Friday, October 31, 2014


The Power Vertical

Russia's Next Crisis

Former Finance Minister Aleksei Kudrin
Former Finance Minister Aleksei Kudrin
What would happen if Russia's current political turmoil were compounded by an economic crisis?
 
Last week, a think tank associated with former Finance Minister Aleksei Kudrin raised that question, and the answers were -- to say the least -- not pretty for the Kremlin. And today, the ruble fell to a three-year low on falling oil prices, which dropped by 4.5 percent over the past week.
 
The government insists there is no cause for alarm. Deputy Prime Minister Arkady Dvorkovich told RIA-Novosti that the authorities are "prepared for any scenario" and "have the reserves necessary for dealing with a crisis, if there is one."
 
Nevertheless, whether Russia's $513 billion in foreign reserves will be enough to weather an economic downturn sparked by contagion from the eurozone and falling oil prices must be causing a lot of sleepless nights in the Kremlin.
 
A report released on May 24 by the highly respected Center for Strategic Research commissioned by Kudrin's newly formed Committee of Civic Initiatives warned that Russia could descend into violence and chaos if the authorities continued to crack down on opposition protesters or if the economy slides:
 
Our research shows that the crisis has become irreversible. regardless of the scenarios of its further development. Maintaining political stability, let alone a return to the pre-crisis status quo, is no longer possible ... At this stage we view the probability of such a scenario as high because the escalation of violence has already started. As it spreads, the return of the protests to a peaceful course is becoming less and less likely.           
 
The report noted that "the middle class in the largest cities is de facto lost for the authorities." An economic downturn would undoubtedly cause them to lose the working class as well, leading to rural and industrial unrest.
 
At a press conference presenting the report, Kudrin -- who won accolades for steering Russia through the 2008 financial crisis -- said a recession in Russia is "possible and even likely," adding that there was a 50 percent chance that this would be "a destabilizing factor for political problems."
 
An economic downturn would, indeed, land the second half of a one-two punch against President Vladimir Putin and his ruling circle.
 
As I have blogged in the past, rising living standards in Russia over the past decade led to the creation of an embryonic middle class that once made up the bedrock of the regime's support. But once that class became secure in its wealth -- as was the case in South Korea, Indonesia, and elsewhere -- it began to seek political freedoms, causing it to lose patience with Putin's authoritarian rule.
 
Having lost the middle class, which has taken to the streets against him, Putin turned to the working class, which is now the backbone of the Kremlin's social base. A deep recession risks turning them against him as well.
 
"In connection with the problems in the countries of the eurozone, notably in Greece, the world economy can expect a new strong shock. In the meantime, in Moscow, they are busy with everything under the sun except preparations for a new wave of crisis," a May 25 editorial in Gazeta.ru opined.
 
"Of course, fears do not always come true, but if they do come true, it certainly does not have to be in full. But the atmosphere is heating up before our eyes. The flight of capital from Russia is speeding up. Oil has become cheaper," the editorial continued.

"The Russian budget, half of whose income is provided by selling energy, will encounter real difficulties yet this year if the oil price simply stays fixed at today's level. And if it so happens that it stays below $100 for quite a long time, it will simply become impossible to describe what is happening other than with the words 'economic crisis.'"
 
If the worst-case scenario does come to pass, the results could be nasty. The opposition to Putin is comprised as much of nationalists and radical leftists as it is of pro-Western liberals.

(Note to readers: Tune into "The Power Vertical Podcast" on June 1, where I will discuss this issue at length with my regular co-host Kirill Kobrin, managing editor of RFE/RL's Russian Service.)

