This week’s highlights:

• A description of the meeting between CIA Director Mike Pompeo and two top Russian intelligence officials portrayed Russia as a partner willing to work with the United States and said the countries should look for ways to cooperate on counterterrorism issues.
• A Treasury Department report obtained by Bloomberg concluded that expanding sanctions to new Russian sovereign debt and derivatives could destabilize markets and spread beyond Russia to have “negative spillover effects into global financial markets and businesses.”
• Legal experts say President Donald Trump will probably never have to implement the Russia sanctions if he doesn't want to.

 

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

Special section on the list of senior Russian political figures and oligarchs published by the U.S. Treasury Department as potential sanction targets:

• Just 12 minutes before deadline, the U.S. Treasury published a list of “Senior Foreign Political Figures and Oligarchs in the Russian Federation and Russian Parastatal Entities” that the Trump administration was supposed to supply to Congress in compliance with the Countering America's Adversaries Through Sanctions Act of 2017 (CAATSA). While the Trump administration unveiled the list late Jan. 29, it chose not to immediately impose any new sanctions on Russian individuals or entities. The State Department noted that CAATSA is already causing pain by deterring billions in Russian arms exports. However, later, a senior State Department official told a press briefing that Jan. 29 "was not a deadline to impose sanctions; it was actually a start date… It was the day on or after which we could start imposing sanctions if we make the determination here at the State Department of activity that falls under the provision." On Jan. 20 Treasury Secretary Steven Mnuchin assured members of Congress that new U.S. sanctions are forthcoming. “We will take the basis of that report and look at, as we do in the normal course, where it’s appropriate to put sanctions. This should in no way be interpreted as we’re not putting sanctions on any of the people in that report,” Mnuchin said of the list. Tony Sayegh, the Treasury Department’s assistant secretary for public affairs, said: “Treasury included a classified annex in the report in order to avoid potential asset flight from the named individuals and entities, as well as to prevent disclosure of sensitive information.” A Treasury report obtained by Bloomberg concluded that expanding sanctions to new Russian sovereign debt and derivatives could destabilize markets and spread beyond Russia to have “negative spillover effects into global financial markets and businesses.” (Russia Matters, 01.30.18, Bloomberg, 01.30.18, Bloomberg, 02.02.18, RFE/RL, 01.31.18, Bloomberg, 01.31.18)

