Friday, October 31, 2014


The Power Vertical

Kudrin's Game: The Man In The Middle

Former Finance Minister Aleksei Kudrin.
Former Finance Minister Aleksei Kudrin.
Aleksei Kudrin is at it again.
 
Speaking at a conference on April 3 at Moscow's Higher School of Economics, the former finance minister said Russia needs to cut military and security spending, slash subsidies to industry, and increase funding for road construction, education, and health care.

He also warned that the government won't be able to continue relying on high oil prices to finance its expenditures.
 
"There has to be some kind of reform and it needs to be spelled out now because the budget preparations finish up in the beginning of June," Kudrin said.
 
We can probably expect to hear many more such warnings from him in the coming months.
 
Since resigning from the government in September after a very public spat with President Dmitry Medvedev, one of the big mysteries of Russian politics has been where Kudrin would land once Putin returns to the Kremlin.
 
It is more or less clear where he wanted to land.
 
Kudrin's stated reason for resigning was that he opposed Medvedev's plans to increase military spending by $65 billion over the next three years. He is apparently sincere about this as given his persistent warnings about the dangers ahead for Russia's budget.
 
But there is more to it than that. Informed speculation has it that Kudrin had hoped to be tapped as Putin's prime minister, and was furious when Medvedev, with whom he has strained relations, got the nod instead.
 
According to a thought-provoking piece by political analyst Mikhail Rostovsky in "Moskovsky komsomolets" last week, Putin was less than pleased with Kudrin's resignation. "How could you let me down in this way?" Putin reportedly said.
 
Putin stressed publicly that Kudrin remained a valued member of his team and, according to Rostovsky's report, offered him the chairmanship of the Central Bank.
 
He turned down that offer but Putin nevertheless reportedly instructed members of his economics and finance team "to do what Kudrin was telling them to."
 
Putin obviously values Kudrin greatly. The two have been close friends since serving together in the St. Petersburg city government in the 1990s. And Putin is also smart enough to understand that it was Kudrin's steady management of Russia's finances -- as much as high oil prices -- that facilitated the macroeconomic stability of the past decade.
 
Kudrin's closeness to Putin clearly gives him some leverage -- and some latitude. How else would he be able to get away with resigning against Putin's wishes, turning down the Central Bank job, and speaking out in favor of political reform at opposition rallies?
 
But what is Kudrin planning to do with this leverage?
 
After flirting with forming a center-right political party with billionaire oligarch Mikhail Prokhorov, he seems to have settled on starting up a foundation -- it is unclear whether this will be a classic think-tank, a lobbying outfit, or both -- to promote economic and political reform.
 
A recent story in "Polit.ru" compared the initiative to a similar foundation that the late former Prime Minister Yegor Gaidar formed after leaving government.
 
At first glance, this doesn't look terribly exciting, nor does it look like a great career move. Ex-government officials forming think-tanks, after all, are a dime-a-dozen.
 
But as Rostovsky points out in his "Moskovsky komsomolets" piece, given Kudrin's prominent position in the elite, there appears to be more going on here:
 
Kudrin decided to assume responsibility for formulation of a new positive agenda. He promptly raised the money necessary for establishment of a research center and set up office in the business center in central Moscow. It is from there that Kudrin intends to dish out economic recipes and say in which direction the country ought to be moving. That Medvedev will disagree with Kudrin's suggestions on some points need not be said.

Rostovsky suggests that Kudrin will play the role of something akin to a shadow prime minister -- or a prime minister in waiting -- as Medvedev struggles to keep Russia's financial house in order and carry out badly needed public sector reforms.
 
"Medvedev had a co-president when he was in the Kremlin. When he is chairman of the government, he will have a co-premier. Either a co-premier or leader of the opposition to the government. This is going to be Aleksei Kudrin," Rostovsky wrote.
 
Significantly, Kudrin has said that he was open to having his new think tank cooperate with Prokhorov's fledgling new center-right party.
 