-- Brian Whitmore

Tags: Russian economy,Russian opposition

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Comment Sorting
Comments
     
by: Eugenio from: Vienna
June 01, 2012 07:18
"Russia's Next Crisis", "Russia's current political turmoil" :-))))). Ah, the RFE/RL clowns are really desperate in trying to divert people's attention from the fact that their "wonderful" country is going towards a financial bankrupcy at home and (one more) military defeat abroad :-)). And yes, please do continue asking me for "proofs" that you, US-made Beavuses and Buttheads, are just a nation of useless inept bankrupt losers :-)).
In Response

by: M from: M
June 01, 2012 14:38
Is it all what you are able to say.
As your Marx said: you are on the history garbage tip, unfortunately comrade you didn't notice it, yet.
In Response

by: Eugenio from: Vienna
June 02, 2012 08:52
No, M, unfortunately for you, this is not all I am able to say. Just a little bit more data on the REAL CRISIS which is happening right here in the EU right now (and not the imaginary one in Russia):
(a) yesterday (Friday) the Central Bank of Spain (this country blessed by god to be a member of the EU) annonced that the capital flight from SPAIN during the month of APRIL only constituted more than € 66,000,000,000!
(b) and following this news - and demonstrating once again what a great system is that of free capitalist market economy - ALL the major stock exchange indicators in the "advanced" "industrial" "democracies" collapsed: the German DAX by 3,20 % in one day (and Germany, as we know, is the industrial motor of Europe), the US Dow by 2,22 % in one day, the French CAC 40 by 2,21 % in one day etc.
And while the roof is already falling on your heads, you continue talking about the "Russia's Next Crisis" :-)).
All this RFE/RL promoted discourse really reminds me of the stories that Joseph Goebbels was telling the Germans in January of 1945 about the "Wunderwaffe" with which the Deutsche Reich was going to destroy all of its adversaries in one night. And then - 6 months later - there was no Wunderwaffe, no Joseph Goebbels and no Deutsche Reich. There was only a bunch of ruins. That's what happened to those who did not want to face the reality back in Jan. 1945 and that's what will happen to you, guys, for this very same reason a couple of months from now.

by: Aibek
June 01, 2012 12:58
Rising living standards in the middle class also preceded the fall of the Soviet Union. However, Putin is unlikely to repeat Gorbachev's "mistake" of allowing greater freedoms. And despite what we read in the news, the numbers of people protesting still represent only a tiny percentage of the population.

Still, the continuing massive outflows of cash from Russia show that the moneyed elites agree with this article.
In Response

by: Jack from: US
June 01, 2012 14:57
money outflow from Russia is similar to money outflow from EU and from Middle East. With EU is heading toward collapse, with US-instigated wars in Middle East, money flee EU, Middle East for safe heaven in US. As EU is the largest trading partner of Russia, Russia is also affected, i.e. money flee Russia for US. Have you watched euro and ruble going down against dollar in recent months? US government makes troubles abroad so as to attract foreign buyers into US treasury bonds, which otherwise would have gone down the drain long time ago, with US economy collapsing as a result. So US government is instigating wars for a reason - to force foreign investors to pile money into US. That's how US is parasiting on world's financial system.
In Response

by: William from: Aragon
June 02, 2012 23:41
Certainly the price of oil is being manipulated in this manner, Jack. Have you noticed how the price of oil goes up due to "instability in the Middle East" when nothing has really changed, apart from the issue of a strongly-worded press release from the White House about Iran, Yemen or some other Middle Eastern country?

by: Dragomir from: Australia
June 01, 2012 14:49
Russia as undemocratic country should be prohibited to sale of oil,gas , minerals and any commodities because all of them by mistake were placed in to soil of undemocratic country.Full unrestricted exploration shall be given to western more democratic country for a 1oo years at least.Al Jazeera should be appointed to educate Russia in all aspects of democracy.I am hoping you do agree with me.By the way you will be free to set out price list . Hopefully once exploration is over Russia will be full
democracy to take care of environmental recovery.

by: Mark from: Victoria
June 01, 2012 16:46
What would happen if Russia's current political turmoil - largely in the minds of the handful of protesters, the perennially dissatisfied elite and their western supporters - were to be compounded by its being struck by a piece of deorbiting space junk roughly the same size and shape, which removed Russia from the map as efficiently as a giant surgeon might? Seriously; if we're going to play "what if?" based on nothing more than a temporary drop in oil prices, which are constantly fluctuating, why not go apocalyptic? Last August the spot oil price was $85.06. Did Russia collapse? Did Medvedev weakly beckon the liberal elite to take the leadership of the country from his failing hands? Was Kudrin - never so popular with the west when he was the actual Finance Minister as he apparently is now that he's a political dissident - carried through the streets on the shoulders of his cheering countrymen? Are we going to be treated to a flutter of seditionist excitement every time the world oil price hiccups?

