group’s “propaganda machine.” (RFE/RL, 12.30.14).
Head of Chechnya Ramzan Kadyrov says there is no need to worry that militants fighting for the Islamic State group will join insurgents in the North Caucasus. (RFE/RL, 01.04.15).
A female suicide bomber who detonated herself at an Istanbul police station in the touristic area of Sultanahmet has been identified as a Russian citizen named Diana Ramazova. A policeman, Kenan Kumaş, was killed in the suicide attack by a woman at the Tourism Police Station on Jan. 6. (Hurriyet, 01.08.15).
Head of Chechnya Ramzan Kadyrov says he is implementing a new tactic in the fight against militants. A January 1 post on the official website of the Russian region's government says that individual commanders of security forces will be "personally" tasked with searching for specific suspects who are wanted by the authorities. (RFE/RL, 01.02.15).
Two militants involved in the Dec. 4 attack on the Chechen capital of Grozny were killed during a special forces operation on Thursday, Russia's National Anti-Terrorism Committee reported. (Moscow Times, 01.02.15).
Two police officers were killed and two more injured when unidentified attackers opened fire on their car in the North Caucasus republic of Dagestan in the latest outbreak of violence in the turbulent Russian region. One of the suspected attackers was also killed during the gunfight that ensued when policemen chased down their car. (Moscow Times, 01.07.15).
A Russian court gave Kremlin critic Alexei Navalny a suspended sentence on Tuesday for embezzling money but jailed his brother for three and a half years in a case seen as part of a campaign to stifle dissent. (Reuters, 12.30.14).

Foreign affairs and trade:

Russia has voiced regret over the UN Security Council's rejection of a resolution calling for Israel's withdrawal from occupied territories and the establishment of a Palestinian state by late 2017. (RFE/RL, 12.31.14).
Western nations should stop threatening Russia with new sanctions and instead offer to ease off on existing restrictions in exchange for progress in the peace process in Ukraine, President François Hollande of France said. In Germany, a vice chancellor, Sigmar Gabriel, also signaled concerns about the effect of sanctions on Russia’s stability. (New York Times, 01.05.15).
“You can’t say, we will lift 10 percent of sanctions for the line of control, or 20 percent if some other point is met,” Chancellor Angela Merkel of Germany said on Thursday. “I think we need to see the entire Minsk agreement implemented before we can say that sanctions will be lifted.” Merkel has earlier pledged to maintain a strong and united European position against Russia over the crisis in Ukraine. Merkel said in a December 30 early release of her New Year's address to Germans that Europe "cannot and will not accept the purported right of the strong who violate international law." (RFE/RL, 12.31.14, New York Times, 01.08.15).
The French defense minister has named the conditions on which France will consider fulfilling a contract to deliver two Mistral helicopter carriers to Russia. "There needs to be a ceasefire that is completely respected in this part of Europe [Ukraine]. A political roadmap is also necessary," Interfax quoted Defense Minister Jean-Yves Le Drian said. (Moscow Times, 01.02.15).
Latvia’s foreign minister, whose country has just taken over the revolving presidency of the European Union, said Wednesday that the bloc had received “some signals” from Russia that it was more willing to engage on resolving the crisis in eastern Ukraine. (Wall Street Journal, 01.07.15).
Russia has invited Syrian opposition figures to Moscow for talks later this month aimed at setting up a meeting with officials from the government of Syrian President Bashar al-Assad. (RFE/RL, 01.02.15).

Russia's neighbors:

Ukraine has just $10 billion in hard currency reserves but almost $8 billion in bonds falling due over the next three years. (Reuters, 01.08.15).
Sharp rises in the domestic price of gas and the devaluation of the hryvnya currency pushed up inflation in Ukraine to almost 25 percent last year, its highest level in 14 years. Ukraine's State Statistics Service also said consumer price inflation soared to 24.9 percent from 0.5 percent in 2013 — close to the 25.8 percent recorded in 2000 when Ukraine had to absorb the effect of a global crisis. (Reuters, 01.01.15).
Germany agreed on Wednesday to guarantee credit worth 500 million euros, or nearly $593 million, for Ukraine, contingent on prior approval for the specific use of the funds, said Beate Braams, a spokeswoman for the Economy Ministry. The German government is seeking prior approval to ensure that the funds are not used for any military purpose. (New York Times, 01.08.15).
The European Commission on Thursday proposed an extra €1.8 billion ($2.13 billion) in financial support for crisis-hit Ukraine. (Wall Street Journal, 01.08.15).
An IMF team resumed talks in Kiev on Thursday that Ukraine's government hopes will lead to a bigger aid program. The International Monetary Fund's existing package is worth $17 billion. (Reuters, 01.08.15).
Billionaire financier George Soros has urged the West to step up aid to Ukraine, outlining steps towards a $50 billion financing package that he said should be viewed as a bulwark against an increasingly aggressive Russia. (Reuters, 01.08.15).
Ukrainian President Petro Poroshenko has signed a law abandoning Ukraine's neutral "non-bloc" status, and said Ukrainians will decide whether the country should seek NATO membership once it meets the standards of the Western military alliance. Poroshenko predicted that moment would come in five or six years. (RFE/RL, 12.29.14).
The very idea of Ukraine's accession to NATO jeopardizes the people of that country and the entire system of European security, Russian Foreign Minister Sergei Lavrov said. "I do not think we have lost Ukraine; it is impossible to separate Russia and Ukraine. We are connected by centuries-old history, the economy, geography, culture, civilization values, as well as family and kinship bonds," the minister said. (Interfax, 12.25.14).
Ukrainian Prime Minister Arseniy Yatsenyuk said during his visit to Germany: “The Russian aggression against Ukraine encroaches on world order. We all remember the Soviet invasion into Ukraine as well as into Germany. It must be avoided. No one is allowed to rewrite the results of Second World War.” (BBC, translated from Ukrainian, 01.09.15).
Moscow has requested Berlin's official position regarding Ukrainian Prime Minister Arseniy Yatsenyuk's statement about "the invasion of Germany and Ukraine by the USSR", Russian First Deputy Foreign Minister Vladimir Titov has told journalists. (Tass via BBC, 01.09.15).
Ukrainian Prime Minister Arseniy Yatsenyuk says Russia is still sending military forces into Ukraine despite a September 5 deal on a cease-fire and steps toward peace. (RFE/RL, 01.08.15).
Ukrainian prime minister Arseniy P. Yatsenyuk said that the Minsk accord “is not a menu; you can’t cherry-pick” which items to adhere while ignoring others. (New York Times, 01.08.15).
France, Germany, and Kyiv have cast doubt on whether a four-way summit on Ukraine will be held in Kazakhstan's capital on January 15. Ukrainian President Petro Poroshenko said late last month that he would meet with Russian President Vladimir Putin, French President Francois Hollande, and German Chancellor Angela Merkel in Astana in an attempt to end the conflict in eastern Ukraine. (RFE/RL, 01.05.15).
Ukraine deployed new military aircraft, heavy weapons and vehicles to bolster troops fighting separatists in the country's east as it continues peace talks with rebels and Russia's government. (Bloomberg, 01.06.15).
The Organization for Security and Cooperation in Europe plans to double the number of monitors it has in Ukraine by the end of this month. (RFE/RL, 01.04.15).
On December 26, Ukrainian forces and separatists exchanged 149 Ukrainian service personnel for 222 detained people from the separatist areas. (RFE/RL, 01.04.15).
More than one million people have been driven from their homes by the conflict in Ukraine, hampering aid efforts and leaving the country on the verge of a humanitarian catastrophe, aid agencies said on Thursday. (Reuters, 01.08.15).