Whether Kudrin's role will be that or a de facto co-premier or the intellectual leader of the opposition to the government depends largely on what Putin intends to do with his new term.
 
In one scenario, Medvedev will carry out deeply unpopular social reforms, take the heat, become the fall guy, and retire to some ceremonial post. Kudrin would then step in as prime minister and implement the economic and political reforms he has long championed. (Writing on  his blog, "In Moscow's Shadows," back in January, Mark Galeotti spelled out the optimistic scenario of Kudrin eventually becoming Putin's reformist premier.)

In another scenario, Putin will play his classic game of balancing different power centers off against each other -- in this case Medvedev and Kudrin -- to preserve his role as the ultimate power broker. But Kudrin would likely tire of that game quickly.
 
Kudrin is very much the man in the middle in Russian politics. He is personally close to Putin (but reviled by his siloviki courtiers) while being politically aligned with the reformist technocratic wing of the elite. He held a prominent place in Putin's system of managed democracy and has recently made overtures to the Russian Street, offering to play the role of intermediary between the opposition and the authorities. He continues to flirt with the idea of teaming up with Prokhorov.
 
He is therefore something of a barometer and his actions merit watching as things move forward.
 
-- Brian Whitmore

Tags: Vladimir Putin,Dmitry Medvedev,Aleksei Kudrin

This forum has been closed.
Comment Sorting
Comments
     
by: Mark from: Victoria
April 04, 2012 05:03
This post does a nice job of promoting the conventional wisdom that Aleksei Kudrin was - and is - some kind of economic savant who guided Russia through the tumultuous waters of fiscal uncertainty to the golden shores of Cash Surplus Land. Well, it comes right out and says it, doesn't it? "...it was Kudrin's steady management of Russia's finances -- as much as high oil prices -- that facilitated the macroeconomic stability of the past decade."

Does that mean Kudrin could have achieved a balanced budget and a cash surplus with oil at $55.00 a barrel? The above statement seems to dangle the suggestion that Kudrin's genius was equally responsible for Russia's prosperity.

Well, let's take a look. I'm intrigued right away by Kudrin's contention that the government won't be able to continue relying on high oil prices to finance its expenditures. Really? Why not? What would lead him to make such a forecast?

Not research into world energy prices.

http://www.wtrg.com/oil_graphs/oilprice1970.gif

World oil price has risen steadily since 2003, when the world's biggest per capita consumer decided to punish a major oil producer for the 9-11 attacks on its soil, who...ummm...didn't actually have anything to do with those attacks, and dropped significantly only when the subprime meltdown sent that economy - and much of the world - into recession. Perhaps Kudrin sees another worldwide recession approaching, but based on his displayed forecasting skills so far, I would have to say that's unlikely.

But hold on! Maybe the world can just increase production, and the price will drop!!

Nope. As you can see here,

http://www.wtrg.com/oil_graphs/PAPRPOP.gif

and here,

http://www.wtrg.com/oil_graphs/PAPRPNT.gif

production by both OPEC and non-OPEC sources has increased pretty steadily since the mid-80's for OPEC and the mid-90's for non-OPEC, and it has had diddly for effect on the upward price trend. Moreover, Kurt Cobb at oilprice.com argues persuasively that the U.S. and Saudi Arabia are powerless to bring prices down, the one by tapping the strategic reserves and the other by increasing production. As evidence, he offers, "It's true that oil markets move on rumours and sentiment, but not as far nor for as long as people believe. The joint U.S.-Great Britain announcement caused oil prices to fall sharply the same day before recovering nearly the entire loss by the close. The Saudi announcement that it might increase production caused a sharper one-day fall which was largely recouped the following day."

http://oilprice.com/Energy/Oil-Prices/Why-Saudi-and-US-Attempts-to-Influence-Oil-Prices-are-Ineffective.html

See anything in there that suggests the Russian government will not be able to rely on high energy prices for much longer? I don't.

