Russia Update: ‘Ruble Drowning in Oil’

As oil prices continued to fall along with the ruble’s value, President Vladimir Putin announced in Ankara today, December 1, that Moscow will halt development of the South Stream natural gas pipeline to Europe due to EU opposition, the Financial Times reported:

“If Europe does not want this project to be implemented, we will not implement this project,” he said at a press conference with Recep Tayyip Erdogan, his Turkish counterpart.

“We will redirect our energy resources to other regions of the world, in part through implementing our liquefied natural gas projects and speeding them up.. This would be contrary to European economic interests, this will negatively impact our economic cooperation, but that is the choice on the part of our European friends.”

Putin is in Turkey to discuss further economic ties and prospective pipeline projects. Russia is offering Turkey a 6 per cent price cut on natural gas from January 1 and an increase in deliveries by 3 billion cubic meters (bcm).

RIA Novosti said Putin explained his decision as follows (translation by The Interpreter):

Meanwhile, taking into account the position of the European Commission, which has not enabled the implementation of this project, taking into account that we received only just recently permission from the relevant bodies in the Netherlands….they made a positive decision. Taking into account that we have not obtained permission from Bulgaria, we believe that Russia under these circumstances cannot continue to implement this project. We cannot begin building in the sea and wait until we get permission from Bulgaria.

At a press conference at the conclusion of the Russian-Turkish talks Aleksei Miller, CEO of Gazprom, Russia’s state gas monopoly, said, “That’s it, the project is closed” and would not be revisited, RIA Novosti reported.

He said Moscow and Ankara had reached agreement to build a new pipeline themselves across the Black Sea, to carry 63 billion cubic meters a year, the business daily RBC reported (translation by The Interpreter).

Today a memorandum of understanding has been signed with [the Turkish petroleum company] Botas on building the sea pipeline across the Black Sea in the direction of Turkey with a volume of 63 billion cubic meters a year.

He added that Turkey would take about 14 billion cubic meters, and the rest would be sent to the border of Turkey and Greece. Regarding the price, Miller said:

To the extent the cooperation develops, and deepens, I think that we will be prepared for a further reduction of price [for Turkey]. I think to the extent of implementation of joint projects, including in the gas transport area, we can say that the level of prices for Turkey will in the future come to the level of prices that Germany has today.

Gazprom has provided $4.66 billion, half of the cost of South Stream and looked for the rest to come from European investors, which included Italy’s Eni, Germany’s Wintershall and France’s EDF, even as the project grew more expensive — the estimate of the sea portion grew to 14 billion euros and the land route to 9.5 billion euros. The European Commission complained that the project did not meet European standards. With growing alarm about Russia’s war on Ukraine and the imposing of sanctions, the project was stalled, with only Austria’s gas giant OMV pursuing it enthusiastically with the Russians. The pipeline was to feed Bulgaria, Serbia, Hungary and Slovenia.

Russia had already agreed last year to build a nuclear power station for Turkey and has been increasing ties in recent years even as the West has pursued Turkey’s help in confronting the war in Syria. The EU has also ultimately sought Turkey as a partner in its Southern Corridor pipeline projects to circumvent Russia and lessen dependence on Gazprom.

Although the Trans-Caspian Pipeline was shelved due to lack of cooperation between Turkmenistan and Azerbaijan in terms of demarcating their disputed Caspian Sea border, shorter, less expensive projects have been moving forward and are expected to start construction in 2015. Turkey is part of the TANAP (Trans-Anatolian Natural Gas Pipeline) project with Azerbaijan which is planned to hook up to the Trans-Adriatic Pipeline (TAP) which will bring gas from the Shah Deniz II fields in Azerbaijan to Europe. 

South Stream was once begun to compete with the EU’s now-abandonded cumbersome Nabucco project; now it is junked in favor of what could be a competitor to to the EU’s now less-ambitious Southern Corridor projects. It will be interesting to see whether Russia diverts Turkey from its participation in those other projects by enlisting it in an ambitious new Black Sea project.

