Russia in Review

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

Nuclear security agenda:

Russia's Rosatom and the European Bank for Reconstruction and Development have announced milestone dates for two projects in the Nuclear Window program. Rosatom said that the Lepse nuclear service ship will be put into dry dock at the Nerpa Shipyard on the Kola Peninsula, and the process of dismantling it will start in December and continue throughout 2015. Unloading of used nuclear fuel from Lepse will start in 2017. Rosatom also said that a berth crane had been delivered to the Andreeva Bayin September and would be installed by the end of this year. (WNN, 10.16.14).

Iran nuclear issues:

"I'm sure that a compromise is possible," Russia Foreign Minister Lavrov said when commenting on nuclear talks between P5+1 and Iran. “I can't guarantee you that it would be reached by Nov. 24. This date is not sacred," he said during a visit to Paris where he met U.S. Secretary of State John Kerry on Tuesday. (Reuters, 10.15.14).
The secretary of Russian President Vladimir Putin's Security Council will reportedly visit Iran early next week. Nikolai Patrushev is expected to discuss bilateral cooperation, regional security and the issue of Iran's nuclear program during meetings with Iranian officials. (RFE/RL, 10.17.14).

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

No significant developments.

Missile defense:

No significant developments.

Nuclear arms control:

No significant developments.

Counter-terrorism cooperation:

U.S. Secretary of State John Kerry said on October 14th that he and his Russian counterpart, Sergei Lavrov, have agreed to step up intelligence sharing over the Islamic State group. Kerry said Lavrov "indeed acknowledged [Russia's] preparedness to help with respect to arms, weapons, they are doing that now, they already have provided some, and also potentially with the training and advising aspects." Kerry said he and Lavrov recognized "that ISIL has absolutely no place in the 21st century."(RFE/RL, 10.14.14).
Russia played down comments by U.S. Secretary of State John Kerry on Thursday over sharing intelligence about Islamic State militants, saying Moscow refuses to be involved in coalitions that breach "international law." (Reuters, 10.17.14).

Cyber security:

Sopka teams, tasked to detect and prevent cyberattacks, have been created within the Russian Strategic Missile Forces, the ministry’s Strategic Missile Forces spokesman Col. Igor Yegorov said. By 2017, the Defense Ministry will set up a special division tasked with repelling cyberattacks aimed at its crucial objectives. (RIA Novosti, 10.16.14).
The top U.S. spy sounded alarms about America’s lack of preparedness to combat a growing threat from cyberattacks and said that Russia poses a greater cyberspying threat than China. “I worry a lot more about the Russians,” Director of National Intelligence James Clapper said at University of Texas intelligence forum in Austin Thursday. (Wall Street Journal, 10.16.14).
A Russian hacking group probably working for the government has been exploiting a previously unknown flaw in Microsoft's Windows operating system to spy on NATO, the Ukrainian government, a U.S. university researcher and other national security targets, according to a new report. The group has been active since at least 2009, according to research by iSight Partners, a cybersecurity firm (Washington Post, 10.14.14).
The head of Europol's Cybercrime Center has said there are "around 100" cybercriminal kingpins behind global cybercrime, the majority of who are located in the Russian-speaking world. Russian-speaking hackers from countries in the former Soviet Union have raked in $2.5 billion since 2013, mostly through financial fraud via mobile devices, according to a report by Russian cyber-security analytics firm Group-IV. (Moscow Times, 10.15.14, RFE/RL, 10.10.14).

Energy exports from CIS:

Russia's Energy Ministry says crude oil supplies to China surged in January-September by almost 45 percent year-on-year, to 16.8 million tons (450,000 barrels per day), while shipments from the Baltic Sea port of Primorsk plunged almost 20 percent to 33 million tons. Russia supplies around 16 percent of its crude exports to Asia, and by 2035 aims to double that share to a third. (Reuters, 10.13.14).
In a worst-case scenario, in which Russian gas supplies were stopped entirely for six months, Bulgaria, Romania, Finland and Baltic countries such as Estonia and Latvia could face severe shortages of between 40 percent and 100 percent, relative to their overall gas supplies, according to a report released Thursday by the European Commission (Wall Street Journal, 10.16.14).
Russia has proposed to Tokyo building a natural gas pipeline connecting fields in its Far East with northern Japan. (Reuters, 10.15.14).