• Who is and is not on the list:
  • The public portion of the list contains 210 names of people viewed as close to President Vladimir Putin’s government. Russians with an estimated net worth of more than $1 billion were included in the list of 96 oligarchs; the other 114 were senior Kremlin and government officials, as well as CEOs of state companies. (Bloomberg, 01.30.18)
  • The officials on the list include 43 of Putin's aides and advisers, among them: Kremlin spokesman Dmitry Peskov; 31 cabinet ministers, including Prime Minister Dmitry Medvedev and Foreign Minister Sergei Lavrov; senior lawmakers; top officials in Russia's intelligence agencies; and three Russian presidential envoys, including at least one for human rights. The list omitted a few liberal-minded senior officials, including central bank governor Elvira Nabiullina, Rusnano chief Anatoly Chubais and Alexei Kudrin, a former finance minister who advises Putin on the economy. (Financial Times, 01.30.18, RFE/RL, 01.30.18)
  • The 96 people on the oligarch list correspond exactly to the 96 billionaires on last year’s Forbes list of Russia’s ultra-rich. The tycoons include Roman Abramovich, Alisher Usmanov, U.S. NBA basketball team owner Mikhail Prokhorov, aluminum magnate Oleg Deripaska and Kaspersky Lab founder Yevgeny Kaspersky. The list also included a few businessmen with no obvious links to the Kremlin, including Yandex’s Arkady Volozh, supermarket magnate Sergei Galitsky and online bank entrepreneur Oleg Tinkov. The CEOs of major state-owned companies, including energy giant Rosneft's chief, Igor Sechin, and the head of state-controlled Sberbank, German Gref, are also on the list. (RFE/RL, 01.30.18, RFE/RL, 01.30.18, Financial Times, 01.30.18)
• Markets’ and businesses’ reaction:
  • According to the RBC business news website’s tally of Forbes data, as of late Jan. 30, the assets of the 96 Russian oligarchs had declined by $1.1 billion after the publication of the list, taking their aggregate wealth to $420 billion. LUKoil chief executive Vagit Alekperov and Vladimir Lisin, owner of NLMK, one of Russia’s largest steelmakers, lost $226 million and $205 million, respectively, according to RBC. Billionaire senator Suleiman Kerimov, in French custody on suspicion of money laundering and tax fraud, lost $102 million. Conversely, supermarket magnate Sergei Galitsky and tycoon Vladimir Yevtushenkov saw their fortunes go up by $157 million and $32 million, respectively. Despite being added to the U.S. Treasury list, neither businessman is considered to be close to the Kremlin. (The Moscow Times, 01.31.18)
  • The Moscow exchange’s equity index, which includes companies controlled by nearly all the men listed, went up four points on Jan. 30 after the report was published. The Moscow Stock Exchange’s dollar-denominated RTS index was up 1.15 percent at 1,290.21 points as of 12:17 GMT after briefly touching its lowest point since Jan. 19 at 1,266.48. The ruble-based MOEX Russian index, previously known as MICEX, was 0.3 percent higher at 2,290.19 points, inching toward the all-time high of 2,328.48 it hit last week. (Reuters, 01.30.18, Financial Times, 01.30.18)
  • Relieved investors pushed yields on Russian 10-year bonds to the lowest levels in five years as Treasury provided no details on a separate report on the effect of expanding sanctions to Russian sovereign debt. (Bloomberg, 01.30.18)
  • Russia’s borrowing costs plunged to the lowest level in more than four years as investors took the lack of detail in the Treasury report as a sign that Washington isn’t ready for tougher sanctions. (Bloomberg, 01.30.18)
  • The ruble opened down 0.1 percent against the dollar on Jan. 30. Shares in some big companies fell, although Russian stocks and the ruble later edged higher overall. Norilsk Nickel was down 1.2 percent after its co-owner Vladimir Potanin was included on the U.S. list. Aluminum giant Rusal, whose co-owner Oleg Deripaska was also named, saw its shares tumble 1.4 percent in Hong Kong. (Reuters, 01.30.18)
  • IPSCO Tubulars, the U.S. subsidiary of Russia’s largest maker of steel pipes for the oil and gas industry, TMK, said on Jan. 29 that it has launched an initial public offering of its common stock. The chairman of TMK is Dmitry Pumpyanskiy who was included in the Treasury list. (Reuters, 01.29.18, Interfax, 01.30.18)
  • Credit Bank of Moscow, whose owner Roman Avdeev is one of the people on the list, said that it would launch a U.S. roadshow for a dollar-denominated bond later this week. Vladimir Yevtushenkov, owner of the Sistema conglomerate, said he saw “no risks” for his business. (Financial Times, 01.30.18)
  • Moody’s Investors Service said that it would consider raising Russia to investment grade even if the nation is burdened with the kind of penalties that have curbed Venezuela’s ability to finance its debts. Moody’s put Russia on positive outlook last week, setting it on course for a possible raise out of junk in the next 12-18 months. Russia’s economy has gained enough resilience to withstand new Western sanctions and the country’s sovereign rating may be upgraded by the end of the year, Kristin Lindow, a senior vice president at Moody’s, said in an interview. (Bloomberg, 01.31.18, 01.30.18)
  • “We believe that the current U.S. approach significantly diminishes the risk of harsh measures against Russian sovereign debt over the short term,” Societe Generale analysts said in a note. (Bloomberg, 01.30.18)
• Reaction in Russia:
  • Russian President Vladimir Putin said a list of Kremlin-connected individuals released by the U.S. Treasury Department was a "hostile step" and an affront to all Russians that would harm bilateral relations. “In effect, all 146 million of us have been put on some list,” he said, calling it “indisputably an unfriendly act.” However, he dismissed its impact as an empty threat. Describing the Treasury report as “nonsense” that would “reduce our bilateral relationship to zero,” Putin mocked the U.S. for bundling together North Korea, Iran and Russia as threats, while asking Moscow for help in dealing with Tehran and Pyongyang. "I won't hide it: We were waiting for this report. We were ready to take steps—serious ones that would have brought our relations to nothing," Putin said. Joking that it was offensive that he wasn’t included, Putin said at a campaign event that Russia will “refrain for the moment” from implementing the serious retaliatory measures it had prepared. "We do not intend to … escalate the situation," Putin said. "We want and intend to patiently build relations to whatever degree the other side—the American side—is ready." (Financial Times, 01.30.18, RFE/RL, 01.30.18, Bloomberg, 01.30.18, AP, 01.30.18)
  • "The importance of this list is null," said Russian Prime Minister Dmitry Medvedev, who then added a joke: "I believe in this case not being included on this list provides grounds for resignation." Medvedev also said the list was "absolutely discriminatory" and would "poison our ties, our relations for quite a long period of time—which is bad in itself." (RFE/RL, 01.30.18, The Washington Post, 01.30.18)
  • Dmitry Peskov, Putin's spokesman, said the list’s publication as part of a sanctions law shows that the United States views the entire Russian government as enemies. "De facto, everyone [on the list] is being called an enemy of the United States," Peskov said on Jan. 30. Peskov on Feb. 1 accused the United States of being a “very unpredictable” partner and said it could not predict if Washington would introduce additional sanctions aimed at its sovereign debt. (AP, 01.30.18, RFE/RL, 01.30.18, Reuters, 02.01.18)
  • A spokesman for Rosneft’s Igor Sechin, who is already subject to U.S. sanctions imposed in 2014, said the list was based on “vicious principles.” (Financial Times, 01.30.18)
  • Russian Deputy Prime Minister Arkady Dvorkovich has dismissed the public portion of the list as simply a "who's who" of Russian politics. (AP, 01.30.18)
  • Valentina Matviyenko, chair of the upper chamber of Russia’s parliament, says the list of Russian officials and businessmen is an attempt to influence Russia's upcoming presidential vote. (AP, 01.30.18)
  • A senior Russian lawmaker has described the list as "political paranoia that, it turns out, is very hard to cure." In a Facebook post Jan. 30, Konstantin Kosachev, chairman of the senate’s foreign affairs committee, said U.S. intelligence failed to find compromising material on Russian politicians and "ended up copying the Kremlin phone book." (AP, 01.30.18)
  • A Russian businessman who is on the list says he will nevertheless advocate for better ties with the West. Boris Titov, presidential ombudsman for business, is on the list along with two other Russian presidential envoys for human rights. (AP, 01.30.18)
  • "One does not have to be very smart to make this list," Mikhail Fedotov, the head of the Kremlin Human Rights Council, told the news agency Interfax. He was also on the list. (The Washington Post, 01.30.18)
  • Russian billionaire businessman Mikhail Fridman, a member of the supervisory board of X5 food retailer, said it was difficult to predict how his inclusion on the list could affect his business empire. (Reuters, 02.01.18)
  • Evgeny Kaspersky, whose cybersecurity firm Kaspersky Lab was recently banned from supplying U.S. government agencies under a separate action, tweeted: “Calling all successful businessmen from the Forbes ratings ‘oligarchs’ is incorrect. I believe @BillGates @WarrenBuffett & @JeffBezos would agree with me here.” (Financial Times, 01.30.18)
  • Russian opposition leader Alexei Navalny has lauded the Trump administration's list of Russian oligarchs and politicians as a "good list." (AP, 01.30.18)
• Reaction in U.S. and other countries:
  • Legal experts say President Donald Trump will probably never have to implement the Russia sanctions if he doesn't want to. Congress doesn't have a lot of viable options to force the president's hand on foreign policy—other than incredibly confrontational ones such as suing or impeaching him. (The Washington Post, 02.01.18)
  • “The State Department claims that the mere threat of sanctions will deter Russia’s aggressive behavior. How do you deter an attack that happened two years ago, and another that’s already underway? It just doesn’t make sense,” said Rep. Eliot Engel, the top Democrat on the U.S. House of Representatives Foreign Affairs Committee. “I’m fed up waiting for this Administration to protect our country and our elections,” he said in a statement. (Reuters, 01.30.18)
  • Democratic Sen. Ben Cardin, the ranking member of the U.S. Senate Foreign Relations Committee, and 19 other Senate Democrats sent a letter to Secretary of State Rex Tillerson on Jan. 30 saying the failure to impose new sanctions was "unacceptable." In their letter, the 20 senators accused the administration of failing to do everything possible to deter any future foreign election interference and expressed "concern" that its policies on Russia "do not fully reflect the clear congressional intent described in the legislation." (RFE/RL, 01.31.18)
  • "The one thing we know for sure already, is the Russians did attempt to meddle in our elections and not only should there be a price to pay in terms of sanctions but also we need to put safeguards in place right now for the elections for this year," Sen. Susan Collins told CNN. (RFE/RL, 01.31.18)
  • Sen. Sherrod Brown, an Ohio Democrat, accused Treasury Secretary Steven Mnuchin of “slow-walking” the report. (Bloomberg, 01.30.18)
  • ''It is a grave breach of President Trump's responsibilities to reward President Putin by inaction for his intervention in an American election—it represents nothing less than appeasement for an attack on our country's democracy,'' said Rep. Adam Smith of Washington State, the ranking Democrat on the House Armed Services Committee. (New York Times, 01.30.18)
  • Sen. Chuck Schumer of New York, the Democratic minority leader, said on Jan. 30 that Trump was effectively circumventing the law and ''afraid to sanction Putin'' and his associates. (New York Times, 01.30.18)
  • Rep. Maxine Waters, a California Democrat, sent a letter to Mnuchin on Jan. 31 admonishing him for what she called a lack of action. (Bloomberg, 01.31.18)
  • “By naming the whole Russian government, presidential administration and all Russian billionaires, the Trump administration has undermined and ridiculed the U.S. sanctions on Russia,” Anders Aslund, an economist and frequent Putin critic who had published recommendations for the list before its release, wrote on Twitter. (Bloomberg, 01.30.18)
  • Ukrainian President Petro Poroshenko praised the United States in a tweet on Jan. 30, expressing "sincere gratitude to Washington" for what he called its "demonstration of leadership in countering Russian aggression." (RFE/RL, 01.30.18)

