TODAY: New all-time low for ruble, reserves down; sanctions will stay until Russia leaves Ukraine, says U.S.; ECHR Yukos decision to be appealed; Navalny says Khodorkovsky is an ally; activist released; Foreign Ministry not pleased with NATO comments; Moscow to support election process in eastern Ukraine; Putin says Russia will act as global sporting events consultant; Manifesta biennial.
The ruble hit its weakest-ever level yesterday, of 45.03 versus the euro-dollar basket, causing the Central Bank to intervene and shift its trading band, albeit to no effect. Russia has lost a tenth of its hard currency reserves so far this year, and is down to $457 billion. The U.S. Assistant Secretary of State says that sanctions on Russia will not be lifted until all foreign forces are out of Ukraine – not that Russia is asking. The FT agrees that the West should hold its ground. Before the end of this month, Russia is planning to appeal a decision by the European Court of Human Rights to award Yukos shareholders $2.42 billion. Former corruption whistleblower and opposition figure Alexei Navalny says he sees Mikhail Khodorkovsky as ‘an ally’, and welcomes any opportunity to collaborate with him in the future; though the opposition ‘is still far from presenting a unified front in the 2016 race’, says the Moscow Times. Activist Sergei Mokhnatkin, charged with violence against police for his role in a demonstration on Triumfalnaya Square in 2013, has been released.
TODAY: Sanctions compensation bill passes first reading; ‘foreign agent’ law fines may be softened; Russia’s business landscape looks feudal, says Putin associate; budget boosts RT funding by 41%; art market at a high, ruble still not recovering; Gazprom signs deal with Argentina; Rosneft will struggle at Arctic wells without Western assistance; 331 killed in Ukraine since ceasefire.
A bill dubbed the ‘Roterberg law’, which seeks to provide financial compensation to Russian companies and citizens affected by sanctions, has passed its first reading in the Duma. Initially ‘sneered at’ by the Kremlin, the name of the bill comes from the government’s U-turn last month after ‘Putin pal’ Arkady Rotenberg’s four Italian villas were seized as a result of sanctions. A separate bill proposes reducing the fines levied against non-governmental organisations under the new ‘Foreign Agent’ law – apparently in response to complaints from the human rights commissioner. Sergei Pugachev, a former close associate of Vladimir Putin, described Russian businessmen as ‘serfs’ who belong to the President, and that there are no longer any ‘untouchables’ or private property in the business landscape. The new state budget includes a 41% funding increase for Russia Today, the ambitious, global, state-run television network; and just this year Putin cut a deal that will allow RT’s Spanish-language channel to broadcast 24/7 in Argentina. The Central Bank’s interventions have not stopped the ruble from falling this week. But despite Russia’s economic hardships, its art market is at a six-year high. A majority of Russians believe that their country is seen by foreigners as ‘interesting’, and generally viewed favorably, according to a new poll.
TODAY: Siluanov says Russia can’t afford military upgrade; Central Bank intervenes as ruble falls; low oil price will create deficit next year; Putin cancels budget address; eighth anniversary of Politkovskaya murder; Kostroma court rules in favour of gay rights activist; gay exchange student seeks U.S. asylum.
Finance Minister Anton Siluanov says Russia cannot afford the costly military upgrade that is currently underway: ‘When we were adopting the defense program, the forecasts for the economy and budget revenues were completely different. Right now, we just cannot afford it.’ The Central Bank spent $1.75 billion trying to keep the ruble afloat over the last two days of trading. If oil prices were to continue at their current 27-month low of $90 a barrel, Russia would see a budget deficit next year, but the lower prices has short-term implications also, according to former Finance Minister Alexei Kudrin. Russia’s economy has been a broken record for the past ten years, says Forbes. If Russia wants to survive current Western sanctions, it needs to establish a domestic credit system, says Presidential Aide Sergei Glazyev. Vladimir Putin’s cancellation of his yearly budget address gives the impression of ‘a presidential admission that Russia’s economic woes are real’. Yesterday was the eighth anniversary of the murder of Anna Politkovskaya; flowers made from newspaper were left outside the headquarters of Novaya Gazeta, her former employer, as a memorial. The person who ordered her killing has still not been brought to justice.
TODAY: Ruble hits all-time low; Khodorkovsky says stringent sanctions needed but would destabilise the West, Peskov dismisses him; Navalny ally seeking British asylum; Putin turns 62, bans nighttime gatherings; Russian nuclear threat? Orthodox Church seen as ‘soft power’ in Ukraine; Romania seizes Lukoil’s supplies.