The Power Vertical Feed

In this space, I will regularly comment on events in Russia, repost content and tweets I find interesting and informative, and shamelessly promote myself (and others, whose work I like). The traditional Power Vertical Blog remains for larger and more developed items. The Podcast, of course, will continue to appear every Friday. I hope you find the new Power Vertical Feed to be a useful resource and welcome your feedback. More

09:54

50 RUBLES TO THE DOLLAR?!?

Writing in Slon, Yakov Mirkin, chairman of the Department of International Capital Markets at the Russian Academy of Sciences Insititute of World Economy and International Relations, argued that the ruble could easily sink to 50 to the dollar.

The reasons? 

1) The ruble is overvalued anyway;

2) The dollar is rising against major currencies and this upward cycle is likely to continue;

3) Oil prices are falling;

4) A combination of Western sanctions and diversification of energy supplies

5) Capital flight from Russia continues apace.

And in light of Mirkin's argument, it is worth noting that he has consistently been arguing that the ruble is overvalued. Here he is speaking back in August 2013:

09:41

UKRAINIAN HOSPITALITY

Russian journalist Ivan Sukhov writing in "The Moscow Times" on working in Ukraine:

"Russian journalists encounter no personal aggression while working in Ukraine. Only the rare local politician refuses to speak to Russian reporters.

And in place of perfectly understandable aggression, Russian journalists encounter only gentle Ukrainian hospitality along with a sizable share of condescending sympathy.

It is as if they want to tell us, 'We will stay here, where we have taken the responsibility for our future into our own hands, whereas you will fly home to Russia's stifling political atmosphere, to a country that futilely reconsiders the outcome of the Cold War and the people are caught up in a mass euphoria over the bloodshed in the Donbass.'"

Read it all here.

08:56

MORNING NEWS ROUNDUP

From RFE/RL's News Desk:

RUSSIA, UKRAINE SIGN EU-BROKERED GAS DEAL

By RFE/RL

Moscow and Kyiv have signed a landmark agreement that will guarantee Russian gas deliveries to Ukraine throughout the winter despite tense relations over the fighting in eastern Ukraine.

The EU-brokered deal, which extends until March 2015, was signed at a ceremony in Brussels by the energy ministers of the two countries, Aleksandr Novak and Yuriy Prodan, and European Energy Commissioner Guenther Oettinger.

Outgoing EU Commission President Jose Manuel Barroso, who oversaw the signing, hailed the agreement, saying, "There is now no reason for people in Europe to stay cold this winter."

The hard-fought deal followed months-long EU-mediated negotiations between Moscow and Kyiv amid a long and bitter dispute over payments.

The agreement was reached after two days of marathon talks that had stalled before dawn on October 30 when Russia demanded that the EU first agree with Ukraine how to pay Kyiv's outstanding bills and finance gas deliveries through to March.

Oettinger said that under the accord, Ukraine will pay Russia $1.45 billion in gas arrears within "days" for Moscow to resume gas deliveries.

He said Russia will then "immediately" lower Ukraine's gas price by 100 dollars to around $385 per 1,000 cubic meters.

Kyiv will subsequently have access to Russian gas deliveries in exchange for pre-payment, according to Oettinger. He said Ukraine also agreed to settle another $1.65 billion in arrears by the end of the year.

The deal is expected to include EU funding to help Ukraine pay off its debts to Russia's state-owned gas giant Gazprom.

Oettinger said, "we can guarantee a security of supply over the winter," not only for Ukraine but also for the EU nations closest to the region.

He added that the deal "is perhaps the first glimmer of a relaxation" between Ukraine and Russia.

Ukraine's Prodan said the "decisions taken today will provide energy security for Ukraine and the EU."

Moscow cut off gas deliveries to Ukraine in mid-June, citing a $5.3-billion debt and demanding that Ukraine settle its outstanding bills and pay up front for any future deliveries.

The dispute occurred amid Russia's conflict with Ukraine and Western sanctions imposed on Moscow for its annexation of Crimea in March and its subseqent military and political support for pro-Russian separatists in eastern Ukraine.

