Russia in Review

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

Nuclear security agenda:

No significant developments

Iran nuclear issues:

Russia could begin shipping materials to Iran this year under an oil-for-goods deal that the U.S. has said would force a response from Washington if it is found to violate international sanctions on the Islamic republic. (Moscow Times, 12.04.14).

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

NATO Secretary General Jens Stoltenberg said: "NATO is not an adversary of Russia."(Kommersant, 12.02.14).
Russian Deputy Foreign Minister Aleksei Meshkov said Russia-NATO relations have not reached the "point of no return" despite serious disagreements. (RFE/RL, Reuters, 12.01.14).
Russian Deputy Foreign Minister Aleksei Meshkov said that Moscow believes NATO is destabilizing northern Europe by holding military exercises there and "transferring aircraft capable of carrying nuclear arms" to the Baltic states. Asked to comment on Meshkov's remarks, the U.S. ambassador to NATO told a news conference in Brussels that such measures were meant to demonstrate to members that the alliance is committed to mutual self-defense. (RFE/RL, Reuters, 12.01.14).
Germany has urged NATO to set up an early warning system with Russia to prevent any military accident from spiraling out of control. (Reuters, 12.03.14).
NATO aircraft have been scrambled more than 400 times this year to intercept Russian aircraft, an increase of 50 percent over such incidents last year. (RFE/RL, 12.01.14).
Britain said Monday that it was concerned by a sharp increase in Russian military flights close to its borders that it said were designed to test its air defenses. (Reuters, 12.01.14).
A squadron of Russian warships entered the English Channel on Friday but a NATO official dismissed a Russian media report that they were there to conduct military exercises. (Moscow Times, 11.28.14).
NATO's planned new fast-reaction force, centerpiece of its response to Russia's annexation of Crimea, is proving harder to set up than expected because of shortages of vital equipment and arguments over funding, diplomats say. (Reuters, 11.28.14).

Missile defense:

No significant developments.

Nuclear arms control:

No significant developments.

Counter-terrorism agenda:

No significant developments.

Cyber security:

Cybercrime in the ex-Soviet space is robust: Russia was the world's No. 1 source of cyber-attacks as of last month with 2.7 million launched, according to statistics by Deutsche Telecom. The runner-up, Germany, lagged significantly with 1.4 million, followed by the U.S. (1.2 million) and China (1 million)." (Moscow Times, 11.28.14).
A recent influx of reports about Russian electronic espionage activity has prompted fresh concerns that the Kremlin may be gunning for a cyberwar with the West. Not everyone is convinced: Russian IT analysts interviewed by The Moscow Times were more inclined to blame the spike in attack reports on media hype and cybersecurity companies exploiting clients' fears. (Moscow Times, 11.28.14).
The Kremlin is pushing to have Russian Internet providers filter content before delivering it to users, a potentially very costly censoring procedure. (Moscow Times, 12.02.14).
Freedom House says Internet freedom around the world has deteriorated for the fourth consecutive year, with the steepest declines in Russia, Ukraine, and Turkey. (RFE/RL, 12.04.14).

Energy exports from CIS:

Russian President Vladimir Putin on Monday scrapped plans for the South Stream gas pipeline to Europe. Putin said Russia would build a smaller pipeline to Turkey instead of the bigger project, for which construction started two years ago, to funnel large quantities of Russian gas underneath the Black Sea to Europe. Putin said the alternative pipeline would run through Turkey and end in a hub near the Greek border. (Washington Post, 12.02.14).
European Commission President Jean-Claude Juncker has insisted the $40 billion South Stream natural gas pipeline can still go ahead and accused Russia of holding EU-member Bulgaria to ransom when it said it had abandoned the project. The European Commission's new energy chief said that Russia could revive the South Stream if it follows EU rules. (RFE/RL, 12.05.14, Reuters, 12.04.14).
Russian Energy Minister Alexander Novak said Friday that he thought the idea of creating oil reserves in Russia was impractical and that the issue was not under discussion. (Reuters, 11.28.14).
Russia and Slovakia on Friday signed a 15-year oil supply agreement that will see Moscow deliver 6 million tons of crude a year to its former Soviet satellite and send a further 6 million tons through the country to Western Europe. (Moscow Times, 12.05.14).
Slovak gas pipeline operator, Eustream, is proposing a new pipeline be built to carry natural gas from Western Europe to the Balkans, relieving the region of its almost total dependence on Russian supply. (Reuters, 11.28.14).

