This Week’s Highlights

• The Trump administration is considering intervening in the Saudi-Russian oil-price war with a diplomatic push to get the Saudis to cut oil production and threats of sanctions on Russia aimed at stabilizing markets, according to the Wall Street Journal. The news prompted the Kremlin to assert that Russia and Saudi Arabia have good relations when it comes to oil markets and Moscow does not need anyone else to intervene, Reuters reports.
• U.S. national security adviser Robert O'Brien will travel to Moscow to attend Russia's World War II Victory Day celebrations on May 9, Reuters reports.
• The vast majority of Russians, 87 percent, believe that Western sanctions against Russia did not create any particular problems for them personally or for their families, according to the Levada Center, a high for the period of research beginning in the spring of 2014, when the first sanctions were introduced, Vedomosit reports.
• There have been 253 cases of coronavirus infections reported in Russia so far and one death, The Moscow Times reports. Russian authorities have banned foreign nationals from entering the country from March 18 until May 1, shut state schools and limited public gatherings in Moscow in an effort to curb the spread of coronavirus, according to the New York Times and Reuters. Meanwhile, a Russian state watchdog has reportedly found that a third of medical facilities in Russia had no running water and 40 percent lacked central heating.
• As a result of the coronavirus turmoil and falling oil prices, the Russian stock markets and the value of the ruble—already the worst performer among the world’s currencies this year—are down around 20 percent since the start of the year, according to The Moscow Times. The Russian government has announced the formation of a $4 billion fund to support the economy, RFE/RL reports, while the Central Bank has separately announced a $6.3 billion bank lending facility to offer loans to small and medium-sized businesses, according to the Financial Times.
• Paradoxically, Western sanctions since 2014 and the policies Russia enacted in response prepared the Kremlin for what came this month: a universal dislocation of the global economy from the coronavirus pandemic and an oil price war, the New York Times reports.
• According to Levada’s 2019 survey in Crimea, support for joining Russia remains very high (86 percent in 2014 and 82 percent in 2019)—and is especially high among ethnic Russians and Ukrainians, The Washington Post reports. Irina Kiviko, Crimea's finance minister, says the region's economy has more than doubled in size since 2014, according to the Wall Street Journal.
• Russia’s Konteiner new generation over-the-horizon radar, capable of tracking launches of cruise and hypersonic missiles at the distance of up to 3,000 kilometers, will be deployed in Russia’s Baltic exclave of Kaliningrad to cover the entire territory of Europe, including the U.K., according to TASS.

 

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

Nuclear security and safety:

• The European Bank for Reconstruction and Development has signaled its readiness to help Russia raise Soviet-era radioactive debris, including two sunken nuclear submarines, from the bottom of Arctic seas. (Bellona, 03.18.20)
• This year’s first shipment of uranium tails from Germany arrived in Russia’s post of Ust Luga on March 19. Containers containing about 600 tons of so-called uranium tails will be loaded onto the train, which will go to Novouralsk in the Sverdlovsk region, according to Russian environmental activists. (Rosbalt, 03.19.20)

North Korea’s nuclear and missile programs:

• Russia said March 19 it has sent test kits for the novel coronavirus to countries including Iran, North Korea and ex-Soviet states. (The Moscow Times, 03.12.20)

Iran and its nuclear program:

• On March 16, China's Foreign Ministry asked the U.S. to lift its sanctions against Iran, saying they were thwarting Tehran's efforts to counter COVID-19. Russia's Foreign Ministry made a similar announcement, calling the sanctions "anti-human." (Middle East Eye, 03.17.20)

New Cold War/saber rattling:

• No significant developments.

NATO-Russia relations:

• U.S. officials are significantly reducing the size and scope of the long-awaited Defender 2020 exercise intended to test the Army’s ability to move a division-sized force from U.S. seaports to European training grounds this spring. The exercise is being curtailed due to the outbreak of the novel form of coronavirus. (Army Times, 03.17.20)

Missile defense:

• No significant developments.

Nuclear arms control:

• No significant developments.

