Russia Daily Brief for May 21, 2015

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May 21, 2015

Russia Daily Brief for May 21, 2015

This is the 45th edition of the Daily Brief, which covers stories trending in the Russian social media. To view other editions click on the Daily Brief tab above the title.

Russia

IHS Jane’s: Russia made revolutionary changes in its military-industrial complex

 Jane’s Defence Weekly is impressed with the scale and scope of the transformation within the Russian defense industry which showed itself once again to be a global leader with the wide range of highly innovative and capable weapon systems that were on display during the May 9 parade.

Direct Lavrov. For those who are in the tank.

Lavrov made five points in his Rossiyskaya Gazeta interview (some of which were referenced in yesterday’s brief). 1: The US has de-facto recognized Crimea as part of Russia. 2: While there are “normal” politicians in Europe, they can’t shake off the control of the “jesuitic” wing which controls Brussels (interestingly, 1 and 2 together suggest Russia currently views the US as a better partner than the EU…). 3: Russia wants the Donbass to remain part of Ukraine, though on special rights which only Ukraine’s constitutional reform can guarantee. 4: Poroshenko is an acceptable partner for Russia because, in spite of his militant rhetoric which he needs to cover his right flank, he is interested in resolving the outstanding issues in the Russia-Ukraine relationship.  5: The process of historical revisionism is a form of “cognitive warfare” whose aim is to marginalize Russia politically.

Ulyukayev: Russia’s position on Ukraine’s association with the EU found understanding in Brussels

Ulyukayev also said that the specifics of the trilateral Russia-Ukraine-EU relationship will be worked out by experts by July. 

Putin irritated by Ukraine’s upcoming default

 Putin noted that so far Russia had not demanded the immediate repayment of its loans to Ukraine even though it would be within Russia’s rights to do so, and that a default would de-facto place Ukraine into a receivership, which in turn would imply foreign political control over the country’s future. For that reason alone Kiev might not be viewing a default as the worst of all possible worlds.

Russian manufacturing drops by 4.5% in April 2015

While the first three months were relatively gentle, and manufacturing actually grew in January, the Russian Central Bank anti-inflation “tight money” policy aimed at stabilizing the ruble following the panic of late 2014 is beginning to tell on the manufacturers who have far less access to investment capital, foreign or domestic, that they had even a year ago. Moreover, Russian consumers are tightening their wallets in response to the economic instability. Even the strengthening of the ruble is hurting the Russian manufacturers. The decrease is the worst monthly drop since October 2009. However, overall, nobody predicts that the crisis will be as severe as the 2008-2009 one, when Russian manufacturing experienced monthly decreases of up to 8%, and most expect the situation to start improving in Q3 of 2015, by which time the recent RCB prime lending rate cuts will begin to have an effect.

Russian real salaries may decrease by up to 10% in 2015

So says the Deputy Minister of Labor Lyubov Yeltsova. By comparison, the average Russian salary increased by 1.2% in 2014 even after taking inflation into account. Salary growth is expected to resume only in 2018. 

Ulyukayev: Russia’s growth may exceed the global average

 Ulyukayev expects Russia’s economic growth to reach 4% in 2017 and 4.5% in 2018, which is more than the global average, and believes that Russia’s economy will return to growth already in the Q3 of 2015. It’s not an unreasonable expectation, considering that downturns caused by interest rate spikes likewise tend to be sharp and short, and are followed by rapid recoveries once the interest rates are lowered–which the RCB has been doing in recent weeks now that inflation is much less of a concern than a few months ago.

Gazprom is not risking anything by starting the Turkish Stream construction

Even though the Turkish Stream is not a “done deal”, the portion of the pipeline that Gazprom is already building would still be useful in supplying Turkey with gas without it traversing the territory of Ukraine. The Turkish Stream pipeline will follow much of the route of the now-defunct South Stream project, which means the permits and agreements signed earlier to facilitate that pipeline can be used by Gazprom to complete the South Stream. The only part that is really new is the Turkish segment of the route, and the recent Turkish statements concerning Crimean Tatars may be part of its negotiations maneuvering.

 Ukraine does not want an exchange and insists on a trial

The Ukrainian government is making it known that Aleksandrov and Yerofeyev will be tried on terrorism charges. The public trial may begin in as little as two weeks.

Russian embassy in Kiev has not received a reply concerning the two captives

The Russian Embassy is requesting to meet with the two, in keeping with international conventions.

Russia 24 TV channel airs interview with Yerofeyev’s spouse

Aleksandrov’s spouse Yekaterina said during the TV interview that her husband served as a contract soldier with a special operations unit until December 2014. He then left the service because, as he told his wife, he received a good job offer in Samara where he would be able to spend more time with the family, but first needed to get some job training in Voronezh. She also mentioned Aleksandrov noted he had paternal relatives in the vicinity of Lugansk, where in fact he was captured.

There will be no winners

Aside from noting that every party to the conflict, including Russia, Ukraine, the Donbass, and the West, lost something in process, it points out that while Russia’s rhetoric has grown moderate and accommodating now that it has achieved its main foreign policy objectives (Crimea, Ukraine neutrality), in Ukraine the situation is exactly the opposite since the country literally needs the war to stay afloat.

