January 2009 Archives

Here's what's going on over at my new Venezuela Report blog:  One could be forgiven for buying into the illusion of Hugo Chávez's Venezuelan socialist utopia, especially those living comfortably abroad in open and free democracies.  After all, this is government praised effusively by the well-meaning vanguard of the Left (and I do believe that they are for the most part well meaning) such as Sean Penn and Danny Glover, combined with the successful marketing of the Chavista cocktail of fervent anti-Americanism combined with the illusion of social inclusion.  However the truth on the ground is much more complicated, to put it extremely lightly.

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A man walks past a grafitti depicting a Palestinian boy and a slogan meaning "Long life to the Palestinian people's resistance" in a low income suburb of Caracas on January 15, 2009. Venezuela broke diplomatic ties with Israel over its deadly military offensive in the Gaza Strip. (Credit: AFP/Getty Images)

In the early hours of January 31, one of Venezuela's largest and most important synagogues, Maripérez (popularly known as Papelón), was raided, ransacked, and defaced by a commando militia group.  This news comes directly to me from Sammy Eppel, a Jewish community leader (member of the CAIV - Confederación Asociaciones Israelitas de Venezuela) and columnist from El Universal.  I believe that this blog is the first English language media to report on the incident, and will be cross posted on our new Venezuela Report.

Mr. Eppel, whom I had the opportunity to meet during my visit to Caracas this week, tells us that around 3:00-4:00 AM, several armed men scaled the walls of the Maripérez synagogue and took the security guards by surprise, leaving them tied up and locked in a storage closet.  These individuals then opened the doors to let in a group estimated to be as large as 16 people, who proceeded to ransack and destroy the building, including painting anti-Semitic graffiti on the walls and removing the scared Torah scrolls from their place of keeping.  The scrolls were thrown to the floor, painted upon, shredded, and defaced.  The majority of the graffiti read "Death to Jews" and "Jews Get Out of Venezuela."  There was distinct absence of any graffiti relating to the Bolivarian revolution.

"I believe that this is the result of the call to action published by the government press,which has been publishing an increasing number of specific anti-Semitic articles over the past few months," said Mr. Eppel. "The state's official and unacceptable position of hostility toward the Jewish community dates back to 2004."

The raid was characterized by a high level of professionalism and apparent planning.  The group seized every computer hard drive in the office - not bothering to steal keyboards or monitors or anything else of value - which contain the names, addresses and personal details of a large majority of the Jewish population of the country, said Mr. Eppel.  The community fears that the seizure of this contact information could result in a new campaign of violence by state-sponsored anti-Semitic groups, some with links to Arabic radical movements.

The commados also knew exactly where to find the video surveillance technology, and erased any record of their visit.  At five in the morning, the police were called to investigate the incident and look for fingerprints and other indications of the identity of the attackers.  Mr. Eppel did not seem confident that the official investigations would yield any result.
Dear Sergey,

I read with great interest your comments on NATO and global security published in the Guardian, and as Russia's Minister of Defense, I should hope that others gave careful consideration to the conclusions of your article. 

However I do regret that there will likely be many people who will not give much consideration to Russia's arguments over its security concerns for several reasons.  Dear Sergey, I hope that you understand that the rest of the world would take these kinds of arguments and pleas for international law much more seriously, if only the commitment within Russia to rule of law could be reaffirmed.  Unfortunately, that has not been the case, and a significant depletion of the country's soft power appears to be well underway.

I believe that this article by Amartya Sen published in the New Republic makes some tremendously important points about the future of human rights law:

The Universal Declaration of Human Rights made its contribution to practical reason and global politics in four distinct ways. First, the Declaration took the firm view that human rights do not depend on legislation for recognition. People have these rights simply by virtue of being human. The contention here was that the acknowledgment of a human right is best seen not as a putative legal instrument, but as an important ethical demand--a demand that everyone should have certain freedoms irrespective of citizenship, nationality, and location. Such a recognition would lead to fresh legislation rather than await it. The Declaration championed the priority of morality to law. It constituted an open invitation to all to re-organize the world in such a way that the basic freedoms recognized as rights would actually be realized.


So nice to hear high-placed Russian officials such as Sergey Lavrov using the language of democracy and international law. It would be even nicer if it meant something. From his article in the Guardian.

Plans to expand Nato seem aimed at tackling problems of the past, rather than building confidence now. So, too, do unilateral decisions over anti-ballistic missile defence systems. We must recognise that it is not possible to enhance the security of individual countries by ignoring the security implications for their neighbours.

Many of the institutions already in place are primarily concerned with the security of their own members; the Organisation of Security and Co-operation in Europe, as the summer crisis in the Caucasus demonstrated, lacks the rules and accountability to be effective. And it was seeking a way to plug this damaging gap that prompted President Medvedev to propose a new treaty on European security: we believe it would establish a truly united area of collective security in the Euro-Atlantic region and put right what we together so far failed to manage.

The new system would have to be based on supremacy of international law and adherence to the UN charter. It is intended to provide the forum through which we could resolve security problems for many years to come. A treaty could only arise from a democratic negotiating process involving all states of the region, as well as multilateral security bodies already working in this area.

The following is a translation of an interview by the Polish newspaper Gazeta Wyborzca with Robert Amsterdam:

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Markelov a victim of Putin's regime

The lawlessness built in Russia by Vladimir Putin is to be blamed for Stanislav Markelov's death. A system where you can't count on police and prosecutors to conduct an honest inquiry and track down the killers.

Interview with Robert Amsterdam

Tomasz Bielecki: Did you know Stanislav Markelov, a lawyer killed last week in the centre of Moscow together with Anastasia Baburova, the journalist from "Novaya Gazeta"?

Alisher Usmanov has sold his majority stake in Yuzhno-Tambeiskoye, one of the biggest gas deposits in Russia, to Gazprom's banking arm.  Energy sector leaders from around the world have told the World Economic Forum that the current price of oil is too low to allow them to make investments needed to ensure that they can meet energy demands in the future.  NATO officials meeting in Reykjavik say the race for territory in the energy-rich Arctic poses serious new security threats.  Prime Minister Vladimir Putin has signed a government decree on customs duties on crude oil exported from Russia to countries outside of the zone of its existing agreements, setting the price at $100.9 per ton.  Japan's National Tax Tribunal has rejected a request from Nippon Oil to nullify extra taxes imposed on it in 2006 on gains from energy derivatives trading.  
Despite efforts to help the ruble to find an equilibrium level, the currency continues to hit new lows, a drop apparently compounded by investors' view of Vladimir Putin's Davos speech as 'absurd'.  In a bid to stimulate the economy, the government has announced that it will give 60,000 rubles ($1,700) to unemployed Russians as startup capital to open small businesses.  It has been agreed that VTB needs a recapitalization of 200 billion rubles, but the bank has not yet decided how to implement this, and is considering an issue of preference shares.  'The quest for a competitively priced opportunity is guiding Russians in their search among the bargains now on offer' for London's top properties.  Russia may bail out Oleg Deripaska's carmaker GAZ, 'a move that would mark the first financial rescue of an individual company by the government'.
300109.jpgTODAY: Putin's policies questioned; complicated ownership structures keep developments anonymous; former Mayor to be extradited to Moscow; Lavrov on EU security; missile debate exposes Poland's security concerns.

Alexander Lebedev, who has just purchased London's Evening Standard newspaper, said that Prime Minister Vladimir Putin's strategy for economic recovery is based on cronyism and is fueling corruption'We have two Putins.  There are lots of words, but the system doesn't work,' he said.  Former US President Bill Clinton, speaking at the World Economic Forum, jokingly referred to Putin's opening speech, which warned against state economic intervention.  'This is the first I've heard of Prime Minister Putin coming out for free enterprise.  I hope it works for him.'  Three activists from the banned National Bolshevik party apparently stormed one of Putin's offices to accuse him of ignoring the plight of ordinary people in the economic slowdown by bailing out 'banks and oligarchs'.  The protesters 'demanded a meeting with Putin,' said one.  'I have no doubt that our demands will be put on Putin's desk.'

Things have been relatively quiet on the tit-for-tat spy games we saw going down last year, when the United States and Russia seemed to be going through some sort of strange ritual dance from the Cold War by presenting highly public awards to their best double agents.  Not wanting to be left out of a game they invented, even the UK got wrapped up in things.

Today's news of a new father-son spy case in the United States might be enough to start a new exchange.  The son of the jailed ex-CIA officer Harold Nicholson has been arrested and accused of helping his father continue to sell state secrets to the Russians.  From the BBC:

Matthew Olsen, acting assistant attorney general for national security, said: "Today's indictment alleges that an imprisoned spy recruited and trained his own 24-year-old son to travel the globe to collect on past spying debts and channel information to foreign agents.

"These charges underscore the continuing threat posed by foreign intelligence services and should send a clear message to others who would consider selling out their country for money."

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The previous posting by Grigory Pasko, which reported that Moscow spends more on housing its stray dogs than its homeless people, has prompted another related story (thanks to our translator) which we've seen going around in the Russian press.  Some time ago, Komsomolskaya pravda had a very hard-hitting expose about the financial scams which hide behind these dog shelter projects.

Essentially, the story is the following: The city pays the dog shelter per head to care for stray dogs, which naturally motivates them to pack in as many animals in as possible. But then these same facilities operate in a private, for-profit function, renting themselves out as private kennels for rich people going away to Courchevel for the month or whatever, and even as breeders of pedigree animals. The strays are kept in overcrowded primitive pens reminiscent of an investigative isolator and fed rotten slop thrown on the floor, while the nice warm compartments and the real food are allocated to the "paying customers".

While much of this blog's content deals with the repeated human rights abuses experienced by those unfortunate Russians made victim of political cases, perhaps some animal rights folks might have a bone to pick here too.  The newspaper has published an abridged English translation of the expose here.

One would hope that Vladimir Putin's black lab Koni, made famous for his GPS tracking collar and for sniffing foreign foreign leaders, receives somewhat better treatment. We don't even have to ask about the other dog, Tosya (credit to FP's Passport blog for owning the Putin dog stories).

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Living well isn't against the law...

Moscow's budget in the epoch of crisis

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

A friend of mine works in the administration of one of the rayons [administrative districts, like New York's boroughs or Paris's arrondissements--Trans.] of Moscow. We meet with him rarely, but enough to understand from his stories how the administrative world of the capital of the largest state in the world is set up. It's set up strangely. Judge for yourselves.

Once, in January of this year, my friend drove off around his rayon to form... brigades for catching stray dogs. It's done like this. An official comes (my friend is an official not of the lowest echelon by Muscovite measures) to the housing-exploitation office (they're now called directorates or administrations) and randomly chooses two surnames from a list provided. These could be Tajik streetsweepers or Russian plumbers Having written down these surnames on a separate list of members of the dog-catching brigade, he leaves. What happens next is already completely irrelevant to this exercise.

Looks like the thieves in the biggest heist in modern history might be made to be held accountable.  From Reuters:

The European Court of Human Rights has ruled that a case brought against Russia by shareholders in collapsed oil firm YUKOS is admissible and will be examined, a spokesman said on Thursday. (...)

The company's former chief financial officer, Bruce Misamore, welcomed the decision in which he said the court had ruled that "aspects of the complaint" were admissible.

"The decision by the European Court of Human Rights to investigate elements of our claim is excellent news for all of YUKOS Oil Company's stakeholders," he said.

"This is an important step towards the vindication of the company's belief in the rule of law -- something it never secured in Russia," he said.

(A note:  sorry for the relatively quiet day - a hectic travel schedule and technological problems have interrupted our regularly scheduled programming ... We appreciate your patience. - James)

Some rather significant breaking news today, as it appears that President Dmitry Medvedev has broken his silence (deplorable silence, in the opinion of some) over the murder of Stanislav Markelov.  Nine days after he was murdered in the street.  Better late the never?  A message, albeit delayed, that the siloviki and military shouldn't, you know, just go around shooting human rights people in the middle of the city during daylight?  Or was it just some meaningless, after-the-fact pandering?  Medvedev's explanation about why he hasn't made any statements about the murders says quite a lot about legal nihilism.  Let's keep our eyes on this one.

From RFE/RL's interview with Dmitry Muratov of Novaya Gazeta, who was invited to the Kremlin today by Medvedev for a little heart to heart chat:

RFE/RL: And what did Medvedev tell you?

Muratov: Mr. Medvedev said he absolutely did not want to make any statements [on the killing of Markelov and Baburova] because he knew very well how things work in the administration -- he worked as chief of the presidential administration for many years. And he said he understood perfectly well that investigators could interpret the words of the head of state as a directive to pursue a certain line of investigation. As a lawyer he felt strongly against that as a matter or principle.
Russia's energy market is Vladimir Putin's 'personal project', and the New York Times charts his involvement with the South Stream project over the last few years.  German Chancellor Angela Merkel has called on all EU members to give their full backing to the planned Nord Stream gas pipeline, saying that 'the European Union must be more independent and crisis-resistant'.  The European Commission has pledged to give the Nabucco Pipeline €250 million to help it do just that, but will it be enough?  The Commission has also proposed to invest €5 billion in various other energy and broadband infrastructure projects, including pipelines.  Royal Dutch Shell has reported a massive drop in fourth-quarter net profits on the back of plummeting oil prices.  
Why are Russia's business elite are getting all worked up about a potential merger of the country's largest metals and mining companies?  It will probably never happen, says Yulia Latynina'If the government is determined to finance large-scale infrastructure projects as a way of stimulating the faltering economy, there should be real, transparent competition for construction contracts.'  Group of 20 countries, including Russia, are seeking a relaxation of commitments they made at last November's summit in response to the financial crisis, including the promise not to raise trade barriers, which Russia already broke with this year's imported car tariffs.  Bad loans are likely to soar to 10% of Russia's banking sector by the end of 2010, says Sberbank, just a little higher than VTB Group's prediction.  Did you know?  Vladimir Putin is the chairman of Vneshekonombank.  The bank says it has received a total of $90 billion in bids from troubled Russian companies, but Putin's deputy Igor Shuvalov said owners of companies seeking emergency funding from the government should dip into their own pockets first because the state won't help everyone.  Oleg Deripaska, who received $4.5 billion of emergency funding from the government, said Putin is right to limit the amount of bailout money available to companies.  The Times is counting oligarch losses, estimating current figures of around $260 billion.  Russia's international reserves dropped by $9.7 billion this week thanks to interventions to support the ruble.  
290109.jpgTODAY: Putin warns against state intervention and reliance on the dollar during his Davos speech; Castro in Russia for trade-boosting visit; staged rallies of Kremlin support fall flat; still no unambiguous response from Russia on missile defense retaliation plans.