Counter-terrorism:

• U.S. President Donald Trump on March 17 tapped Christopher Miller to serve as his next director of the National Counterterrorism Center, a move that will fill a key role in the intelligence community. Miller, who currently serves as the deputy assistant secretary of defense for special operations and combating terrorism, will take over the role previously held by Joseph Maguire. (The Hill, 03.19.20)
• The U.S. blacklisted the new leader of Islamic State as a specially designated global terrorist. The designation of Amir Muhammad Sa'id Abdal-Rahman al-Mawla comes as the U.S. continues to add pressure on ISIS, which the U.S. has designated as a foreign terrorist organization. (Wall Street Journal, 03.17.20)

Conflict in Syria:

• “We believe Russia has killed dozens of Turkish military personnel in the course of their military operations, and we stand with our NATO ally Turkey and we continue to consider additional measures to support Turkey and to end the violence in Idlib and in Syria more broadly,” U.S. Secretary of State Mike Pompeo said. (Reuters, 03.17.20)
• Russia and Turkey carried out their first joint patrol along an east-west highway in northwest Syria on March 15, although the route was reportedly cut short due to militant activity. The patrols along the M4 highway in Idlib Province are being conducted in keeping with a March 5 cease-fire accord between Russia and Turkey. (RFE/RL, 03.15.20)
• The U.S. Armed Forces reportedly intercepted and blocked a Russian military patrol in northeastern Syria this week near the town of Tal Tamr in Syria’s Al-Hasakah governorate. (Almasdarnews, 03.17.20)

Cyber security:

• Over the course of last weekend, mobile phones across the U.S. began to ping with an urgent warning: Trump was planning to mandate a nationwide quarantine in response to the coronavirus outbreak. But the messages were far from true. U.S. officials believe that the campaign bore hallmarks suggesting that Russia or China may have been the potential originators. On March 20, Pompeo described "pretty diffused" efforts from within China, Iran and Russia designed to "disparage what America is doing and our activity to set in motion" the administration's plan to address the coronavirus. (Financial Times, 03.20.20, U.S. News, 03.20.20)
• Russian hacker group Digital Revolution claims to have breached a contractor for the FSB and discovered details about a project intended for hacking Internet of Things (IoT) devices. (ZDNet, 03.20.20)

Elections interference:

• The U.S. has dropped its criminal case against a company controlled by a close associate of Russian President Vladimir Putin that allegedly funded an infamous social-media campaign to meddle in the 2016 presidential elections. The Justice Department announced March 16 it was withdrawing the eight-count indictment of Concord Management and Consulting, a company owned by Yevgeny Prigozhin, a man dubbed “Putin’s chef,” to avoid disclosing investigative techniques to the Russians. Prosecutors said the firm was taking advantage of the rights it was offered under the American legal system, but not fulfilling its obligations. (RFE/RL, 03.17.20, Wall Street Journal, 03.17.20)

Energy exports from CIS:

• The Trump administration is considering intervening in the Saudi-Russian oil-price war with a diplomatic push to get the Saudis to cut oil production and threats of sanctions on Russia aimed at stabilizing markets. (Wall Street Journal, 03.19.20)
• Russia and Saudi Arabia have good relations when it comes to oil markets and Moscow does not need anyone else to intervene, the Kremlin said on March 20, when asked to comment on a statement by Trump saying he planned to get involved. (Reuters, 03.20.20)
• U.S. energy producers responded to one of the worst weeks ever for oil prices by pumping as much crude from the ground as they ever have before. While the price of oil plunged 23 percent last week, U.S. crude output hit 13.1 million barrels a day, the U.S. Energy Information Administration estimates. (Wall Street Journal, 03.19.20)

U.S.-Russian economic ties:

• No significant developments.

U.S.-Russian relations in general:

• U.S. national security adviser Robert O'Brien will travel to Moscow to attend Russia's World War II Victory Day celebrations on May 9, U.S. Ambassador John Sullivan said. (Reuters, 03.19.20)
• Trump said he may pardon his former national security adviser Michael Flynn, who was among the first individuals swept up in the investigation into possible collusion between Russia and the Trump campaign in 2016. (RFE/RL, 03.16.20)
• The trial of former U.S. Marine Paul Whelan, who is being held in a Moscow prison on espionage charges, will start on March 23. (The Moscow Times, 03.19.20)
• The U.S. stock market watchdog has charged a Russian national with scamming American investors out of at least $26 million over the past five years by allegedly offering fake, high-yielding deposits. The SEC said in a March 13 complaint that Denis Sotnikov purchased Internet ads that directed people searching for certificates of deposit to websites spoofing legitimate financial firms. (RFE/RL, 03.14.20)
• “I'm talking about speaking to China, to Russia, to countries all over the world—and in this moment, making the point that instead of spending $1.8 trillion on weapons of destruction designed to kill each other, maybe we should pool our resources and fight our common enemy, which is climate change,” Bernie Sanders said at the Democratic presidential debate on March 15. (The Pavlovic Today, 03.15.20)
• “I have opposed authoritarianism, whether it's in Cuba, whether it's in Saudi Arabia, whether it's in China or whether it is in Russia. That is my life record… What I believe right now, in this world, is that we are faced with a global crisis and a movement toward authoritarianism. That's what Putin in Russia is leading. That's what MBS in Saudi Arabia is leading,” Sanders said at the Democratic presidential debate on March 15. (The Pavlovic Today, 03.15.20)
• “We may have to work out—for example, I was able to help negotiate a New START agreement with Russia, not because I like Putin. The guy's a thug,” Joe Biden said at the Democratic presidential debate on March 15. (The Pavlovic Today, 03.15.20)
• The vast majority of Russians (87 percent) believe that Western sanctions against Russia did not create any particular problems for them personally and for their families, according to the Levada Center pollster, a high for the period of research beginning in the spring of 2014, when the first sanctions were introduced. (Vedomosti, 03.17.20)