Bilateral economic ties:

Boeing Co. and Lockheed Martin Corp. face the potential loss of hundreds of millions of dollars if U.S. lawmakers succeed in a push to ban future purchases of Russian-made RD-180 rocket engines used by the companies to launch Pentagon satellites. The compromise defense bill published late Tuesday would block the use of the rocket engines by the companies’ United Launch Alliance joint venture unless they were bought before Russia’s annexation of Crimea this year. (Wall Street Journal, 12.03.14).

Other bilateral issues:

U.S. President Barack Obama said on Wednesday that Russian president Vladimir Putin "has been improvising himself into a nationalist, backward-looking approach to Russian policy that is scaring the heck out of his neighbors and is badly damaging his economy." Obama said the West intends to maintain economic pressure. Obama’s comments are "obviously unfriendly and obviously unconstructive," Dmitry Peskov, a Kremlin spokesman, said Thursday. (Washington Post, 12.05.14).
Washington and its allies are pursuing a regime change policy towards Russia, deliberately introducing sanctions and attacking the ruble through manipulation of world oil prices, Mikhail Fradkov, the head of the Foreign Intelligence Service (SVR) said. He also attributed the more than 30 percent drop in oil price partly to US actions. Fradkov also said foreign investment funds are “taking part” in ruble speculation via intermediaries. (Russia Today, 12.05.14).
U.S. Secretary of State John Kerry said Thursday that hundreds of Russian soldiers have been fighting and dying inside Ukraine. Mr. Kerry did not provide a specific number for Russian military deaths in Ukraine. But senior Obama administration officials have estimated that at least 400 Russian soldiers have died there. (New York Times, 12.05.14).
The House of Representatives overwhelmingly passed a resolution Thursday condemning Russian President Vladimir Putin’s policy of “aggression” in Ukraine and other neighboring countries. The motion, which passed 411-10, also censures Russia for its actions in Georgia and Moldova, two other countries where Russian troops are present. (Foreign Policy, 12.04.14).
U.S. Department of Homeland Security's latest figures show that overall applications for asylum by Russians totaled 969 in the 2014 fiscal year, up 34 percent from 2012. (AP, 11.30.14).
Fifty-three percent of Russians had a generally positive attitude to the U.S. in February 2013, while 30 percent declared their dislike for the country, according to the Russian Public Opinion Study Center. The trend has now reversed: 22% like the U.S. and 66 percent do not. Another 12 percent of the respondents were undecided. (Interfax, 12.04.14).

II. Russia news.

Domestic politics, economy and energy:

In his yearly address Russian President Vladimir Putin compared Crimea to the Temple Mount in Jerusalem, saying the peninsula held sacred importance for Russians because the Russian Orthodox Church was born there. Crimea was as dear to Russians "as the Temple Mount in Jerusalem" is to Jews and Muslims, he said. Evoking World War II history, Mr. Putin also suggested attempts to dismember Russia through sanctions and other means would fail just as Adolf Hitler had failed to conquer Russia. (New York Times, Washington Post 12.05.14).
In his yearly address Russian President Vladimir Putin said his country should use the confrontation with the West to try to overhaul its economy, and to depend more on itself for food, medicine and technology. He said there should be a four-year freeze in the business tax rate and proposed that honest small and medium businesses get a reprieve from constant government inspections, a font of corruption. He also said billions of dollars salted away in one of the government’s sovereign wealth funds should be used to prop up domestic banks. (New York Times, 12.05.14).
Russian President Vladimir Putin has announced a complete capital amnesty, allowing businesses to repatriate offshore funds without fear of the consequences. "We need to finally turn the 'offshore page' in the history of our economy and country," Putin told the federal assembly in his annual address. (Business New Europe, 12.04.14).
The majority (58 per cent) of Russians would like to see Vladimir Putin re-elected as president of Russia in 2018, according to a poll published on the website of Russian independent polling organization Levada Centre on 3 December. Conversely, 19 per cent of respondents would prefer to see somebody else take the helm, while 22 per cent did not provide an answer. (Levada.ru, 12.03.14).
Russian President Vladimir Putin has signed a federal law "On the Federal Budget for 2015 and the Planned Period of 2016-2017. Main parameters of the 2015 federal budget are based on the gross domestic product forecasted to reach 77,498 billion rubles ($1,527 billion) and inflation rates not higher than 5.5 percent. The federal budget will have a deficit of 430.7 billion rubles ($8.4 billion). (Interfax, 12.03.14).
President Vladimir Putin signed a law Monday freezing salaries for government officials in 2015. (Moscow Times, 12.02.14).
Russia’s Ministry of Economic Development on Tuesday revised its forecast for 2015 to show a contraction of 0.8 percent, compared with a previous projection of 1.2 percent growth. The Economy Ministry said it had previously expected some respite in terms of external pressure on the Russian economy by mid-2015 but now it expects the Western sanctions to still be in place by 2016. (New York Times, Wall Street Journal, 12.02.14).
The Bank of Russia this week made its heaviest currency intervention in more than a month. Central bank data showed Friday that it spent $1.9 billion to ease downward pressure on the ruble on Wednesday after selling $700 million on Monday. The ruble climbed almost 4 percent as trading opened on Friday, rising to 52.4 against the U.S. dollar and 64.74 against the euro, according to data from the Moscow Exchange. (Wall Street Journal, Moscow Times, 12.05.14).
Russian President Vladimir Putin said last Friday that he was confident the oil market would find its balance by the middle of next year. Kseniya Yudaeva, first deputy chairwoman of the Russian central bank, said the central bank was planning for prices to fall as low as $60 a barrel and remain there for a prolonged period, a scenario that only recently had been considered extreme. (Wall Street Journal, 12.02.14, Reuters, 11.28.14).
Consumer inflation in Russia is likely to reach double-digit readings in early 2015 for the first time in several years, the central bank’s first deputy chairwoman Ksenia Yudaeva said on Monday. (Wall Street Journal, 12.01.14).
In 2015, the Russian Finance Ministry may resume the issue of short-term government bonds (GKOs) to plug holes in the budget resulting from falling oil prices. (RBTH, 12.02.14).
The head of Sberbank, Russia's largest lender, said Thursday that the banking sector was grappling with huge liquidity problems, and warned that there was no easy money for Russian companies to be found in Asia. (Moscow Times, 12.04.14).
The cost of insuring Russia's five-year debt against default -- considered a key measure of perceived risk in the country -- was at 354.4 basis points, according to Thomson Reuters data, marking a more than five-year high. This means it would cost investors $354,400 a year to protect a notional $10 million of Russian debt for five years. A week ago it cost just over $300,000. (Wall Street Journal, 12.04.14).
Russian Prime Minister Dmitry Medvedev has authorized the sale of a 19.5 percent stake in Rosneft, the country's biggest oil producer, according to an order published on the government's website Monday. (Moscow Times, 12.01.14).
State-controlled Rostelecom could lay off as many as 10,000 people annually over the next four years, in an effort to increase its business efficiency, a move that could weigh on Russia’s embattled economy. (Wall Street Journal, 11.27.14).
In a survey by independent pollster, Levada Center, released on Friday, 80 percent of respondents said they had noticed price inflation, falling quality of life and problems in the wider economy. Russians are split on whether to blame price rises, deteriorating quality of life and a worsening of Russia's economic health on Moscow's annexation of Crimea or on Western sanctions, a poll found. (Moscow Times, 11.28.14).
A new bill would allow Russia to deny entry to anyone who has offended the country's "national, historical, spiritual, cultural or other social values." (Moscow Times, 11.28.14).
In the past decade, the number of HIV-infected people in Russia has increased from about 100,000 to more than 1 million. (Moscow Times, 11.30.14).
Around 500,000 Russians die due to alcohol abuse every year, Russia's health and safety watchdog said in a statement Monday. (Moscow Times, 12.01.14).
By early next year, Moscow plans to shutter 28 hospitals and clinics — almost a quarter of its inpatient facilities — and downsize several dozen other medical centers in an "optimization" that will also reduce the city's medical staff by up to 10,000 positions. Doctors and nurses protested the impending moves twice last month. (Washington Post, 12.05.14).
Lomonosov Moscow State University has ranked in the top five of the 2015 BRICS and emerging-economies university rankings published this week by Times Higher Education, an esteemed U.K.-based magazine. (Moscow Times, 12.04.14).
Russia slipped three places to rank a dismal 136th out of 175 countries in Transparency International's annual latest corruption survey, unveiled Wednesday. (Moscow Times, 12.03.14).
The human rights landscape in Russia has deteriorated beyond recognition in the last decade with critics silenced and labeled as spies and minorities discriminated against, Human Rights Watch said at a news conference in Moscow on Thursday. (Moscow Times, 12.04.14).
A majority of Russians believe their country's troops are not fighting in eastern Ukraine, but nearly half would be glad if it turned out they were, an opinion poll showed Thursday. (Reuters, 11.27.14).