Prime Minister Vladimir Putin's opening speech at the World Economic Forum in Davos focused on the dangers of excessive state intervention in the economy, saying that Soviet measures 'finally led to our economy being totally noncompetitive.  We paid dearly for that lesson. I am confident that no one would want to retry that.'  One journalist responds, 'It beggars belief to hear a Russian leader warn the west not to turn into the Soviet Union'.  Some were surprised that Putin did not blame the US outright for the global financial crisis, but he did insist on a rebalancing of global power as a way out of it, spoke about the death of investment banks in contrast to the US' 'cloudless prospects' of last year, and pointed out that 'the existing financial system has failed'.  He also suggested that the world should move towards a system of multiple reserve currencies, questioning the reliability of using just the US dollar.  The Times sees Putin as having 'eaten his words'.  China and Russia reportedly held a private meeting on the sidelines of the Forum last night to discuss measures for countering the effects the crisis.

cy.jpgBritain and Russia could be heading for another row  after multi-millionaire Yevgeny Chichvarkin, seen as a foe of Prime Minister Vladimir Putin, fled to the UK to escape arrest in Moscow.  Chichvarkin is accused of kidnapping and extortion, which he claims are political charges.   Chichvarkin most notably founded mobile phone network Euroset (also referred to as Yevroset) in 1997, but had sold his share of the business to a pro-Kremlin businessman last year. Since then he has been involved in the political party Right Cause, on behalf of the business class in Russia.

Russia will now demand his arrest and extradition from Britain. British tabloid The Daily Mail notes that "all previous demands for other Russian tycoons have been refused by 
London courts on the grounds that the businessmen cannot expect a fair trial in Russia".


Remember Putin's charity artwork effort? Here's the latest...

An article by
Adam McDowell in Canada's National Post describes how the painting sold at auction in Russia on January 17, and has been on display at a Moscow gallery as of Tuesday. Pattern on a Frosty Window cost the Natalia Kournikova Gallery 37 million roubles at a charity auction, The Art Newspaper reported, and "now it's a coveted item among the oligarchy".

McDowell writes, "if anyone asks, we love it -- an offended Putin could have us crushed by means of (a) an offhanded remark to the FSB, (b) a knowing wink to his inner circle of goons, or (c) his own KGB-trained, vice-grip-like hands".

There's a strong piece by Luke Harding in today's Guardian on the murder of Stanislav Markelov and the state's role in similar cases:

The murders of these Kremlin foes - journalists, lawyers and critics of Russia's security services - all have a common theme. Nobody is ever caught and punished. The trial of four men accused of involvement in Politkovskaya's murder is ongoing, but is regarded by human rights activists as a farce. Investigators have failed to catch her assassin and have also apparently been unable to work out who ordered her death. "We can't even call it a trial. The people being convicted aren't the ones who carried it out," Natalia Estemirova of the human rights group Memorial says. After Markelov's slaying last week, the offices of Russia's prime minister, Vladimir Putin, and the country's president, Dmitry Medvedev, were strangely silent. Instead, authorities sent in riot police to break up spontaneous protests in several Russian cities.

This failure to condemn looks like a sign of tacit approval to whatever dark, reactionary and well-organised forces plotted Markelov's death, his friends believe. They say that it comes against a backdrop of officially blessed harassment and persecution in Russia against human rights organisations - against anyone, in fact, who challenges the Kremlin's monopoly on power. State TV has largely ignored Markelov's death. (The snub is reminiscent of Putin's description of Politkovskaya after her murder as an "extremely insignificant figure well known only in the west".)

Read the full article here.
Russia has made so many noises in recent weeks about its optimism about US President Barack Obama's new administration and the positive turns its holds for US-Russia relations that one was almost inclined to believe today's announcement about Russia's 'olive branch' to the US.  Russia, went the story, was to halt its initial plan to retaliate against the proposed US missile defense shield by stationing its own missiles near Europe's border.  A NATO spokesperson cautiously said that such a move would be 'a very positive step'.  Indeed it would.

But don't believe it just yet... According to the Financial Times:

a high-ranking source in the defence ministry later dismissed the report as "rubbish".

...in direct contradiction to the official quoted by the Telegraph, who said that:

"The implementation of these plans has been halted in connection with the fact that the new US administration is not rushing through plans to deploy" elements of its missile defence shield in eastern Europe.

Your guess is as good as mine...
President Dmitry Medvedev has apparently heeded public criticism, and will rework Vladimir Putin's controversial treason bill, which was originally intended to broaden the definitions of espionage and treason to include the passing of state secrets to foreign organizations including nongovernmental organizations.  This latter aspect of the bill was considered especially suspect given government efforts over the years to limit the activities of NGOs in Russia.

Human rights activists called the bill a 'legislation in the spirit of Stalin and Hitler,' and warned that it could potentially allow authorities to brand any government critic a traitor, apparently sparking Medvedev to order a review of the bill, 'to prevent the measure from curtailing human rights' (an increasingly fluid concept, it seems).

This is the second reported contradiction between the policies of Medvedev and Putin this month, after the earlier swipe from Medvedev about the latter's handling of the economy.  But are these disagreements that indicate some stronger clash of policy, or PR moves that look like disagreements?
maps.jpgGeorgia must be pleased.  Following the emergence of the news that Russia is planning to start printing maps that highlight the independence of Abkhazia and South Ossetia by printing them in different colors from their former territory, the Georgian government will surely be itching to get its hands on whatever anti-Russian propaganda it can find.
 
And help has duly arrived, in the form of a 21-year-old Russian soldier, previously stationed in South Ossetia, who asked Georgia for asylum after donning civilian clothes and crossing the border from his military post, with which he was apparently 'fed up'.  The story has quickly evolved into another battle of the PR ammo, with Georgian sources claiming that the soldier was found 'starving' and mistreated by the Russian military (although they aren't the only ones concerned about the treatment of Russian soldiers this week), and Russian sources demanding that the 'kidnapped' soldier be returned home. 

You can read the details over at the New York Times.  
With press speculation mounting over how Vladimir Putin is going to play his opening speech in Davos at the World Economic Forum tonight, it will be exciting to see how the Prime Minister decides to play this momentous occasion.  Not only will it be the first time that a Russian leader has been given this introductory slot, but all eyes are on Putin to see how he will portray Russia during these times of economic turpitude and relative social unrest.

'The first cracks in the formidable edifice of Mr Putin's popularity are beginning to appear. Recent protests in Vladivostok over increased car import tariffs were suppressed by interior ministry troops flown to the Far East across eight time zones because local police could not be trusted. Anticipating further unrest as increases in living costs outstrip those of incomes for the first time in nearly a decade, Moscow has suspended jury trials for accused ringleaders.'

So says a leading article in The Times of London today, entitled 'Vlad the Vulnerable'.  The piece is pre-emptive and pretty scornful, and speculates about what Putin might say tonight, suggesting that 'candour and conciliation should be his watchwords'.  Sounds unlikely, doesn't it?  Watch this space...
Despite making noises about the deal last week, Ukraine's president has promised that he will not reopen his country's 2009 energy deal with Moscow.  'Tymoshenko walked away from this conflict with an outstanding victory.  RosUkrEnergo has been excluded from the Russian-Ukrainian gas trade, losing profits of at least $1 billion a year.'  The European Union could provide up to €200 million in initial funding for the proposed Nabucco gas pipeline in an effort to reduce its reliance on Russian supplies.  Gazprom may increase capacity on the South Stream gas pipeline to Europe by 50%.  A former East German spy may be set to join the company's board
Prime Minister Vladimir Putin will give the opening speech at the World Economic Forum in Davos this evening, in which he will 'express his attitude toward the causes of the crisis and the circumstances on the world arena ... that led to the crisis' (according to his spokesman), and is expected to call for a change in the world economic order.  Putin will become the first Russian official to open the annual forum.  The Times says that he will speak 'diminished as an international figure by the global financial crisis, and challenged at home as Prime Minister in ways he never was as President'Another commentator notes that 'the Chinese and Russians are no longer as cocky as they were about six months ago'.  Earlier this week, Vladimir Putin said he saw 'light at the end of the tunnel' for the Russian economy later this year, but Troika Dialog owner Ruben Vardanian says the economy won't resume expansion until 2010.  Read more about the Kremlin's planned 900 billion ruble cash injection for its banks, which Forbes says won't make any difference to the crisis.  The central bank has indicated that the depreciation of the ruble is coming to an end, but market activity suggests that investors do not quite trust that this is so, and the currency has hit its lowest level yet against the Euro.  Vimpelcom insists that the Russian consumer telecommunications market is not shrinking
280109.jpgTODAY: Russia to halt US retaliation plans; Church elects news leader; Russian military is a 'paper tiger'; Russia-Georgia soldier spat; Putin 'too trusting'.

Russia has halted its plan to retaliate against a proposed US missile defense shield by stationing its own missiles near Europe's borders, and the US will welcome confirmation of the news.  London's International Institute for Strategic Studies says that, despite many very visible demonstrations recently, and a 34% boost to its defense spending budget, the Russian military remains a 'paper tiger'.  The Moscow Times reports on a Russian soldier who said he deserted his unit in South Ossetia and sought asylum in Georgia because of 'unbearable living conditions'.  A Russian Defense Ministry spokesman suggested that the soldier's comments were probably the result of 'coercion''Russian and Georgian television reported Sergeant Glukhov's story very differently' - a Georgian channel described him as starving, while a Russian source stressed the theory that he had been abducted.  Georgia has promised to protect the soldier's rights and says it will not hand him over to the Russian army.

Here's an excerpt from an editorial on the murder of Stanislav Markelov on VOA News which "reflects the opinion of the U.S. government" - Barack Obama's government, I might add.

The Russian people have spoken loudly in condemnation of these murders. Ordinary citizens have taken to the streets to demand justice for Baburova and Markelov. The Public Chamber, some Duma members, and other Russian officials have joined these calls, and the Russian Prosecutor General's Office has set up an investigative committee and special task force to find and prosecute those responsible for this crime.  

The United States believes that these calls are critical in order to stem the climate of fear and bolster the rule of law and freedom of expression that are undermined by continued assassinations of journalists and human rights defenders without justice.  

panorama012709.jpgBased on the results of a survey by the analytical center of Yuri Levada, carried out last year, Russians named as the countries most unfriendly, antagonistically disposed towards Russia:  Georgia, the USA, Ukraine, Estonia, the Baltic states and Poland.

And here are some other data. Based on the results of a survey of the inhabitants of the world, it became clear that out of all the countries in the world, Russia is least popular in such countries as Finland, France, Poland, and Great Britain. (I would also add the Baltic states). And the place where they have the best attitude of all towards Russia is in Nigeria. And also, no doubt, in Nicaragua and Venezuela. We will note that Belorussia does not belong to the countries that have a loving attitude towards its neighbor - Russia.

andropov012609.gifFrom Brian Whitmore over at the excellent blog The Power Vertical:

Putin and his closest allies revered Andropov (most of them joined the KGB in the mid-1970s when he ran the spy agency) and tried to establish a new version of his "authoritarian modernization" over the past decade. It all looked successful when oil prices were soaring. But now, the lack of diversification in Russia's economy is exposing Putin's economic miracle as a mirage.

But history isn't exactly repeating itself (it never does). Unlike in the 1980s, there is nobody with the clout and political will to pick up the reform mantle and seize the moment. Despite his recent friskiness, Medvedev doesn't appear to fit the bill.

So for the time being at least, the choice appears to be one between Putin's teetering authoritarianism and chaos. And as long as that is the choice, most Russians will choose the former.

Some Russians seem to think that clandestine, byzantine networks of Republican elites control Washington like the siloviki run Russia.  From Anne Applebaum in the Washington Post:

Yet there was another, more negative category of foreign response to Obama's inauguration that is worth noting, not so much because of what it tells us about our new president but because of what it reveals about those making the comments. A number of international observers eschewed the general adulation and concluded, simply, that the entire event -- the election, the inauguration -- was a hoax.

Look, for a typical example, at Pravda.ru, the Russian Web site that succeeded the organ of the Soviet Communist Party. Writing in the spirit of times past, one of its authors informed readers last week that Obama's presidency was a sham. After all, he "became the president because one needed a scapegoat during hard times of the crisis," and he will not last: "If Obama does not manage to extricate the nation from the crisis in two or three years, the Republicans will unveil their real candidate, and Obama's presidency will finish earlier than expected." The U.S. president, in other words, is merely a placeholder -- a description that makes him sound remarkably similar to the president of Russia.

Benedict Mander at the Financial Times points out that the crash in oil prices is causing Venezuelan President Hugo Chávez to abandon some of the more expensive diplomatic activities that the government has been using to up its influence in the region.  How long before we see similar cuts in Russia?  It seems that in times of low prices, petrostates like to concentrate their resources where it matters the most - propaganda.  But the most important question for Venezuela, as the FT points out, is whether they can count on Russia for loans if the economy gets really bad.

His government has responded to falling oil prices, and export revenues, by restricting the amount of dollars allotted to importers and Venezuelans travelling abroad. PDVSA, the state oil company, is reviewing its operations. Caracas has also dipped into the central bank's $50bn in foreign exchange reserves with $12bn in "excess" reserves being handed over for use by the government. (...)

However, Mark Weisbrot, an economist at the Centre for Economic Policy and Research think-tank in Washington argued that there was no imminent danger for Venezuela's economy, thanks to ample reserves, low foreign debt and a comfortable, if reduced, current account surplus. "There's no pressure on the government to devalue," said Mr Weisbrot, arguing that in the worst-case scenario the government could borrow from China and Russia. "The question is whether the government does enough, fast enough, to prevent the economy slowing down," he said.