Bilateral economic ties:

Morgan Stanley said its sale of certain oil-trading and storage businesses to Rosneft may fall apart, as tensions between the U.S. and Russian governments leave the deal in limbo. (Wall Street Journal, 10.11.14).

Other bilateral issues:

Russian President Vladimir Putin called on the United States to demonstrate consistency in its relations with Russia and has warned against any rift between the major nuclear powers, but described the attitude of U.S. President Barack Obama’s administration toward Moscow as “antagonistic.” (Interfax, 10.16.14).
“Let’s be clear: We did not come up with these sanctions, our international partners did,” Russian Prime Minister Dmitry Medvedev said. “What kind of reset is possible in these circumstances?.” “It’s sad to hear President Obama say in an address at the U.N. that the threats and challenges facing humanity are, in this particular order: the Ebola virus, the Russian Federation, and only then the Islamic State,” Medvedev said. (Washington Post/NBC, 10.16.14).
“The demands on the Army will only grow more diverse and complicated going forward. Threats from terrorists and insurgents will remain with us for a long time, but we also must deal with a revisionist Russia -- with its modern and capable Army -- on NATO's doorstep,” US Defense Secretary Chuck Hagel said. (Defense.gov, 10.15.14).
Russian Defense Minister Sergei Shoigu accused the United States on Thursday of working on military "scenarios" near Russia's borders that he said were a source of grave concern. “Chuck Hagel's thesis on the necessity for the American army to 'deal' with 'modern and capable' Russian armed forces on NATO's doorstep is of grave concern," Shoigu said. Russian presidential press-secretary Dmitry Peskov has dismissed Hagel’s rhetoric as unprofessional and alarmist (Reuters, 10.17.14, Tass, 10.16.14).
Deputy Secretary General of NATO Alexander Vershbow compared the actions of the Islamic State (IS) militant group with Russia’s politics while speaking at the Security Jam conference on Wednesday. (RIA Novosti, 10.15.14).
Russian officials temporarily detained and then banned two American journalists from conducting an investigative-journalism workshop in St. Petersburg. The men were found by a court on October 16 of violating Russian visa regulations and released after several hours. (RFE/RL, 10.16.14).

II. Russia news.

Domestic politics, economy and energy:

Russia’s September industrial output rose 2.8 percent compared with a year ago, and was up 2.7 percent from a month before, the Federal Statistics Service said on Wednesday. (Reuters, 10.15.14).
The ruble weakened Friday to a fresh historic low. Shortly after 11:00 a.m. the Russian currency devalued to the record level of 46.29 rubles against the euro-dollar basket. The ruble has lost around 18 percent versus the dollar since the beginning of the year. The Bank of Russia sold as much as $12.95 billion in the first half of October to support the ruble as the falling oil prices battered the sanctions-hit Russian economy, the central bank’s data showed Friday. (Wall Street Journal, 10.16.14, Moscow Times, 10.17.14, Wall Street Journal, 10.14.14).
The Bank of Russia will start providing the market with dollars and euros at weekly foreign-exchange repo auctions in late October to smooth out the ruble rate volatility, the central bank said Thursday. (Wall Street Journal, 10.16.14).
Now Russian households have 15 percent more rubles than in 2007, but while in that year one U.S. dollar cost 25 rubles, the same dollar now costs 34 rubles, Credit Suisse’s 2014 Global Wealth Report said. The result: Russian household wealth has fallen 17 percent since 2007 and is now at $19,590 per adult, the report said. (Moscow Times, 10.15.14).
President Vladimir Putin has approved the creation of a state-owned oil exploration drilling corporation that will replace Western oil service companies forced to reduce operations in Russia by sanctions on Moscow over Ukraine, a news report said Monday. (Moscow Times, 10.13.14).
Russian gas producer, Gazprom, said Tuesday its second quarter net profit was up 13 percent to 227.6 billion rubles ($5.6 billion) boosted by foreign exchange gains but still short of analysts’ expectations. (Reuters, 10.14.14).
Russian oil giant, Rosneft, is devising a strategy to fight Western sanctions in European courts modeled after one that brought some success for Iran's Bank Mellat. (Wall Street Journal, 10.14.14).
A survey by pollster, Levada-Center, released Thursday showed that 59 percent of Russians believe sanctions will benefit the Russian economy. (Wall Street Journal, 10.16.14).
Russia is the only country among the world's biggest economies whose biological resources not only exceed its environmental footprint but are continuing to grow, a new study by WWF said. (Moscow Times, 10.13.14).
Russian President Vladimir Putin has signed a bill into law that limits foreign ownership in Russian media. The law requires owners of media companies with foreign-owned stakes of more than 20 percent to lower these stakes by February 2017. (RFE/RL, 10.15.14).
Russia's Justice Ministry has appealed to the country's Supreme Court to close the independent rights organization Memorial. A hearing in the lawsuit to liquidate the group is set to be held November 13, according to the Supreme Court's website. (RFE/RL, 10.10.14).
Russia had 1.45 million officials in 2013, compared with 1.5 million five years ago, the study conducted by the RBC news website said. Their collective earnings have grown 31 percent to 682 billion rubles ($16 billion). (Moscow Times, 10.15.14).
The Russian navy has completed a cartographic survey of a recently discovered island in the Arctic, which would allow the country to add 1,165 square kilometers of territorial waters around the sliver of land to its possessions. (Moscow Times, 10.15.14).