— Catherine A. Fitzpatrick

High-ranking Russian officials working for Vladislav Surkov in the presidential administration who were responsible for the self-proclaimed “People’s Republics” of Donetsk and Lugansk (DPR and LPR) in eastern Ukraine have resigned, Vedomosti reports.

Surkov is often described as the Kremlin’s “grey cardinal,” in charge of some of the most sensitive foreign and domestic political matters for President Vladimir Putin. Surkov was assigned to deal with Abkhazia and South Ossetia when he was returned to the Kremlin after a period in exile, although it
is widely believed that he has been involved in negotiations on Ukraine
as well.

A source in the presidential administration and another source close to the administration have reported the recent personnel changes to Vedomosti.

Boris Rapoport, a deputy to Surkov in the Department for Social and Economic Cooperation with the countries of the CIS, Abkhazia and South Ossetia, is said to have resigned of his own volition. He was responsible for work with the DPR and LPR. Earlier, Vladimir Avdeyenko, who was head of a department and said to be responsible for economic relations with the DPR and LPR, had also resigned.

Rapoport’s resignation went into effect today, December 1. A source said that two weeks ago, Rapoport said he would “have more free time,” and speculated that the workload was too great for both officials. “The situation is complex, and at the present time, there simply doesn’t exist an iron-clad plan to get out of the crisis, working under such conditions is not easy,” said a source.

Oleg Govorun, head of the division, remains at his position, but aside from Rapoport and Avdeyenko, five or six other staff members have quit the division, sources said. “It’s not clear who in Surkov’s office is working on Ukraine in general now,” said a source.

Rapoport had no comment for Vedomosti and Avdeyenko said the information that he was responsible for economic issues was “inaccurate.” He also refused to confirm that he had worked in the administration.

“Surkov did not answer the telephone,” said Vedomosti.

Rapoport was in his job for exactly a year, and had come at Govorun’s invitation to the Kremlin from the White House [government], where he had worked on the “Open Government” program. He had previously worked with Govorun when he was minister of regional development.

The vacancy may be filled by Igor Udovichenko, who in 2011 served as deputy head of the division on domestic policy. Most recently, he was chairman of the board of directors of the company Rosvodokanal from July 2013 to May 2014.

The division headed by Surkov to deal with the two breakaway republics after the invasion of Georgia, which has also taken on other neighbors was created by Putin in June 2012 to “implement social and economic projects in the CIS countries, form effective institutions of civil society, create modern financial and pension infrastructure and also a social security system.”

— Catherine A. Fitzpatrick

The trial opens again today, December 1, in the Moscow Regional Court of four participants in a violent ultranationalist group called “Battle Organization of Russian Nationalists” (BORN).  Two others already convicted for the group’s crimes testifying at this trial have claimed its members were tied to the Kremlin, Radio Svoboda, the Russian Service of RFE/RL and Russia media have reported.

BORN has taken responsibility for a number of murders and assaults, including the murders in 2009 of lawyer Stanislav Markelov and journalist Anastasiya Baburova. Two BORN members, Nikita Tikhonov and his common-law wife Yevgeniya Khasis, are already serving 18-year prison sentences for that crime, grani.ru reported.

Ilya Goryachev, leader of the Russkiy Obraz [Russian Image] group who is said to be the “ideological inspiration” for BORN, and is himself in custody, is also expected to give testimony in the current trial.

The four suspects are Vyacheslav Isayev, Maskim Baklagin, Mikhail Volkov, and Yury Tikhomirov. They are charged with murder, attempted murder, murder motivated by political, ideological, ethnic or religious reasons, unlawful possession of a weapon, organization of an extremist group, and “banditism” for their involvement in the murders of Fyodor Filatov, Ilya Dzhaparidze and Ivan Khotorsky, leaders of the anti-fascist movement in Russia; Muslim Abdullayev, a Thai boxing world champion and a judge, Eduard Chuvashov.