What would happen to Russia if there were an economic crisis right now? Perhaps Kudrin's think tank found that the answers were not pretty, but you should have asked him how pretty the situation looked for countries that did not have a $500 Billion reserve fund to fall back on. And if the prospect causes a lot of sleepless nights in the Kremlin, what must it be causing in Washington, mortgaged to the hilt to China?

If there is an economic crisis, and there is an excellent chance there will be considering Western Europe is teetering on the brink of the abyss, development will slow or stop, and energy prices will fall steeply. Will they stay low for years? Well, what do you think? Does the west loathe Russia so deeply that it is prepared to undergo years of deprivation and economic contraction in order to bring it to heel or destroy it?

Better ask the voters.

by: Mike from: Prague
June 02, 2012 15:35
This is an interesting post. But I don't see the direct connection between the economic crisis (lower ruble and oil/gas demand) directly translates into a loss of support by the working classes. Unemployment is now at 5.8%, real wages are increasing 10% y/y. Increasing domestic demand can maintain the political support of the working class and can offset part of the headwinds of the European crisis. The only way Putin can lose the support of the working class is by a sharp increase in unemployment and inflation.

What the political opposition really needs at the moment is not the working class, but a set of credible charismatic leaders. But for that to even happen, we need to see greater signs of division among the Kremlin elite (resignation of politicians who then join the opposition). I don't see a way for the Kremlin to start censuring the Internet - they are way behind the curve in that - and so I agree that it is a matter of time until the 'power horizontal' begins to take hold.

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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:

15:04 October 27, 2014

AFTERNOON NEWS ROUNDUP

From RFE/RL's News Desk:

AS EU PRAISES UKRAINE ELECTIONS, RUSSIA CRITICIZES 'DIRTY CAMPAIGN'

The European Union has hailed the parliamentary election in Ukraine as a victory for democracy and pro-European reforms in the ex-Soviet republic.

European Commission President Jose Manuel Barroso said in a tweet on October 27: "Congratulations to the people of #Ukraine! Victory of democracy and European reforms' agenda."

Pro-Europe parties won a sweeping victory in a parliamentary election that Ukrainians hope will strengthen the country after a year of political turmoil and months of warfare against Russian-supported separatists in the east.

Russian Deputy Foreign Minister Grigory Karasin said it was clear the election was valid "in spite of the rather harsh and dirty campaign," Interfax news agency reported.

He said the new Rada would have to "start an inclusive dialogue with entire society."

(Based on reporting by AFP and Interfax)

AEROFLOT RESUMES FLIGHTS TO GEORGIA

State-controlled Russian airline Aeroflot has resumed flights between Moscow and the Georgian capital, Tbilisi, after a six-year hiatus caused by the war between the two former Soviet republics.

An Aeroflot Airbus 320 carried about 100 passengers from Moscow to Tbilisi on October 27.

It was the Russian flag-carrier's first direct flight since a five-day war in August 2008 over breakaway South Ossetia.

Russia recognized South Ossetia and another Moscow-backed separatist province, Abkhazia, as independent states after the war, and it has troops stationed in both regions.

Diplomatic ties were severed over the war.

Direct flights between Russia and Georgia - operated by Russia's S7 and Ural Airlines as well as Georgian Airways - have been available in charter form only since August 2010.

(Based on reporting by apsny.ge and Interfax)

And via Reuters:

CZECH SECRET SERVICE SEES 'EXTREMELY HIGH' NUMBER OF RUSSIAN SPIES

PRAGUE, Oct 27 (Reuters) - Russia deployed an "extremely high" number of intelligence officers at its Czech embassy last year, the NATO member country's secret service said in an annual report released on Monday.

The reported increase in spying comes as relations between Russia and the West have worsened, culminating in the Ukraine crisis that began a year ago with street demonstrations against pro-Russian president Viktor Yanukovich.