With Ukraine relying on Russia for around 50 percent of its gas, the onset of winter made the need for a deal more urgent.

Russia also provides about one-third of the European Union's gas, about half of which is pumped via Ukraine.

The EU was seeking to avoid a repeat of 2006 and 2009 when Russia halted supplies to Ukraine, disrupting deliveries to Europe during two very cold winters.

But Russia's Novak said after the signing that Moscow will remain a "reliable supplier" of energy to Europe and the deal struck with Ukraine will ensure stable gas deliveries over the winter.

In reaction to the deal, the French and German leaders said in a joint statement that the EU will "fully play its role" to implement the gas deal.

Francois Hollande and Angela Merkel said they had spoken with Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko earlier October 30, and all four "have welcomed the conclusion of negotiations on the delivery of Russian gas to Ukraine, achieved thanks to the mediation of the European Union."

(Based on live broadcast, with additional reporting by Reuters, AP, and AFP)

AIR ARMENIA BLAMES RUSSIA FOR FLIGHT SUSPENSIONS

By RFE/RL’s Armenian Service

YEREVAN -- Air Armenia, a passengar and cargo airline based in Yerevan, has suspended all passenger flights until at least December 20 over financial difficulties that the firm is blaming on Russia.

Air Armenia says it is unable continue regular passenger services because of a “panic” among investors and customers over a statement by Russia's federal air navigation service.

Russia's Rosaeronavigatsia announced on September 11 that it would ban Air Armenia from operating flights to Russian cities unless the company paid its outstanding debts by September 21.

Air Armenia said ihe statement damaged its business reputation and that, as a result, its fleet was reduced to one aircraft.

Other than Russian cities, the airline had been flying to Paris, Frankfurt, and Athens.

Air Armenia was founded as a cargo airline in 2003 and began operating commercial passenger flights in 2013 after the bankruptcy of Armavia.

COURT ORDERS NATIONALIZATION OF OLIGARCH'S BASHNEFT SHARES

A Moscow court has ordered the nationalization of a stake in an oil company owned by a detained tycoon.

The Moscow Arbitration Court ruled on October 30 the stake in Bashneft held by billionaire Vladimir Yevtushenkov's holding company Sistema would be returned to the state.

Prosecutors claimed the stake was illegally privatized by officials in Russia's Bashkortostan region.

The court said new claims could be filed after the worth of Sistema's stake in Bashneft was ascertained.

Yevtushenkov was arrested last month on charges of money laundering related to the acquisition of Bashneft.

His arrested sparked speculation that Russia's largest oil company, state-run Rosneft, would acquire Sistema's Bashneft shares.

Yevtushenkov is one of Russia's richest businessmen, with assets estimated to be worth some $9 billion.

(Based on reporting by AFP, rapsinews.ru, and Interfax)

LATVIA-BASED RUSSIAN NEWS PORTAL BLOCKED IN KAZAKHSTAN

By RFE/RL's Kazakh Service

An online Russian news portal based in Latvia has been blocked in Kazakhstan over an article described by Astana as "inflicting ethnic discord."

Kazakhstan's Ministry of Investments and Development said on October 30 that the Meduza.io website published an article "propagating ethnic discord and threatening the territorial integrity" of Kazakhstan.

The article about ethnic Russians living in Kazakhstan's eastern city of Ust-Kamenogorsk (aka Oskemen) is titled: "Ust-Kamenogorsk People's Republic. Are Locals Ready For Polite Green Men?"

‘Green Men’ refers to the deployment in foreign countries of Russian military forces wearing unmarked green uniforms – as Russia has done in the past in regions of Georgia and Ukraine.

The ministry also has filed a lawsuit against Meduza.io in connection with the article.

It says the website will remain blocked in Kazakhstan until a local court rules in the case.

(With reporting by Interfax)

KYRGYZ WILL NEED PASSPORTS TO ENTER RUSSIA

By RFE/RL's Kyrgyz Service

Kyrgyzstan's State Registration Ministry says that as of January 1, 2015, Kyrgyz citizens will no longer be able to enter the Russian Federation using their national identification documents.

