More Respect for Russia Would Go a Long Way

29 March 2013 | Issue 5098

By Vladislav Inozemtsev

Klipping The Moscow Times

Although the "reset" in U.S.-Russian relations has been sapped dry, Moscow and Washington can still find ways to cooperate on combatting global terrorism, arms control and the resolution of regional conflicts. The time has come to set the agenda for such talks. Considering, however, how deeply President Vladimir Putin has taken offense with Washington over the U.S. Magnitsky Act, it would be unrealistic to expect constructive proposals from Russia anytime soon. That means the initiative should come from the U.S. side. The U.S. should take the first step because Russia is not an enemy or even a threat.
Russia wants to build a global financial center in Moscow, but it turns out that even tiny Cyprus is more of a financial center for Russian businesses and depositors than Moscow. Russia believes that it will supply Europe with oil and gas forever, but the first wave of European Union states will largely switch to buying shale oil and gas from the U.S. or switch to renewable and alternative sources of energy by 2025.
The main problem that the West currently faces with regard to Russia is not its strength, but its instability. Russia's position today is closer to that of the Soviet Union of 1988 than 1962. Given this situation, the new U.S. strategy toward Russia could be based on three fundamental policies:

The measure of wisdom for a great power like the U.S. is its ability to treat  influential partners like Russia as equals. 

First, it would be pointless to pursue a political dialogue with Russia based solely on the old, worn-out issues of arms control and human rights. The emphasis should be shifted from politics to the economy, and Washington should be prepared to offer Russia substantial economic incentives in return for political concessions. If U.S. President Barack Obama wants Moscow to agree to major bilateral cuts in nuclear arsenals, he should promise a sharp increase in U.S. investment in Russia, cooperation on advanced technologies and willingness to sell U.S. assets to Russian companies that are interested in them, even if those companies are partially owned by the state. Washington should take the lead in engaging Russia with economic and investment initiatives to aid the development of both countries. For example, this could include a free trade zone like the one Moscow is currently negotiating with the EU and Japan. Russia is not a competitor to the United States. It is more likely an additional market for its goods and services. Washington can best achieve its military and political agenda with Russia by offering economic cooperation on any scale Moscow desires. This would be advantageous to both sides.
Second, it is fruitless to continue emphasizing human rights and other sore spots with Moscow. It would be much more productive to focus instead on general issues concerning the new world order. Russia wants its voice to be heard on the global arena. Why couldn't the U.S. work with Russia to formulate principles governing, for example, humanitarian intervention or limited sovereignty? Why not actively involve Russia in a dialogue on issues of global governance? Working together, they could define a new world for the 21st century in which the U.S., Russia and Europe would team up to retain their leadership positions in the face of rising threats from global terrorism, rogue states and competing centers of power.
Third, the U.S. has de facto disengaged from Europe politically and militarily, and it has yet to establish strong economic ties with Russia. That means Moscow and Washington should look for a new area of cooperation. One good place to start would be the Pacific Rim. Alaska, which borders Russia, currently does more trade with Ukraine than with Russia.
Just like Washington, Moscow would also like to "pivot" to the East. But in addition to China, that East should also include Japan, South Korea and, strangely enough, the United States. The U.S. and Russia could even create an alliance called the "North Pacific Treaty Organization." It sounds like a joke, but for Russia the East includes countries that for many years were part of the West. With this pivot to the East, the U.S. should become Russia's best "Eastern" ally.
Twenty-five years ago, the Soviet Union initiated perestroika and glasnost, a reform program that the U.S. supported wholeheartedly. But even after the Soviet collapse, the full potential of that bilateral cooperation was not realized because the U.S. side did not treat Moscow as an equal partner, particularly  during the 1990s.
Now that Russia has recovered from the chaos, instability and poverty of the 1990s, the U.S. must take the lead in U.S.-Russian relations. Washington should start by speaking with Moscow on equal terms and with respect. The measure of wisdom for a great power like the U.S. is its ability to treat large, influential partners like Russia as equals. That approach has always been very effective in global diplomacy and international relations. The alternative — acting like a global gendarme — is not only ineffective, but it is also dangerous and destructive to global security.

Vladislav Inozemtsev is director of the Moscow-based Center for Post-Industrial Studies.

Baikonur Launch Plan Finalized

01 April 2013 | Issue 5099

By Anatoly Medetsky

Klipping The Moscow Times

Scott Andrews / NASA

Russia and Kazakhstan have had a major dispute over the use of Baikonur.