The slumping price of oil reduces the amount of 'easy' money available to pay bribes, and could contribute to an overall drop in corruption, according to an economist at Russia's Troika Dialog. An aide to Ukrainian President Viktor Yushchenko suggested that last week's deal to restore Russian gas flows to Europe could be declared invalid if shown to have been concluded under pressure.  A PGNiG spokesman says that Poland is still receiving only half the contracted volumes of Russian natural gas via Ukraine.  French President Nicolas Sarkozy, speaking earlier this month on the recent crisis, says 'we have nothing to fear from Russia', but the country must respect its customers.  Deliveries of liquefied natural gas from the Sakhalin-2 project to Japan could be delayed by two months. A summit of countries interested in the construction of the Nabucco gas pipeline from Central Asia to Europe has opened in Budapest.  
Yevgeny Chichvarkin, the former owner of mobile phone company Yevroset, who is suspected of kidnapping in Russia, has reportedly fled to London.  'The case is likely to irritate the Kremlin, which regards Britain as a pernicious haven for Russia's enemies.'  Sberbank has seen a mild rise in third-quarter profit, contributing overall to the highest Russian stock climb in seven weeks.  The Kremlin is planning a 900 billion ruble ($27.4 billion) capital injection for commercial banks, which will favor those that are state-run.  Truck maker Kamaz expects a net loss of 1.5 billion roubles ($45.59 million) in 2009.  Russia's Polyus Gold and Canada's Kinross Gold Corporation have signed an agreement on joint gold exploration at the Nezhdaninskoye deposit in Eastern Siberia.  Prime Minister Vladimir Putin said Russian metals companies could merge with their rivals, but only to enhance competitiveness, rather than to consolidate debt.  'It doesn't take a lot of brains simply to unify debts with debts.  If we combine two poor people, the family will not become richer.'  
270109.jpgTODAY: Russia and NATO to resume ties by next month; Russia to build 'illegal' naval base in Abkhazia; new patriarch will be 'alleged former KGB agent'; Storchak case re-opened; Putin and Medvedev 'at odds' about economic crisis; alleged army abuses.

Full ties between Russia and NATO could be resumed as early as next month, according to envoy Dmitry Rogozin, speaking after yesterday's informal preliminary meetings.  'Everything was very constructive,' he said.  NATO Secretary-General Jaap de Hoop Scheffer confirmed the re-engagement.  Moscow could start building a naval base in Georgia's breakaway Abkhazia region this year, potentially fueling Western concerns about its growing military presence there.  Tbilisi says the move would violate its sovereignty, and Georgian lawmakers say the plan is 'absolutely illegal'.

matsuura012609.jpgIt looks like we're not the only ones paying attention to the parallel trends of violence and insecurity in both Russia and Venezuela.  Today UNESCO chief Koïchiro Matsuura condemned both the murder of Stanislav Markelov and Orel Zambrano:

The head of the United Nations agency tasked with upholding press freedom condemned the killings of journalists and a lawyer in Russia and Venezuela, underscoring that these murders are a contravention of human rights. (...)

"These killings represent a tragic blow to the basic human right of freedom of expression and to all other human rights, which are essential if good governance and the rule of law are to be upheld," said UN Educational, Scientific and Cultural Organization (UNESCO) Director-General Koïchiro Matsuura. (...)

The "deliberate targeting" of media professionals such as Mr. Sambrano is a setback to "democracy and rule of law which depend on the ability of the members of any society to hold free debates about issues of general concern and make informed decisions," said Mr. Matsuura.

The Other Russia coalition is running a comment piece by Olga Malysh on the death of Stanislav Markelov, looking at some of the theories currently being discussed among Russian journalists and human rights activists as to why he was killed.  The piece quotes some thoughts from Novaya Gazeta journalist Yulia Latynina, whose sharp articles (like this one on China) are often linked to on this blog.

Novaya Gazeta columnist Yulia Latynina leans to the theory that right wing radicals, connected with Budanov, killed Markelov.  "This is a case where everything is immediately clear," she told me, reminding me that "fascists" had already attacked Stanislav for his part in the case against the former colonel.  "Budanov's heroism consisted in that he raped a young Chechen girl, and the heroism of Markelov and Baburova's killer in that he shot at defenseless people in the back of the head," Yulia added.

Read the full article here.
In the run-up to April's G20 meeting, Russian Finance Minister Alexei Kudrin has proposed an alternative to the Financial Stability Forum, which, he points out, excludes the BRIC economies.  Writing in Voprosy Ekonomiki over the weekend, Kudrin pointed out 'a need for an international authority whose recommendations are mandatory'.  Not sure exactly what he means by 'mandatory' here - the last G20 pledge not to raise trade barriers wasn't exactly optional... 

Presumably the financial world needs a stronger regulatory authority because these commitments are so easily sidestepped...?

The Guardian has a summary of Kudrin's article here.
Diplomatic sources reportedly believe that Iran's stockpile of yellow cake uranium, without which it cannot support a sustained nuclear program, could be exhausted within months, triggering an international race to prevent it from importing more.  Could Turkey turn out to be the 'real winner' in the aftermath of the Russia-Ukraine gas dispute?  Hungary wants EU members to seek compensation for the supply cuts.  Deputy Prime Minister Viktor Zubkov seems to agree with the increasingly popular idea that 'natural gas transport routes to Europe must be diversified', saying that Russia has 'no aversion' to the planned Nabucco natural gas pipeline from central Asia to Europe, which is intended to bypass Russia.  Is this because Uzbek President Islam Karimov pledged his support on Friday to a new trans-Russian gas pipeline?  Gazprom has contacted Norway for informal discussions about the possibility of shipping gas through its pipelines.  Kuwaiti firm Noor Financial Investment is forming two joint ventures with Gazprom.  Participation in OPEC's recent cut has been high, which has helped the oil price stabilize, says the New York Times.  An oil spill from the Sakhalin II project over the weekend has killed hundreds of birds
Finance Minister Alexei Kudrin is calling for a new global financial watchdog to deal with the financial crisis.  The number of unemployed Russians rose by 1 million to 6 million in December.  Car imports through Vladivostok have fallen by almost 95% since this month's controversial and widely disputed tariff increase.  The Czech PPF Group is writing off a loan to Russia's Eldorado electronics group, in exchange for 51% of its shares.  State bank VTB, which took a stake in Norilsk Nickel as collateral on a loan, will try to win a seat on the company's board.  Vneshekonombank will make its second major foreign acquisition this month when it takes over Hungary's Malev airline.  Read more about former Yevroset (or Euroset) chairman Yevgeny Chichvarkin, who is wanted by the authorities on suspicion of smuggling, kidnapping, and extortion.  Russia is apparently not considering a request for a 100 billion ruble loan from Belarus.  'Deripaska's empire will look like what the government wants it to look like.'  
260109.jpgTODAY: Putin blames Ukraine again; Rogozin to meet NATO ambassadors today; Russia ready to cooperate on Afghanistan supply routes, get involved in Darfur; Orthodox Church voting for new head; Stanislav Markelov: rights activists condemn Medvedev's silence; art, history, Stalin's favourite ballerina dies.

In an interview with Bloomberg yesterday, Prime Minister Vladimir Putin focused on recent disputes with Ukraine, again blaming former US President George W. Bush for fostering political chaos in the region, and reiterating his optimism about the Obama administration.  'To some extent, I think, the opportunity for the US is to find ways to make [Russia] believe that they are being taken seriously,' says a former US ambassador.  Dmitry Rogozin, Russia's NATO envoy, sees relations with NATO improving, and wants the military alliance to succeed in Afghanistan in order to be able to help counter what he views as a regional threat.  Rogozin is to meet NATO ambassadors today in Brussels for an informal meeting, the first after a 5-month hiatus.  President Dmitry Medvedev says Russia is ready to cooperate on supply routes for NATO forces in Afghanistan, and Russia's envoy to Sudan says the country is planning to step up its diplomatic involvement in African issues, including the Darfur crisis.

stanislav012609.jpgAs last week came to its prolonged close, punctuated by the singularly disheartening farewell to slain human rights lawyer Stanislav Markelov, one can't help but be struck by the feeling that Russia had hit a new low point, and the even greater disappointment of knowing that we haven't yet hit the bottom.  If you are anything like me, the repeated images from the funeral were a cause for a sudden reckoning:  internalizing the fact that this most brilliant young lawyer, with both the courage and unlimited energy that has become so rare in this world, has been taken away from us all.

Russia was a safer place when Markelov was still alive, because at the very least, his advocacy was ultimately emblematic of moral outrage - seemingly our last defense.  In his work was the affirmation that there was a right and there was a wrong, and when it came to the behavior of the state, no risk is too great if it manages to shine a light on conduct that is both criminal and viral in the nature of its impunity. 

markelov012409.jpgThis is from a comment piece by Dmitri Sidorov in Forbes on the murders of Stanislav Markelov and Anastasi Baburova:

The double murder of Markelov and Baburina comes as yet another dreadful confirmation that to be a human rights advocate, or an investigative journalist without Kremlin sanction, is equivalent to a death sentence in today's Russia.

Any unsanctioned move rouses the ire of the various forces in and around the Kremlin that prize, above all else, control over "sensitive" information they consider an obstacle to the brainwashing of the population. If the defense of human rights and the exposure of crimes committed by members of the security service is at issue, as it was with Markelov, the stakes are even higher.


Yesterday El Nuevo Herald published an article about an evening mass held in Key Biscayne, Florida by the Venezuelan expatriate to draw attention to the plight of political prisoners in the country.  Below is a flyer from the event followed by our own exclusive translation.  Today Robert Amsterdam's Washington Post article comparing Russia and Venezuela was published in Spanish in the leading Caracas daily, El Nacional.

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The following is from an interview with Charles A. Kupchan of the Council on Foreign Relations, republished in the New York Times.  Kupchan suggests that despite low oil prices, political unrest may lead the Kremlin to further adventures in Latin America as a function of "external ambition" to rally the support base.  Given the news from Cuba today, he's probably right.

It's been suggested by some people that the severe drop in oil prices, from 146 dollars a barrel to 40 dollars a barrel, has deeply hurt Russia's economy and will have the effect of reducing the sort of confrontational nature of recent Russian policy. Do you agree?

It cuts both ways. On the positive side of the ledger there will be fewer resources around for building up the military or pursuing policies that are expensive and ambitious. Or sending fleets and aircraft on global surveillance missions.

Like the highly publicized flights by Russian bombers to Venezuela?

Yes. You know, a lot of this stuff is bluster, but it does require resources, and it requires a certain level of self-confidence. So from that perspective, Russia will be pulling in its horns. But the less positive interpretation would be that countries which experience economic distress tend to move in a nationalist and populist direction. And so it may be that if the Kremlin finds itself strapped and there is discontent among the Russian electorate, Medvedev, Prime Minister Vladimir Putin, and others are more prone to rely on external ambition and nationalism to rally domestic support.

From a book review of Jeffrey Tayler's Murderers in Masoleums published in the Washington Post.

tayler012409.jpgDespite enormous variations in their traditions and beliefs, all the Eurasians he encounters seem uniformly disgusted with their governments. At the same time, they are disillusioned with the alternatives that Western capitalism has offered them. As one acquaintance in the Caucasus exclaimed vehemently, "What has the West given us, what? Pornography and sex . . . Nobody believes in liberals anymore. They just want to create problems and get rich off other people's grief." (...)

The intensity of his interest also leads to amusing insights. "In Russia," Tayler notes, "rules abound and they must be publicly posted, even if only to be flagrantly violated." Eurasians have difficulty refusing a drink, he explains, because their companions will suspect they are staying sober so they can remember what is said and report it to the authorities in the morning. "Russia's Hobbesian human jungles hone ruthless talents of survival," he writes, "and its poverty anneals the masses to discomfort; whereas Westerners, or so Russians think, are spoiled, fragile, and spineless."

Brussels is currently going through some revisions on their lobbying regulations, seeking to establish a higher standard for transparency - coincidentally losing Gazprom one of its most expensive levers of influence.  No problem, they still have Schröder and Scaroni.  From the Financial Times:

Gazprom's Brussels lobbying firm has been suspended from the European Union's lobbying register for failing to disclose the identity of three clients.

GPlus Europe, one of Brussels' most influential lobbying firms, is the first to be suspended from the voluntary registry, which was established in June to promote greater transparency about the role of lobbyists in EU decision making.

The commission's decision, communicated in a letter last week, does not imply any wrongdoing by GPlus or restrict its ability to operate.

The Economist is running an article that evaluates a recent study, published in the British journal Lancet, of the sudden drop in the life expectancy of Russian male from 1991 to 1994.  Amazingly, the study blames 'shock therapy' - an element of the economic reform package being implemented by the government at the time - for the drop.  The article looks at the feasibility of this claim, as well as the state of the economy during Soviet times.

Why was the Soviet economy in ruins by 1991? Partly because planned economies don't work (blame Lenin and Stalin for that). Partly because the gerontocratic leadership of Leonid Brezhnev failed to start reforms in the early 1970s, when gradualism might have had a chance of succeeding. By the time Mikhail Gorbachev initiated perestroika and glasnost in the late 1980s, the Soviet Union was all but bust. Worse, by running the printing presses red-hot, his government created a colossal monetary overhang. Russians may have thought that their savings evaporated when prices were liberalised at the start of 1992; in truth, their cash was already worthless.
Read the full article here.
Russians may have a bit of a different understanding of what Barack Obama said during his inaugural speech.  From the Moscow Times:

One problem for translators was the list of American values Obama called upon Americans to return to -- "hard work and honesty, courage and fair play, tolerance and curiosity, loyalty and patriotism." They were variously rendered as: трудолюбие и честность, отвага и справедливость, терпимость и интерес к миру, преданность и патриотизм (diligence and honesty, courage and justice, tolerance and interest in the world, devotion and patriotism); and работа и честность, смелость, ответственность, лояльность и патриотизм (work and honesty, courage, responsibility, loyalty and patriotism). Not quite a perfect match.

In another passage, one translator had some problems with English verb forms and may not have known American society very well. Obama said, "A man whose father less than 60 years ago might not have been served at a local restaurant," which came out in Russian: человек, отец которого приехал в эту страну и которому ещё 60 лет назад не разрешили бы работать в ресторане (a man whose father came to this country and who even 60 years ago would not have been allowed to work in a restaurant). Americans know that he could have gotten a job there; he just couldn't have sat at the counter.
Ukrainian Prime Minister Yulia Tymoshenko says that the gas price of $450 per 1,000 cubic meters, agreed by Russia and Ukraine for 2009, is 'fair', but a Moscow Times report suggests Tymoshenko will try to negotiate a discount on Russian gas supplies for 2010.  Meanwhile supporters of President Viktor Yushchenko claim that Tymoshenko didn't have the authority in the first place to negotiate gas prices and sign an agreement with Putin, and consider the deal a 'defeat'. Russia plans to increase its renewable energy output from 1% to 4.5% by 2020.  Norway likes to think of itself as a good custodian of the environment, says The Economist, but the country is also a 'prodigious polluter'.  GDF Suez wants the European Union to consider reaching a framework agreement on energy with Russia and not intervene on supply contracts. 
The Central Bank says it will stop widening the ruble trading corridor from today, and switch to a managed float.  Meanwhile, some real estate companies and car dealers are repricing their fees in 'conditional units' instead of rubles, and the Economic Development Ministry is expecting the economy to shrink by 0.2% this year, largely due to low global demand for energy and metals.  VTB says it won't accept equity in exchange for debts.  Yevgeny Chichvarkin, the founder and former co-owner of mobile phone retailer Euroset, has been put on the federal wanted list, suspected of involvement in a 2003 kidnapping case.  The Telegraph is counting oligarch losses.  Alexander Lebedev says he intends to pump 'tens of millions' of pounds into the Evening Standard newspaper over the next two years.  Deputy Prime Minister Igor Sechin is in talks with Cuban officials to expand economic ties between Russia and Cuba, ahead of next month's planned visit by Cuban President Raul Castro. 
230109.jpgTODAY: The popular Mr Putin; Medvedev trying to sway Uzbeks; Russia could broker Afghan deal with NATO; Human Rights Watch says both sides of the Georgia-Russia war violated the law, accusations continue to fly.