Defense:

Russia said Monday that it would carry out more than 4,000 military drills next year, which is more than this year, with the largest one in the Central military district involving "tens of thousands" of servicemen next summer. (Moscow Times, 12.01.14, Reuters, 02.12.14).
Russia's Defense Ministry said on November 28 the "Aleksandr Nevsky" had test fired a "Bulava" ICBM from an underwater position in the Barents Sea off the northwest coast of Russia. (RFE/RL, 11.28.14).
Russia's Strategic Rocket Forces are considering bringing back iconic Soviet-era nuclear missile trains as Moscow pumps money into a complete overhaul its aging nuclear arsenal. (Moscow Times, 11.27.14).
Russian troops moved into the Defense Ministry's second base erected recently in environmentally protected territories in the Arctic, RIA Novosti reported Thursday. The autonomous base — shaped like a five-point star — is located on Cape Schmidt in the far-eastern Chukotka region. (Moscow Times, 11.27.14).

Security, law-enforcement and justice:

In his yearly address Russian President Vladimir Putin: “We remember well how and who, almost openly, supported separatism back then and even outright terrorism in Russia… These “rebels” showed up in Chechnya again. I'm sure the local guys, the local law enforcement authorities, will take proper care of them. They are now working to eliminate another terrorist raid.” (Kremlin.ru, 12.04.14).
A fierce gun battle between Islamist militants and government security forces paralyzed the center of the Chechen capital, Grozny, overnight into Thursday, leaving at least 20 people dead. (New York Times, 12.05.14).
A Russian court on Friday convicted four Dagestani natives to prison time for aiding the terrorists behind two suicide bombings that rocked the southern city of Volgograd with 34 deaths last year. (Moscow Times, 12.05.14).
A 22-year-old Russian man, Termkhan Tleugabilov, is standing trial in Chelyabinsk for allegedly recruiting local Muslims to fight in Syria. (RFE/RL, 12.01.14).
The Moscow City Court has sentenced a former anti-corruption official to five years in prison after he was found guilty of bribe-taking, tampering with evidence and taking part in a criminal organization. (Moscow Times, 12.04.14).
The Prosecutor General's Office is looking into the Central Bank's operations after a ruling party lawmaker accused it being an "enemy of the country" by supposedly driving down the ruble and plotting "evil" against Russia. (Moscow Times, 12.02.14).
About 43,000 Russian citizens have been punished for not declaring a second passport or foreign residency permit since a deadline for reporting dual citizenship expired two months ago, a news report said Friday. (Moscow Times, 12.05.14).
Ten New York residents, including five former Soviet citizens, have been charged in a $70 million scheme to defraud Medicaid and Medicare at health clinics in New York. (RFE/RL, 12.05.14).

