Russia in Review

Russia in Review: a digest of useful news from U.S.-Russia Initiative to Prevent Nuclear Terrorism for October 24-31 , 2014

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

Nuclear security agenda:

Deputy administrator of NNSA Anne Harrington said, “I would have to say probably the area in and around Russia continues to be a major concern for us, simply because Russia has such huge stockpiles of (nuclear) material.” “There’s no way to avoid the impact of our geopolitical relationship with Russia right now on some of our programs. But I think to the credit of both countries we have remained fully committed, especially to the third-country removal and bringing that material back to Russia. So that work is proceeding, I’m very happy to say,” she said. (Knoxville News Sentinel, 10.29.14).
“We have been implementing the Megatons to Megawatts Program for the last 20 years, in which Russian fuel has met half the needs of U.S. nuclear power plants. We’ve had better and worse times during that time, but we have not seen a single disruption in fuel supplies – not a single day’s delay – in 20 years,” Sergei Kirienko, the general director of Russia’s state nuclear agency Rosatom, said. (RBTH, 10.30.14).

Iran nuclear issues:

No significant developments.

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

NATO Secretary General Jens Stoltenberg said the alliance wants a cooperative relationship with Russia, but that Moscow needed to take "clear steps" first to bring ties back from their post-Cold War low. “My main message today is that a precondition for a constructive relationship with Russia is that we have a strong NATO,” he said. (Wall Street Journal, 10.29.14).
Russia has delivered the last of 63 Mi-17 transport helicopters ordered in 2011 by the U.S. Defense Department for the Afghan National Security Forces, the company Russian Helicopters said in a statement on Thursday. "The helicopters supplied assist with the successful formation of the Afghan National Security Forces and are part of Russia-U.S. cooperation in the fight against international terrorism," the statement said. (The Moscow Times, 10.30.14).
NATO said Wednesday that it had intercepted a large number of Russian aircraft flying close to European airspace in the past two days. There were no incursions into national airspace. Fighter jets from Norway, Britain, Portugal, Turkey, Germany, Denmark, Finland and Sweden were involved in responding to the Russian aircraft. German Chancellor Angela Merkel said Thursday that she was not very concerned about the sorties (Washington Post, Reuters, 10.30.14).

Missile defense:

No significant developments.

Nuclear arms control:

NATO Secretary General Jens Stoltenberg said: “I would not speculate what would happen if they (Russians) leave the (INF) treaty. I think now is the time to once again underline the importance of the treaty and call for Russia to respect it.” (Wall Street Journal, 10.30.14).

Counter-terrorism cooperation:

A friend of Chechen Boston Marathon bombing suspect Dzhokhar Tsarnaev has been convicted of lying to U.S. authorities during a terrorism investigation into the 2013 attack. The 21-year-old Robel Phillipos was found guilty by a jury on two criminal counts on October 28. (RFE/RL, 10.28.14).
A Russian captured fighting with insurgents in Afghanistan and held for years at a detention facility near Bagram air base will be flown to the United States to be prosecuted in federal court. The detainee, known by the nom de guerre Irek Hamidullan, is suspected of leading several insurgent attacks in 2009 in which U.S. troops were wounded or killed. (Washington Post, 10.24.14).

Cyber security:

In a report released on Tuesday by FireEye, a Silicon Valley firm, researchers say hackers working for the Russian government have for seven years been using sophisticated techniques to break into computer networks, including systems run by the government of Georgia, other Eastern European governments and militaries, NATO and other European security organizations. (New York Times, 10.30.14)
Hackers thought to be working for the Russian government breached the unclassified White House computer networks in recent weeks, sources said, resulting in temporary disruptions to some services while cybersecurity teams worked to contain the intrusion. (Washington Post, 10.29.14).

Energy exports from CIS:

Russia agreed Thursday to resume selling natural gas to Ukraine. The stopgap deal will secure critical energy supplies for Ukraine through March and will also help assure European countries that their own natural gas supply will not be disrupted during chilly winter months. Ukraine agreed to pay $3.1 billion toward its debt to Russia in two installments by the end of the year. It plans to buy up to 4 billion cubic meters of gas at the price of $378 per thousand cubic meters until the end of the year, a discount of $100 from its current contract with Russia. (Washington Post, 10.31.14).
The EU has scrapped plans for a major new natural gas pipeline between Russia and Britain. The pipeline – a branch of natural gas giant Gazprom’s Nord Stream project that connects Russian energy sources with Germany – will not get the go-ahead, despite a feasibility study completed in February proving it could work. (RBTH, 10.27.14).