A new poll by the Levada Center says that Prime Minister Vladimir Putin has retained 'sky-high approval ratings' despite the economic crisis, and despite the fact that the percentage of Russians who believe that the country is going in the right direction has fallen from 54% to 43% since October.  'It's not for nothing we call him the Teflon president, because criticism doesn't stick,' said Lev Gudkov, the Center's director.  President Dmitry Medvedev arrived in Uzbekistan yesterday, amid reports that he will try to persuade the country that it should ignore European efforts to persuade it to transport gas through routes that bypass Russia.  The leaders also discussed regional security in relation to supply routes through Afghanistan.
 

From Irina Filatova on the Guardian's Comment is Free:

Many in Russia compare Budanov's case with that of Svetlana Bakhmina, a legal executive in the firm of the former tycoon Mikhail Khodorkovsky and mother of three children. She also applied for release on the grounds of good behaviour, but her requests were denied.

For the Russian goddess of justice is choosy: she usually bestows mercy only on those who are popular with the Russian authorities. Budanov is. He is very popular among Russia's military and he has a huge following in the broader society. Bakhmina has none of the above.

Minutes before his death, Markelov told reporters that he planned to challenge Budanov's release, which has prompted street protests in Chechnya attended by both sides of the political divide - human rights activists and representatives of the Chechen pro-Moscow party. There is hardly any doubt that Budanov's assurances that he has nothing to do with the murder are sincere. But whatever the future official verdict, Markelov's assassination is seen both in Russia and Chechnya as a message from Budanov's supporters to the whole of Russian society: don't count on the law. We are the law in this country. We define who lives and who dies.

Below is a translation of a blog post by Vladimir Varfolomeyev, a reporter who works at Echo Moskvy.  Hat tip to Veronica Khokhlova at Global Voices for bringing it to our attention.

Callous people
21 Jan, 2009 at 7:41 PM
The "Live journal" of Vladimir Varfolomeyev

We probably really have started getting used to the regular murders - of journalists, lawyers, politicians... - all those who on the strength of their calling, professional duty or civic conscience are found on the forward flank. Or maybe the point here is that we always were callous people, indifferent to the pain of others.

noose012209.jpgNot too difficult to see what's going on here.  From UPI:

"The need to diversify routes of supplying gas from my country to EU member states has been underlined by this crisis," Russian ambassador Vladimir Chizhov told the EU Observer, referring to recent disruptions caused by a dispute between Russia and Ukraine. (...)

Russia also believes the recent supply crisis will boost support for a South Stream project designed to deliver gas to Bulgaria, Romania, Greece, Austria, Hungary, Slovenia and Italy. the Observer said.

South Stream and Nord Stream "will provide a circle ... of energy security," Chizhov said.

"If the circle is broken at one point for whatever reason ... the rest of the circle will work," he said.

Today Robert Amsterdam had the following opinion article published in the Washington Post.  To read more about the Russia-Venezuela relationship, click here, here, and here.  To read more about Eligio Cedeño, click here.

partnersincrime012109.jpgPartners In Crime
Why Lawlessness Works For Chávez and Putin

By Robert R. Amsterdam
Thursday, January 22, 2009; A17

The administrations of Hugo Chávez in Venezuela and Vladimir Putin in Russia are enjoying a robust, burgeoning friendship. Though they are separated by 6,000 miles, the two leaders' bond is sealed not only by their similar tastes for repressive authoritarianism, oil expropriations and large arms deals but also by parallel trends of increasing violence and murder on the streets of their cities.

Roger Boyes writes in today's Times of London about an increasing number of protests and riots seen in Iceland, Latvia, Bulgaria, Greece, and Russia over the last months, most of them calling for changes in government, as people respond to the effects of the financial crisis.

He quotes LSE economist Robert Wade, who has warned that large-scale civil unrest is on its way in Europe:

"It will be caused by the rise of general awareness throughout Europe, America and Asia that hundreds and millions of people in rich and poor countries are experiencing rapidly falling consumption standards; that the crisis is getting worse, not better, and that it has escaped the control of public authorities, national and international," he said.

I was surprised to read so many government voices rallying on the side of Stanislav Markelov and Anastasia Baburova in this report from the Press Association.  The article says that lawmakers in the State Duma 'voted unanimously to demand that prosecutors share details of the inquiry into the murder[s]', and even quotes a United Russia party member, Sergei Markov, who urged a 'stop to the wave of attacks on rights defenders'.

mb220109.jpgThe United Russia voice sounds especially jarring here, but all of these voices are complicit in a system within which these awful things happen again and again - the same system which will, presumably, do nothing to ensure that those responsible are brought to justice.

A document called the Golden 1,000 is drawing attention to the failings of the Kremlin's traditional recruitment procedure. 

Apparently suffering from a lack of competent personnel thanks to years of good old-fashioned nepotism, the Kremlin is to receive an injection of Russian talent via a recruitment drive initiated by President Dmitry Medvedev last summer.  Under Medvedev's plan, members of a Duma commission have been scouring the country for 'the most talented, creative-thinking and professional people' who, the plan goes, will fill Russia's senior government posts.

From the Moscow Times:

The recruitment drive highlights [...] the need for a new generation of managers to replace the Soviet-era nomenklatura, and Kremlin watchers say the initiative is an attempt to lessen the influence of civil servants directly loyal to Prime Minister Vladimir Putin.

Gas flow through Europe has now been fully restored, with German utilities now receiving complete volumes of gas, and Ukrainian Prime Minister Yulia Tymoshenko has announced that neither Ukraine nor Russia will seek compensation for losses.  German oil and gas group Wintershall says it will push forward with the Nord Stream gas pipeline plan under the Baltic Sea, drawing a lesson from the recent cuts.  RosUkrEnergo, the intermediary company involved in supplying Russia's gas to Ukraine says it is still owed about $650 million by Ukraine's state energy company, and its chairman has implied that the company would no longer work with Ukraine.  Now that the Ukraine-Russia dispute has been solved, attentions are turning to energy issues in Moldova, says this article.  In other news, China's Sinopec says its 2008 net profits show a drop of more than 50%, and Deutsche Bank is not the first to say that OPEC oil cuts won't affect prices
President Dmitry Medvedev is reportedly meeting some resistance in trying to push regional governments to create more jobs.  Wage arrears have declined by almost 40% thanks to a surge in budget spending which helped companies pay their staff.  Alexander Lebedev, 'the spy who came in for the gold', has successfully purchased a 75.1% stake in the Evening Standard newspaper.  Will this week's ruble gains hold?  Probably not, with international reserves down $30 billion in just one week.  The Russian retail sector, struggling harder than ever in the face of a recession, may yet attract global investors due to its 'potential'.  Russian bank VTB reported net loss attributable to shareholders of $369 million in the third quarter, and needs to raise first-tier capital.  Russian companies are facing repayments of over $100 billion this year on foreign debt borrowed during the global oil boom, but analysts say that the most difficult wave of debt repayments are over.  The financial crisis is reportedly leading many Russians to seek psychiatric advice
220109.jpgTODAY: Markelov murder decried by Duma; Novaya Gazeta wants firearms for its journalists; Bakhmina case opened to possible early release; United Russia to rally public; OSCE confident of Russia deal; Lenin protesters detained.

Members of the Duma, the Communist and the United Russia parties have added their voices to widespread condemnation of the murders of human rights lawyer Stanislav Markelov and journalist Anastasia Baburova.  Novaya Gazeta, the newspaper at which Baburova worked, is to ask the Federal Security Service to issue arms licenses to its staff as a measure of protection.  The Mordovian Supreme Court has overturned a lower court's refusal to free Yukos lawyer Svetlana Bakhmina, opening up the possibility that she could be granted an early release, although there will be no ruling for at least three months.  In what is being called a contract killing, the head of a private company has been shot dead by unknown assailants in northwest Moscow.  The Other Russia has picked up on a story from earlier this week, saying that Vladimir Putin's United Russia party is planning to stage street rallies to drum up public support for the authorities.

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Today Robert Amsterdam gave an interview on Echo Moskvy about the murder of lawyer Stanislav Markelov.  Below is a small excerpt adapted from his on-air comments.

"Russia's vertical of power does not bring law and order. Rather, it has brought chaos and nihilism. These murders show that the Power is incapable of defending the people and their constitutional rights. We must ask ourselves whether the authorities, too many of whom are predators against Russia's citizens and businesses, even truly care. I will not call upon the Russian authorities to investigate these murders because we know they have no true interest in doing so, and will not do so properly. They have lost my trust. We can only mourn and commit even more strongly to defending the principles that Markelov and Baburova died for.

I extend to their families and friends my deepest sympathies and my hopes that they may be among the last heroes of Russia to die in such circumstances."

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If you know you can't do it - promise you will anyway...

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

The January Russian newspapers and websites are full of headlines: «Published are the most complete predictions of Vanga...» (the key word here is "most", because last year there already was such a headline, only without this word).

The next headline - «Who killed Vlad Listev...» (I will remind readers of the blog that the producer of the first telechannel of Russia, the journalist Listev, was shot to death in the entryway to his own building in the year 1995).

The next headline - «Who killed Anna Politkovskaya» (The journalist Anna Politkovskaya, as you will recall, they shot in the entryway to her own building in the year 2006).

The next headline - «Who poisoned Viktor Yushchenko ...» Well, here everybody knows who Yushchenko is and why they wanted to poison him. This was several years ago.

Representatives from the European Union, furious with the duplicity and irresponsibility of both Russia and Ukraine in the gas war, are promising that they won't soon forget how this was handled.  Really.  This time they mean it ... no more business as usualEven though you've heard this kind of warning in the past, this isn't like last time, when we forgot everything right away.

From the Financial Times:

José Manuel Barroso, president of the European Commission, criticised Russia and Ukraine on Tuesday for their conduct in negotiations to end a two-week natural gas crisis, saying he had never witnessed such "really incredible" behaviour before.

As Russian gas flows resumed across Europe, Mr Barroso vented his frustration over the ordeal, accusing both countries of failing to live up to their promises as the European Union worked to broker a truce.

"Let me tell you, frankly, I was very disappointed during these discussions about the way the leadership in these two countries negotiated," Mr Barroso said. "I will not forget that, and I think European citizens should know that."
Being in the car business is tough.  All the noise we heard about the Big Three bailout in the United States was just the tip of the iceberg for a troubled global market, as fewer and larger manufacturers scramble to place their bets on the best growth markets - namely Russia and Asia.  However, in these shifting economic winds, are we going to see a strategic revision with regard to foreign investment in Russia's car market?

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The inauguration speech of US President Barack Obama included a special focus on alternative energy sources and energy security.  The cash crunch facing Gazprom offers strong business opportunities for Western companies, says The Times.  Gazprom has been given rights to explore for hydrocarbons in Algeria.  Kazakhstan intends to invest $3.14 billion over the next six years to increase oil-refining capacity and produce as much fuel as possible domestically, and has raised its transit fees for gas heading to Russia by 21% for the year.  StatoilHydro has requested that Norwegian politicians assess the oil industry's access to areas on the Norwegian continental shelf.  
Arkady Dvorkovich, the Kremlin's economic aide, forecasts that the correction of the ruble is at an end, after the currency showed its first signs of stabilizing yesterday.  In response, the central bank has bought foreign currency for the first time in months, but the government is still facing its first deficit in a decade.  The crisis has put a quarter of smaller food businesses at risk.  Oligarch Mikhail Prokhorov has won a defamation case against the Moscow Times, which will have to pay a fine and publish a retraction of a quote by Vladimir Potanin, saying that Prokhorov promised to sell a stake in Norilsk Nickel to him, but in the end, did not.  Prokhorov filed a suit over this quotation because, he thought, it portrayed him as an 'unreliable partner'.  Roman Abramovich, meanwhile, has launched legal proceedings against London's Times Newspaper over this article's claim that he was looking to sell the Chelsea Football Club.  The recent growth in Russia's car market could be undone this year, with forecasts of a drop in demand of as much as 50%.  Polymetal is pleased with its 15% increase in gold output.  
210109.jpgTODAY: Russia sees NATO as test for Obama; gas supplies to Europe resume; Duma reading freedom of information bill; fighter jets transported to Lebanon; tributes to Stanislav Markelov.

The Kremlin says that it considers the US position on NATO membership for Georgia and Ukraine to be a key issue on which to judge the intentions of US President Barack Obama.  The new US administration will certainly improve relations with Russia, says one columnist, but only because 'bilateral relations could hardly get worse than they are now'.  But others see Obama's inauguration speech, in which he said 'America is a friend of each nation', as a cause for optimism regarding the improvement of US-Russia relations.  The United States military has obtained permission to move troop supplies for Afghanistan through Russian territory.  Russia, 'which is trying to increase its influence again in the Mideast,' has begun shipping fighter jets to Lebanon.

The Boston Globe makes it clear that the coexistence of regular political murders and the regularity of a rule of law state is not possible.

Markelov had received death threats because of his efforts to keep the murderer of the strangled Chechen woman in prison. In the past, he had defended the assassinated reporter Anna Politkovskaya as well as labor unions, human rights groups, and other journalists. He knew his life was at risk because of his legal work, as are the lives of many of the most admirable people in Russia - the lawyers, reporters, environmentalists, and human rights defenders who try to make the Kremlin live up to its claim of presiding over a law-based democratic state.