Czech spy-watchers have long warned about Russian intelligence services activities in the central European country, a member of the European Union, which is popular with Russians who often travel to and buy property in the country.

The Security Information Service (BIS) said Russian and Chinese spies in the Czech Republic work mostly to use politicians or journalists to extend their influence and secure their countries' economic interests.

"Both the Russian and the Chinese embassy employ intelligence officers serving under diplomatic cover. In 2013, the number of such officers at the Russian embassy was extremely high," the BIS report said.

Other intelligence officers travelled to the Czech Republic individually as tourists, experts, academics or businessmen.

"Russian intelligence services attempted to make use of both open and covert political, media and societal influence to promote Russian economic interests in the Czech Republic," the report said.

Russian intelligence activity previously jumped in 2007, when the Czech Republic and the United States held negotiations on building a missile defence radar in the country. The plan was eventually cancelled by President Barack Obama's administration after also running into opposition in the Czech parliament.

The current centre-left Czech government has taken a cautious approach as relations between Western countries and Russia have deteriorated this year over Moscow's role in the Ukraine crisis.

A number of Czech officials have spoken against sanctions imposed by Brussels -- for which Russia has retaliated by banning food imports from Europe -- although the government has backed the EU's actions.

Yanukovich's overthrow in February prompted Moscow to annexe the Crimea peninsula and back separatist rebellions in eastern Ukraine in which more than 3,700 people have died.

The BIS has in the past warned of Russian intelligence officers building networks in the country using Czech citizens as well as the local Russian community.

The Polish government said on Saturday it had withdrawn accreditation from a Russian journalist after arresting two Poles, including a military officer, earlier this month on suspicion of spying for Russia.

The BIS said rejecting Czech visas or accreditation for Russians with ties to the intelligence services had led to cases of retaliation against Czech career diplomats.

RUSSIAN FM SAYS UKRAINE VOTE MAY LEAD TO PEACE, WARNS OF NATIONALISTS

MOSCOW, Oct 27 (Reuters) - A parliamentary election in Ukraine offers a chance for peace in the country's east, a deputy Russian foreign minister said on Monday but warned that "nationalists" in the chamber could undermine the process, RIA news agency reported.

An initial vote count showed pro-European parties had secured a clear victory in the Ukrainian poll, the first to be held since street protests ousted the country's pro-Russian leader, Viktor Yanukovich, earlier this year.

"Parties supporting a peaceful resolution of the internal Ukrainian crisis won a majority. This gives them a new chance to return to the agreements made, first and foremost, in Minsk," Deputy Foreign Minister Grigory Karasin said, referring to agreements made by Kiev, Moscow and pro-Russian separatists in eastern Ukraine.

Ukraine's pro-Western President Petro Poroshenko hailed the election result as a show of popular support for his plan to end a pro-Russian rebellion in the east and pursue reforms.

Kiev and the West blame Moscow for destabilising Ukraine by supporting and arming the rebels as well as reinforcing them with Russian troops. Moscow denies taking part in the armed conflict.

"The fact that openly nationalistic and chauvinistic forces won considerable support and will be represented in the Rada (parliament) creates an additional threat that again calls will sound ... for the use of force, for bloodshed," Karasin added.

"That is extremely dangerous."

14:36 October 27, 2014

PREPARING FOR A WAR AGAINST ALL

Just now catching up with defense analyst Pavel Felgenhauer's disturbing analysis of Russia's military thinking: "Preparing for War Against the US on All Fronts—A Net Assessment of Russia’s Defense and Foreign Policy Since the Start of 2014."

"During all of 2014, Russia’s rulers and most of the population seem to have been living together in a daydream. Consequently, Russian defense and foreign policy plans as well as the country’s decision making apparatus have, for months, been based on little more than strange fantasies and outlandish assumptions. Yet, these fantasies are backed up by a formidable military machine, billions of petrodollars and a nuclear superpower arsenal of weapons of mass destruction. And this is a truly dangerous mix."

Read it all here.

17:49 October 24, 2014

EVENING NEWS ROUNDUP

From RFE/RL's News Desk:

PUTIN ACCUSES UNITED STATES OF 'UNILATERAL DIKTAT'

Russian President Vladimir Putin has accused the United States of escalating conflicts around the world by imposing what he called a "unilateral diktat."