The ruble hit another new all-time low against the dollar last night, falling below 40 to the dollar. The E.U.’s new foreign policy chief acknowledges that sanctions are impacting the Russian economy, but having no impact on the Kremlin’s political decisions. Mikhail Khodorkovsky says that, in order to really have any influence, sanctions would have to be much more strident, but that the West would not be able to handle the knock-on economic effects. Vladimir Putin’s spokesman, Dmitry Peskov, disparaged Khodorkovsky, saying that the Kremlin ‘doesn’t follow’ his speeches and appearances, and that ‘he spent so much time in prison that he lost touch with reality.’ Vladimir Ashurkov, a close ally of anti-Kremlin dissident Alexei Navalny who fled Russia earlier this year, has applied for political asylum in the U.K. after the FSB opened an investigation against him for allegedly stealing money from Navalny’s campaign. The Moscow Times describes ex-A Just Russia member Dmitry Gudkov as ‘at once an insider and a crusading outsider’. Happy 62nd Birthday to President Vladimir Putin, who is celebrating with a holiday in the Siberian taiga forest, hot on the heels of signing one law banning nighttime demonstrations and meetings between 10pm and 7am, and another that will increase property tax rates for homeowners. The Moscow Times compiled a ‘bucket list’ of Putin’s most attention-grabbing stunts since coming to power in 1999.
TODAY: Khodorkovsky vows to set Russia straight; political elite rumoured to be at war; investors avoid Russian stocks due to falling ruble; China and Russia flexing military air power, planning new energy deals; Latvian pro-Russia party wins most votes in parliamentary elections; Statoil teams up with Naftogaz; Putin pardons former FSB member; theatre legend dies.
In an in-depth interview and profile, Mikhail Khodorkovsky said that Russia is going back in time to ‘1985 – the eve of glasnost and perestroika’, and vowed to do everything in his power to ‘reverse the trend’. Bloomberg argues that Russia’s political elites are at war, as pro-Putin rivals fight over ‘a shrinking pool of assets’, fearful of the economy’s downward trajectory, and at odds over Putin’s plans to isolate the country from the global financial system. Investors are continuing to avoid Russian stocks as the falling ruble risks rendering investments worthless. This piece identifies two key drains on the budget that should be cut in order to rescue the economy: public sector salaries, and military spending. Regarding the latter, Russia has overtaken the U.S. in nuclear warhead deployment – by one. Both China and Russia are flexing their military power against the U.S. with ‘increasingly assertive strategies’ in the air. On his trip to Europe later this week, Chinese Prime Minister Li Keqiang will sign energy and infrastructure deals with Russia. VTB Capital investment bank says it is switching its focus to Asian markets in response to Western sanctions.
TODAY: Putin woos investors with optimistic address at VTB conference; evidence and opinion continue to mount against him; oil output is at a new high but prices are dropping; Gref castigates wasteful government inefficiency; Mechel will survive by selling assets; Romania goes after Lukoil; UK Tories snub ECHR.
Speaking in Washington, former Yukos head Mikhail Khodorkovsky vowed to lead a political movement against President Vladimir Putin by re-establishing his Open Russia foundation. ‘It’s not just Putin that needs to be replaced. The entire system needs to be changed.’ The President spoke at the VTB Russia Calling investment conference yesterday (click for a brief video excerpt), where he made a number of comments about the current financial situation and forecast aimed at appeasing investors. He said that Russia would remain an open market economy in spite of ‘stupid’ Western sanctions; that the plan to privatise the country’s key energy companies, including 20% of Rosneft, will go ahead, though he gave no time-frame for this; and generally assured investors that sanctions will not hamper economic development, despite ongoing arguments and mounting evidence to the contrary. The Economist for example paints a very bleak picture of the current situation, arguing that sanctions are ‘dramatically accelerat[ing]’ the worst-case scenario, and that, according to Alexei Kudrin, Russia will be ‘balancing on the edge of recession all the time’ over the next few years. Putin’s claim that Russia needs to make a ‘true industrial breakthrough’ in the coming years reflects a real and urgent need, but this rhetoric is rather late; Putin’s failure to implement a new growth model in 2012 may have been due to the ‘troublesome political implications’ of shifting away from oil and gas revenue. Russia’s oil output hit a new post-Soviet record last month thanks to foreign-led projects, but oil prices are at their lowest since June 2012.
TODAY: Putin says internet isolation plan is for information security, not censorship; Russians see Western sanctions as affront, China support grows since Ukraine crisis; Russia pulls out of FLEX after gay adoption; conscription begins this fall, Arctic military command structure planned; Kasparov warns of Putin’s long-term goals; IMF halves its 2015 Russia growth forecast; new NATO head.
President Vladimir Putin indicated that he supports a plan to isolate Russia’s internet from the rest of the world, but insisted that the Kremlin is ‘not even considering’ censorship of sites. ‘Media freedoms, the right of people to receive and disseminate information — these are basic principles of any democratic state and society. They must be strictly adhered to.’ The plan, he says, is geared towards information security and protection from foreign political and military threats; Russian media nonetheless have likened it to China’s ‘Great Firewall’. Russia is possibly responding to concerns that the West might try to shut off its global internet access, in connection with claims made recently by Edward Snowden that the NSA caused an internet outage in Syria in 2012. 71% of Russians polled by the Levada Center see Western sanctions as an attempt to weaken and humiliate their country, with 68% supporting current policy in Ukraine; Chinese popular support for Russia has risen by 19% since the Ukraine crisis began. Russia has pulled out of the Future Leaders Exchange (FLEX), a Russia-U.S. exchange program, after a participant was adopted by a same-sex couple in the U.S. Ukraine has revoked its agreement to jointly construct with Russia a bridge over the Kerch Strait.