Bilateral economic ties:

No significant developments.

Other bilateral issues:

The United States says it is not seeking "confrontation with Russia." But U.S. State Department spokeswoman Jen Psaki said Washington "cannot and will not compromise on the principles on which security in Europe and North America rest." Psaki said there may be disagreements, "but we remain committed to upholding Ukraine's sovereignty and territorial integrity." (RFE/RL, 10.24.14).
Vadim Mikerin, head of the TENAM Corp, which is a subsidiary of Russia's Tekhsnabeskort, was detained in the United States.Representatives in the Russian embassy in Washington, D.C. tols a TASS correspondent that the Russian citizen is getting all necessary legal assistance. (Tass, 10.31.14).
Russia's Foreign Ministry has issued an angry denial following a report that U.S. Embassy staff are facing increased harassment and psychological pressure while working in Moscow, appealing to the U.S. to stop the "negativity." In an article published Monday, ABC News reported that a number of embassy staff had encountered intimidation during their employment in Russia. (The Moscow Times, 10.29.14).
U.S. Defense Secretary Chuck Hagel has said privately that by shipping only non-lethal aid to Kiev and doing so too slowly, the U.S. was sending the wrong message to Russia. (Wall Street Journal, 10.30.14).
The crash of an unmanned Antares rocket is a "wake-up call" to the U.S. space community about the reduce reliance on Russian rocket engines, the head of Boeing Co's defense division said Thursday. (Reuters, 10.31.14).
Last year, the United States spent roughly $40 billion on its space program, which is more than every other country combined, according to a new study by the Organization for Economic Cooperation and Development. For comparison, China's space budget was just under $11 billion in 2013; and Russia's the third largest, was roughly $8.6 billion. (Washington Post, 10.26.14).
The Western effort to freeze Kremlin-connected assets has cost what the U.S. Treasury describes as Russian President Vladimir Putin's favored bank nearly $21 million, according to a new U.S. corporate disclosure. The money involved dividends related to Bank Rossiya’s indirect investment in a U.S.-listed company. (Wall Street Journal, 10.31.14).

II. Russia news.

Domestic politics, economy and energy:

Russian President Vladimir Putin's approval rating has reached 88 percent, the highest since August 2008 when Russia went to war with Georgia, according to a poll by Russian polling organization Levada Centre. The poll was conducted on 24-27 October among a representative sample of 1,630 people across Russia, Levada said. (Levada.ru, 10.29.14).
President Vladimir Putin's rating has fallen for the first time this year, with a substantial drop in the number of those who say they are ready to re-elect him, a poll by the Levada Center showed Tuesday. While a poll in August showed 57 percent of respondents would vote for Putin if he were to run for re-election, a new poll conducted from Sept. 26-29 revealed that only 49 percent would support him. (The Moscow Times, 10.28.14).
Russia’s economy expanded by 1.1% year-over-year in September after showing no growth in August, data from the Economy Ministry showed on Monday, Interfax news agency reported. (Wall Street Journal, 10.27.14).
The Bank of Russia on Friday raised interest rates by 1.5 percentage points, seeking to slow surging inflation and shore up the sagging ruble as the economic cost of sanctions and falling oil prices deepens. After a short-lived rally against the dollar, the currency was back trading just above RUB43 against the dollar, against in recent trading. Not far from an all-time record low of 43.91 hit Thursday. (Wall Street Journal, 10.31.14).
The price of oil, Russia's major export, has plummeted in recent months, falling around almost $30 since June to around $85 per barrel. Next year's budget is based an oil price of $100 per barrel. There are "very big risks" that Russia's economic growth could turn negative in 2015 if oil prices remain close to present levels, Economic Development Minister Alexei Ulyukayev said Friday. (Reuters, 10.26.14).
Russia increased its gold reserves for a sixth straight month in September, according to International Monetary Fund data. Russia added 37 tons to its reserves last month, taking the total to 1,149 tons. (Reuters, 10.29.14).
Russia has leaped up an unprecedented 30 positions in the World Bank's annual "Doing Business" survey for 2015, the bank said Wednesday. Russia rose to 62nd place out of 189 ranked countries, ahead of China at 90, Brazil at 120 and India at 142, although still below many nations in the West. (The Moscow Times, 10.29.14).
Moscow Arbitration Court on Thursday ordered local conglomerate AFK Sistema, to return all of its stake in major oil company OAO Bashneft to the state, in a closely watched case that has raised fears about re-nationalization of privatized assets. (Wall Street Journal, 10.30.14).
Vladimir Putin's spokesman said on October 29 that the Russian president is in good health, seeking to quash rumors of an illness. Peskov spoke after a spate of Russian media reports referring to an October 24 column in the tabloid "New York Post" whose author, Richard Johnson, cited unidentified sources as saying Putin had pancreatic cancer. (RFE/RL, 10.29.14).
The Volga Interregional Department for Supervision of Nuclear and Radiation Safety, a specialist commission of Russian regulator Rostechnadzor, has completed its checks of information submitted as part of the license application for building a nuclear research facility with the multi-purpose fast neutron reactor, or MBIR by its Russian acronym. (WNN, 10.28.14).
Sergei Kirienko, the general director of Russia’s state nuclear agency Rosatom, said that the sanctions against Russia have had no effect on the Russian nuclear industry and that all contracts with foreign partners are being carried out in full. (RBTH, 10.30.14).
More people emigrated from Russia in the first eight months of 2014 -- 203,659 -- than in any full year under Vladimir Putin’s rule, according to the Federal Statistics Service. (Bloomberg, 10.26.14).
Nearly half of all Russians believe that a return to Soviet-era repression is possible within their lifetime, a poll by the state-run Public Opinion Foundation revealed Wednesday. (The Moscow Times, 10.29.14).

Defense:

Russia plans to build 13 airfields and ten technical radar stations in the Arctic region to maintain its military security, said chief of the Russian National Defense Center, Lt. Gen. Mikhail Mizintsev. (Interfax, 10.28.14).
Russian Deputy Defense Minister Yuri Borisov has lauded the Wednesday test launch of a seaborne Bulava intercontinental ballistic missile. “The warheads were delivered to the designated area with a required precision. The missile launch was detected by the Pechora post of the missile attack warning network. We have thus made a comprehensive check of that [radar] station as well," he said. (Interfax, 10.30.13).
The Russian Defense Ministry will restore the space-based echelon of the missile attack early warning system, Deputy Defense Minister Yuri Borisov told reporters on Thursday. General designer of the missile warning system Sergey Boyev told TASS in early October that the first new satellites will be orbited in 2015.

Security, law-enforcement and justice:

A court in Moscow convicted two Russians of setting up an illegal mercenary squad, the first sentence in the country's history to be handed down on those charges. Vadim Gusev and Pavel Sidorov were found guilty of deploying a 250-person unit in 2013 to fight in Syria's civil conflict. (The Moscow Times, 10.29.14).
Dozens of individuals have been detained across Russia on suspicion of aiding and abetting terrorist group the Islamic State amid a widespread crackdown by the Federal Security Service. (Reuters, 10.28.14).
More than 380 lb of heroin, worth up to $500 million, were confiscated by officers of the Russian Federal Drug Control Service in the Moscow region, service chief Viktor Ivanov told reporters on Friday. (Interfax, 10.31.14).
Russia's Embassy in Damascus is verifying reports claiming that Islamic State militants had executed a Russian engineer. Early this year, a Russian prisoner, Sergey Gorbunov, was shot dead by the ISIS militants, who showed their other captives a video of his body as a warning of what awaited them if their governments failed to pay. (Independent, 10.27.14, Interfax, 10.28.14).
A Moscow court has extended by two months the detention of an Estonian police officer charged with espionage. The European Union and United States have called for the immediate release of the Estonian security official. (RFE/RL, 10.31.14).