Putin made the remarks in a combative speech to political experts at the Valdai International Discussion Club, in Russia's Black Sea resort of Sochi.

Putin said the United States has been "fighting against the results of its own policy" in Iraq, Libya and Syria.

He said risks of serious conflicts involving major countries have risen, as well as risks of arms treaties being violated.

He also dismissed international sanctions over Russia's actions in Ukraine as a "mistake," saying they aimed at pushing Russia into isolation and would end up "hurting everyone."

We did not start this," he added, referring to rising tensions between Russia and the West.

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

MERKEL URGES PUTIN TO SOLVE UKRAINIAN GAS DISPUTE

German Chancellor Angela Merkel has urged Russian President Vladimir Putin in a telephone call to push for a quick resolution of the ongoing gas dispute with Ukraine as winter looms.

The call by Merkel to Putin on October 24 comes as representatives of the EU, Russia, and Ukraine are due to meet again next week in EU brokered talks aimed at solving the gas dispute between Kyiv and Moscow.

Merkel also underlined that upcoming elections in areas of eastern Ukraine controlled by Russian-backed separatists must respect Ukrainian national law.

Pro-Russian insurgent leaders are boycotting a parliamentary snap poll on October 26 in Ukraine and are holding their own election in the Lugansk and Donetsk regions, home to nearly three million people, on the same day instead.

(Based on reporting by AFP and Reuters)

UNHCR SAYS MORE THAN 800,000 DISPLACED IN UKRAINE CONFLICT

By RFE/RL

The United Nations says the conflict in Ukraine has forced more than 800,000 people from their homes.

Around 95 percent of displaced people come from eastern Ukraine, where government troops have been battling pro-Russian separatists.

UNHCR, the UN refugee agency, told a briefing in Geneva that an estimated 430,000 people were currently displaced within Ukraine -- 170,000 more than at the start of September.

It said at least 387,000 other people have asked for refugee status, temporary asylum, or other forms of residency permits in Russia.

Another 6,600 have applied for asylum in the European Union and 581 in Belarus.

The agency said it was "racing to help some of the most vulnerable displaced people" as winter approaches.

It also said the number of displaced people is expected to rise further due to ongoing fighting in eastern Ukraine.

THREE ALLEGED MILITANTS KILLED IN NORTH CAUCASUS

Three alleged militants have been killed by security forces in Russia's volatile North Caucasus region.

Russia's National Antiterrorism Committee says that two suspects were killed in the village of Charoda in Daghestan on October 24 after they refused to leave an apartment and opened fire at police and security troops.

One police officer was wounded.

Also on October 24, police in another North Caucasus region, Kabardino-Balkaria, killed a suspected militant after he refused to identify himself, threw a grenade towards police, and opened fire with a pistol.

A police officer was wounded in that incident.

Violence is common in Russia's North Caucasus region, which includes the restive republics of Daghestan, Kabardino-Balkaria, Ingushetia, and Chechnya.

Islamic militants and criminal groups routinely target Russian military personnel and local officials.

(Based on reporting by Interfax and TASS)

MOSCOW LAWYER IN HIGH PROFILE ORGANIZED CRIME CASE KILLED

A lawyer, who represented an alleged victim of the notorious Orekhovo criminal group in Moscow, has been assassinated.

Police in the Russian capital say that Vitaly Moiseyev and his wife were found dead with gunshot wounds in a car near Moscow on October 24.

Moiseyev was representing Sergei Zhurba, an alleged victim of the Orekhovo gang and a key witness in a case against one of the gang's leaders Dmitry Belkin.

Belkin was sentenced to life in prison on October 23 for multiple murders and extortion.

Last month, another of Zhurba's lawyers, Tatyana Akimtseva (eds: a woman), was shot dead by unknown individuals.

The Orekhovo group was one of the most powerful crime gangs of the Moscow region and in Russia in the 1990s. Its members are believed to be responsible for dozens of murders.

(Based on reporting by TASS and Interfax)

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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