Hardly a day goes by in Ukraine these days without headlines about some terrorist incident or about the country's security forces breaking up a would-be plot or capturing a cache of weapons or explosives. In recent weeks there have been dozens of small bombings across the country, with the epicenters being Kharkiv, Odesa, Mariupol, and Kyiv. There were at least six bombings in Odesa in December alone. (RFE/RL, 01.08.15).
Westinghouse and Energoatom have agreed "to significantly increase" nuclear fuel deliveries to Ukrainian nuclear power plants until 2020. Referring to the new agreement Energoatom and Westinghouse signed in Brussels, Ukrainian prime minister Arseniy Yatsenyuk told reporters in Kiev yesterday that Ukraine is "gradually moving from dependence on Russia towards energy independence. “Russia’s foreign ministry issued a statement in response, saying that it was "alarmed" by news of the contract. (World Nuclear News, 12.31.14).
Ukrainian authorities have denied a report in pro-Kremlin media that a radioactive leak had taken place at the Zaporizhzhya nuclear plant, Europe's largest. (Reuters, 12.31.14).
Activist website Open Russia has published a map detailing the birthplaces of all Russian soldiers believed to have died fighting in Ukraine in 2014, with the largest group reported to have come from Moscow. The report used publicly available information to determine the number and identities of 227 men believed to have died fighting in Ukraine in 2014. (Moscow Times, 01.07.15).
The prosecutor's office of the self-proclaimed Luhansk People's Republic (LNR) released a statement on January 2 confirming the death of Aleksandr Bednov, known as "Batman," who led the LNR's 4th Brigade. (RFE/RL, 01.03.15).
Ukrainian military pilot Nadia Savchenko has been placed in solitary confinement at a pretrial detention center in Moscow. Savchenko's lawyer Mark Feigin said she was moved to solitary confinement due to the hunger strike she has been holding for almost a month. (RFE/RL, 01.09.15).
The Eurasian Economic Union, a trade bloc of former Soviet states, expanded to four nations on January 2 when Armenia formally joined, a day after the union between Russia, Belarus and Kazakhstan began. (AP, 01.02.15).
Belarus took further emergency steps on Thursday to defend itself from economic turmoil in Russia, devaluing its currency by around 7 percent for the second time this week, raising its main refinancing rate and imposing a new export tax on potash. Earlier Belarus' president has replaced his prime minister, the head of the national bank and an array of other top officials as the country weathers economic troubles. Lukashenka has said that his country's main goals for 2015 must be to diversify exports and reduce economic dependence on Russia. (RFE/RL, 12.31.14, AP, 12.27.14, Reuters, 01.08.15).
From Jan. 1, Central Asian gas producer Turkmenistan devalued its manat currency by around 19 percent to 3.5 to the dollar. (Reuters, 01.05.15).
The United States has transferred five prisoners from the military prison at Guantanamo Bay to Kazakhstan for resettlement. (RFE/RL, 01.02.15).
The suspected leader of a cell of the Islamic Movement of Uzbekistan (IMU) and 10 alleged subordinates have been detained in Tajikistan (RFE/RL, 01.08.15).
A Russian-speaking militant from Moldova has appeared in a new video released by Al Hayat, the Islamic State (IS) group's media wing. (RFE/RL, 01.07.15).
Authorities in Azerbaijan have detained 10 men on suspicion of taking part in militant activities alongside armed groups in Syria. (RFE/RL, 01.07.15).
Defense officials in the disputed territory of Nagorno-Karabakh have accused Azerbaijan of attacks that left two ethnic Armenian soldiers dead. A statement from the Nagorno-Karabakh Defense Ministry said Azerbaijani infiltrators crossed the buffer zone that separates the region from the rest of Azerbaijan early on January 3 and opened fire. (RFE/RL, 01.03.15).
A dozen employees of Radio Free Europe/Radio Liberty in Azerbaijan were arrested and detained for up to 12 hours of questioning over the weekend, as state prosecutors intensified a crackdown on journalists and nongovernmental organizations that has drawn sharp criticism in the West. (New York Times, 12.29.14).
The Russian military says Russia, Kazakhstan, and Azerbaijan will hold joint naval exercises in the Caspian Sea for the first time this summer. (RFE/RL, 01.07.15).
Georgia's prime minister has urged the European Union to strongly oppose a treaty that would tighten Russia's ties with Georgia's breakaway South Ossetia region. (RFE/RL, 01.08.15).

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