Mikhail Volkov. Photo by Aleksei Nichukin/RIA Novosti

Isayev has admitted his guilt fully and expressed remorse; Baklagin and Volkov do not deny involvement in the murders but say they were not members of BORN nor motivated by ethnic hatred. Tikhomirov has pleaded not guilty.

Vyacheslav Isayev. Photo by Gennady Gulyayev/Kommersant.

Nikita Tikhonov

Tikhonov, already serving an 18-year sentence, gave testimony in the trial of the four about the series of murders, and for the first time admitted publicly he was an organizer of BORN since the fall of 2007, says Svoboda. He said that Ilya Goryachev was the link between the ultranationalists and an official named Leonid Valeryevich Simunin, who led Mestnye [Locals], a youth movement organized by the Kremlin.

According to Novaya Gazeta, Tikhonov testified of the link said to exist between Goryachev and the presidential administration:

In the fall of 2007, Ilya Goryachev told me that he had friends in the government, including in the Administration of the president, and proposed committing crimes in the framework of the interests of his acquaintances — for example, to attack the political opposition: the NBP [National Bolshevik Party], Garri Kasparov’s activists, and organizations allied with him. For that, these powerful acquaintances of Goryachev’s could help me on the other crime [the case of the murder of the anti-fascist Ryukhin] for which I was wanted. At that time I refused, replying that the natsbols [Nationalist Bolsheviks] weren’t my enemies.

Goryachev (L) and Simunin (R). Photo via Novaya Gazeta.

Goryachev then pointed out the lawyer Markelov, said he was creating a leftist party which would advocate amnesty for illegal migrants and combatting homophobia, and was going to bring in antifascist activists. He said that “if something happened to him” these acquaintances of his would be very grateful.

Simunin was said to serve as first deputy to then-head of the presidential administration, Vladislav Surkov, long believed to be the architect and manipulator of nationalist and ultranationalist groups within Russia as well as Ukraine and other neighboring republics. Col. Igor Strelkov, the former commander of the Russian-backed separatists of the “Donetsk People’s Republic” (DPR) is also now giving accounts to the media about Surkov’s involvement there.

Russian blogger Roman Popkov discovered that Simunin is now working for the Ministry of Energy and was proposed as an advisor to the DPR in that capacity. An account of his position is on the Facebook page of a separatist supporter, Boris Borisov. He recalls how Simunin cooperated with the authorities to jail members of a rival group, the National Bolshevik Party led by Eduard Limonov, who had attacked him and his comrades.

Another blogger, Aleks Dar, has long followed Simunin’s career, going back to 2005 when he led Mestnye in Lyubertsy, a suburb of Moscow. He believes he was part of a government effort to channel the nationalists who were appearing in the “Russian Marches” and fighting against migrants in Moscow, into pro-Putin activities.

Leonid Simunin. Photo via Roman Popkov.

Yevgeniya Khasis has claimed that Gorachev and Simunin decided who was to be targeted by BORN, and Tikhonov took care of the “technical coordination” of the attack, Svoboda reports.

Yevgeniya Khasis. Photo by Mediazona.

According to Khasis, Russkiy Obraz was supposed to be the “legitimate political organization” and BORN was supposed to be the muscle behind it — something like Sinn Fein and the IRA, Mediazona reported about the court session where she testified.

When questioned about BORN’s financing, she said the following in court, Mediazona reported (translation by The Interpreter):

I know that, from the money sent for youth policy, Simunin allocated some to Goryachev for the nationalist organization. I don’t know for sure if Surkov knew about all that. But I do know that Leonid Simunin, who was Surkov’s representative, said a phrase like ‘I consulted with the leadership,’ ‘the leadership didn’t recommend it.’ I knew this either from Tikhonov’s statements or Goryachev’s.

As the Riga-based Russian news site Meduza reported in dramatic coverage of the trial headlined “I Was His Woman, I Kept the Machine Gun Under My Pillow,” while Tikhonov was vague about Goryachev’s Kremlin connection in his statements, Khasis was more detailed:

It was Vladislav Surkov then who instilled the manual control of civil society. And the middleman linking Goryachev was Leonid Simunin. They were to be mixed up in future crimes.