Russian President Dmitry Medvedev has spoken of his determination to improve Russia's attractiveness to investors, both foreign and domestic, by strengthening the rule of law. But as long as powerful, hidden bosses can have people like Markelov, Baburova, or Politkovskaya murdered with impunity, Russia will deserve its reputation as a Mafia petrostate crouching behind a Potemkin democracy.
Right now in Washington, dozen of galas are convening to raise a celebratory toast to a new era.  The champagne was also likely flowing in Moscow at more than one dinner table, however marking a far different type of outcome.  This excerpt comes from View from Vokzal:

Neither Markelov nor Baburova will protest any longer. Nor will they take any more holidays, read any more books, or live to be old. For standing up against cruelty in the Armed Forces, in the North Caucasus and in Russia as a whole, they had the full force of that cruelty turned upon themselves. More than one person languishing in Russia's moral vacuum will be relieved today that they are dead. We can reasonably imagine that toasts will have been raised in celebration.
Oleg Kozlovsky, occasional contributor to this blog, has posted an extensive list of all the political murders in Russia.  However before he could finish writing his article, he was notified that the opposition activist Anton Stradymov, who was brutally beaten into a coma days earlier, died in the hospital on Monday night.
inauguration.jpgToday at noon in Washington DC, Barack Obama was sworn in as the President of the United States.  It was hard not to get swept up in the excitement of such a historical moment, even among us hardened cynics who may be wary of impossibly high hopes.  Here we had the ultimate ceremony of democracy (even bigger than voting day), being pulled off with aplomb and the production value of the open ceremony of the Beijing Olympics.  Every television commentator seemed keen to emphasize the "transformational" setting of the event, and indeed, it would be hard to imagine hundreds of thousands braving the cold had any other candidate arrived to that podium. Obama's inaugural speech was profoundly ideological and driven by a certain vision of America's role in global relations. I'm not one to say whether or not the new president will be able to fulfill his promises, but if today's objective were to generate considerable pride, conviction, and fortitude across new boundaries of the American polity, I believe he succeeded handily.

Meanwhile, across the Atlantic and on the other side of Europe, the mood couldn't be more different in Moscow.

put-3012009.jpg«Saint» Putin, with order, mounted

Grigory Pasko, journalist

Если Вы хотите прочитать оригинал данной статьи на русском языке, нажмите сюда.

I like Germany and the Germans. True, not all Germans. Those who at times forget about the rules of decency in their headlong efforts to do what would please Putin and his regime - these don't impress me.

On 16 January, prime-minister of the RF Vladimir Putin in Dresden in a solemn atmosphere received the "Saxon order of gratitude" of the Dresden Semperoper in the nomination of a "Politician". The order represents a figure of Saint George mounted on a horse, striking with a lance a dragon personifying evil. It is fabricated in the Dresden jewellers' workshop as a precise copy of one of the most precious masterpieces of the "Grüne Gewölbe" museum - a statuette of Saint George - against the background of a panel with the motto "Adverso Flumine" ("Against the flow"). In the number of former laureates of this order - actor Maximilian Schell, footballer Franz Beckenbauer and ex-minister of foreign affairs of Germany Hans-Dietrich Genscher.

We've all heard the stories about Igor Panarin, the "academic" who has become extremely popular in the Russian state media for his prediction that the United States will dissolve into five separate countries within a year, but this one about a prophetess is really stretching one's suspension of disbelief. Desperate times call for desperate illusions... From James Marson on the Guardian:

Another story of a similar ilk has sat at the top of the state-backed Moscow News's prophetess012009.jpgmost-read list for the past few months: a "prophetess" called Vanga has predicted that Russia will dominate the world. Economists' assessments of Russia, a country that currently accounts for about 3% of global GDP (comparable with the UK) and with per capita GDP at a quarter of the US level, are somewhat more sobering. Its economy is in serious trouble after years of neglected reforms, over-reliance on commodities and a failure to tackle rampant corruption. (...)

As the crisis increasingly reveals the gulf between Russia's self-image and its real possibilities, the time of Panarin and Vanga could be coming to an end. Talk will surely move from fantasies about Russia challenging the US to the country's very real internal problems and how to solve them. Previously deaf ears will begin to listen as the failures of the current leadership become clear in everyday life. The question that will then be raised is one that has been asked of Russian leaders for centuries: liberalisation, or crack down?
This opinion piece from Alexander Arkhangelsky was published on RIA Novosti in Russian last week, and then translated a few days later (still before the double murder of Markelov and Baburova).  See Arkhangelsky's earlier pieces and RA's "Politics of Parole" on the same subject.

Yuri Budanov has been released from prison, while Mikhail Khodorkovsky and his accomplices remain incarcerated. No matter how one feels about these individuals personally, one thing is clear: there are criminal cases that somehow, on their own accord, turn into cases that are political and emblematic.

From the editorial page of the Washington Post:

The larger story here is of serial murders of Mr. Putin's opponents, at home and abroad. Ms. Baburova, 25, is at least the 15th journalist to be slain since Mr. Putin took power. No one has been held accountable in any of the cases -- including that of Anna Politkovskaya, a former client of Mr. Markelov who also was murdered execution-style in broad daylight, on Mr. Putin's birthday in 2006. In London, dissident former KGB agent Alexander Litvinenko was poisoned; so was Ukrainian President Viktor Yushchenko, who survived. Karina Moskalenko, another opposition lawyer who has represented Ms. Politkovkaya's family, fell ill from mercury poisoning in Strasbourg, France, in October, just before a hearing in the case. Last week in Vienna, a Chechen dissident who had received political asylum was murdered on the street -- shot twice in the head.

It is possible that Mr. Putin and his security services had nothing to do with any of these murders. But it is a fact that the Russian leader has not pressed for justice; on the contrary, he has protected the suspects identified by Scotland Yard in the Litvinenko case. What is indisputable is that Russians live in a political climate in which those who criticize Mr. Putin or the human rights violations of his government can be murdered with impunity. Although some of the killings have occurred in their cities, Western governments have made no attempt to hold Mr. Putin or the Russian government accountable. Their silence helps keep brazen murder a part of Russia's politics.
roses012009.jpgSeveral hundred Muscovites, a rather small number considering the gravity of the event, have come out today to lay roses, mourn, and demand justice for the brutal murder of lawyer Stanislav Markelov and reporter Anastasia Baburova.  It seems that amidst all the outrage and sadness, we are seeing many express a sense of disgust.  From Reuters:

Mourners left a mound of red roses and yellow carnations in the snow at the spot where Markelov was shot. Candles burnt below pictures of the two and a small Russian flag with the words "They died for Russia's freedom" hung above the flowers.

"I came today as I am deeply sorry and disgusted for Russia: how can you just shoot people down in broad daylight in the centre of Moscow," said Alexandra Fomina, a prominent artist.

"Can we tolerate this much longer? And will they catch anyone for this murder - or will it be business as usual?" (...)

"Markelov was a lawyer foremost but in his heart he was also a human rights activist - he fought for the underdog against some powerful people," said Lyudmilla Alexeyeva, one of Russia's most famous human rights activists.



Oil has dropped below $34 a barrel.  Prime Minister Vladimir Putin has ordered changes to this year's federal budget, drawing up new calculations on an estimated average price of $41 per barrel of crude oil for the year, roughly in line with yesterday's price prediction from Alexei Kudrin.  Is the Italian Government looking at ways to speed up approval of the Rivara gas storage project, as a means of guarding against future shortages?
Dmitry Medvedev's economic adviser says the government is approaching the final stages of its ruble devaluation, and is planning to allocate another $40 billion to banks to support lending. Moscow rent prices are plummeting, with some properties' rates down by over 50%.  Russia is considering loaning $20 million to Cuba, to be spent purchasing Russian goods.  The struggling region of Penza is firing government officials, apparently in the hope that they will improve the economy: 'The more officials we fire, the more candidates there will be to start small businesses.'  The appointment of former German Chancellor Gerhard Schröder to the board of TNK-BP brings the issue of corporate governance to the forefront, says the Moscow Times.  
200109.jpgTODAY: Putin and Tymoshenko sign 10-year gas deal, networks to return to working order in 36 hours; Medvedev sanctions countries selling arms to Georgia; Human Rights Watch calls for probe into death of Stanislav Markelov and Anastasiya Baburova.

Human Rights Watch is calling for a government probe into yesterday's 'disgraceful' contract killing of human rights lawyer Stanislav Markelov and journalist Anastasiya Baburova, and has urged the EU to put pressure on Russia 'to bring to justice those responsible for the killings'.  'The larger story here is of serial murders of Mr. Putin's opponents, at home and abroad,' says the Washington Post.  20-year-old Anton Stradymov, one of the Oborona activists detained last year and a protester involved with the banned National Bolshevik Party, has been beaten to death in Moscow.  The 18-year-old leader of a nationalist group has been sentenced to three-and-a-half years in prison by a Moscow court for staging a mock killing.

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Yet another human rights advocate killed in the capital of Russia. Lawyer Stanislav Markelov was shot on Prechistenka street in the center of Moscow. Stanislav was only 34 years old, but he was well known not only in the milieu of human rights advocates, but in wider circles as well. First and foremost, he was known as the Moscow lawyer who was not afraid to conduct cases in Chechnya, defending Chechen citizens. In recent days, his name was never off the pages of the mass information media, because he was striving to get the conditional early release of Yuri Budanov, a former colonel who killed the young Chechen woman Elza Kungayeva, declared unlawful.

And it was right after a press conference dedicated to this unlawful release that Stanislav was killed.

It would seem odd that your average extremist ultra-nationalist would use a professional silencer.  This comes from RFE/RL:

Svetlana Gannushkina of Russia's Memorial human rights center told RFE/RL's Russian Service that Markelov's murder bore the signs of a hired killing.

"This could not have been accidental, and there was certainly no criminal motive behind it," Gannushkina said. "Unfortunately, we cannot conduct our own investigation. We can only demand that the law enforcement bodies do it. But our capabilities, our mechanisms, so to speak, of making such demands are unfortunately very, very weak. All we can do is express our indignation and try to find out who threatened Stanislav, when, why, and how." (...)

In an interview with RFE/RL's North Caucasus Service, Kungayev -- who now lives in Norway with this four remaining children -- said he believed Budanov was behind the slaying.

markelov5011909.jpgToday's murder of lawyer Stanislav Markelov was preceded by many clear warnings and physical threats, some indirect and others quite overt.

In addition to being an outspoken human rights activist with a focus on Ingushetia, the South Caucasus, and the filtration camps of Blagoveshchensk, he also represented numerous clients perceived as opponents of the Kremlin, including the family of Anna Politkovskaya and the victims' families in the high profile cases against Yury Budanov and Sergey "Kadet" Lapin.  Taking into account the general context of the state's well documented "war on lawyers" currently occurring in Russia, Markelov's politically volatile client roster put a specific target on his head.  It is not difficult to understand how any group wishing Markelov harm would interpret the government's position as "a green light" for impunity.

As such, there exists a pattern of threats against Markelov and government inaction to protect him, which accumulated over the years. 

Grigory Pasko has contacted us to inform that Russian media is reporting that Anastasia Baburova, the young freelance reporter from Novaya Gazeta who was accompanying Stanislav Markelov, has died in hospital while receiving urgent medical care for a gunshot wound to the head.  (The news has also just been confirmed by AP)

baburova011909.jpg

In light of the slaying of lawyer Stanislav Markelov, we are digging into the archives of older news reports to inform our readers of the story of former colonel Yury Budanov, whose release on parole Markelov spent his final days fighting.  It is important to understand how the trial and imprisonment of Budanov became a rallying point for ultra-nationalists in support of the campaign in Chechnya.

"Rape and Murder Trial Puts Russia in Dock over Chechnya," by Andrew Jack, Financial Times, (June 22, 2002, pp. 16)

In most countries, a soldier accused of raping and murdering an 18-year old girl would be heavily stigmatised. In Russia, where nearly three years of fighting has poisoned relations with its breakaway republic of Chechnya, Colonel Yuri Budanov has become a strange kind of hero.

The following is a translation, hot off the press, of an article posted to Novaya Gazeta, the newspaper where Anastasia Baburova was employed.  Baburov was accompanying Stanislav Markelov when an attacker shot them both, fatally wounding the lawyer.

baburova011909.jpgLawyer Stanislav Markelov killed and «Novaya gazeta» employee seriously wounded in center of Moscow

The murder of Stanislav Markelov took place in the day in the area of the «Kropotkinskaya» metro station. In the words of eyewitnesses, the criminal shot the lawyer in the head from a pistol with a silencer. «Novaya gazeta» employee Anastasia Baburova, being found at that moment alongside Markelov, attempted to detain the killer, however was wounded likewise by a shot to the head. In serious condition they hospitalized her in the 1st City hospital. She is found in intensive care, doctors are fighting for her life.

I usually don't publish Russia Today clips, but this one contains some good details.


budanov2011909.jpgLawyers for Yury Budanov (photo), the former colonel released on bail, have told Interfax that he was not involved in arranging the assassination of human rights lawyer Stanislav Markelov.

The following is a translation from Interfax:

"In his turn, Budanov's lawyer Alexey Dulimov considers that the former colonel of the Russian army does not have [anything] to do with the death of Stanislav Markelov.  "I am deeply convinced that Budanov can not have anything to do with this", - said Dulimov on the air of the radio station "Russkaya sluzhba novostei" [«Russian news service»] on Monday.  "He (Budanov - IF) never had thoughts about taking revenge on Markelov, he doesn't even know the guy and has never even seen him", - said Dulimov.

"For the fulfillment by a lawyer of professional duties encroachment on his life - sheer madness.  That way all people in our country will remain defenseless, if such events will be taking place", said the lawyer of Budanov.  In his words, "no one of the military" can be involved in the murder of Markelov."
Russian newspaper Kommersant has published five photos on the Stanislav Markelov story, four from the crime scene, and one from earlier.  They are not for the faint of heart.
mark011909.jpgThere have been some conflicting reports as to the identity of the woman who was accompanying lawyer Stanislav Markelov when he was assassinated today.  So far, most reports indicate that it was Anastasia Baburova, a 24-year-old reporter from Novaya Gazeta, and the author of a series of articles about both Budanov and the Kungayeva family.  According to some early correspondence that has been forwarded to me by an editor at a large news organization (meaning that I can't confirm the accuracy of this information), doctors are currently struggling to save Baburova's life.  She apparently suffered a shot to the head as she attempted to stop the assailant.  The attacker used a handgun with silencer.

I've also been sent a couple of quotes from the human rights community on Interfax.  Lyudmila Alexeyeva said "The death of such people as Markelov is a disgrace for our country.  He was a very young man - exceptionally selfless, who had his own civil position."

