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The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Russia Update: January 28, 2016

Publication: Russia Update
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The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
White House Backs US Treasury Department's Characterization of Putin as 'Corrupt'
White House spokesman Joshua Earnest backed up an assessment of a US Treasury Department official that President Vladimir Putin is "corrupt," Reuters reported.

This "best reflects the administration's view," Earnest told reporters at a briefing today.

On January 25, Reuters reported that the BBC interviewed Adam Szubin, acting US Treasury Department secretary for terrorism and financial crimes, in a documentary film. He said President Vladimir Putin was "corrupt" and the US had known this "for many, many years":

"We've seen him enriching his friends, his close allies and marginalizing those who he doesn't view as friends using state assets. Whether that's Russia's energy wealth, whether it's other state contracts, he directs those to whom he believes will serve him and excludes those who don't. To me, that is a picture of corruption," Szubin was quoted as saying.

The BBC report said Szubin declined to comment on a 2007 Central Intelligence Agency report that estimated Putin's wealth at $40 billion, but he said the Russian leader's stated wealth is an underestimation.

"He supposedly draws a state salary of something like $110,000 a year," Szubin said. "That is not an accurate statement of the man's wealth, and he has longtime training and practices in terms of how to mask his actual wealth."
The Kremlin denied the allegations, Russian media reported, calling them "pure fabrication" but as Reuters reported, Moscow recognized it was an "official accusation."

The US has sanctioned a number of Putin's closest wealthy associates for their role in the annexation of Crimea

As Reuters reported:

In March 2014, the U.S. Treasury Department tied Putin to profits from one of the sanctioned businessmen, Gennady Timchenko, a long-time Putin acquaintance and then co-owner of Gunvor, which trades nearly 3 percent of the world's oil.

"Timchenko activities in the energy sector have been directly linked to Putin. Putin has investments in Gunvor and may have access to Gunvor funds," the department said in a statement announcing the sanctions. 

Geneva-based Gunvor, which has not been sanctioned, denied the allegations in the Treasury statement. "President Putin does not and never has had any ownership, beneficial or otherwise, in Gunvor. He is not a beneficiary of Gunvor or its activities," company spokesman Seth Thomas Pietras said in an email.

But the US has held back until now from making a direct pronouncement about Putin. The London High Court finding that Putin "probably" ordered the murder of ex-spy Alexander Litvinenko, coupled with Russia's continued refusal to fulfill the Minsk agreement to end the war in Ukraine and lack of cooperation on Syria may have finally pushed the US into making this call.

Meanwhile, Foreign Minister Lavrov said earlier this week that he wants the US to "reset" ties with Russia again, as it did at the start of the Obama Administration in 2009 but did not offer any concessions.

-- Catherine A. Fitzpatrick

The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Brent Jumps to $35 At News Russia May Participate in OPEC Meeting, But Decision Delayed Due to Sechin Absence

With the price of March futures for Brent crude jumping to $35 today (although it is back at $33.93 currently), the ruble was back up, currently at $76.59 to the dollar. April futures are above $36.

The increase is believed to have been caused by the news announced yesterday January 27 by Russian Energy Minister Aleksandr Novak that Russia may take part in the OPEC meeting, says Novak said:

"Certain countries came out with this initiative, now a development of the issues is underway among the countries. We for our part confirmed the possibility of our taking part in this meeting."
As CNBC reported, there were expectations that major oil producers would cooperate to cut their output, driving up prices:

Russian Energy Minister Alexander Novak said Saudi Arabia had proposed to cut oil production by up to 5 percent by each country in order to support weak prices.

A Saudi official later told the Wall Street Journal the proposal did not in fact come from Saudi Arabia, but Riyadh and its Persian Gulf allies "are ready to cooperate with others" to bring stability to international oil markets.
Yesterday, January 27, Nikolai Tokarev, head of Transneft had a meeting with Novakov and then said that Russian planned to hold negotiations with the OPEC countries about possible reduction of oil extraction (translation by The Interpreter):

"Extraction has not been included in the planning for several years now. I don't know if it will be in this year's plan. But this topic will be discussed both with OPEC partners and with non-members of OPEC. In the near future, such negotiations are planned to be held. Saudi Arabia was first to show initiative to discuss the prospect of reducing volumes."
Tokarev clarified that Russia would take part in the February meeting of OPEC, and today this was confirmed by Novak.

Asked by reporters if Saudi Arabia had really asked Russia to reduce its output, Novak replied:

"In fact, when at previous meetings and consultations we discussed this, we spoke on the whole not only of Russia but on the whole about countries that are involved in the extraction and export of oil. Approximately such parameters were in fact discussed -- about reducing the extraction of each country up to 5%."
But presidential administration spokesman Dmitry Peskov said today that Russia did not plan to hold talks with Saudi Arabi or OPEC about reducing production, reported.

Four OPEC states told Bloomberg that no negotiations with Russia were planned:

Four OPEC representatives said they hadn’t heard of any plan for talks. One Gulf member said de facto leader Saudi Arabia had no proposal to trim production by 5 percent, after Interfax reported the country had suggested such a cut at previous OPEC meetings, citing Novak. The minister said Russia would be willing to discuss output with OPEC, according to the news service.

"It’s possible that Russia could be testing the waters to gauge how OPEC members would respond to the idea of cuts," said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official at the White House.