Since 2007, Kyrgyz labor migrants have been travelling between the two countries with internal identification documents. Now they will have to obtain travel passports.

The regulation, announced on October 29, will affect hundreds of thousands of Kyrgyz labor migrants who work in Russia and periodically travel between the two countries.

Moscow announced earlier this year that it wants to tighten by 2015 the regulations for entering Russia by nationals of former Soviet republics that are not members of the Russia-led Customs Union and Eurasian Economic Union.

In May, Kyrgyzstan signed a road map under which it is to join the Customs Union, which currently comprises Russia, Belarus, and Kazakhstan, by the end of 2014.  

NATO REPORTS UNUSUAL RUSSIAN WARPLANE ACTIVITY AROUND EUROPE

NATO said on October 29 that it tracked and intercepted four groups of Russian warplanes “conducting significant military manoeuvers” in international airspace close to the borders of the European Union during the previous 24 hours.

NATO’s SHAPE military headquarters in Mons, Belgium said: “These sizeable Russian flights represent an unusual level of air activity over European airspace.”

It said the planes included strategic bombers, fighters, and tanker aircraft.

They were detected over the Baltic Sea, the North Sea, the Atlantic Ocean, and the Black Sea on October 28 and 29.

Russian bombers flew south all the way to international airspace west of Portugal and Spain.

Norwegian, British, Portuguese, German, Danish, and Turkish fighters were scrambled to intercept and identify the Russian planes.

Planes from the non-NATO nations of Finland and Sweden also responded.

Since Russia’s intervention in Ukraine, tensions between NATO and Russia have risen to the highest level since the Cold War.

(Based on reporting by AP and AFP)

18:33 October 29, 2014

EVENING NEWS ROUNDUP

From RFE/RL's News Desk:

KREMLIN MOVES TO QUASH PUTIN HEALTH RUMORS

Vladimir Putin's spokesman said on October 29 that the Russian president is in good health, seeking to quash rumors of an illness.

Dmitry Peskov told reporters in Moscow that "everything is okay" with Putin's health, Russian news agencies Interfax and TASS reported.

"They will wait in vain. May their tongues wither," Peskov said of those who claim Putin is ill.

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.

Putin and the Kremlin have strongly discouraged reporting about the 62-year-old president's private life.

(Based on reporting by TASS and Interfax)

ROSNEFT THREATENS TO SUE NEWSPAPER OVER SANCTIONS REPORT

Russia's largest oil company, Rosneft, is threatening to sue the Russian daily "Kommersant" for a report alleging Rosneft sent President Vladimir Putin proposals for countersanctions against Western companies and individuals.

"Kommersant" reported on October 29 that state-run Rosneft's proposals include limiting cooperation aboard the International Space Station, prohibiting burial of U.S. and EU nuclear waste in Russia, and possible confiscation of property in Russia owned by Western countries or their citizens.

Putin's spokesman, Dmitry Peskov, denied there were any Rosneft proposals for sanctions, but presidential aide Andrei Belousov and Economy Minister Aleksei Ulyukayev seemed to contradict this.

State-run TASS reported Peskov said reports Rosneft had sent such proposals were untrue.

Peskov said decisions on imposing sanctions were made "in line with the relevant departments, and taken on the level of the government and president."

A different TASS report quoted Belousov as saying, "We are closely studying Rosneft's proposals."

Belousov went on to say, "I would say the radicalism of the proposals for now exceeds the current level of tensions."

The Interfax news agency quoted Ulyukayev as saying the proposals were a "very complex document" and adding, "I don’t think it is grounds for making any decisions."

The "Kommersant" report said "Russian government officials" had provided information about the alleged proposals.

A statement from Rosneft said the company was "deeply shocked" by the "Kommersant" article and might sue the newspaper.

Western governments have imposed several rounds of sanctions on Russia over its annexation of Crimea and support for separatists in eastern Ukraine.