Oleg Orlov of the NGO Memorial told Interfax. "The murder in the center of Moscow of a man, a lawyer, who took up high-profile  political  cases, and the murder of Anna Politkovskaya are events of the same scale. (...) He defended victims of a riot police operation in Blagoveshchensk, Bashkortostan,  and  he  dealt  with  human  rights  abuses in Chechnya. Incidentally,  Anna  Politkovskaya wrote about one of such cases and she was threatened after that."

More to come soon ... this blog was one of the first places to publish Markelov's work on the Blagoveshchensk filtration camps in English.

Photo from RIA Novosti.
stanislav_markelov.jpgOne of Russia's bravest and most highly regarded human rights lawyers, Stanislav Markelov, has been assassinated today by an unknown gunman at point blank range on Prechistenka Street in Moscow.  Anastasia Baburova, a woman accompanying Markelov, was also shot.  Among other high profile political cases, Markelov represented the family of Elza Kungayeva, and helped to push forward the successful prosecution and conviction of one of the worst human rights violators of the war in Chechnya, Colonel Yury Budanov.  In recent weeks, Markelov had been in the news as one of the strongest voices opposing the early parole of Budanov.

I am completely taken aback by the news of this brutal murder.  I knew Stanislav personally, considered him a friend and respected colleague.  I will have more information to share on this later, but for now, my thoughts and prayers are with his family.

We will be adding updates to this post throughout the evening.  For now, links to news coverage: Reuters, Russia Today, Associated Press, and RIA Novosti, cited below.

UPDATE #1: Coverage from the New York Times has just come online. This report indicates that the woman accompanying Markelov was a journalist who had published highly critical articles on the government's Chechnya policies.  Markelov had just finished giving a news conference in which he announced the possibility of bringing international legal action against Budanov.

UPDATE #2: Luke Harding of the Guardian has filed his story, and the AP has updated their coverage with more information, which quotes Lev Ponomarev as saying "When one needed a bold journalist, one called Politkovskaya, when one needed a bold lawyer -- one called Markelov."

UPDATE #3Novaya Gazeta has updated their coverage ... translation here.

UPDATE #4The Moscow Times has filed its coverage, with further details on the press conference given before the murder. The event was titled "The Illegal Release of Budanov From Prison: the Ignorance of the Court and a Direct Benefit For Militants," and the father of the victim accused Budanov of securing his bail thanks to "his influential friends."

UPDATE #5
The Telegraph has filed a story, not much info except for that the killer was wearing a balaclava style mask. Amnesty International has also posted a statement.

For some, it is going to get worse before it gets better.  From Ian Bremmer on RCP:

With oil prices well below what the Russians can afford, but Putin's (& Medvedev's) popularity still high, the initial moves have been to consolidate power. Yet despite no organized political opposition to speak of, we're still starting to see social unrest. For the first time in years, there have been widespread demonstrations in Russia--in 30 cities, following the imposition of import duties on used cars. We're likely to see much more turbulence in 2009, as factories providing employment for entire cities are shuttered. That's a sort of suffering that Russians are certainly used to, but only in the context of a very different kind of political system.

Where could this go? There will be near-zero state tolerance for dissent. And the strongest level of anti-Americanism (and, in many quarters, of broader xenophobia) of any significant emerging market in the world, creates the potential to make security a serious concern--and possibly lead to unrest that disrupts supply chains. The Obama administration is unlikely to quietly tolerate a crackdown, and will put plenty of focus on human rights and democracy. So American and some European nations' relations with Russia will continue to deteriorate over the course of 2009 (with the Germans, who are more dependent on the Russians economically and, to some extent, politically, playing the role of wild card).

budanov011709.jpg

(Editor's note: RA drafted this piece on Friday, before the murder of Stanislav Markelov, the lawyer representing the family of Budanov's victim)

To describe the Russian justice system as flawed and dysfunctional would be an extremely generous understatement, yet however arcane and unfair the system has become, judicial decisions are still made. Charges are filed, hearings held, trials convened, and convictions and even the occasional acquittals are parsed out. And as we have seen lately, certain individuals are even granted parole once in a while - though the process by which these small acts of compassion are distributed is quite far from clear.

The latest news makes the parole issue even more confusing. Last Thursday, the former army colonel Yury Budanov, who was convicted in 2005 for the brutal murder by strangling of eighteen-year-old Elza Kungayeva, walked out of prison after being granted a swift parole. The fact that Budanov was even convicted and spent some time behind bars represented a major victory for human rights in Russia at the time, as he attained a martyr status for extreme nationalists. Lawyer Stanislav Markelov, who has written for this blog, represents the family of Kungayeva and was instrumental in bringing the case to prosecution. Markelov's appeals against Budanov's parole have been essentially ignored by the Russian courts.

The Polish Foreign Minister, Radoslaw Sikorski, has accused German Chancellor Angela Merkel of making Europe more dependent on Russia by giving her support to the Nord Stream pipeline.  The EU is unlikely to be able diversify energy supplies away from Russia for many years, says the Moscow Times.  The price of crude oil is currently around $36 a barrel, and Finance Minister Alexei Kudrin has predicted that 2009 oil prices will stay below International Energy Agency forecasts of roughly $40 a barrel.  Evraz Group has renounced the right to purchase a license to develop the Mezhegey coal deposit, due to weakening coal market conditions, and MMK and Mechel are involved in a row over coal pricing.  Turkey has received a revised offer from Russia's Atomstroyexport to build the country's first nuclear plant.  Mosenergo has had to suspend plans to build four new turbines after regulators capped the price of power from a recently installed plant.  Gazprom has signed a $120 million contract on exploring and developing a hydrocarbon deposit in eastern Algeria. 
The ruble fell below the weakest level seen in the 1998 Russian crisis after the central bank devalued it for the sixth time in seven days, and reports say that Russians are hoarding US currency over fears of total economic collapse.  Finance Minister Alexei Kudrin has warned that consumer prices could rise by 13% this year, and that the economic growth rate could slow to 0-2%.  Russia's Central Bank has issued a license to a subsidiary of Goldman Sachs, with one analyst saying that the deal shows continuing foreign investor interest in the Russian market.  The usually pro-Kremlin Mikhail Gorbachev has accused the government of bailing out billionaires at taxpayers' expense, and the British government has responded angrily to reports that the Royal Bank of Scotland wrote off a £2.5 billion loan for oligarch Leonid Blavatnik.  A CEO at Norilsk Nickel says the mining company isn't planning to merge with Rusal.  The CEO of Russia's Sberbank and Kazakh Prime Minister Karim Masimov reportedly discussed combining the two countries' resources in a bid to dictate prices on world markets.  The head of the Moscow Advertising Committee is being investigated on suspicion of embezzling more than $4 million.  Chelsea Football Club is denying reports that owner Roman Abramovich wants to sell it to a buyer in the Middle East.
190109.jpgTODAY: Understanding reached between Russia and Ukraine, but EU remains cautious until gas flows are restored; Putin tries to temper Obama expectations; his charity painting sells for over $1m; suicide and bullying major problems for Russian military.

Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, reached a 'mutual understanding' after a late-night meeting over the weekend, and promised that Russian gas would begin flowing to Europe today, but the EU has responded cautiously to the news, referring to 'many false dawns'.  Putin said Ukraine would pay 20% less than 2009's European gas price, 'but the complex, opaque nature of the two nations' gas dealings and the lack of full detail about the outline agreement makes it very hard to be certain what is really happening'.  In any case, the two leaders are to sign an official agreement in Moscow today.  The New York Times wonders whether Russia will be able to win control of Ukraine's gas pipeline system, which it apparently 'continues to covet'.  This month's crisis has its roots in Viktor Yushchenko's initial gas deals with Russia, in which he ceded too much control, says the Washington Post.

syd-2.jpg

It's sure been a long time since I last visited Moscow's courts. But, having visited one today, I saw for myself: nothing's changed there. A whole bunch of people. One judge over a brief period of time examines several cases. This is called tekuchka in Russian [meaning something like "churning them out" or "assembly-line"--Trans.]. How can you even talk about the quality of the meting out of courts here!

Already at 9 o'clock in the morning beside the courtroom in the Meshchansky District Court of Moscow there were five journalists. By the start of the court session on the lawsuit of the convict A. Kuchma against Mikhail Khodorkovsky on compensation of moral damage for supposedly sexual solicitations on the part of Khodorkovsky there were already 20 journalists. Soon the court bailiff appeared - a pretty young woman - and reported that only seven scribes would be able to enter the courtroom. (I hasten to report that the correspondent of the blog www.robertamsterdam.com was in the number of these seven).

sing011609.jpgThe civic act of non-violent demonstration and public assembly, taken for granted as a constitutional right even in less-than-free countries (China experienced record levels of "civil disturbances" in 2008), has been legislated to the point of outright criminalization in Singapore.  Just ask Dr. Chee Soon Juan, leader of the opposition Singapore Democratic Party, who will stand trial for a barrage of trumped up charges, including protesting without permit.  The state police also recently arrested just two people who were demonstrating in support of Burmese nationals, later releasing them on $2,000 bails.

Now with the approach of the Asia-Pacific Economic Cooperation (APEC) summit, the world's eyes will be on the shining city state - and the authorities are determined to make sure there will be practically no public demonstrations whatsoever.  Once again, the law will serve as their primary weapon.  This weekend the state media reported that the government is meeting to make revisions to a series of laws on public assembly, granting the police even greater power and discretion to crack down on dissent.

The following is a translation from Khodorkovsky.ru:

yurischmidt061008.jpeg

Yuri Schmidt: "Kuchma, this is not a plaintiff, it is a dummy figure"

Meshchansky District Court of Moscow postpones session to 25 February.

On Friday, the Meshchansky District Court of Moscow was supposed to examine a lawsuit about compensation of moral damage, filed by the inmate Kuchma against Mikhail Khodorkovsky, but because the court did not have at its disposal information that the plaintiff had been duly notified of the process, they postponed the session to 25 February. Lawyer Yuri Schmidt, who has accumulated 50 questions for Kuchma, considers that the "dummy figure" of the plaintiff is being directed by official persons of the Chita UFSIN and FSIN, aspiring to create "intolerable conditions of the serving of punishment" for Mikhail Khodorkovsky.


Here's a dose of realism from Stephen M. Walt on his new Foreign Policy blog:

It's obvious that Moscow is using Ukraine's dependence on Russian natural gas as a diplomatic weapon -- no surprise there -- but it's equally clear that Moscow's leverage is reduced by the EU's reliance on gas flowing through Ukrainian pipelines. Whenever Moscow tries to squeeze Kiev, Europe hollers and jumps in, and then the Russians have to lighten up in order to avoid a major fight with the Europeans (an important trading partner). But this problem will ease as soon as EU-Russian pipelines bypassing Ukraine are completed and Russia's ability to pressure Ukraine will perforce increase. As long as the rest of the EU is toasty warm in winter, they aren't going to care much about conditions in Kiev. So if I were Ukrainian, I'd think long and hard about where this one was headed.
It seems that no matter what the situation, no matter how serious, the Nashi finds room for some crass ridicule.  It's not the first time - and one would think there is a better use for the state budget.

From RIA Novosti:

About 30 activists of the pro-Kremlin youth group Nashi (Ours) on Friday brought firewood for Ukrainian President Viktor Yushchenko to the Kiev's embassy in Moscow. (...)

The group said they intended to show Yushchenko that he should "stop using fuel received by illegal means to the detriment of hundreds of thousands of Russian and European people, and begin heating his home and presidential administration building with firewood."

"Yushchenko has brought Ukrainians to a situation when they prepare to heat their houses with firewood," a group leader, Maria Drokova, said in a speech outside the embassy.

Members of Russia's ultranationalist LDPR party, led by the outspoken deputy speaker of parliament's lower house, Vladimir Zhirinovsky, also held a rally in front of the Ukrainian Embassy on Friday.

The party's slogans included "Stealing is a sin, Gazprom will punish you," "Yushchenko has frozen relations, don't freeze Europe!" and "Gas stealing earns a real beating!"

Vladimir Putin's efforts to convene a summit with European political and corporate energy leaders in Moscow to settle the natural gas dispute with Ukraine has hit a few speed bumps.  French President Nicholas Sarkozy, who is not unfamiliar with broken promises, has balked over the conditions and is refusing to send a delegation.  From the Associated Press:

"The conditions for a summit are insufficient," the French Embassy in Moscow said. In a foreign policy speech, Sarkozy said the credibility of Ukraine and Russia were at stake.

"I know and understand political rivalries. They must not hold hostage an energy dispute which concerns millions of Europeans, who expect better. Ukraine's credibility is at stake," he said.

Turning to Russia, he added: "When one supplies two-thirds of the gas that Europe needs, you respect your clients, as the clients must respect the supplier."

norilsk011609.jpgOver the past few months, many observers have been speculating that bailout efforts by state-owned banks to rescue Russian companies and large industrial interests would result in the nationalization of minority or controlling shares, thus dramatically increasing the government's participation in the business sector.  It has been called loans for shares in reverse.  Already many of the country's largest business owners have been snagged in this trap, their fortunes nearly evaporated, and put into a much more humble position before the discretion of the state (not that many of them were particularly independent to begin with).

All eyes have been on the crown jewel of Russian metals, Norilsk Nickel, which before the economic crisis hit with full impact was undergoing a high profile legal battle over control of one of the largest stakes.  All the way back in August, the feuding owners Mikhail Prokhorov and Vladimir Potanin agreed to swap 16.7% of Norilsk Nickel for 35% of Polyus Gold, in what was speculated to be part of a Putin-endorsed plan to create a new metals giant big enough to compete with BHP Bilton (call it the Gazprom of mining).  When Kremlin insider Alexander Voloshin was nominated to board of Norilsk on Dec. 26, these rumors of state takeover accelerated.

Today it appears to be official.  The Wall Street Journal reports that a new metals plan for the formation of a mega-consortium was discussed at a hastily called meeting late Tuesday between President Dmitry Medvedev, other senior officials and metals tycoons including Oleg Deripaska (Rusal), Vladimir Potanin (Norilsk Nickel), and Alisher Usmanov of Metalloinvest.

Brian Whitmore has a good post up over at The Power Vertical:

The political structure Putin built over the past decade was based on a vast system of patronage that, thanks to high oil and gas prices, allowed the Kremlin to purchase the loyalty of Russia's sprawling bureaucracy and at least the tacit consent of a critical mass of the population.