Foreign affairs and trade:

Russia intends to lay claim to more than a million square kilometers of Arctic shelf by filing a formal application with the United Nations next spring. Moscow expects the area to contain some 5 billion tons of oil and gas resources, Natural Resources and Environment Minister Sergei Donskoi said. Russia's claim partially overlaps with Canada's. (The Moscow Times 10.30.14).
Russia has sold $9.8 billion dollars worth of weapons and military equipment since the beginning of this year. (The Moscow Times, 10.28.14).
President François Hollande’s government on Thursday disputed a Russian claim that France was preparing to hand over the first of two Mistral-class warships in mid-November. France's Finance Minister also cast doubt Thursday on what Russia had said was the imminent delivery of the first of two Mistral helicopter carriers. (Reuters, 10.30.14, New York Times, 10.31.14).
Chinese power giant Amur Sirius plans to invest up to 45 billion rubles ($1 billion) in Russian solar energy starting next year. (The Moscow Times, 10.29.14).
The European Union has launched a complaint with the World Trade Organization over Russian import duties on some European agricultural and manufactured goods. (RFE/RL, 10.31.14).
German exports to Russia were 26% lower in August than a year earlier. In the January-to-August period, German exports were almost 17% lower than a year earlier and amounted to €20.3 billion ($25.9 billion). Russia was the 13th-largest recipient of German export, after having ranked 11th in 2013. (Wall Street Journal, 10.29.14).
The first president of the USSR, Mikhail Gorbachev, thinks that Russian President Vladimir Putin's Valdai “was fantastic.” “I don't think there has been such a speech in all the years of Putin's rule. Perhaps also because the situation demands this. Basically, I agree with all the ideas expressed by him," Gorbachev said. (RIA Novosti, 10.26.14).
The Czech Republic's secret service has accused Russia of dispatching an "extremely high" number of intelligence officers to its Czech Embassy last year. (Reuters, 10.27.14).

Russia's neighbors:

Six parties cleared the 5 percent threshold in the weekend elections to the Ukrainian parliament: People’s Front (22.17 percent), Petro Poroshenko’s Block (21.82 percent), Samopomich (11.01 percent), Opposition Block (9.35 percent), Radical Party of Oleh Liashko (7.44 percent), and Batkivshchina (5.68 percent). Out of some 100 independents who as of the current count got elected in their districts, as many as 81 may join the Opposition Block caucus, which will put the size of the Opposition Block caucus at 112 in the legislature that will have 423 members. (Washington Post, 10.29.14).
Ukrainian President Petro Poroshenko's office says the leaders of Ukraine, Germany, and France have urged Russian President Vladimir Putin not to recognize elections being held on November 2 by pro-Russian separatists in eastern Ukraine. The Ukrainian Parliament set Dec. 7 as the date for nationwide elections, but the separatist leaders announced plans to hold the balloting on their own schedule, in early November. Russia said it will recognize the November 2^nd vote. (New York Times, 10.29.14, RFE/RL, 10.30.14).
Ukraine's economy continued its rapid slide in the third quarter despite substantial military spending on its conflict with Russia, government data showed. The economy shrank 4.7% in the second quarter and by 1.1% in the first, the statistics service said on Thursday. (Wall Street Journal, 10.31.14).
Ukraine is unlikely to receive a second tranche of a $17 billion loan program from the International Monetary Fund this year as expected, Finance Minister Oleksandr Shlapak said Tuesday. (Reuters, 10.28.14).
About 1,000 houses and apartment blocks, some 10 percent of Donetsk’s total, have been damaged by shelling, 2,000 private houses and several dozens of apartment blocks were without electricity, while 49 villages and 3 towns in the region were partly or fully cut off. (AP, 10.29.14).
A Russian ban on all meat imports from Moldova came into force Monday, stepping up a campaign of trade restrictions imposed this year as Moldova moved closer to the European Union. (The Moscow Times, 10.27.14).
Yerevan says talks in Paris on October 27 between Armenian President Serzh Sarkisian and Azerbaijan's President Ilham Aliyev were "constructive, useful, and sincere." (RFE/RL, 10.28.14).
The head of Kazakhstan’s Border Guard Service, Nurlan Zholamanov, has been detained on suspicion of abuse of power. (RFE/RL, 10.27.14).

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