Defense:

Russia's national defense budget for next year will reach a record 3.3 trillion rubles ($81 billion), or 4.2 percent of the country's GDP, the head of the State Duma's defense committee, Admiral Vladimir Komoyedov, said. The 2015 budget represents an 812 billion ruble ($20 billion) increase over this year, and portends a larger defense budget over the next several years. (Moscow Times, 10.16.14).
Russia's Defense Ministry is currently drafting amendments to the federal Law on Defense that would allow for the creation of several reservist armies, according to Frants Klintsevich, deputy chairman of the Russian State Duma's Defense (RFE/RL, 10.13.14).
In a move that brings the Russian navy one step closer to establishing a permanent presence in the Mediterranean Sea, Black Sea Fleet Commander, Alexander Vitko, announced on Thursday that he would take personal command of upcoming exercises with a Mediterranean naval task force designed to test the water for a future long-term deployment. (Moscow Times, 10.16.14).
The head of the Russian air force announced that Russia will establish an airbase for fighter jets in eastern Belarus in 2016. Colonel General Viktor Bondarev also said Moscow is negotiating with Bishkek to reconstruct the Kant airbase in Kyrgyzstan to support Russian strategic bombers. Bondarev said similar work will be done on an airbase in Armenia. (Moscow Times, 10.15.14).

Security, law-enforcement and justice:

Combatting the Islamic State and controlling the outbreak of Ebola were among the topics discussed at the Security Council meeting hosted by President Vladimir Putin in the Krasnodar region on Saturday. (Moscow Times, 10.12.14).
The number of terrorist attacks in Russia's restive North Caucasus has halved year-on-year, the head of the Federal Security Service (FSB) said Tuesday. Sixty-nine terrorism-related crimes have been registered in the region since the start of the year, Alexander Bortnikov said. Forty-one security services operatives were killed in this year's attacks, Bortnikov said. (Moscow Times, 10.14.14).
Security forces have killed three suspected militants in Dagestan. (RFE/RL, 10.16.14).
Turkish authorities have arrested two men suspected of killing Chechen activist Medet Ünlü last year in a high-profile murder. Russian news website Newsru.com identified the two men detained Monday as 47-year-old Murat Aluch and 24 year-old Omar Peltek. (Moscow Times, 10.15.14).
Two Central Asian migrant workers from Kyrgyzstan and Uzbekistan were found stabbed to death in Moscow on October 12. (RFE/RL, 10.14.14).