Nuclear security and safety:

• A new report published by the Norwegian Radiation Protection Authority has said that radiation levels near the Russian K-159 nuclear submarine—which sank in the Barents Sea in 2003 with 800 kilograms of uranium in its reactors—are not dangerously high, though the group recommended that monitoring be continued. (Bellona, 01.31.18)

North Korea’s nuclear and missile programs:

• The State Department warned Russia on Jan. 29 that "there is no more time for excuses" after it reportedly failed to enforce sanctions restricting exports from North Korea. Responding to reports that North Korea likely shipped coal to South Korea and Japan through Russia last year in violation of United Nations sanctions, spokeswoman Heather Nauert criticized the Kremlin for not upholding international agreements. In his State of the Union speech U.S. President Donald Trump said North Korea's "reckless pursuit" of nuclear missiles could very soon threaten the United States. He said the United States was waging a campaign of "maximum pressure" against North Korea and its nuclear weapons ambitions, and he called Pyongyang a "cruel dictatorship." (RFE/RL, 01.31.18, Politico, 01.29.18)
• Russia will send home all migrant workers from North Korea by the end of 2019 to comply with sanctions imposed by the U.N. Security Council, Interfax news agency quoted the Russian ambassador to North Korea, as saying on Jan. 30. (Reuters, 01.30.18)
• Russia’s embassy in North Korea announced on Jan. 29 that it would open a polling station in Pyongyang so that Vladimir Li, the only Russian expatriate living in the country, will have a chance to vote in presidential elections on March 18. (The Moscow Times, 01.30.18)

Iran’s nuclear program and related issues:

• In his State of the Union speech U.S. President Donald Trump called on Congress to fix "fundamental flaws" in the landmark nuclear deal between world powers and Iran. Trump has stopped short of tearing up the deal altogether, a move some analysts feared could lead Iran to move more quickly to develop a nuclear weapon—something Tehran says it has not done and does not plan to do. (RFE/RL, 01.31.18)
• Russia does not believe there is a case for United Nations action against Iran, Russia’s U.N. ambassador said on Jan. 31 after traveling to Washington to view pieces of weapons that Washington says Tehran gave Yemen’s Houthi group. (Reuters, 01.31.18)

Military issues, including NATO-Russia relations:

• Officially unveiled on the afternoon of Feb. 2, the Nuclear Posture Review—a comprehensive look at America’s nuclear weapons and the doctrine behind them—largely continues ideas pushed forward from the Obama administration’s 2010 review. It fully supports the nuclear modernization projects now underway and reaffirms commitments to non-proliferation treaties. While the NPR features sections for North Korea, China and Iran, the primary focus is clearly Russia and what Pentagon officials believe is the needed to ensure a balance of power with Moscow. The NPR proposes introducing two new capabilities into the U.S. arsenal—a low-yield warhead for submarine-launched ballistic missiles and the development of a new submarine-launched cruise missile. (Defense News, 02.02.18)
• The United States is accusing Moscow of unsafe military practices after it says a Russian jet flew within five feet of a U.S. Navy plane over the Black Sea. The State Department says the incident occurred Jan. 29 when a Russian Su-27 jet crossed directly in front of the flight path of the American jet in international airspace. The interception posed no danger to the U.S. aircraft, Russia’s Defense Ministry claimed in response. (AP, 01.29.18, Reuters, 02.01.18)
• Russia has ridiculed a UK minister for suggesting it could cause "thousands and thousands and thousands" of deaths by crippling British infrastructure. Defense Secretary Gavin Williamson told the Daily Telegraph that Moscow was spying on energy supplies and could cause "total chaos" in the country by cutting them. The UK has four undersea energy connections for electricity linked to mainland Europe and a further four for gas. Williamson, who became defense secretary last November, said Russia had been researching these types of connections and would be willing to take action "any other nation would see as completely unacceptable." (BBC, 01.26.18)
• President Donald Trump is expected to ask for $716 billion in defense spending when he unveils his 2019 budget next month, a major increase that signals a shift away from concerns about rising deficits, U.S. officials said. It would increase Pentagon spending by more than 7 percent over the 2018 budget, which still has not passed through Congress. (The Washington Post, 01.27.18)
• Failure by the next German government to fulfill a pledge to boost military spending to 2 percent of its economic output will weaken the NATO alliance, U.S. Army secretary Mark Esper said on Jan. 29. (VOA, 01.29.18)

Missile defense:

• The Pentagon made a major investment in its missile defense systems this week, awarding Boeing an additional $6.5 billion contract. The sole-source contract by the Missile Defense Agency is to complete the "accelerated delivery of a new missile field with 20 additional silos" at Fort Greely, Alaska, the Pentagon said in a statement. It would also pay for the procurement of 20 additional Ground Based Interceptor missiles, and bring the total value of the contract to $12.6 billion through 2023. (The Washington Post, 02.02.18)
• A test shoot of the SM-3 Block IIA fired from an Aegis Ashore test site in Hawaii failed Jan. 31. The missile is designed to intercept ballistic missiles. (Defense News, 01.31.18)

Nuclear arms control:

• The United States has fulfilled its obligations under the New START nuclear arms treaty with Russia in August last year and expects Moscow also will be within the limits set by the accord by the Feb. 5 deadline, the State Department said on Feb. 1. (Reuters, 02.01.18)
• “As part of our defense, we must modernize and rebuild our nuclear arsenal, hopefully never having to use it, but making it so strong and powerful that it will deter any acts of aggression. Perhaps someday in the future there will be a magical moment when the countries of the world will get together to eliminate their nuclear weapons. Unfortunately, we are not there yet,” U.S. President Donald Trump said in his State of the Union address. (Russia Matters, 01.30.18)
• Russian President Vladimir Putin has appointed Mikhail Ulyanov as Russia’s permanent representative to the U.N. office and other international organizations in Vienna. Prior to his new appointment, Ulyanov served as director of the Russian Foreign Ministry’s non-proliferation and arms control department. Vladimir Yermakov has been appointed to replace him there. (TASS, 01.23.18, Russian Foreign Ministry, 01.25.18)
• Secretary of State Rex Tillerson faces another key vacancy at the State Department after Tom Shannon, the department’s No. 3 official, announced his retirement. Tillerson used Shannon for many tasks, including resolving minor irritants in the fraught relationship with Russia. Shannon has been holding consultations on strategic stability with Russian Deputy Foreign Minister Sergei Ryabkov, who is one of several candidates that may reportedly replace Sergei Lavrov as Russia’s top diplomat after the presidential elections in Russia in March. (Bloomberg, 01.31.18, Russia Matters, 02.02.18)

Counter-terrorism:

• Sergey Naryshkin, the head of Russia's Foreign Intelligence Service, or SVR, and Alexander Bortnikov, who runs the FSB, which is the main successor to the Soviet-era security service the KGB, visited the U.S. last week to meet with CIA Director Mike Pompeo. Naryshkin also met with U.S. Director of National Intelligence Dan Coats in Washington. The meeting with Pompeo addressed the countries' mutual interest in preventing terrorist attacks. The head of Russia's military intelligence, the GRU, also came to Washington, though it's not clear that he met with Pompeo. A senior U.S. intelligence official based in Moscow was also called back to Washington for the meeting with the CIA chief. A description of the meeting sent to U.S. intelligence officers portrayed Russia as a partner willing to work with the United States, and said the countries should look for ways to cooperate on counterterrorism issues. (The Washington Post, 01.31.18, The Moscow Times, 01.31.18)
  • Pompeo shot back at Senate Democratic leader Chuck Schumer after the lawmaker accused President Donald Trump of letting Russia’s sanctioned spy chief “waltz through the U.S. front door”: “While Russia remains an adversary, we would put American lives at greater risk if we ignored opportunities to work with the Russian services in the fight against terrorism,” Pompeo said. In those meetings, “we cover very difficult subjects in which American and Russian interests do not align” and U.S. officials “pull no punches.” (Bloomberg, 02.01.18)
  • Russian Ambassador Anatoly Antonov said that contacts among Russian and U.S. intelligence services continued “even in the most difficult of times. … Politics is politics, but work is work,” he said. (The Moscow Times, 01.31.18)
• Russian security services have reportedly killed an Islamic State member plotting to commit a terrorist attack during the March 18 presidential elections. (The Moscow Times, 02.01.18)
• Police in Russia’s North Caucasus region have arrested Kazim Nurmagomedov on charges of aiding and abetting terrorism five years after he traveled to Syria to rescue his adult son from the ranks of the Islamic State. (The Moscow Times, 02.02.18)
• “Terrorists are not merely criminals. They are unlawful enemy combatants. And when captured overseas, they should be treated like the terrorists they are,” Trump said in his State of the Union address. The U.S. president says he has signed an executive order to keep open the high-security U.S. military detention center in Guantanamo Bay, Cuba. (Russia Matters, 01.30.18, RFE/RL, 01.31.18)

Conflict in Syria:

• The Syrian Congress of National Dialogue in the Black Sea resort of Sochi concluded on Jan. 30 with an agreement to create a constitutional committee that will work under the auspices of U.N. talks in Geneva. The 1,500 delegates also proposed a list of committee members that can be approved only in Geneva. The congress concluded with a final statement that said the participants agreed on a set of principles for resolving the conflict that include "full commitment to the sovereignty, independence, territorial integrity and unity of the Syrian Arab Republic" and "full commitment to Syria's national sovereign equality." The statement also called for self-determination through "democratic" elections and for the maintenance of Syria's security forces, but insisted they must "operate within the law." Most of Syria’s rebel groups refused to attend. Those who did come refused to leave the airport. At the conference Russia’s Foreign Minister Sergei Lavrov was heckled by a critic of Russia’s bombing campaign. The United Nations agreed that its Syria envoy, Staffan de Mistura, would attend, lending Sochi gravitas, if Russia would stop trying to make Sochi rather than Geneva the site of discussions for rewriting Syria’s constitution. The United States, Britain and France declined to attend because of what they said was Assad's refusal to properly engage. (RFE/RL, 01.31.18, Reuters, 01.30.18, New York Times, 01.30.18, The Washington Post, 01.31.18)
• Russian President Vladimir Putin spoke with his Turkish counterpart, Recep Tayyip Erdogan, on Jan. 31 to discuss the outcome of the Russian-sponsored conference in Sochi. (Reuters, 01.31.18)
• Russian forces used some 215 new types of advanced weapons systems in Syria, according to Putin. (National Interest, 01.30.18)
• At least 15 people were killed on Jan. 30 when warplanes suspected to be Russian struck a crowded market in the rebel-held city of Ariha in the second such strike on a shopping area in opposition-held Idlib within 24 hours, residents and rescuers said. (Reuters, 01.30.18)
• France’s Foreign Ministry on Feb. 1 condemned a series of bombing raids in rebel-held areas of Syria and called on Russia and Iran, as allies of the government, to urgently end the attacks and ensure humanitarian aid entered the regions. (Reuters, 02.01.18)
• Several hundred people, including civilians, have been killed during Turkey’s military operation in Syria’s Afrin, Interfax news agency cited Russian Foreign Ministry spokeswoman Maria Zakharova as saying on Jan. 31. (Reuters, 01.31.18)
• Russia’s military called on Damascus to hold direct talks with Syrian opposition groups in the besieged enclave of eastern Ghouta so the sick could be evacuated, RIA news said on Jan. 29, citing Russia’s Defense Ministry. (Reuters, 01.29.18)
• The Syrian government may be developing new types of chemical weapons, and U.S. President Donald Trump is prepared to consider further military action if necessary to deter chemical attacks, senior U.S. officials said on Feb. 1. (Reuters, 02.01.18)
• Prime Minister Benjamin Netanyahu was in Moscow on Jan. 29 to discuss Israeli concerns about any expansion of Iran’s military foothold in Syria with Putin. (Reuters, 01.29.18)

Cyber security:

• No significant developments.

Elections interference:

• House Republicans, with the approval of President Donald Trump, on Feb. 2 released a disputed GOP intelligence memo that alleges FBI abuses of its surveillance authority. The highly controversial memo from the GOP and Rep. Devin Nunes alleges that the FBI’s then-Deputy Director Andrew McCabe told the House Intelligence Committee that no surveillance warrant would have been sought for a Trump campaign aide without the dossier compiled by British ex-spy Christopher Steele. The FISA court granted a warrant to monitor former Trump foreign-policy adviser Carter Page and approved three subsequent renewals, according to the memo. McCabe abruptly stepped down on Jan. 29. (CNN, 02.02.18, New York Times, 01.30.18)
• Page, the Trump's campaign former foreign-policy adviser, was known to U.S. counterintelligence officials for years before he became a prominent figure in the Steele dossier, which contains unverified research about the future president's ties to Russia. Page had his first known brush with a U.S. counterintelligence official in June 2013. He was interviewed by FBI counterintelligence agent Gregory Monaghan and another FBI agent, who were investigating whether Victor Podobnyy was a Russian intelligence agent, according to a criminal complaint. (Wall Street Journal, 02.01.18)
• Trump has lashed out at the FBI amid a controversy over the memo. In a tweet on Feb. 2, Trump charged that senior officials and investigators of the FBI and Justice Department "have politicized the sacred investigative process in favor of Democrats and against Republicans." Trump was overheard on the night of Jan. 30 telling a Republican lawmaker that he was “100 percent” planning to release the memo. Trump’s frustrations with the Russia investigation boiled over on Air Force One last week when he learned that a top Justice Department official had warned against the memo. (RFE/RL, 02.02.18, Bloomberg, 01.31.18, Bloomberg, 01.29.18)
• Democratic lawmakers have said the memo cherry-picks facts and omits important context. The FBI director, meanwhile, has taken the unusual step of publicly calling for it not to be released. Democrats also charged late Jan. 31 that House Republicans secretly altered a controversial memo drawn from classified information on how the FBI handled an investigation into Russian election meddling before sending it to the White House for review. (RFE/RL, 02.02.18, Bloomberg, 01.31.18)
• FBI Director Christopher Wray told the White House he opposes the release of the controversial, classified GOP memo because it contains inaccurate information and paints a false narrative, according to a person familiar with the matter. The FBI said on Jan. 31 that it has "grave concerns" about omissions in the memo. (Bloomberg, 01.31.18, The Boston Globe, 02.01.18)
• The FBI inquiry into alleged Russian collusion in the 2016 U.S. presidential election has been given a second memo that independently set out some of the same allegations made in the Steele dossier. The second memo was written by Cody Shearer, a controversial political activist and former journalist who was close to the Clinton White House in the 1990s. (The Guardian, 01.30.18)
• House Speaker Paul Ryan defended a House committee’s party-line vote to release the memo, saying there are “legitimate questions” about whether an American’s civil liberties were violated and possible official “malfeasance.” (Bloomberg, 01.30.18)
• The reference to Deputy Attorney General Rod Rosenstein’s actions in the memo  indicates that Republicans may be moving to seize on his role as they seek to undermine the Russia inquiry. (New York Times, 01.28.18)
• Trump’s presidency would “end” if he followed through on efforts to fire Robert Mueller, the special counsel leading the investigation into Russian interference in the 2016 U.S. election, said Sen. Lindsey Graham. Graham and Republican Sen. Susan Collins of Maine also said Congress should move forward on bipartisan legislation preventing a president from firing a special counsel. Graham and Collins have urged Trump to avoid public comments about the special counsel’s probe into potential contacts with Russia during his 2016 campaign. (RFE/RL, 01.29.18, Bloomberg, 01.27.18)
• Senate majority leader Mitch McConnell said Jan. 30 that he sees no need to act to protect Mueller’s Russia investigation—and declined to say how Republicans would react if Trump tries to fire Mueller. (Bloomberg, 01.30.18)
• Mueller is seeking to interview Mark Corallo, the former spokesman of Trump’s legal team as part of his investigation, according to a source with knowledge of the matter.  (Reuters, 01.31.18)
• Mueller and his office have interviewed at least one member of a Facebook team that was associated with Trump’s 2016 presidential campaign, Wired magazine reported on Jan. 26. (Reuters, 01.26.18)
• Three attorneys representing Rick Gates told a federal court Feb. 1 that they are immediately withdrawing as counsel for the former Trump campaign aide, who is fighting Mueller’s indictment of him on money laundering and other charges. (Politico, 02.01.18)
• Trump met with Attorney General Jeff Sessions and FBI Director Christopher Wray at the White House on Jan. 22 to discuss missing text messages sent between two FBI agents who had expressed anti-Trump views. (Bloomberg, 01.29.18)
• Steve Bannon’s second appearance before a House panel investigating Russian meddling in the 2016 election has been postponed as the lawyer for Trump’s former adviser works out details with the White House, a person familiar with the matter said. (Bloomberg, 01.30.18)
• CIA Director Mike Pompeo has said Russia will target U.S. midterm elections in November as part of the Kremlin's efforts to influence domestic politics across the West. (RFE/RL, 01.30.18)
• In a document posted by the Senate Judiciary Committee, Twitter has revealed that Russian bots retweeted Trump almost 470,000 times between Sept. 1 and Nov. 15, 2016. During that same timeframe, the Russian-linked accounts retweeted candidate Hillary Clinton fewer than 50,000 times, Twitter told the committee. (CNET, 01.28.18)