Here's how Moscow-based political analyst Dmitry Oreshkin put it when I spoke to him about the emerging political crisis:

The vertical is not as strong as it seemed. It is based on buying the loyalty of officials with the help of oil funds. The bureaucratic class gives its loyalty to the center and the center closes its eyes to their corruption...When oil and gas prices were high and when the economy was growing, it worked well. Bureaucrats were afraid to show disloyalty to their bosses because if they were fired they would be outsiders. But when gas and oil prices are low and the economy falters, it is not possible to buy everybody's loyalty.

Petrodollars, in short, were the lubricant that kept the system functioning. And now that these are drying up, the arrangement is breaking down with unpredictable consequences.

The gas war appears to be doing for Vladimir Putin what the invasion of Iraq did for George W. Bush - a boon of popularity during a difficult time.  Unfortunately, the longer term outlook of freezing Ukraine, Bulgaria, and the rest of Europe is unlikely to play to Russia's favor.

From Bloomberg:

In turning off gas supplies to Ukraine and Europe, Putin showed Russians that he is in charge as a recession looms, and that the West must treat him as a key player in global energy. He also is pushing for higher long-term revenue for state-controlled OAO Gazprom, and has damaged West-leaning Ukrainian President Viktor Yushchenko.

"The more they criticize Putin abroad and the more they fight with Russia, the greater his political weight grows," said Mikhail Delyagin, an economic adviser to former Russian Prime Minister Mikhail Kasyanov and director of the Institute for Globalization Studies in Moscow. (...)

"Putin has again shown to the domestic Russian audience that he is a strong leader," said Chris Weafer, chief strategist at UralSib Financial Corp. in Moscow. "His message to the people is that nobody should mess with Russia when he is around."
Europe's energy crisis has started to hit UK gas prices.  Gazprom and Italy's ENI have agreed to step up work on the South Stream pipeline project.  A 60-member delegation of US firms is lobbying in India this week for a share in the country's nuclear market, but issues of liability are stalling progress.  Former German Chancellor Gerhard Schroeder - a favourite with the Russians and in particular with Vladimir Putin - is to join the board of British-Russian oil major TNK-BP as an independent director.  Russia's budget deficit could top 4 trillion rubles ($124 billion) this year - more than 10% of its GDP - if oil prices stay below $40 a barrel, and low prices have caused the government to cut oil export taxes by 15%.  Iraq's oil ministry will hold a workshop for international oil companies interested in bidding for a stake in its largest oil and gas fields, but one analyst suggested that 'investing in an environment like Iraq isn't very tempting for international oil companies' due to the current price slump.  Venezuela's PdVSA is struggling to pay its bills, says this report.  Lukoil's planned purchase of a 20% stake in Spain's Repsol is on hold.  
It looks increasingly likely that Alexander Lebedev's bid to buy London's Evening Standard newspaper will go ahead - meanwhile the British press has turned its attention to his son, Evgeny.  Russia's central bank has devalued the ruble yet again, and wage levels are crashing.  Despite the financial crisis, Russia plans to earmark $125 billion for arms purchases by 2011, and will spend $31 billion on weapons in 2009 alone.  The Duma will hear proposals to create a new state company today - to manage federal roads'If this company will be a monopoly, it will become yet another way of pumping money out of the people, masked as a measure in the interest of drivers,' said one critic.  State-run Vneshekonombank has bought a 75% stake in Ukraine's Prominvestbank for $150 million.

160109.jpgTODAY: Following suggestion from Putin, Eni tries to form consortium to get gas pipelines working again; gas summit to meet tomorrow in Moscow; Putin in Germany, Poland siding with Ukraine.  Gas row boosting public support for Putin at home; US needs Russia, says lawmaker; post-Soviet mortality; Medvedev is 'the president without a team'.

The Russia-Ukraine gas dispute hits its eleventh day.  In light of another failed attempt at a resolution, Prime Minister Vladimir Putin suggested that European countries suffering from the dispute should form a consortium to purchase gas directly from Russia.  'Russia is not ready to take all the risks,' said Putin's spokesman, Dmitry Peskov.  Italian Prime Minister Silvio Berlusconi is the only leader so far to have backed the plan, but Eni is in the process of trying to do just that, organizing a consortium to provide enough gas to get pipelines and pumping stations working again.  Foreign Minister Sergei Lavrov has urged EU leaders to attend this weekend's energy summit in Moscow, but France says there is no need to attend a summit until gas supplies have resumed.

Diarmid O'Sullivan and Tom Mayne of Global Witness have a new opinion article in the Financial Times on the gas crisis - they frame the argument for transparency quite well:

So what can be done? The EU has attributes that, wielded intelligently, could give it some influence over the countries that supply its energy. Europe is a big market, a source of commercial finance and development aid and, more subtly, a source of legitimacy for governments abroad that often rest on shaky political foundations.

gerhard011509.jpgToday's news that TNK-BP has appointed the former chancellor of Germany, Gerhard Schröder, to its board of directors is a striking illustration of just how far away Russia has fallen from the most basic standards of a functioning market.  What matters in this business environment is not efficiency nor competitive, commercial success, but rather proximity to power, whereby business survival depends on personal relationships with the political apparatus, and backroom handshakes of preferential status are necessary to overcome problems.  It is a process of creeping corporate acquiescence to the corruption of state officials, and the final resignation to the fact that Russia is not a rule of law state in which the law is dependable to protect one's property.

TNK-BP's motivation behind this decision is clear.  The Anglo-Russian joint venture, 50% held by the British and 50% held by the AAR consortium (Alfa Bank, Access Industries, and Renova, bringing the weight of the two powerful oligarchs Mikhail Fridman and Viktor Vekselberg), experienced an absolutely awful year in 2008 as the two sides underwent an epic struggle for control of the company.  The BP side had certain views on the strategic development of the company, seeking to reinvest dividends into maximizing production (which requires the hiring of expensive technical experts and secondees).  In a compelling letter to FT, Mikhail Fridman outlined the Russian perspective, which accused the British of treating TNK-BP as "a vehicle for adding reserves to shore up its own stock price" while preventing the venture from expansion beyond Russia.  There was no love lost over at BP, whose Chairman Peter Sutherland put it quite bluntly:  "This is just a return to the corporate raiding activities that were prevalent in Russia in the 1990s."
One wonders whether it could really be worth it for the Kremlin to keep up this gas war, no matter how upset they are with the endlessly frustrating Ukrainians.  For as much economic and political damage as they are imposing on their NATO-loving brethren to the West, Gazprom is increasingly shouldering an intolerable financial burden, from which it might not be able to recover without years of work.  First we had the announcement earlier this week that Gazprom had lost more than $1.1 billion in revenues, then Gazprombank got downgraded to junk status (which is huge), and now, according to the Associated Press, the company has tumbled from the 3rd largest in the world to the 35th (and naturally there's a Yukos play in the equation).  If only money were still "a snap," as the president used to be fond of saying.

AP:

Losing foreign income is catastrophic for Gazprom: It exports a third of its production and reaps much higher profits abroad than at home, where prices are capped.

Saddled with net debt of roughly $45 billion, the protracted dispute with Ukraine is one Gazprom can ill afford. And considering the company's central importance to Russia's prosperity, its mounting woes may hold the key out of the deadlock with Ukraine -- which is also losing millions a day in the pipeline freeze.

lebedev011509.jpgAlexander Lebedev is getting a lot of positive press lately after having made a bid for the London newspaper The Evening Standard.  Luke Harding of the Guardian describes him as an "oligarch we could learn to love," despite the fact that his much ballyhooed new political party project with Mikhail Gorbachev seems to have completely disappeared, and the Kremlin might decide to take away his fortune.  Below is an excerpt from a profile on the BBC:

One of its journalists, columnist Yulia Latynina, told the Observer newspaper that Mr Lebedev was the genuine article - a tycoon intellectual with a social conscience.

"Most Russian oligarchs seem to settle into, 'We can do nothing'," she said.

"They spend their days in Courchevel (ski resort), drinking wine, eating caviar and watching girls dance on the table.

"Lebedev is trying to do something so the country will be better. But he knows that if he does anything to offend people in power there will be punishment."

Opposition protests led by students in Bulgaria's capital, Sofia, quickly spiraled out of control and into violence yesterday - sparked by the gas shortages cause by the Russia-Ukraine dispute, but also focused on corruption of the ruling party.


Valdus Adamkus, president of Lithuania, had an interview with the Financial Times today.  Since the invasion of Georgia and the gas war with Ukraine, the Baltics have become an area of grave concern, where some feel as though they are next on the list for an attack of some sort from Moscow.  Depending on how one wishes to interpret the motives, the invasion of Georgia was a "humanitarian intervention" and the supply cut off a "purely commercial dispute."  But for other EU countries sharing a border with Russia, there seems to be a greater focus on the practical outcomes of these events - that both governments of Tbilisi and Kiev are on the verge of being toppled (in the case of Ukraine, collapse seems imminent given the financial crisis).  As such, we should be paying very close attention to how the Baltic states handle relations with Russia in coming months, and hope that the rest of the EU does as well (though there are few reasons for optimism on this front).

Mr Adamkus was speaking on the eve of a security conference in Lithuania attended by officials from the US and EU states. His views reflect criticism of Russia that is often aired in the EU but seldom voiced so strongly for fear of offending Moscow. Now ending his second presidential term, he is a popular leader who spent much of his life in exile in the US, where he served as a senior government official before returning to his native country in the 1990s.

In today's Wall Street Journal, Kyle Wingfield compares Gazprom to Airbus - pointing out that what could be an eminently great company is ruined by political intervention and abuses.

That said, the Russian energy sector is emblematic of the emerging era of "capitolism" -- with an "o" -- in which governments are reclaiming ground previously ceded to the private sector. So it's useful to note what happens to a company when a government exploits it with the aim of producing national power or pride rather than simply taking pride in what the company produces.

In Airbus's case, the British, French, German and Spanish governments that created Airbus's corporate parent, European Aeronautic Defence and Space Co., also poured billions of dollars in subsidies into the firm. One consequence was that these governments often tried to pull the company's strings: Make these parts here, balance the final assembly lines between this city in Country A and that one in Country B -- and definitely no layoffs. It was only after an insider-trading scandal and mounting financial problems that Airbus was free to hire a CEO, Louis Gallois, who understood that the firm needed some separation between C-suite and state if it was to take off again. Before the global financial and economic crisis hit, it was doing just that.

Europe's energy supplies are running out, with insufficient stockpiles of liquefied natural gas to cover demand and Russian gas still not flowing.  Polish government representatives are due to hold talks in Moscow today over gas supplies for state-controlled PGNiG.  A December power package auction at Russia's Market Council saw prices rise 18% on the previous year.  A slump in demand from steelmakers is causing output and pricing for coking coal in Russia to drop sharply.  China's National Petroleum Corp has signed a deal to develop Iran's north Azadegan oil field.  Senior Venezuelan officials have begun soliciting bids from some of the largest Western oil companies in recent weeks, supposedly due to President Hugo Chávez' fears that falling oil prices will scupper his plans to establish a Socialist-inspired state.  The New York Times writes on the oil that is going nowhere.  
The ruble continues to lose value, hitting another record low against the Euro and a six-year low against the dollar.  Despite earlier reports that his attempt had been blocked, oligarch Alexander Lebedev (also profiled here) has reportedly made a bid for 75% of London's Evening Standard newspaper, which could be finalized as early as tomorrow, say some reports 'This is not my way to make money, but I'd like to explain to the public that newspapers are something they should love and cherish,' he said.  One analyst commented that such an acquisition would be a 'trophy asset'.  The news has sparked The Guardian to look at the opportunities for Russian oligarchs in 'Londonograd'.  Oleg Deripaska's aluminum smelter in Montenegro may close, after plunging metal prices made the plant unprofitable.  Dmitry Medvedev is in talks to plan support for the aluminum and iron-ore industries, amid rumors that the government may ask Russia's three largest producers to merge.  A Moscow Times contributor compares the current crisis with those of 1998 and the early 1960s.  
150109.jpgTODAY: Ukraine and Russia to meet, Barroso decries lack of gas resolution, both sides continue to apportion blame. World Economic Forum to see mass protests; Putin takes up painting.

The governments of Ukraine and Russia have agreed to meet this Saturday in Moscow to try and resolve the gas dispute, but Europe, meanwhile, is responding angrily to the ongoing lack of resolution.  EU Commission president José Manuel Barroso called the crisis 'unacceptable and incredible', and said that both Moscow and Kiev have blown their credibility as energy suppliers to Europe.  The blame game continues.  Gazprom refers to Naftogaz's 'systematic lame excuses'.  The British press blames Russia: 'Tuesday's ceremonial reopening of the taps that Gazprom should never have turned off was a propaganda stunt, no more.'  'If Russia has alienated even Bulgaria, its staunchest supporter within the European Union - but this week its bitter critic - then it really has problems.'  Meanwhile voices in the Russian press continue to talk about 'the manipulation of Europe by the Ukrainian government'.

On Monday afternoon, the editor of this blog posted an excerpt of an article authored by one Dr. Gary Busch, entitled "The Misperception of the Russian-Ukrainian Gas Problem."  We have since been notified by John Evans of European Tribune that the article may in fact be a collection of cut-and-paste instances of plagiarism without attribution.  I have reviewed the article, and found it significantly lacking in many respects, as well as factually incorrect in many instances.  I regret that this blog has presented material of such inferior quality, and I hope readers will take a moment to consider Mr. Evan's comment outlining the original sources. If Dr. Busch would like to retort, I'd be happy to post any comments.

Dear Mr Amsterdam,

I think you should be aware that the "editorial" by Dr Gary K Busch that you quote here contains unattributed material copy-pasted from other sources.

renaissanceman.jpgPrime Minister Vladimir Putin has donated a painting to charity, but don't blame him for the Ukrainian detailing on the window curtains.  Here is a link to the auction website - I wonder if Putin's painting will garner the highest bid?

The Daily Mail:

Vladimir Putin has gone from Macho Man to Renaissance Man as he displays his art skills for a Russian audience getting used to being told of his many and varied talents. (...)

While it is signed in his name, V Putin, at the top left of the picture, it is clear that the work in acrylic paint was 'touched up' by Nadezhda Anfalova, a noted Russian artist who is coordinating the auction on Saturday to raise funds for a local hospital, a cancer unit and a church restoration project in St Petersburg, his home city.

She is said to have 'improved' the curtains, which, perhaps embarrassingly given the current conflict, are decorated with a red Ukrainian pattern.