The sanctions target key Russian industries and individuals close to Putin, including Rosneft and its head, Igor Sechin, who is a former Kremlin deputy chief of staff.

The sanctions have hurt Rosneft, which has already requested additional funding from the Russian government to make up for losses incurred due to sanctions.

British oil company BP reported on October 28 that its income from its operations with Rosneft dropped from $808 million in the third quarter of 2013 to $110 million in the same period this year.

(Based on reporting by TASS, Interfax, Reuters, and Kommersant)

WHITE HOUSE DETECTS SUSPICIOUS CYBER ACTIVITY, REPORT BLAMES RUSSIA

The White House says it has taken measures to counter suspicious activity detected on its unclassified computer network.

A White House official would not say who might have been responsible for the activity on what was described as an unclassified computer network used by employees of the Executive Office of the President.

The official, who spoke on condition of anonymity, said the authorities had taken "immediate measures to evaluate and mitigate the activity."

In a report on October 28, the "Washington Post" cited sources as saying hackers believed to be working for the Russian government breached the unclassified computer network in recent weeks.

The White House has declined to comment on the "Washington Post" report.

A U.S. administration official said there were no indications that classified networks had been affected.

(Based on reporting by Reuters, AP, and dpa)

VICTIMS OF STALIN TERROR REMEMBERED IN MOSCOW CEREMONY

By RFE/RL

Activists are gathering near the former KGB headquarters to honor the memory of thousands of men and women executed by Soviet authorities during Josef Stalin's "Great Terror."

Speakers at the daylong ceremony at the Solovetsky Stone memorial on Moscow's Lubyanka Square read out aloud the names, ages, occupations, and dates of executions of some 30,000 people killed by Soviet authorities in 1937-1938.

Muscovites and others brought flowers, pictures of victims and candles to the site of the "Returning the Names" commemoration, which began at 1000 (local time; 0800 Prague time) and was to end at 1000 (local time; 0800 Prague time).

The annual ceremony is organized by Memorial, Russia's oldest and best-known human rights organization, which is under pressure from the government.

On October 10, Russia's Justice Ministry appealed to the Supreme Court to close Memorial.

Memorial has held the ceremony every year since 2006 at the site near the headquarters of the Federal Security Service, the KGB's main successor.

Ceremonies were also being held in other Russian cities.

(Based on live broadcast by october29.ru)

SEPARATISTS SHELL UKRAINIAN TROOPS

Pro-Russian separatists reportedly shelled the position of Ukrainian government troops in southeastern Ukraine on October 29, despite an almost two-month-old cease-fire agreement.

Authorities in the port city of Mariupol say military positions located near the village of Talakovka were targeted on October 29 by conventional artillery and Grad rockets that were fired from from the separatist-controlled region of Donetsk.

Casualties were reported among troops.

The cease-fire agreement signed in early September ended most fighting between the two sides -- although battles at the Donetsk airport, in Mariupol, and in villages near the city of Luhansk continue on an almost daily basis.

The UN says more than 3,700 people have been killed in six months of fighting between government forces and separatists in eastern Ukraine, with hundreds of thousands fleeing their homes.

(Based on reporting by Interfax and UNIAN)

RUSSIAN AIRLINE PLANS YEREVAN-CRIMEA FLIGHTS OVER kYIV'S OBJECTIONS

By RFE/RL's Armenian Service

The Grozny Air civil aviation company, based in the Russia's Chechnya region, is pressing ahead with plans to launch regular flights from Yerevan to Crimea, despite protests from Kyiv.

Timur Shimayev, an executive officer for Grozny Air, told RFE/RL on October 29 that the firm's inaugural flight to Crimea is scheduled for November 17.

But Ukraine's Ambassador to Armenia, Ivan Kukhta, told reporters in Yerevan on October 29 that any commercial flights between Yerevan and Crimea must first be approved by Kyiv.

Kukhta's statement came five days after a spokesman for the Armenian government’s Civil Aviation Department, Ruben Grdzelian, said that a Russian regional airline had not been allowed to launch flights between Armenia and Crimea since the Ukrainian penninsula was annexed by Russia in March.