Khasis, who was used by wardens to harass Pussy Riot’s Nadezhda Tolokonnikova when she was in the same prison, also testified that another lawyer to be targeted by BORN was Vadim Klyugvant, the attorney for Mikhail Khodorkovsky, Lenta.ru reported.

Russian independent journalists have long been investigating the claims of the possible connections between the youth groups engineered by the Kremlin’s “grey cardinal” Surkov and violent extremists, but they have not come up with any definitive connections.

Journalist and human rights advocate Zoya Svetova has researched the case and published materials for RFE/RL, commented about the trial (translation by The Interpreter):

We will likely find out how reliable these testimonies are only in the event that the court summons the ‘Kremlin’ people. When I wrote about Goryachev’s case, I met with Leonid Simunin. He said he was acquainted with Goryachev, but he never worked in the presidential administration. If we are to believe Simunin, he said they had only a business relationship. Then we sent an inquiry to the presidential administration and there they said: Simunin never was an employee.

Khasis says in her testimonies that Surkov was connected with the Nazi organizations, with BORN, that he supposedly could have provided them some financial aid. She also names Vasily Yakimenko, and Tikhonov names him as well. But the problem is that neither Tikhonov nor Khasis communicated either with Surkov or with Yakimenko. Tikhonov only communicated with Simunin, and they know this only from Ilya Goryachev’s statements.

My version of the story is as follows: it is quite likely that Goryachev had relations with the presidential administration. I think he was acquainted with Nikita Ivanov, who at that time was a deputy to Surkov and in fact was responsible for youth policy. For some reason, neither Khasis nor Tikhonov name him. I think, however that Ivanov is that person who was directly tied to Goryachev. I don’t know to what extent they knew in the presidential administration that they were planning and committing murders. But I think another point is very important: such organizations as BORN could not exist without supervision on the part of the FSB. Of course the FSB was informed about what was going on. I think that there was dual curating her on the part of the FSB and on the part of the presidential administration.

“Curating” is a word Russians use to mean the management or manipulation of people by intelligence agencies for state purposes.

Tikhonov and Khasis could be giving such testimony to improve their conditions in prison, says Svetova, who met with Tikhonov in prison. He is not likely to get his sentence reduced, but he could be moved into more bearable conditions; the prison where he is located now is so cold there are icicles in the cells, she says.

It’s not clear how testimony against a sitting official like Surkov would be desirable such as to benefit a prisoner — unless the Kremlin was bent on ridding itself of Surkov or his deputies for their own reasons. Strelkov has been making allegations about Surkov for some months, and it doesn’t seem to have impacted on Surkov’s position in the Kremlin. Goryachev may also speak in court about the Kremlin connections, although his lawyer says his client has no connection to the murders.

The story is complicated by the fact that Goryachev gave testimony against Tikhonov for the murder of Markelov, then withdrew his testimony and wound up being extradited from Serbia, where he was living at the time, and becoming a defendant himself in a separate trial which is to take place no earlier than next spring. Goryachev has declined to name names so far although he has hinted that he had some connections to the presidential administration.

Svetova has cautioned against drawing conclusions with such contradictory testimony, and has also noted that the defendants could have been tortured while in custody and such statements extracted from them. Still, she doesn’t think the claims are totally unfounded:

Of course what astounds us the most about this case is how the organization existed under the nose of the law-enforcement agencies! I am certain that the FSB knew about this organization and it is quite likely that someone in the presidential administration knew as well that these people could be involved in sensational murders, and this organization existed for such a long time, and continued to murder people with total impunity. It was only a miracle they were caught. It is largely, of course, to the credit of Stanislav Markelov’s brother, who was a deputy of the State Duma, that Tikhonov and Khasis were caught. It is astounding when you read the materials of the case, how cold-bloodedly they prepared those murders, and how they killed them.