 Levada Center polls: Do Western political and economic sanctions against Russia worry you? (percent of respondents)

	March 2014	April 2014	May 2014	July 2014	August 2014	December 2014	July 2015	August 2016	December 2017	April 2018	November 2018	February 2020
Very worried	11	8	8	10	7	16	10	7	7	7	20	12
Quite worried	42	34	29	26	25	35	31	32	21	23	23	19
Not too worried	31	40	39	43	39	33	37	38	40	42	33	36
Not worried at all	9	16	21	18	27	13	19	21	28	26	23	31
Difficult to say	7	3	3	4	3	3	4	2	5	2	3	2

 

II. Russia’s domestic policies

Domestic politics, economy and energy:

• There have been 253 cases of coronavirus infections reported in Russia so far and one death. (The Moscow Times, 03.20.20)  Here’s a link to interactive map of the spread of virus around the world, including in Russia and the rest of post-Soviet Eurasia.
  • Russia has announced the formation of a $4 billion fund as part of a package of measures to support the economy. Prime Minister Mikhail Mishustin said on March 16 that the new measures would include tax breaks for airlines and companies in the tourism sector, along with an expansion of a program to give preferential loans to businesses. On March 20, Russia’s Central Bank announced it would hold its key interest rate at 6 percent, but has also announced a number of initiatives including a 500 billion ruble ($6.3 billion) bank lending facility with an interest rate of 4 percent to offer loans to small and medium-sized businesses. (Financial Times, 03.20.20, The Moscow Times, 03.20.20, RFE/RL, 03.16.20)
    • Six years ago, the U.S. and the EU slammed the door on Western bank loans for Russian companies. Paradoxically, however, those sanctions and the policies Russia enacted in response prepared the Kremlin for what came this month: a universal dislocation of the global economy from the coronavirus pandemic and an oil price war. “Russia will be a bit better off than other countries because of its experience, because of sanctions and because of reserves,” said Vladimir Tikhomirov, chief economist for BCS Global Markets, referring to the roughly $600 billion in gold and hard currency reserves the country has amassed. (New York Times, 03.20.20)
  • Russian authorities on March 16 banned foreign nationals from entering the country from March 18 until May 1, but at the same time foreign nationals already in Russia will be able to extend their current visas without facing a penalty due to the coronavirus outbreak that is closing borders and canceling flights worldwide. Anyone arriving from abroad in Russia is now required to enter quarantine. Russian authorities have also shut state schools and limited public gatherings in Moscow. (New York Times, 03.19.20, Reuters, 03.17.20, The Moscow Times, 03.20.20)
  • In a shocking report published just weeks ago, a Russian state watchdog found that a third of medical facilities in Russia had no running water and 40 percent lacked central heating. (The Moscow Times, 03.19.20)
  • Russian scientists have begun testing prototypes of potential vaccines against the new coronavirus on animals in a laboratory in Siberia, Russia's consumer health regulator said March 20. (Reuters, 03.20.20)
  • The Russian Fund for Direct Investment (RDIF) has teamed up with Japanese scientists to create a state-of-the-art portable kit that can test for the coronavirus within 30 minutes and will go into mass production in April. (bne IntelliNews, 03.17.20)
  • The coronavirus turmoil has resulted in sharp volatility on the Russian stock markets and swings in the value of the ruble—both of which are down around 20 percent since the start of the year. The ruble is already the worst performer among the world’s currencies this year. (The Moscow Times, 03.19.20, The Moscow Times, 03.20.20)
  • Investors withdrew a record $1.4 billion in Russian assets and bonds in the week ending March 18 as the coronavirus pandemic sent shockwaves through the global economy, the state-run Prime financial news agency reported. (The Moscow Times, 03.20.20)
• The Russian Energy Ministry predicts that oil prices will recover to $40-$45 per barrel in the second half of 2020 and $45-$50 per barrel in 2021. Audit Chamber head Alexei Kudrin says with oil at $35 per barrel and the ruble averaging 72 to the dollar this year, the federal budget will lose approximately 3 trillion rubles and run a deficit of just under 2 percent of GDP. (bne IntelliNews, 03.15.20)
• Russia’s industrial production was up 3.3 percent year-on-year in February, but that was largely because this year is a leap year, with an extra day in February. Adjusting for calendar effects, the industrial production expansion in February was close to zero, reported Alexander Isakov, chief economist at VTB Capital. (bne IntelliNews, 03.18.20)
• Putin has signed a decree for a nationwide vote on constitutional amendments that open the possibility of him remaining in power for a further 16 years. Putin on March 17 signed the decree setting the date for April 22, but he said the referendum could be postponed "if the situation requires," as Russia, along with the rest of the world, battles to stem the coronavirus pandemic. Earlier, Russia's Constitutional Court approved the amendment. (RFE/RL, 03.16.20, RFE/RL, 03.17.20)
• Russia due to coronavirus has postponed a test designed to improve the ability of its domestic internet infrastructure to cope with being cut off from the global network, the Communications Ministry said March 20. (Reuters, 03.20.20)
• The representative on freedom of the media for OSCE has expressed "serious concerns" about the ongoing prosecution of Russian journalist Svetlana Prokopyeva. OSCE representative Harlem Desir on March 17 reiterated his call for Russian authorities to drop the terrorism charges brought against Prokopyeva. (RFE/RL, 03.17.20)
• Russia ranked 94th in the Heritage Foundation's global Index of Economic Freedom for 2020, moving up to the "moderately free" category for the first time, helped by what Heritage called a higher "fiscal health" score. Georgia has placed 12th in the Index. Armenia was also placed in the "mostly free" category in the report, ranking 34th. (RFE/RL, 03.17.20)
• Eduard Limonov, a Russian avant-garde writer whose fringe political activism helped fuel Russian nationalist fervor under Putin, died March 17 in Moscow. He was 77. (Wall Street Journal, 03.19.20)