Moscow's annexation of Crimea has been condemned as illegal by the United States, the European Union, and the United Nations General Assembly.

 

12:55 October 29, 2014

SANCTION THIS!

The Russian daily "Kommersant" reports that the state-run oil giant Rosneft is calling on President Vladimir Putin to impose new sanctions on the West. The new moves reportedly include limiting cooperation aboard the International Space Station, prohibiting burial of U.S. and EU nuclear waste in Russia, and possible confiscation of property in Russia owned by Western countries or their citizens.

12:41 October 29, 2014

AND IN THE FALLOUT DEPARTMENT...

Just a few things I've noticed this morning:

Russian-German Trade Down

German exports to Russia have dropped by more than a quarter, "The Moscow Times" reports. In August, exports from Germany to Russia were 2.3 billion euros, a 26.3 percent decrease from a year ago. Moreover, German exports to Russia fell by 16.6 percent from January-August 2014.

Russian Elite More Cohesive -- For Now

According to a report by Reuters, sanctions have had the "opposite effect to the one intended" among the elite. "Far from dividing those closest to President Vladimir Putin, they have forced the main players in the energy sector to rally behind him. This circle has by necessity become more focused, Western and Russian businessmen, diplomats and politicians said," according to the report.

Sweden Is Warming Up To NATO

Foreign Directors Bail On Russian Firms

Since the start of the year, 14 percent of foreigners serving on the boards of Russian firms have left their posts, "The Moscow Times" reports. "Western sanctions have forced some foreign directors to step down or curb their activities on the boards of publicly traded Russian companies, leaving a critical gap that few domestic candidates are equipped to fill," according to the report.

09:17 October 29, 2014

MORNING NEWS ROUNDUP

From RFE/RL's News Desk:

RUSSIA AND UKRAINE TO RESUME GAS TALKS

Russia and Ukraine are set to resume talks over a gas dispute on October 29 in Brussels.

The new round of negotiations comes after inconclusive talks October 21, when European Energy Commissioner Guenther Oettinger announced some progress, but said a final deal has yet to be agreed.

Russia cut off gas deliveries to Ukraine in mid-June, citing a $5.3-billion debt.

Oettinger said that, as part of tentative deals, Ukraine planned to purchase some 4 billion cubic meters of Russian gas before the end of this year.

Russia on October 21 said the it would sell gas to Ukraine for $385 per 1,000 cubic meters, much lower than the $485 that Russia's state-controlled Gazprom was demanding just weeks ago.

Moscow said that price would be in force from October 2014 until late March 2015 -- but only if Ukraine pays in advance.

(Based on reporting by AFP and AP)

KYIV CONDEMNS MOSCOW'S SUPPORT FOR SEPARATIST ELECTIONS

Ukraine on October 28 condemned as “destructive and provocative” Russia’s support for elections organized by pro-Russian separatists in eastern Ukraine, while the United States said a vote by separatists in eastern Ukraine would be unlawful.

The November 2 vote was scheduled by rebels in defiance of Ukrainian national elections on October 26, which were won by pro-Western parties.

Ukrainian President Petro Poroshenko on October 28 described the vote planned by rebels as "pseudo-elections," saying they "grossly contradict the spirit and letter" of international agreements reached in Minsk in September.

Russian Foreign Minister Sergei Lavrov says Moscow plans to recognize the elections that are being organized by separatists in the Donetsk and Luhansk regions of Ukraine.

Meanwhile, U.S. Secretary of State John Kerry warned that the the vote "will be a clear violation of the commitments made by both Russia and the separatists that it backs in the Minsk agreements."

(Based on reporting by Reuters, AP, AFP, and TASS)

GAZPROM NEFT CHALLENGES EU SANCTIONS IN EUROPEAN COURT

Gazprom Neft, the oil arm of Russia's state-controlled natural gas monopoly Gazprom, said on October 28 that it has challenged European Union sanctions against the firm in the EU’s Court of Justice.