Foreign affairs and trade:

Russian President Vladimir Putin told Chinese Prime Minister Li Keqiang at the Kremlin on October 14 that "we are natural partners, natural allies, we are neighbors." Li praised the "inexhaustible" potential for cooperation between Moscow and Beijing. He said that Russia-China trade turnover will reach $100 billion next year. The 38 deals, signed on a visit to Moscow by Premier Li Keqiang, allow for deeper cooperation on energy and a currency swap worth 150 billion yuan ($25 billion) intended partly to reduce the sway of the U.S. dollar. Among the more significant deals, Chinese banks agreed to provide credit lines reaching more than $4.5 billion to Russian banks and companies. Li was less effusive, even when holding out the prospect of a deal in 2015 to build a second pipeline along what is called the Western route to ferry Russian gas to China. (Interfax, 10.14.14, RFE/RL, 10.14.14, Reuters, 10.13.14, Wall Street Journal, 10.14.14).
Vladimir Putin watched on as Belgrade held a large-scale military parade to celebrate the 70th anniversary of its liberation. The Russian president stood alongside Serbian President Tomislav Nikolic, and re-emphasized Russia's support for Serbia, including its stance on Kosovo. (Washington Post, 10.16.14).
Australia has confirmed that Russian President Vladimir Putin will attend the G20 summit next month, despite concerns about Moscow's actions in Ukraine. A Russian diplomat on Tuesday dismissed the Australian prime minister's threat of a physical confrontation with the Russian president during the G20 summit as immature, warning that Vladimir Putin is a judo expert. (AP, RFE/RL 10.14.14).
"Unfortunately, the 'vaccine' for the Nazi virus that was developed at the [post-war] Nuremburg trials has lost its power in certain countries of Europe. A clear example of this is the open manifestations of neo-Nazism that has become commonplace in Latvia and other Baltic countries," President Vladimir Putin said. (Moscow Times, 10.15.14).
Russia's Foreign Ministry announced Sunday that it will support a United Nations Security Council draft resolution on the establishment of a Palestinian state. (Moscow Times, 10.12.14).
A $6.5 billion attempt by Russian billionaire Mikhail Fridman to buy the oil and gas operations of German utility firm RWE, which has operations in British coastal waters, could be blocked by London. (Moscow Times, 10.16.14).
The authorities in Poland have arrested a Polish army officer and a lawyer for espionage, amid reports that they allegedly spied for Russia. (BBC, 10.17.14).

‘Russia's neighbors:

Russia and Ukraine made progress on Friday towards resolving a dispute over gas supplies in time for winter, but European leaders said Moscow still had to do much more to prop up a fragile ceasefire and end fighting in eastern Ukraine. The mooted deal could re-open Russian gas to Ukraine cut off since June, and ensure supply to European buyers further west before demand surges in the cold months and stocks run down. It came as something of a surprise after talks in Milan that the Kremlin said were "full of misunderstandings and disagreements". German Chancellor Angela Merkel had earlier said no breakthrough in resolution of the Ukraine conflict was achieved at the meeting in Milan. And European Council President Herman Van Rompuy said the key message of the meeting was “implementation” of last month’s Minsk agreements on a cease fire and a peace plan. Separately, Italy, France, Germany, Ukraine and Russia agreed to supply drones and military personnel to support an international mission aimed at monitoring the borders between Russia and Ukraine. (Reuters, 10.17.14, RFE/RL, 10.17.14, Reuters, 10.17.14,Wall Street Journal, 10.16.14).
Seven civilians were killed and seventeen were injured as a result of the shell attack in the Mariupol suburb on Tuesday, a press service of Mariupol’s own council reported. (Interfax, 10.14.14).
Talks on easing sanctions against Russia imposed over the conflict in Ukraine could begin in the next few weeks, but more measures are possible if there is no progress over a ceasefire deal, the U.S. Deputy National Security Adviser Tony Blinken said on Friday. (Reuters, 10.12.14).
The European Union plans to review its sanctions against Russia at the end of October, the Head of the EU Delegation to Russia, Ambassador Vygaudas Usackas, said. (Interfax, 10.14.14).
On Thursday, Finnish Prime Minister Alexander Stubb said the European bloc is “very unlikely” to ease its economic sanctions in the near future. He said Russia will need to do more to help stabilize the situation in eastern Ukraine. (Wall Street Journal, 10.16.14).
Ukrainian President Petro Poroshenko has signed a law granting three-year limited self-rule status to certain territories in the separatist-minded Luhansk and Donetsk regions. (Moscow Times, 10.17.14).
Ukrainian President Petro Poroshenko nominated National Guard commander Stepan Poltorak as his new defense minister on October 13, one day after accepting the resignation of Valeriy Heletey, who had served in the position for just three months. (RFE/RL, 10.13.14).
The Kremlin's chief of staff has said Russia could serve as a "guarantor" of a peace settlement in Ukraine and that Moscow's support for the demands of eastern Ukrainian separatists was a demonstration of its commitment to "real democracy." Sergei Ivanov also claimed that Russia's democratic achievements were significantly more profound than those of Ukraine. (Moscow Times, 10.15.14).
U.S. President Barack Obama and Ukrainian President Petro Poroshenko have discussed ways to better control the uneasy border between Russia and eastern Ukraine. (RFE/RL, 10.16.14).
NATO said it has not yet detected "significant" movements of Russian troops in a region near the border with Ukraine back to their home bases, as the Kremlin said Russian president Vladimir Putin ordered last week. (RFE/RL, 10.17.14).
Ukraine will not need a new International Monetary Fund financing program unless its conflict with pro-Russian separatists worsens significantly, Finance Minister Oleksandr Shlapak has said. Shlapak also flatly ruled out a restructuring of the nation's debts, which some analysts have said may be needed to avoid a default.(Reuters, 10.14.14).
Ukraine will need at least $2 billion to restore war-shattered areas in eastern Ukraine currently under the control of government forces, the country's Finance Minister Oleksandr Shlapak said. (Moscow Times, 10.14.14).
Ukraine has been forced to push back the commissioning of a new cover for the Chernobyl nuclear plant back two years because it has run out of money for the project, a Ukrainian official said. (Moscow Times, 10.15.14).
Kazakh President Nursultan Nazarbaev has signed a law on the ratification of the treaty creating the Eurasian Economic Union. (RFE/RL, 10.14.14).
Kazakhstan has outlawed Takfir wal-Hijra, a radical Islamic group that has already been banned in Russia and many Western countries. (RFE/RL, 10.15.14).
Armenia’s President Serzh Sarkisian signed the agreement to join the Eurasian Economic Union. (RFE/RL, 10.10.14).
Thousands have taken to the streets of the Armenian capital for an anti-government protest. Demonstrators in Yerevan on October 10th demanded the resignation of the government of President Serzh Sarkisian .(RFE/RL, 10.11.14).
Thousands of opposition supporters in Azerbaijan have attended an antigovernment rally in the capital, Baku, demanding the resignation of President Ilham Aliyev and an end to the repression of human rights defenders and civic activists. (RFE/RL, 10.12.14).
The United States says, the U.S. nongovernmental organization, IREX's decision to halt its work in Azerbaijan amid pressure from authorities will hurt democracy-promotion efforts in the country. (RFE/RL, 10.11.14).
A U.S. State Department official says the United States has engaged in "stern conversations" with Azerbaijani officials about crackdowns on rights organizations in the Caucasus country (RFE/RL, 10.17.14).
The USS Mount Whitney, flagship for the Europe-headquartered U.S. 6th Fleet, berthed at Georgia’s Black Sea port of Batumi on October 14. (RFE/RL, 10.14.14).
Georgia will not allow pressure from Russia to stop it hosting a NATO training center on its territory or deter its plans to deepen ties with the West, the former Soviet republic's defense minister said. "This center will be jointly operated by NATO and Georgia and it's going to be an additional layer of security and defensive capability for Georgia," he said. (Reuters, 10.17.14).
Guram Gumashvili of Georgia's Pankisi Gorge has been killed while fighting in Syria alongside Islamic State militants. Gumashvili became the seventh known resident of the Pankisi Gorge to die fighting for Islamic State. It is believed that up to 100 men from the Pankisi Gorge, which borders Russia's volatile North Caucasus region, might be currently fighting in Syria. (RFE/RL, 10.13.14).
Tbilisi has voiced concern over a reported Kremlin proposal to create a joint armed force of Russia and Georgia's breakaway Abkhazia region. (RFE/RL, 10.15.14).

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