I wonder what the jury’s verdict will be. The very fact that they couldn’t put together the jury after several tries says how significant the case is: people were afraid of being members of the jury on that case. I think that if the jury declares them guilty, or if only one of them does not declare them guilty, then most likely the jury’s verdict can be guessed already: it will be guilty. We must hope that all the people complicit in these murders are brought to court. I am certain that some day we will learn whether there were people in the presidential administration who knew and didn’t stop these murders. But the times must change, and the government must change, that it will become known.

— Catherine A. Fitzpatrick

“Russia Has Lost Moldova,” says the headline this morning at gazeta.ru
as parliamentary elections in Moldova this past Sunday appeared to give a slight edge for pro-European parties.

Yet with the pro-Russian Socialist Party gaining the most votes with 21.4%, the victory is tempered, and some “tough bargaining is expected,” said RFE/RL.

With 89%  of the votes counted, three pro-Western parties have about 44%, and the opposition about 39%, says the BBC.

According to latest results, the three pro-European parties are set to have 57-58 seats in Moldova’s 101-seat parliament, while the two pro-Russian opposition parties are expected to hold 43-44 seats, reports say.

Liberal Democrat leader Vlad Filat, whose party leads the pro-European coalition, had the following warning, said Euronews:

“It is necessary to arrange a post-electoral deal and to act very quickly, being conscious that even after the elections pressure against Moldova will continue. It will consist of economic pressure , media pressure, meant to derail our country’s European path.”

The developments in Moldova’s parliament will be watched closely, as it is widely feared that it will be the next arena for Russian meddling.

German Chancellor Angela Merkel said at the G20 meeting last month that
Russia may move to destabilize Moldova next, after Georgia and Ukraine. 

Yet the pro-Russian forces did not seem to be totally under Moscow’s control. Gazeta.ru blamed a “split inside the pro-Russian forces” for the relatively poor showing, although noting that “the gap between advocates of rapprochement with Russia and apologists for Euro-integration was minimal.”

Vladimir Voronin’s Communist Party lost more than half of its voters; if four years ago the communists attracted more than 44%, today they could barely muster 20%. After communist rule from 2001-2009, their ratings have tumbled.

Younger voters who were still pro-Russian were drawn to the Socialist Party and to another pro-Russian party, Patria, banned the day before the elections. They have criticized Voronin’s unfulfilled promises and called for the Russian language to be given official status and for Moldova to join the Russian-Belarusian Union.

Photo by Valentina Basiul for RFE/RL.

Election turnout was about 56%.

The Socialist Party dominated, with 21% of the vote, and the Communist Party garnered nearly 18%. The pro-EU Liberal Democrats gained 19%, the Democrats had 16% and the Liberals 9%.

The pro-EU parties are aiming for EU candidate status by 2017 and full membership by 2020.

With such close numbers between the blocs, the three pro-Western parties will have to negotiate with the pro-Russian socialists led by Igor Dodon, a former Communist Party member who served in Voronin’s administration, but who left the party to form his own.

On the eve of the elections, the pro-Russian party Patria was banned, a fact criticized by Russia. The Central Elections Commission (CEC) asked an appellate court to overturn Patria’s registration on November 26.

Patria, headed by a Russian businessman, Renato Usaty, had been registered only in September 2014, and was denounced by the Moldovan government as a “Russian project.” Usaty ran a campaign focusing on corruption and oligarchs in Moldova, bringing in popular Russian performers.

While he was later banned from Latvia, popular entertainer Iosif Kobzon appeared in Moldova.

fetching tweet…

Usaty was accused by the CEC of receiving 436,000 euros for his campaign
and his registration was cancelled by the court on November 27; by that
time he had fled back to Russia.

Moldovan police also raided several pro-Russian NGOs, detaining
five who they claimed were planning disorders after the elections, and
confiscating pistols, grenade launchers and cash.

Opposition
parties also accused the Moldovan government of interfering with voting
of Moldovan residents in Russia; 700,000 people, primarily in Russia,
were eligible to vote in the Moldovan parliamentary elections, a figure
that was disputed by the government, which said there were only 300,000
Moldovans working abroad. The Central Bank estimated 700,000 — based on
remittances — and the head of a Moldovan agency for
relations with the diaspora put it at 650,000, including 300,000 in
Russia, RFE/RL reported.