Oil rose as much 7.8 percent to $34.82 a barrel in New York trading, the highest since Jan. 6, after Novak’s comments were reported. It traded at $33.48 as of 11:18 a.m. local time, paring its decline this year to 9.8 percent
Reuters reported this afternoon that Igor Sechin, the head of Rosneft, was absent from yesterday's meeting of oil executives and government officials and that may be the reason why the Kremlin isn't backing the Saudi initiative formally:

The meeting raised the possibility of rare joint action with OPEC, of which Russia is not a member, because of a global oil glut but Kremlin spokesman Dmitry Peskov has said there is "nothing to talk about in a tangible sense" for now.

The final decision will lie with Putin but Sechin's input is likely to be crucial as Russia considers acting in tandem with OPEC for the first time since an ill-fated 2001 deal at the start of Putin's first presidency, when Russia promised modest cuts but raised exports instead.

Sechin has repeatedly made clear in public that Russia, the world's largest oil producer, will not blink first in the battle with OPEC over market share and pricing even though the Russian economy is highly dependent on oil exports and prices have sunk below $30 per barrel from $115 some 18 months ago.

At the table with oil minister Alexander Novak, billionaire executives of private Russian companies and state pipeline officials on Wednesday was Rosneft's chief financial officer, Svyatoslav Slavinsky, who said little about his boss's views, participants at the meeting told Reuters.

Bloomberg sited a source at the meeting who did not wish to be named that said "no deal is possible without him," regarding Sechin.

The Organization of Petroleum Exporting Countries (OPEC) was founded in Baghdad, Iraq in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela and later joined by others for a current total of 13. Various political events over the years have driven decisions by OPEC to increase prices for oil. In response, Western countries have taken action to reduce their dependency on OPEC countries' oil.

-- Catherine A. Fitzpatrick 

The Interpreter
Russian-to-English translation journal, with original analysis and commentary on Russia's foreign & domestic policy.
Russian State Duma Calls for Prosecution of Ekho Moskvy Over Piontkovsky's Article on Chechnya

The Russian State Duma has called for the prosecution of Ekho Moskvy over an article by Andrei Piontkovsky titled "A Bomb Ready to Explode," about Chechnya, reported.

Earlier this week as we reported, Magomed Daudov, speaker of the Chechen parliament and close associate of Kadyrov, called for the prosecution of Ekho Moskvy over Piontkovsky's article.

Irina Yarovaya, chair of the Duma committee on security and anti-corruption, appealed to the Prosecutor General's Office to examine Piontkovsky's article for "extremism" under Russia's criminal code. Piontkovsky had originally called for Chechnya's independence as a solution to the growing threat of Ramzan Kadyrov, who has spent the last few weeks urging that the Russian opposition be jailed or forcibly confined to psychiatric hospitals. Editors removed the last two lines of his article which actually called for "full state independence and all the legal consequences," as blogger Oleg Kashin reported.

Piontkovsky's article came after weeks of threats against the opposition and journalists such as Ekho Moskvy editor-in-chief Aleksei Venediktov and New Times' editor Yevgeniya Albats. On January 22, a million people were reported to rally in Grozny in Kadyrov's support, many carrying posters singling out opposition figures or journalists as "traitors" and "fifth columnists".

Piontkovsky told some unpleasant truths about Putin's subsidy of Kadyrov, even as he posed a threat to the rest of Russia (translation by The Interpreter):

Mr. Putin was often recalled and is still remembered for his dramatic outhouse call, which established the premise for the second Chechen war and defined its sad outcome for Russia. You have to give Putin his due: having ended up after several years of a bloody war, launched for the sake of his coming to power, with the choice between very bad and monstrous, the president chose the very bad.

Admitting his loss, he turned over all power in Chechnya to Kadyrov and his army and pays him in a subsidy of budget transfers. In response, Kadyrov formally declares not so much his loyalty to the Kremlin so much as his personal alliance with Putin. The monstrous choice would have been the continuation of the war to the point of destruction of the Chechen ethnos -- as Gen. Vladimir Shamanov did at Budyonnovsk.

Having unleashed and lost the war in the Caucasus, the Kremlin paid in exchange for a show of submission the tribute subsidy not only to Kadyrov but to the criminal elites of other republics. Palaces and gold pistols for the local leaders are purchased with it. Lumpen unemployed young mountain-dwellers leave for the wars of Allah or migrate from the Caucasus to Russian cities. And in the depressed Biryulovo quarters already a generation of children has grown up that has absolutely and forever lost the 20-year "market" economic reforms. There is a yawning gap between the meaniality of Russian youth and Caucasian youth who from childhood have grown up under the conditions of a brutal war. 

Young Muscovites hold marches around the city with cries of "Enough Feeding the Caucasus!" but young mountain-dwellers demonstratively  behave provocatively and aggressively on the streets of Russian cities. They have developed the psychology of victors. In their conception, Moscow lost the war in the Caucasus and they behave themselves accordingly. In hearts and minds, the Caucasus and Russia are rapidly growing apart from each other. Even so, neither the Kremlin nor the North Caucasus "elites" are prepared for a formal separation.

Shamsail Saraliyev, a United Russia deputy from Chechnya, also separately sent a complaint about the article to the Prosecutor General's Office.

Yarovaya, born in Makeyevka, Ukraine, was educated in Petropavlovsk-Kamchatka where she worked as an investigator. For 10 years she was a member of the Yabloko opposition party, but failed to get a seat in the Duma even after 5 tries. In 2011, she switched to United Russia and with Dmitry Medvedev's patronage gained a seat in the Duma and was named chair of the committee on security and anti-corruption as well as well as co-chair of the commission to review federal budget expenditures on national defense, security and law-enforcement. 

-- Catherine A. Fitzpatrick