TODAY: E.U. decides to keep current sanctions; Sechin says sanctions won’t sway Putin; Central Bank capital controls rumour sent ruble to new lows; Finance Ministry purchases VTB shares; suppression of revolt to have lasting effects; Kremlin rights council advises against bill limiting foreign media ownership; Sechin accuses Yukos of murder; state news says Hong Kong protests are U.S.-led.
The European Union decided yesterday that it will keep in place its current package of economic sanctions against Russia’s finance, defence, and energy sectors, citing ‘encouraging developments’ on the ground in eastern Ukraine. ‘We are keeping the status quo.’ But Rosneft CEO Igor Sechin says sanctions will not influence Vladimir Putin, because the president’s decisions are never made under pressure; he added that the personal impact on his own situation (Sechin is currently banned from entering the U.S.) was mostly ‘creative’. It was rumoured that the Central Bank was considering the introduction of temporary controls to limit capital flight if net outflows intensify significantly; the barest hint of such a move sent the ruble tumbling to a new all-time low against the dollar, briefly falling below the level at which the Central Bank usually intervenes. In response, the bank issued a statement saying that it had no plans to implement ‘any kind‘ of capital controls. Investment banks are preparing to weather a heavily sanctions-impacted winter by ‘surviving on low volumes’. VTB announced that the Finance Ministry has purchased $5.43 billion worth of its preferred shares. The Economist evaluates Russia’s new budget, still in draft form – noting that $17.8 billion worth of spending plans have been cut, and discussing the likelihood of Russia getting the oil price it needs to keep things afloat.
TODAY: Iranian President offers support to Russia; Putin says relations with Azerbaijan are developing; Merkel says E.U. may need to rethink its energy strategy with Russia; 12 killed in eastern Ukraine; Investigative Committee and Ukraine launch criminal cases against each other; Moscow Helsinki Group ceases operations; Moscow City building and selling real estate; ruble at a new low.
Iranian President Hassan Rouhani says Western sanctions against Moscow are ‘the wrong tool’, and vowed to provide Russia with whatever support it might need. President Vladimir Putin met with his Azerbaijani counterpart yesterday and spoke of ‘friendly and trusting’ relations in ‘the most sensitive spheres’. German Chancellor Angela Merkel voiced her support for current economic sanctions, and suggested that the E.U. rethink its energy relationship with Russia in the event of the latter’s ongoing ‘violation of principles’ of national sovereignty. Germany’s ambassador to the U.S. says Putin’s actions in Ukraine have destroyed European trust in Russia. Despite the ongoing ceasefire, 12 people – both troops and civilians – were killed in clashes in eastern Ukraine yesterday. The Investigative Committee says it will launch a criminal case against the Ukrainian government for its ‘genocide’ of Russian-speakers in eastern Ukraine. For its part, Ukraine’s Prosecutor General has opened criminal proceedings against a number of Investigative Committee officials. Paddy Ashdown suggests that poor relations between Russia and the West are due to a ‘personal animus’ between presidents Putin and Obama: ‘If so, get over it.’
TODAY: Central Bank power grows with Putin’s; Yakunin says Russia should declare financial amnesty; Lavrov fights veto abuse allegations, calls for a new reset with the U.S., blames NATO for an unending Cold War; Fogh-Rasmussen says Russia a disappointment; Rosneft and ExxonMobil strike oil in Arctic; foreign media law to hit global players; Tiger Day.
Bank Rossiya, or the Central Bank, has seen its assets grow ‘in parallel with [Putin’s] career’ thanks to deals with state companies and government guidance, reports the New York Times, with a graph charting the bank’s assets, and a more detailed piece about its privileges, which describes it as ‘woven deeply into the Putin system’. There is also a summary of Putin’s ‘inner circle’, including incomes and net worth. In an interview with ITAR-TASS, Vladimir Yakunin, whose salary in 2013 was $15 million, says Russia should declare financial amnesty and take steps to restore capital markets. Foreign Minister Sergei Lavrov told Russia Today (click for the Russian language version) that accusations about Russia abusing its veto right in the UN Security Council are false; that Moscow has no desire to continue a sanctions war with the West; and called for ‘reset 2.0’ with the United States to return ties to normal, with the caveat that ‘it was not us who destroyed them’. Talking to Bloomberg, he accused the U.S. of having a habit of ‘speaking for everyone’, and said he doesn’t think that the Cold War ever ended, citing NATO’s post-Soviet expansion as a violation of international agreements. In an article for the Independent, NATO Secretary-General Anders Fogh-Rasmussen calls Russia his ‘deepest disappointment of the past five years’, alleging that from the start of his role, the country rejected his attempts at establishing a strategic partnership.