The sanctions against Gazprom Neft were imposed as part of wider restrictions against Russia over its illegal annexation of Crimea from Ukraine and its support for pro-Russian separatists in eastern Ukraine.

The EU sanctions restrict the ability of Gazprom Neft, Russia's fourth biggest oil producer by output, to raise funds on European markets.

The United States also has imposed sanctions against Gazprom Neft in response to Russia’s role in Ukraine’s crisis.

The West says Moscow is supplying arms and troops to help pro-Russian separatists in eastern Ukraine battle Ukrainian government forces.

Moscow denies that, despite increasing evidence to support the charges.

(Based on reporting by Reuters, AP, and TASS)

18:54 October 27, 2014

THE BIG CHILL

Sam Greene, Director of the Russia Institute at King’s College London and author of "Moscow in Movement: Power & Opposition in Putin’s Russia," has a depressing (and must-read) blog post up about his recent trip to Moscow titled: "Russia's Tomorrow, Today."

It opens like this:

The news and the invitation were waiting for me, both, when I got off the plane from London to Moscow. I saw the invitation first—from a long-time colleague, to attend a workshop on the future of Russian politics later this month at Memorial, the venerable Russian historical society and human rights organization. I saw the news two hours later: 17 days after that workshop, Russia’s High Court will hold a hearing on the government’s demand that Memorial be liquidated.

That is the condition of life in Russia these days: two hours in which an invitation takes on a funerary pallor, 17 days in which the world becomes immeasurably smaller. Rarely has the distance between today and tomorrow been so great and so fraught as it is now.

And it concludes like this:

The tomorrow whose arrival now seems inevitable is one in which the archives of Memorial and the Sakharov Center disappear, to be replaced with a single national history textbook and a single national literature textbook, so that the past may have no bearing on the future. It is one in which policy analysis disappears from the public space, along with honest reporting, so that the present may also have no bearing on the future. Tomorrow, when it arrives, will bring one sole purpose: to preserve and protect the status quo. It is a tomorrow after which there are meant to be, politically speaking, no more tomorrows at all..

What the designers of this new tomorrow may not realize, however, is that, once freed from the paralysis of a pointless today, the despair of disaffection becomes the desperation of dissent. Dissidents, pitted against a regime that can never fall, take risks that are unnecessary in a more fluid system. They speak at all costs to demonstrate that they have no voice, and they go to jail to demonstrate that they are not free. Once today becomes tomorrow, and there are no more tomorrows for which to wait, the imperative of immediate action reemerges. 

Is the Kremlin ready for an opposition that, because everything is already lost, has nothing left to lose?

Read it all here.

And a h/t to Ben Judah for flagging.

 

15:42 October 27, 2014

FROM THE YOU-CAN'T-MAKE-THIS-STUFF-UP DEPARTMENT

The Russian health and consumer watchdog Rospotrebnadzor has issued a dire warning: SEFIES CAUSE HEAD LICE!

No, really. I'm serious! It is actually on their official website:

"One reason for the spread of lice among teenagers, in the opinion of experts, is because selfie photographs have become more common. In these group photos, lice are transfered due to the touching of heads."

And it is causing a lot of laughs on the Twitter:

15:24 October 27, 2014

UKRAINIAN ECHOES: RUSSIA AND THE NEIGHBORS

The Russian newspaper "Novaya gazeta" has launched a new video series on its YouTube channel called Украинское эхо, or The Ukrainian Echo, that looks at Moscow's relations with former-Soviet states in the aftermath of the Ukraine crisis.

The first installment, which was out on October 20, focused on Georgia:

And the latest, which went online today, looks at Kazakhstan:

Latest Podcasts

About This Blog

The Power Vertical is a blog written especially for Russia wonks and obsessive Kremlin watchers by Brian Whitmore. It covers emerging and developing trends in Russian politics, shining a spotlight on the high-stakes power struggles, machinations, and clashing interests that shape Kremlin policy today. Check out The Power Vertical Facebook page or