Defense and aerospace:

• Russia’s Konteiner new-generation over-the-horizon radar, capable of tracking launches of cruise and hypersonic missiles at the distance of up to 3,000 kilometers, will be deployed in Russia’s Baltic exclave of Kaliningrad to cover the entire territory of Europe, including the U.K. (TASS, 03.18.20)
• Russia's Pacific Fleet will upgrade a submarine base to host new generation submarines. (Interfax, 03.18.20).
• Over 1,500 paratroopers will land on the Crimean coastline during the third stage of command post exercises held in southern Russia, the Russian Defense Ministry said. (TASS, 03.18.20)
• Russian Prosecutor General Igor Krasnov has demanded that military prosecutors take measures in response to the widespread use of non-genuine materials and components by Russia's defense industry. (Interfax, 03.17.20)

Security, law-enforcement and justice:

• Russian authorities have received a slew of hoax bomb threats in recent days, targeting hundreds of Moscow buildings and subway stations. Non-existent bombs were also reported on board several passenger jets. (Deutsche Welle, 03.19.20)
• Russian courts will stop considering all except the most urgent cases from March 19 until April 10 to contain the spread of coronavirus. (Reuters, 03.18.20)
• Russian prisoners, students and military personnel will produce medical masks and other equipment as the country faces down the coronavirus pandemic. (The Moscow Times, 03.17.20)
• The former head of the Moscow branch of Russia's Investigative Committee, Alexander Drymanov, has been sentenced to 12 years in prison for accepting $1 million from Zakhary Kalashov, known among organized criminal groups as Shakro Molodoi, in exchange for the release of one of Kalashov's associates from custody. (RFE/RL, 03.18.20)

 

III. Russia’s relations with other countries

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

• Russian pro-Kremlin media have mounted a “significant disinformation campaign” to aggravate the coronavirus pandemic crisis in Western countries by destroying confidence in the emergency response, according to an internal EU report. (Financial Times, 03.17.20)
• A number of documents have been signed between Russian state nuclear corporation Rosatom and the government of Bangladesh that will enhance existing bilateral cooperation in the use of atomic energy for peaceful purposes. Russia is currently constructing a two-unit nuclear power plant at Rooppur in Bangladesh. (World Nuclear News, 03.18.20)

China-Russia: Allied or Aligned?