Energy exports:

• “The first tanker has already arrived in the United States,” Russian President Vladimir Putin told Gennady Timchenko, co-owner of the Russian partner in Yamal LNG, a $27 billion Arctic project that the Kremlin leader has made a personal priority, despite U.S. financial sanctions. “The media has already put out the information but you’re still scared to.” “I don't want to use Russian gas," said Vsevolod Petriv, chairman of the Boston branch of the Ukrainian Congress Committee of America. “I'm not sure why we can't use our own gas." (The Boston Globe, 02.01.18,The Moscow Times, 02.01.18)
• Russia’s energy monopoly Gazprom has welcomed Germany’s approval of the Nord Stream-2 gas pipeline to Europe that is viewed with suspicion by Moscow’s geopolitical rivals. The United States sees the planned pipeline as a threat to Europe’s energy security, U.S. Secretary of State Rex Tillerson said on Jan. 27. (The Moscow Times, 02.01.18, Reuters, 01.27.18)
• Russia produced an average of 10.12 million barrels of oil daily in November 2017, down from 10.86 a month earlier, but Russia is still the world's top oil producer in the reporting month, according to a Jan. 30 report by Russia’s Rosstat statistics agency. (Intellinews, 01.31.18)
• Crude production by OPEC and its main ally Russia held steady last month as increases in Saudi Arabia and Iran offset the ongoing deterioration of Venezuela’s oil industry. U.S. oil production is gaining faster than expected as the country races to challenge giants Russia and Saudi Arabia. Output topped 10 million barrels a day in November, reaching the highest level since 1970. (Bloomberg, 02.01.18, 01.31.18)

Bilateral economic ties:

• No significant developments.

Other bilateral issues:

• “Around the world, we face rogue regimes, terrorist groups and rivals like China and Russia that challenge our interests, our economy and our values. In confronting these dangers, we know that weakness is the surest path to conflict, and unmatched power is the surest means of our defense. For this reason, I am asking the Congress to end the dangerous defense sequester and fully fund our great military,” U.S. President Donald Trump said in his State of the Union address. Trump did not mention any other post-Soviet republic in his address. (Russia Matters, 01.30.18)
• Russia’s Foreign Ministry has warned citizens traveling abroad that they risk arrest on the request of U.S. intelligence services who are “hunting” for Russians. (The Moscow Times, 02.02.18)
• The current U.S. administration displays anti-Russian sentiment and is no better than its predecessor, Russian senator Alexei Pushkov said. He added that Trump’s administration was “even worse” than Obama’s in certain areas. (The Moscow Times, 01.29.18)
• U.S. Secretary of State Rex Tillerson warned countries of the Western hemisphere to beware of “alarming” actions by Russia and China in their region, urging them to work with the United States instead. He said that Russia’s "growing presence in the region is alarming.” But he had the harshest words for China, which is now the largest trading partner of Chile, Argentina, Brazil and Peru. Chinese offers, he said, “always come at a price.” (RFE/RL, 02.02.18)
• The FBI has released dozens of pages from its investigation into the death of Mikhail Lesin, files that largely corroborate earlier police and other reports about the circumstances behind the former Russian press minister's 2015 death in Washington. (RFE/RL, 01.26.18)

II. Russia’s domestic news

Politics, economy and energy:

• Russia’s economy grew 1.5 percent in 2017, according to data from the country’s Federal Statistics Service released on Feb. 1, pointing to the first annual rise in three years. The Russian economy shrank by 0.2 percent in 2016 and 2.8 percent in 2015. (Financial Times, 02.01.18)
• The Russian Finance Ministry drafted a new bill on cryptocurrency on Jan. 26 in hopes the State Duma will ultimately sign it into law, moving Russia further ahead in the world of digital currency trading. The bill legalizes the term "digital financial asset" as a security in electronic form, "created using encryption methods, of which the legal title of ownership is verified by making a digital record in the register of digital transactions," also known as a blockchain. (Forbes, 01.29.18)
• Russian President Vladimir Putin is scheduled to participate in the grid connection of the country's latest reactor, unit 4 of the Rostov nuclear power plant, which is near the city of Volgodonsk. (World Nuclear News, 02.01.18)
• Russia’s birth rate has fallen to the lowest level in a decade, with just 1.69 million births recorded last year, according to official data. The number of deaths totaled 1.8 million. Yet Russia’s overall population increased by 70,000 to 146.8 million in 2017 thanks to inbound migration, according to Russia’s state statistics service. (The Moscow Times, 01.29.18, Russia Matters, 02.02.18)
• With a month and a half left until Russia stages a presidential vote, Putin’s support in state-run polling has dipped below 70 percent for the first time in almost a year, according to state-run pollster VTsIOM (The Moscow Times, 02.01.18)
• Kremlin spokesman Dmitry Peskov called Putin "an absolute leader" with no competition on the "political Mt. Olympus" earlier this week. In response Ella Pamfilova, the head of Russia’s election office, saw "obvious signs of campaigning," in Peskov’s remarks, the RBC website reported on Feb. 2. Peskov apologized an hour after Pamfilova’s admonition. Putin visited an agricultural equipment factory Feb. 1—and quipped that if he were to lose the upcoming election he’d "start work as a combine driver after March 18." (The Washington Post, 02.02.18, The Moscow Times, 02.02.18)
• Putin's spokesman says the Kremlin does not consider opposition leader Alexei Navalny a threat. Peskov spoke to reporters on Jan. 29, a day after thousands of people demonstrated in cities nationwide in support of Navalny's call for a boycott of the March 18 election that appears certain to extend Putin's rule. Staff and supporters of Navalny have been arrested and fined across Russia for organizing the unauthorized demonstrations on Jan. 28 that called for a “voters’ strike.” Russia's Supreme Court has declined Navalny's appeal to be allowed to run for president. (RFE/RL, 01.26.18, The Moscow Times, 02.01.18, RFE.RL, 01.29.18)
• Putin spoke out against attempts to deny the Holocaust at the Jewish Museum and Tolerance Center in Moscow on Jan. 29. Putin made his remarks at an event dedicated to International Holocaust Remembrance Day, attended by Israeli Prime Minister Benjamin Netanyahu. (The Moscow Times, 01.30.18)
• The European Court of Human Rights has ruled that Russia violated the rights of three men who were jailed in connection with a protest on the eve of Putin's inauguration to his current term. (RFE/RL, 01.30.18)
• Moscow police have reportedly raided the home of a journalist over his controversial report about a Russian jihadist who joined Islamist fighters in Syria. The New Times magazine incurred a fine of 100,000 rubles (almost $1,800) last summer for publishing a text written by Pavel Nikulin titled “From Kaluga with Jihad.” (The Moscow Times, 01.31.18)
• Russian human rights activist Yuri Dmitriev who helped to expose the Stalin-era Great Terror and found mass graves of thousands of its victims was freed from jail while awaiting trial on child pornography charges, local media reported on Jan. 27. (Reuters, 01.27.18)
• The Russian doping scandal took a dramatic turn Feb. 1 when an international court threw out the Olympic bans for 28 Russian athletes. The ruling drew an immediate response from International Olympic Committee officials who voiced their “disappointment” and said they might still block the athletes from the upcoming 2018 Winter Games in Pyeongchang, South Korea. Putin earlier told a gathering of athletes at his presidential residence outside Moscow that the IOC’s decision to ban Russia from the Olympics amounts to an "outside attack" on Russian sports. Putin also called Grigory Rodchenkov, the whistle-blower who has provided evidence of what investigators say was an elaborate state-sponsored doping program, a "jerk" who should not be trusted. (RFE/RL, 01.30.18, Baltimoe Sun, 02.01.18, RFE/RL, 01.31.18)

Defense and aerospace:

• Russia’s Prime Minister Dmitry Medvedev has approved the deployment of Russian warplanes on the disputed Kuril island chain between Russia and Japan. (The Moscow Times, 02.02.18)

Security, law-enforcement and justice:

• Nikita Belykh, the liberal ex-governor of the Kirov region in central Russia, has been sentenced to eight years in prison for accepting a bribe in a case he has labeled absurd. (The Moscow Times, 02.02.18)

III. Foreign affairs, trade and investment

Russia’s general foreign policy and relations with “far abroad” countries:

• Finland’s moderate President Sauli Niinisto cruised to a rare first-round election win with an overwhelming 62.7 percent of the vote on Jan. 28 as his delicate balancing of ties with neighbor Russia and the U.S.-led NATO military alliance resonated with voters. (Reuters, 01.28.18)
• Czech President Milos Zeman won a second term in a presidential election on Jan. 27, gaining the backing of voters for his tough stance against immigration and his courtship of Russia and China. In the run-off against strongly pro-European Union academic Jiri Drahos, Zeman scored 51.4 percent to 48.6 percent for his challenger. (Reuters, 01.27.18)
• Russian President Vladimir Putin has awarded Serbian Foreign Minister Ivica Dacic the Order of Friendship, a state medal he bestows upon several foreigners every year. (RFE/RL, 01.31.18)
• Espionage and foreign interference are occurring at greater levels now than at the height of the Cold War, a top intelligence official warned Australian lawmakers, as concerns grow among the U.S. and its allies about Chinese and Russian meddling. (Wall Street Journal, 01.31.18)

China:

• The Pentagon is in the opening stages of “redesigning the force” around the challenges of Russia and China, according to Gen. Paul Selva, vice chairman of the Joint Chiefs of Staff. “Any fight with China, if it were to come to blows, would be a largely maritime and air fight,” Selva said. In contrast, “the Russia global problem set is largely an air and ground fight, supported by elements of our maritime component, because you can’t get to Russia, you can’t get to Europe in any large measure, without transiting the North Atlantic,” he said. “Which means there’s going to be a maritime fight to get things to the continent, but the fight itself as it evolves is likely to be an air and ground fight.” America may not be able to afford preparing for the two unique problem sets, he said. (Defense News, 01.30.18)
• China must strengthen its nuclear deterrence and counter-strike capabilities to keep pace with the developing nuclear strategies of the United States and Russia, the official paper of the People’s Liberation Army said on Jan. 30.  (Reuters, 01.30.18)

Ukraine:

• U.S. suggestions on deploying a U.N. mission in war-ravaged eastern Ukraine look quite feasible and Russia will study them carefully, Kremlin aide Vladislav Surkov was quoted as saying by Russian media after meeting with his American counterpart, Kurt Volker. Surkov and Volker held talks in the Gulf city of Dubai on Jan. 26.  Russia has shown more "openness" to U.S. suggestions on a possible U.N. peacekeeping mission in war-torn eastern Ukraine, but Washington and Moscow remain far from striking a deal, Volker said. He said he and Surkov "had a very detailed discussion" about how the two sides could break the impasse, including U.S. hopes for peacekeepers with a broad mandate to patrol the entire conflict zone—including the Ukrainian-Russian border. Only then, Volker told reporters on Jan. 29, would it be possible "to create the conditions for implementing the Minsk agreements," pacts made in September 2014 and February 2015 aimed at resolving the conflict. (RFE/RL, 01.29.18, RFE/RL, 01.29.18)
• Ukraine said on Jan. 31 that one of its soldiers has been killed and two wounded in clashes that took place in the country's east. (RFE/RL, 01.31.18)
• Ukrainian President Petro Poroshenko says he is "deeply concerned" by a Polish bill that accuses some Ukrainians of collaborating with Nazi Germany, calling it "categorically unacceptable." The United States, Israel and others have sharply criticized the bill, which subjects anyone who accuses Poland or its people of complicity in Nazi crimes to criminal prosecution and a possible prison sentence of up to three years. (RFE/RL, 02.01.18)
• In its main annual report on anti-Semitism, Israel's government singled out Ukraine as unusual in Eastern Europe for the alleged increase in attacks there, triggering protest by Kiev. The report did not name the total number of incidents reported but a ministry spokesperson queried by JTA said that throughout 2017, more than 130 incidents of anti-Semitism had been reported, including violent assaults, in Ukraine. (JTA, 01.28.18)
• Ukraine tested a locally made cruise missile capable of hitting land and sea targets from land on Jan. 30, National Security and Defense Council Secretary Oleksandr Turchynov said.  (Reuters, 01.30.18)
• Pope Francis has visited a Ukrainian Greek-Catholic basilica in Rome, paying tribute to Catholics who perished in Ukraine because of their faith during the time of Soviet rule. (RFE/RL, 01.29.18)
• The Czech government agreed on Jan. 31 to double the number of Ukrainians it was allowing in as fast-track migrant workers to 19,600 per year, aiming to help firms struggling to find workers and facing pressure from the workforce for wage hikes. (Reuters, 01.31.18)
• Ihor Huzhva, editor in chief of the Ukrainian Strana.ua news site derided by critics as overly friendly toward Russia, says he has fled the country and appealed for political asylum in Austria, citing threats of physical violence and "unprecedented pressure from the authorities," including President Petro Poroshenko. (RFE/RL, 02.01.18)
• The Ukrainian government has fired tax and customs service chief Roman Nasirov, who was suspended from the post after his arrest on suspicion of embezzlement in March 2017. (RFE/RL, 01.31.18)
• Opposition politician Mikheil Saakashvili was in Ukraine's Supreme Court on Jan. 29 to seek the restitution of his Ukrainian citizenship, revoked by Poroshenko last year. (RFE/RL, 01.31.18)

Russia’s other post-Soviet neighbors:

• Uzbek President Shavkat Mirziyoev has dismissed powerful longtime National Security Service chief Rustam Inoyatov, removing an influential insider who had been seen as his rival, two senior government officials have told RFE/RL. Ihtiyor Abdullaev has been appointed to run the service. (RFE/RL, 01.30.18)
• Adham Ahmadboev, Uzbekistan's former interior minister, has been detained, according to two law enforcement officials in the Central Asian state, though it remains unclear on what charges. (RFE/RL, 01.29.18)
• The Moscow City Court ordered the deportation process against journalist Ali Feruz stopped and has granted him permission to leave Russia. (RFE/RL, 02.01.18)
• Azeri President Ilham Aliyev, in office since succeeding his father in 2003, has been nominated as the ruling party’s candidate in the presidential election in October, the party executive secretary said on Feb. 1. (Reuters, 02.01.18)
• People in Armenia and Nagorno-Karabakh are increasingly opposed to making any concessions to Azerbaijan in their long-running conflict, and are also increasingly pessimistic about the chances for peace, a new study has found. A 2004 poll, for example, found that two-thirds of Armenians expressed support for some sort of concessions to Azerbaijan in the name of peace. But a 2017 survey from the Yerevan think tank Caucasus Institute “shows that readiness for compromise has drastically decreased,” with only 8 percent expressing support for some concessions. (Eurasianet, 01.29.18)
• A Belarusian court has convicted three journalists of hate crimes over articles they wrote for Russian news outlet Regnum, ruling that the stories risked inciting ethnic discord by belittling Belarus. (RFE/RL, 02.02.18)
• Hungary is seeking the introduction of more exemptions to the European Union's arms embargo on Belarus to include helicopter spare parts and equipment used for shooting sports, according to several sources familiar with the matter. (RFE/RL, 01.30.18)

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