Foreign affairs and trade:

In his yearly address Russian President Vladimir Putin stressed that Russia did not want to restore the Iron Curtain, that the country was open to the world and that it would never “pursue paranoia, suspicion and looking for enemies.” He also blasted the West and "speculators" who he said were waging an economic war against Russia over its actions in Ukraine. Putin said the Western sanctions were the product of a fight against Russia that began long before what he called the "Crimean Spring. “If none of that had ever happened," he said, “they would have come up with some other excuse to try to contain Russia's growing capabilities.” “The policy of containment was not invented yesterday. It has been carried out against our country for many years,” he said. “Whenever someone thinks that Russia has become too strong or independent, these tools are quickly put into use.” (New York Times, Wall Street Journal, Washington Post, 12.05.14).
Excluding Russia from the global SWIFT banking transactions system is another form of sanctions and would mean "war," said Andrey Kostin, head of VTB Russia's second largest bank, adding that should it happen Russia has a "Plan B." (Russia Today, 12.04.14).
French President Francois Hollande urged Vladimir Putin on Friday to look to the future rather than the past to help ease tension over the Ukraine crisis. "The tension, the pressure at the moment can in no way serve as a solution to problems," he said, suggesting that he, Putin, Ukrainian President Petro Poroshenko and German Chancellor Angela Merkel should "start the process of reducing tension" together. (Reuters, 12.05.14).
Foreign Minister Sergei Lavrov criticized the West on Friday for what he said were constant attempts to blame Russia for the crisis in eastern Ukraine and said Moscow was not isolated over the conflict. (Reuters, 12.05.14).
In Ankara, Russian President Vladimir Putin and his Turkish counterpart, Recep Tayyip Erdogan, signed a protocol on energy cooperation; the two countries hope they can reach $100 billion in annual bilateral trade by 2020. (Washington Post, 12.02.14).
Two warships that France agreed to sell to Russia might never be delivered, the French defense minister said on Friday, drawing an angry response from Moscow, which said Paris must honor its contract in full. Russia is ready to file a lawsuit against France for indefinitely suspending the delivery of two Mistral helicopter carrier warships to Russia, a Russian official said. (New York Times, 12.06.14, Moscow Times, 12.05.14).
The damage the European Union could incur from the sanctions imposed on Russia could reach about 40 billion euro in 2014 and 50 billion euro in 2015, and the level of Russia's losses is likely to be comparable, Russian Deputy Foreign Minister Alexei Meshkov said. (RBTH, 11.29.14).
Russian heavy equipment manufacturer ZiO-Podolsk has shipped the third of four steam generators intended for unit 3 of the Tianwan nuclear power plant in China. (World Nuclear News, 12.0.3.14).
Hungary’s government summoned a senior US envoy on Tuesday over critical comments made by Senator John McCain. Mr McCain described Viktor Orban, the Hungarian prime minister, as a “neo-fascist dictator getting in bed with Vladimir Putin”. (FT, 12.03.14).

Russia's neighbors:

Ukraine’s President Petro O. Poroshenko urged Ukrainian lawmakers to repeal a 2010 law that codified the country's nonaligned status in global affairs, and to instead pursue membership in NATO. (New York Times, 11.28.14).
Ukraine's new parliament has elected Arseniy Yatsenyuk for a new term as prime minister. In its first session since the elections last month, the Rada also elected former Deputy Prime Minister Volodymyr Hroysman as parliament speaker. Three foreigners -- Natalie Jaresko, Aivaras Abromavicius, and Aleksandr Kvitashvili -- were approved as ministers by Ukraine's parliament on December 2. (RFE/RL, 11.27.14, RFE/RL, 12.03.14).
Prime Minister Arseniy P. Yatsenyuk of Ukraine on Wednesday announced that there had been an accident at one of the country's nuclear power plants, briefly setting off fears of a Chernobyl-like catastrophe. But there appeared to have been no radiation leak and only a temporary disruption in the power supply. (Wall Street Journal, 12.04.14).
Ukraine’s foreign-currency and gold reserves dropped below $10 billion in November for the first time in nearly a decade due to large payments for debt and gas, the National Bank of Ukraine said on Friday. (Wall Street Journal, 12.05.14).
Ukraine remains Europe's most corrupt country, and one of the most corrupt countries in the world, according to the 2014 Corruption Perceptions Index compiled by international NGO Transparency International. (Business New Europe, 12.03.14).
Ukrainian President Petro Poroshenko has announced a new initiative to bring a halt to fighting in eastern Ukraine. In a statement on Thursday, Poroshenko said Ukraine's military will halt fire beginning on December 9 in eastern Ukraine, on a "Day of Silence." The Ukrainian government said Monday that it had reached a truce with pro-Russia separatists in the Donetsk airport area. (Wall Street Journal, 12.02.14, RFE/RL, 12.05.14).
A 12-year-old boy and 55-year-old women were reported killed on November 27^th in Donetsk, a major city largely controlled by the rebels. (RFE/RL, 11.27.14).
"We condemn Russia's military build-up in Crimea," NATO Secretary-General Jens Stoltenberg said after a meeting in Brussels of the foreign ministers of 28 NATO nations and Ukraine on December 2. The head of NATO said Russia has been sending large amounts of weapons to rebels in eastern Ukraine. (RFE/RL, 12.01.14, 12.02.14).
Ukraine accused Russia of sending weapons and ammunition into war-torn areas of eastern Ukraine under the guise of humanitarian aid after a column of 106 white trucks crossed the border from Russia on Sunday. (New York Times, 12.01.14).
Slovak Prime Minister Robert Fico said Tuesday that there was a high chance the Ukraine-Russia crisis would grow into a large conflict involving more than just those two countries. "The probability of a military conflict is 70 percent," he said. (Reuters, 12.03.14).
The European Union has imposed sanctions on separatist leaders who organized elections in eastern Ukraine this month, hitting individuals and organizations with asset freezes and travel bans. (RFE/RL, 11.29.14).
Georgia's state minister for European and Euro-Atlantic integration says Tbilisi has asked on November 25^th the UN Security Council to discuss the legality of the recently signed treaty on alliance and strategic partnership by Moscow and Georgia's breakaway region of Abkhazia. (RFE/RL, 11.27.14).
Georgian prosecutors have charged former President Mikheil Saakashvili with complicity in the 2006 murder of banker Sandro Girgvliani. (RFE/RL, 11.27.14).
The president of Azerbaijan, Ilham Aliyev, has said that the rise of the Islamic State militant group in Syria and Iraq is the “fruit of policies carried out in the Middle East over the past 10 years.” ". (RFE/RL, 12.02.14).
The United States says it is "increasingly concerned" over Azerbaijan's human rights record. (RFE/RL, 12.01.14).
The Armenian parliament has overwhelmingly passed a treaty to join the Russia-led Eurasian Economic Union. (RFE/RL, 12.04.14).
Uzbekistan has banned the import, sale and use of pilotless drone aircraft, citing air safety and security concerns. (RFE/RL, 12.02.14).
Kazakh President Nursultan Nazarbaev has said sanctions are having little effect on Russia and that the West should seek compromise with Moscow over the Ukraine crisis. Nazarbaev's remarks came after he held talks with French President Francois Hollande who arrived on December 5 for a two-day visit aimed at boosting bilateral trade and political ties. (RFE/RL, 12.05.14).
A grouping of former Soviet republics whose ties with Moscow are strained switched from the Russian language to English at a meeting on December 5^th. (RFE/RL, 12.05.14).
Belarusian and Russian officials are meeting in Moscow amid a growing feud over Moscow's banning of many food imports from Belarus. (RFE/RL, 12.04.14).

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