• Putin and Chinese President Xi Jinping discussed the coronavirus by phone on March 19 and agreed to deepen cooperation on developing pharmaceuticals, the Kremlin said. Putin praised China’s efforts in preventing the spread of the virus which emerged in China late last year, the Kremlin said in a readout of the phone call. (Reuters, 03.19.20)
• Russia has supplied S-400 air defense systems to China as part of a contract and now has only to deliver missiles by the end of this year. (Interfax, 03.16.20)  

Ukraine:

• According to the Levada Center’s 2019 survey in Crimea, support for joining Russia remains very high (86 percent in 2014 and 82 percent in 2019)—and is especially high among ethnic Russians and Ukrainians. A key change since 2014 has been a significant increase in support by Tatars, a Turkic Muslim population that makes up about 12 percent of the Crimean population. In 2014, only 39 percent of this group viewed joining Russia as a positive move, but this figure rose to 58 percent in 2019. (The Washington Post, 03.18.20)
• Irina Kiviko, Crimea's finance minister, says the region's economy has more than doubled since 2014, while industry and farming are flourishing in this fertile region. (Wall Street Journal, 03.19.20)
• The EU has slammed Russia for its increasing militarization of Ukraine’s Crimea and human rights transgressions six years after its “illegal” annexation. (RFE/RL, 03.16.20)
• The trial in the Netherlands of four men accused of murder over the 2014 downing of Malaysia Airlines Flight 17 will continue behind closed doors later this month due to the coronavirus outbreak. (Reuters, 03.17.20)
• Head of the Office of the President of Ukraine Andriy Yermak notes that Ukraine cannot automatically implement the Minsk agreements in their current form, but even its withdrawal from them will entail catastrophic consequences. (Interfax, 03.14.20)
• Anti-corruption activists in Ukraine see a travesty: The dismissal of Ruslan Ryaboshapka, the prosecutor general who instigated the anti-corruption drive. He was replaced March 17 by Iryna Venediktova, a former adviser to President Volodymyr Zelenskiy and lawmaker from his party. He was pushed out by a faction in Zelensky's Servant of the People party that anti-corruption crusaders and political analysts say is close to the powerful oligarch Ihor Kolomoisky. (The Washington Post, 03.17.20)
• Ukraine’s parliament has approved executive Ihor Petrashko as economy minister. A stable majority of 243 lawmakers voted for Prime Minister Denys Shmyhal’s appointee on March 17, the last day before the legislature went on quarantine amid a snowballing coronavirus outbreak. (RFE/RL, 03.18.20)
• According to businessmen, diplomats and politicians in Ukraine and Washington, Rudy Giuliani has relaunched his effort to prod the Ukrainian government into investigating Joe Biden and his son, Hunter, and is working with a new set of local accomplices in Kyiv. (Financial Times, 03.18.20)
• Washington and Kyiv have agreed on the delivery of 6 billion to 8 billion cubic meters of LNG to Ukraine via terminals in Poland and its further transportation to European countries via a hub based on Ukrainian underground gas storage facilities. (Interfax, 03.16.20)
• Foreign direct investment is in decline in Ukraine. The last reported numbers were $2.4 billion in 2018, down around 10 percent from the previous year. Kazakhstan has higher FDI than Ukraine. (Forbes, 03.18.20)
• The yield on Ukraine's 2028 dollar-denominated Eurobonds surged 147bps to 10.91 percent on March 12, effectively shutting the country out of the international capital markets as it faces more than $5 billion of debt repayments this year. (bne IntelliNews, 03.12.20)

Russia's other post-Soviet neighbors:

• U.S. officials said that Vlad Plahotniuc, a powerful Moldovan oligarch and political figure linked to a massive bank theft, is in the United States despite being subject to a visa ban earlier this year. Officials confirmed earlier reporting by RFE/RL that said Plahotniuc was in the country, and said they were preparing to deport him. (RFE/RL, 03.19.20)
• The U.S. State Department has announced "the willingness of U.S. companies to begin immediately selling oil to Belarus at competitive market prices" in a clear signal to Minsk--and neighboring Russia—of Washington's desire to expand trade ties with the post-Soviet country. (RFE/RL, 03.13.20)
• Gulnara Karimova, the imprisoned elder daughter of the late Uzbek President Islam Karimov, has received an additional 13 years and four months in prison in the latest court ruling against her and her former associates. Uzbekistan's Supreme Court said on March 18 that Karimova was found guilty of extortion, money laundering, misappropriating the property of others and financial and other crimes, and sentenced the same day along with five other defendants. (RFE/RL, 03.18.20)

 

IV. Quoteworthy

• No significant developments.