Crimea’s first Russian Army draftees

About 500 Crimean draftees were inducted into the military during the spring draft season. They will all perform their service in military units stationed on the peninsula.

MOD: The VVS will receive about 250 aircraft in 2015

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 The First Deputy Defense Minister Arkadiy Bakhin said that aviation represented a special priority for the MOD, given its importance in all types of conflicts.

Moscow State University one of the top five in Europe

The ranking was compiled by Thompson-Reuters on the basis of a survey of 65 thousand experts from around the world. The other four top universities were Oxford, Cambridge, King’s College of London, and Switzerland’s ETH.

Ukraine


Yushchenko: The world is starting to treat Ukraine “like a pesky fly”

In his view, Western powers have other problems, and for them Ukraine is no longer even close to the top of the agenda. If anything, they are beginning to view it as a burden rather than as an opportunity.

Media learn of the reasons for the debt moratorium law

The Rada, and the Ukrainian government, are between a rock and Russia a hard place. Paying down debts means not paying salaries and pensions, which means a social explosion. Defaulting means a financial meltdown, which likewise means a social explosion. So the law is simply an act of desperation, the last-ditch attempt to blackmail the creditors into forgiving Ukraine’s debt.

Border fortifications will earn the UAF the Darwin Award

 Since the industry can no longer manufacture armored vehicles in large quantities, fortifications are the new in-thing for the UAF. However, judging by this and other photos at the link, it’s like the UAF is preparing to refight Napoleonic Wars or something. Even in 1914 the bunker pictured above would have been considered a death trap. Hinges on the outside of the (somewhat) armored door, seriously???

Kiev officially ends military-technical cooperation with Russia

On one level this was a mere formality since all cooperative programs have de-facto ended already in 2014.  It may well be that the junta is doubling down in hopes of attracting the world’s attention to itself, but the main result of ending cooperation with Russia is that Ukraine’s defense industry is reduced to building fortifications capable of meeting 19th century standards, since Western firms aren’t looking to pick up Ukrainian ones as partners. On another level, it’s an effort by the pro-Western factions within the Kiev elite to burn as many bridges as possible between Ukraine and Russia in order to make any future rapprochement that much more difficult.

Donald Tusk does not consider the Donbass conflict an obstacle to EU visa-free regime with Ukraine

He promised he’d lean on EU member states to make that happen.

Donald Tusk: Ukraine has a right to its “European dream”, but it’s too soon to talk about it becoming a reality

Tusk seems to be ratcheting down expectations on the eve of the Eastern Partnership summit. The only question is how big a crumb Ukraine will get from the EU during that summit. 

NATO comments on Turchinov’s ABM system remarks

NATO’s answer to Turchinov’s declared aim to hold “consultations” on providing Ukraine with a missile shield to guard against a Russian nuclear strike was simply that its missile defense systems exist to protect NATO member states.

Other Former Soviet Republics

Belarus and Armenia refused to sign summit declaration containing reference to Crimea

 Neither country is willing to sign any joint declarations originating from the Eastern Partnership summit in Riga if they contain any references to “unlawful” annexation of Crimea by Russia. Therefore it’s likely there will be two “joint” statements to account for this…difference of opinion.

Lithuania’s president creates a scandal on TV

 Gribauskaite simply refused to answer TV interview questions that were not coordinated ahead of time, including one on same-sex marriages, and threatened to leave the interview unless the interviewer relented–which he did.

President of Azerbaijan will not go to Riga  

Ilkham Aliev initially expected to attend the Eastern Partnership summit in Riga which begins on Thursday, but decided not to go to protest what he called the West’s “anti-Azerbaijan campaign”. He did not clarify what precisely he meant by that.

Financial Times: EU has lost appetite for eastward expansion

 Further expansion and integration of relatively impoverished countries like Moldova, Georgia, and Ukraine would not only anger domestic voters in the EU who don’t want to see more migrants on their doorsteps, but also complicate the relationship with Russia, which the EU does not wish to lose as an economic and political partner. The rejection of EU aspirations means the countries in question will drift in Russia’s direction.

Tired of the West, Georgians are pulling toward Russia

It’s been a year since Georgia signed its own association agreement with the EU which proved of no help to the country’s economy. As a result, the proportion of Georgians supporting joining the Eurasian Union is higher than ever before at 31%.

The Rest of the World

The US is beginning to recognize the New (Silk) World Order

“What, is he trying to divide us?” “What a strange bird!”

The US is becoming ever-more concerned with China’s foreign policy initiatives, including the Asian Infrastructure Bank, its participation in the BRICS project, and the New Silk Road which represents an alternative to the US-promoted trade pacts with both Europe and Asia. The Chinese troops on the Red Square on May 9 and the joint Russian-Chinese naval exercises on the Black Sea and the Mediterranean are making it clear that the relationship has dimensions other than economic ones, and that the US can no longer count on being the world’s unchallenged hegemon.

Albania against Macedonia closer relationship with NATO

It cites Macedonia’s alleged violations of the Ohrid Agreement of 2001 that regulates the status of the Albanian minority as reasons for opposing its accession.

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