Here is a link to Robert Amsterdam's appearance on Canada's Business News Network (BNN) Market Morning Brief segment to discuss the geopolitical and financial implications of the Russia-Ukraine gas dispute.

bnn011409.jpg

Former Secretary of State Larry Eagleburger has a shocking confession about Russia - he apologizes to inform us that he thinks U.S. policies are partly to blame for the deterioration in relations with Russia:

"From my perspective, and I know everyone will be horrified now, particularly my conservative friends - but I do think we bear some responsibility for the less friendly relationship we now have with them," said Former Secretary of State [1992] Lawrence Eagleburger. "If you are going to bring about alliances along Russia's border and you end up putting anti-ballistic missile launchers and so forth, it seems to me what the Russians have to take away from that is that we intend to isolate them. And our eastern European friends and allies, which used to be puppets to the Soviet Union - they are happy to go along with this as well because they see this as protection from the monster that governed them for so long. But the Russians have to, I think, look at that as an attempt at isolation."
I wonder when the whole who-did-what narrative about this dysfunctional relationship will subside and people will actually begin to debate what should be done...  Of course U.S. policy has played a role - it's not as though these developments happen in a vacuum - but really if we are going to look back, it should be to the early Putin years, and the handling of the relationship after 9/11.  Even then, one could not be certain that different policies would've produced different outcomes in Russia.
shuvalov011409.jpgBack when Betrand Russel declared that "Democracy is the process by which people choose the man who will get the blame," he probably had not yet envisioned that Russian authoritarian capitalism would function in a similar way (except for that whole part about "the people" choosing who is accountable).  These days, with $38 oil, a crashing ruble, and rising unemployment, there's plenty of talk about cracks in the tandemocracy and the careful selection of a scapegoat to carry the blame.  Nikolai Petrov of Carnegie thinks that it will be First Deputy PM Igor Shuvalov (photo) who could be made the "lightning rod."

It begs the question, are we about to witness a new period of trickle down accountability in Russian politics, whereby lower-ranking officials are blamed for the execution of policies?

Shuvalov is in a very sensitive position in the government, heading up the "strategic sectors" commission which determines which companies will be beneficiaries of Kremlin aid.  One reporter believes that Shuvalov has found himself in tension with Igor Sechin over the state's attack on potash miner Urakali, seen by many as another creeping expropriation.  Near the end of the year, the Moscow Times also reported: "It is now an open secret that Putin has been running the government by "remote control" through his two ambitious first deputies -- Igor Shuvalov and Igor Sechin. Both wield enormous power and ultimate responsibility for managing the crisis."

It's far too early to know how any of this will play out, but let's keep our eyes open for important movements in the coming months.
...is for Russia to maintain an aggressive foreign policy.  Joschka Fisher points out this paradox of Russia's attempts to rollback NATO (which was not an issue of concern whatsoever in years past) actually backfiring, and making the defensive alliance seem more important and relevant than in the past.

A few months ago, the Russian government came up with a proposal to negotiate a new European order within the framework of the Organization for Security and Cooperation in Europe. The Kremlin considers the agreements from the 1990s unjust, based as they were on its weakness at the time, and it wants to revise them. Moscow's main strategic objective is the weakening or even rollback of NATO on the grounds that it is essentially an anti-Russian military alliance and the re-establishment of its East European and Central Asian zones of influence.

But Putin is making a big mistake here, because all these aims are unacceptable for the West, and the Kremlin still doesn't seem to understand that the best and most effective guarantee of NATO's existence was, is and will continue to be an aggressive Russian foreign policy.

In the former mother country of Marxism-Leninism, the leaders still don't seem to understand dialectics. After all, if the Kremlin really wanted to achieve a change in the country's post-Soviet status quo, it should, first and foremost, pursue a policy vis-a-vis its neighbors that reduces rather than increases fears.

I caught this one in the FT today:

"I would like to convey a very clear message to Moscow and Kiev: If the agreement sponsored by the EU is not honoured as a matter of urgency, the Commission will advise EU companies to take this matter to the courts," Jose Manuel Barroso, the commission president, told the European Parliament in Strasbourg on Wednesday.

"If the agreement is not honoured, it means that Russia and Ukraine can no longer be considered reliable energy suppliers to the EU," Mr Barroso added.

Isn't the "reliability question" really is beyond dispute at this point?  It's also hard to picture the Kremlin respecting any decisions from a rule of law court - besides, Gazprom was the first to come up with the lawsuit idea early on (and the Hungarians are getting in on this litigation bonanza).  For as much as this disaster is "a purely commercial" dispute or "a fight between oligarchs," its resolution seems overwhelmingly political.

yushchenkosaakashvili.jpgAn article we posted on the gas war this week pointed out that one reason why Gazprom was getting favorable press (at least early on) was that Europe was feeling exhausted from having to deal with fallout of the Russia-Georgia war and the seemingly endless series demands coming from "emergencies" in post-Soviet states, usually having to do with relations with Russia.  Many political and business leaders in Europe just want these problems to be over with, and put their best efforts into repressing the memory of these conflicts in order to go on with business as usual, even if that means sacfricing support to struggling, and often inconvenient, young democracies to the East.  Of course many of these complaints theoretically will become harder to make once the Bush administration rides off into the sunset ... and Europe might be surprised to find that Moscow's agenda might not just be reactionary. 

Reuters columinist Paul Taylor writes about the Euro fatigue:

And they accuse Ukraine's feuding leaders of exacerbating the current gas crisis with Moscow by undermining each other's negotiations, breaking undertakings to the EU on the smooth transit of gas and dealing with murky intermediaries.

Some charge neo-conservatives in the United States, who have campaigned actively to get both countries into the NATO military alliance, with goading them into conflict with the Kremlin.

"The neo-con agenda in that region has been a disaster for Europe," said an EU foreign policy official, who declined to be identified because of the sensitivity of the issue.

As our regular readers know, correspondent Grigory Pasko spent much of last year touring the length of the planned route for the Nord Stream pipeline, writing articles, interviewing communities which would be affected, and even making a short documentary film.  .  Below is a translation of a review about the film, Buried at Sea, published in the German newspaper Frankfurter Rundschau.  If you visit the paper's site, you can watch two clips from the film.

buried at sea011409.jpg

Film about the Baltic Sea Pipeline
"Buried At Sea"
By Viktor Funk

Oleg Tishin seems tired, depleted, exhausted - he is the head of government at Rayon Babayevo in northern Russia, where the first section of the Baltic Sea pipeline North Stream was opened amidst fanfare in December 2005. When the Russian journalist Grigory Pasko interviewed him for his film "Buried at Sea" in June 2007 there was nothing left of the joy surrounding the gas lines. Tishin explains that at the beginning there was a lot of engagement for the project, because it promised jobs and the people of the village hoped to finally get a gas connection. Disillusionment quickly replaced their hopes, as the gas was destined for the west and the villagers of Babayevo had to continue to use their forest for their energy needs.

Former KGB officer Alexander Lebedev, who owns shares in Gazprom, discusses the Russia-Ukraine gas dispute with the BBC.  The Georgian government is defending its plan to hand over control of a hydropower plant on the border with separatist Abkhazia to Inter RAO, a Russian utility controlled by Rosatom.  Opposition members of parliament are attacking the move - not yet binding - which would give the Russian company joint control over half of Georgia's energy supplies.  LUKOIL has found no hydrocarbons in its offshore Caspian exploration development, and may now close the project, which it shares with Azeri firm Socar and Gaz de France.  The Bank of Russia thinks oil export revenue for 2008 was 30% higher than the previous year, and forecasts 2009 exports at only 15 million tons less than 2008.  US president-elect Barack Obama plans to make Canada his first foreign destination as President, in order to discuss the environmental issues surrounding Canada's oil sands.  Qatar's RasGas is in talks with Kuwait Petroleum Corp for a five-year deal to supply liquefied natural gas.  
The financial crisis is having a dire effect on migrants who depend on money from their employers to support their families back home, meaning that the effects of Russia's plummeting economy are felt in many other countries.  The rate of unemployment in Moscow has more than doubled over the New Year period and the city's Mayor is trying to encourage residents to buy apartments, saying that reports of anticipated price drops are 'disinformation'.  For the first time since 2004, Russia had no IPOs during the last quarter.  The central bank has devalued the ruble for the third time in four days.  Venezuela has formed Venrus, a joint venture with Russia, to operate the Las Cristinas gold mine, and Canadian miner Crystallex says it could take legal action over the venture, complaining that it had been waiting years for a permit allowing it to operate the mine.  Mechel announced it would borrow $255 million from Gazprombank in order to fund the construction of a mill for steel rail production, on the same day that the bank had its credit rating lowered to 'junk' by Standard & Poor's.  The government wants to counter the 'brain drain', and is trying to win back some of its scientists who have left for better-paying jobs abroad by offering them lucrative opportunities for team leadership in exchange for just a few months' work each year.  Is increased military spending really a good idea for Russia?

140109.jpgTODAY: Gazprom blames US for ongoing gas dispute; Ukraine says no pressure in gas pipelines; Bulgarian and Slovakian prime ministers to visit Russia and Ukraine; European Commission may advise EU to sue; Russian political freedoms at a low as car tariff protesters plan strike; helicopter crash caused by attempts to hunt endangered animals.

Russia turned the gas back on yesterday, but the EU said little or no gas was flowing to countries suffering urgent shortages.  Both sides blame each other, and Gazprom is now even attempting to blame a 'suspicious' agreement between Ukraine and the United States for the ongoing dispute.  Gazprom also says international monitors confirmed that Ukraine has blocked the transit of gas to Europe, but Ukraine says there is simply not enough pressure in the pipeline system.  Ukrainian Prime Minister Yulia Tymoshenko told Slovakia today that it could not resume gas deliveries because 'we do not have our own supplies'.  Bulgaria and Slovakia, among the worst hit of EU states, are sending their prime ministers to Moscow and Kiev in attempts to see supplies restored.  The European Commission says it will advise EU firms to sue Russian and Ukrainian energy companies unless gas supplies are restored quickly.  Ukraine's political opposition, meanwhile, wants its government to resign.

Undaunted and unrestrained, Garry Kasparov hammers away again at the Russian leadership in the Wall Street Journal:

So the question for Western leaders is whether they doubt Mr. Putin would hesitate to provoke a war in the Middle East. If his regime falls, he and his cronies will face the loss of their immense fortunes and criminal prosecution when their looting is exposed. What are thousands of lives in the Middle East to a Kremlin mob that is openly preparing for the day when they will have to open fire on their own citizens to stay in power?

This "mad bear" theory is even more plausible when you consider how tolerant the current cohort of Western leaders has been regarding the destruction of democratic rights around the world. There appears to be no line the world's despots -- and would-be despots -- cannot cross with impunity.

It is time to bury the failed model of dealing with the world's antidemocratic and bloodthirsty regimes. The real change we must effect in 2009 is toward a new global emphasis on the value of human life. Anything less confirms to the enemies of democratic civilization that everything is negotiable. For Mr. Putin that means democracy; for Hamas it means Israel's existence. The Free World must take those chips off the table.


Germany's RWE has agreed to buy Dutch utility Essent for €9.3 billion ($12.5 billion) including debt, in a bid to become a competitor for E.ON, but the news sent its share price down, with analysts suggesting that the deal was overpriced.  India's Oil and Natural Gas Corp is planning to invest over $600 million developing Imperial Energy's assets.  The price of crude oil is continuing to fall on weaker demand, but industry costs, at long last, are also beginning to fall.  Even after gas supplies from Russia have been safely resumed, RWE Transgas, the Czech trader, says it will take about 48 hours to receive gas from Gazprom once service is restored; and Poland's PGNiG forecasts 24 hours
Putin is scheduled to be the opening speaker at the World Economic Forum at the end of this month, but he'll have his work cut out for him, says Bloomberg.  Writing about a 'deep slowdown' in the global economic system, the Organisation for Economic Co-operation and Development reveals that Russia is one of the three large world economies showing the fastest rate of deterioration.  Russian companies are abandoning the ruble and returning to a barter system, says the Moscow Times.  The European Commission is 'disappointed' by Russia's decision to introduce higher tariffs on imported cars, despite widespread protests against the measure.  Sberbank saw deposit inflows of $5.5 billion last month, recouping October's $3.4 billion outflow and weak November flows.  Russia has lifted restrictions on fish imports from the UK for the first time since last April.  The Defense Ministry is to clarify its official position on the alleged sale of $800 million worth of ammunition to Armenia later this month.  
130109.jpgTODAY: Gazprom resumes gas supply to Europe but says Ukraine is blocking deliveries; Putin responds to Medvedev criticism; troubled times for NGOs in Russia; Freedom House report sparks debate on authoritarian states.

'Everything is fine,' said Gazprom, which resumed full exports to the European Union today, expecting gas to reach EU borders late tomorrow.  But new reports quote Gazprom as saying that Ukraine has blocked deliveries to Europe once again, with Ukraine insisting that Gazprom has switched the transit route.  'We don't know what to do at the moment'. Deputy Prime Minister Igor Sechin offered 'my sympathy to the citizens of the European countries that suffered as a result of the so-called gas blackmail on the part of Ukraine'.  The Moscow Times outlines some of the disputed points in yesterday's Ukrainian declaration, which is said to have stalled the agreement.  One analyst says that, until a long-term strategy is put into place, Europe will see a gas crisis every year

horilka.jpgOver at the FT Brussels Blog, Tony Barber points to a news conference held last week between Prime Minister Vladimir Putin and the press corps, in which Russia's invokes repeated references to Ukrainian food and drink in order to make his point about European bureaucracy (suggesting that they will probably just sit around drinking).

The discussion, which centres on the shut-off of Russian gas deliveries to the European Union via Ukraine, turns at one point to the possible deployment of EU monitors along the pipeline route through Ukrainian territory. "We hope that the issue will be resolved expeditiously. We don't want a group of men and women to come to Kiev and just sit in a hotel and sip horilka [Ukrainian vodka]," Putin says. (...)

An extract from some of Anne Applebaum's pipe dreams...

Instead of sending their best and brightest to create a genuinely secure system -- through expanded use of liquid natural gas, more nuclear plants, clean coal -- most European countries have settled for makeshift arrangements. Instead of using their collective bargaining power, they behave as though they are dependent on Gazprom, when the reverse is equally true: The Russians need the money they get from European sales, after all, almost as much as the Europeans need their gas. Instead of sending in crisis negotiators every Jan. 1, Europe's leaders could focus on this problem and solve it. I would love to describe this past week's events as a "wake-up call," but there have been so many "wake-up calls" already. When will Europe heed them?