Dolls for sale in the marketplace in Chisinau. Photo: BBC.

Residents in the Russian-backed separatist region of
Transnistria, where there are 300,000 Moldovan citizens, 20,000 of whom have dual Russian citizenship, did not take
part in the ballot. There are also 150,000 citizens of Russia and 100,000 citizens of Ukraine in Transnistria (including many with dual or even triple citizenship).

Russian President Vladimir Putin met
personally with the leaders of the Socialist Party, which called for
Moldova to join the Russian-led Eurasian Customs Union. Dmitry Rogozin,
the hardline deputy prime minister in charge of defense, also forged
close ties between his party, Rodina [Motherland] and Patria, the banned
party.

Patria members traveled to the Donbass last month as
observers during the unrecognized elections in the self-proclaimed
“Donetsk and Lugansk People’s Republics.”

Gazeta.ru says Moldovan
society is “split” regarding their geopolitical choices: according to a
November poll by the Russian Institute for State Policy, 39% of
Moldovans would vote for membership in the EU and 43% would vote for
membership in the Eurasian Customs Union. Those Moldovans voting for
closer ties to Russia are unhappy with the results of the pro-European
governments who they believe have failed to make reforms in justice and
privatization and to combat corruption.

Russian Foreign Ministry
Sergei Lavrov helped along the split before the elections, saying that
the Transnistria region would have the right to decide its own fate if
Moldova dropped its “non-bloc” status and opted for a path to the EU.

Moldovan leaders have accused Russia of fostering ethnic
minorities’ secessionist movements, including the Gagauz, Ukrainians and
Bulgars in order to divide Moldova. Igor Formuzal, leader of Gagauzia,
conducted a referendum in February about joining the Eurasian Customs Union which
was not recognized by Chisinau.

— Catherine A. Fitzpatrick

Allegations continue to be made about corruption in Russia’s bid for the 2018 World Cup, CNN reports.

According to a report in the Sunday Times of London published November 30, England’s bid used private security companies and a former member of the UK government’s intelligence service MI6 to gather information on its rivals.

The report, submitted to the House of Commons Culture, Media and Sport Committee (DCMS) says Russia plundered its national museums to provide gifts to officials:

A painting, believed to be a Picasso, was allegedly gifted to Union of European Football Associations (UEFA) president and FIFA executive member Michel Platini in return for his support for the eventually successful Russian bid for the 2018 global showpiece.

Another FIFA voting member, Michel D’Hooghe, from Belgium, was also the recipient of a landscape painting, given to him in a package wrapped in brown paper by Viacheslav Koloskov, a former Russian executive committee member working for his nation’s attempt to host the 2018 tournament, it is alleged in a report in The Sunday Times.

Platini strongly denied the claims, said the Sunday Times. D’Hooghe said he had never voted for Russia or made any promises, and denied that the gift was “fine art,” calling it “ugly.” He also said he had notified FIFA about it.

The report says Putin “took a personal interest in the running of the bid in mid-2010.”

Russia came under intense criticism for its lavish $50 billion Sochi Olympics, quadruple the original estimates submitted and more expensive than any other Olympics game previously.

FIFA cleared Russia of corruption charges after an investigation last month, but US prosecutor Michael Garcia, who led the probe, said his findings were misrepresented and he is seeking an appeal.

According to CNN, FIFA later announced it had filed a criminal complaint in a Swiss
court into the “possible misconduct of individual persons in connection
with the awarding of the hosting rights of the 2018 and 2022 World
Cup.” FIFA declined to provide further details.

A spokesman for the European governing body UEFA told CNN that his organization had no comment for now.

Russian sports officials have denied the charges. “Russia 2018 categorically rejects all of the allegations made in the Sunday Times today as entirely unfounded speculation,” said in a statement for CNN.

— Catherine A. Fitzpatrick