Russia and Kazakhstan appear to have put to rest their differences over the number of launches to be allowed from Baikonur spaceport, following weeks of talks.
But officials from both countries did not reveal how many Russian rockets will blast off this year from the launch facility in the steppe.
"We have no disagreements about permits for launches," First Deputy Prime Minister Igor Shuvalov said, Interfax reported. "We have a fully agreed schedule of launches for 2013."
He made the statement at a news conference after the latest round of negotiations at Baikonur late last week.
His counterpart, Kazakh Deputy Prime Minister Kairat Kelimbetov, confirmed at the news conference that the countries had reached a deal. "We believe that all working issues have been resolved," he said.
Kazakhstan in January said it would allow 14 launch attempts by Proton-M rockets this year, down from 17 that Russia had sought.
Representatives of the Federal Space Agency, Kazakhstan Space Agency and a spokesman for Shuvalov all said Friday that they were unaware exactly how many launches the deal envisaged.
Kazakhstan has insisted that Russia improve the safety of the rocket, which uses highly toxic fuel.
Hours after the Baikonur talks concluded, U.S.- and Luxembourg-based satellite services provider Intelsat said it signed a firm contract for two Proton missions from the cosmodrome. International Launch Services, majority-owned by Proton manufacturer Khrunichev, will conduct the launches.
Representatives of both companies said they could not reveal what year the missions would take place.
"We are pleased to have Intelsat's confidence," International Launch Services president Phil Slack said in a statement about the contract.
One of 11 Proton-M commercial launches failed last year, causing the loss of two communication satellites in August.
In other aerospace news from Baikonur, Russian spaceship maker Energia said it was moving ahead with efforts to build a next-generation space shuttle. Experts could in the next few months approve its technical concept, opening the way for designing and producing a first trial model, said Vitaly Lopota, the company's chief designer.
The new spacecraft aims to have the capacity to carry four people into orbit, instead of the three people that single-use Soyuz workhorses can now lift. The future craft will use the Vostochny Cosmodrome, which is currently under construction, as its launch base.

After Cyprus Bath, Russia Needs New Haven

01 April 2013 | Issue 5099

By Alexei Bayer

Klipping The Moscow Times

The International Herald Tribune ran a cartoon of tourists snapping pictures of a classical ruin with an inscription over its architrave: "Cyprus Tax Haven." Following its financial rescue, which inflicted losses on larger depositors, Cyprus's status as a financial center has been irreparably damaged. But other offshore centers will pick up the slack, and Russian companies and individuals, after taking a bath in Cyprus, will eventually find another home, for their money.
Their critics blame offshore financial centers for a variety of ills. For example, they help corrupt businesspeople and bureaucrats launder profits from illegal activities, and they make financial oversight difficult. Nevertheless, while authorities in the U.S. and Europe appear to be restricting their activities, in reality they allow them to exist and flourish.
The truth is that offshore banks help correct severe inefficiencies and imbalances in the global economy and allow the international financial system to function smoothly. Take money laundering. The illegal drug industry earns some $400 billion annually, with drugs sold in the U.S. alone estimated at some $150 billion. While indicative of some real failures in our society, the existence of such enormous underground flows is a fact of life. There has to be some kind of mechanism for accommodating them within the financial system.
Similarly, the new international class of the super-wealthy, while economically inefficient, requires a special banking system to cater to their needs, including tax avoidance. They increasingly live in a world of their own and use few of the regular services provided by nation-states. Yet national governments in industrial countries, faced with a shrinking middle class, demand that they pay more and more taxes.
The global macroeconomic system is also skewed. The U.S. runs massive trade deficits and finances them by printing dollars. Meanwhile, some countries that run trade surpluses — especially exporters of oil and other commodities — are politically unpredictable, corrupt and have no rule of law. Well-connected elites in these countries have been able to accumulate considerable assets. Obviously, given the precarious political situation and terrible business climate, they have no wish to keep their wealth at home. They do not want to invest in the domestic economy or pay taxes to their own government. They prefer to shift their money abroad to countries with stronger safeguards for private wealth and greater political stability. This is when offshore banking systems come in handy.
Russia is case in point. Its current account surplus is among the largest in the world, measuring close to 6 percent of gross domestic product. But unlike China, which also has a large surplus, Russia's wealthy who get the bulk of the country's oil earnings don't invest at home. Money steadily leaves Russia, and even though a study by Ernst & Young shows that only half of the $350 billion leaving the country since 2008 has been genuine capital flight, it is still an enormous amount. Experts expect more of the same this year and next, with another $100 billion leaving over the next two years.
Much of it has been siphoned through Cyprus. With the effective closing of this route, financial outflows from Russia are not about to stop. On the contrary, the vision of Cyprus, another weakling on the periphery of the euro zone, being used as a whipping boy will only increase the attraction putting one's assets into Switzerland, Germany and the U.S. But getting your money out of Russia and shifting it to your Miami condo will now become more difficult, expensive and risky.

Alexei Bayer, a native Muscovite, is a New York-based economist.

Senior Russian Diplomat Urges Restraint Over North Korea

01 April 2013 | Issue 5099

Reuters

Klipping The Moscow Times

Moscow urged restraint in the Korean Peninsula on Saturday, after North Korea said it was entering a "state of war" with South Korea in a further escalation of its bellicose rhetoric against Seoul and its main ally, Washington.
"We hope that all parties will exercise maximum responsibility and restraint and no one will cross the point of no return," senior Russian Foreign Ministry official Grigory Logvinov told Interfax.
North Korean leader Kim Jong-un on Friday put missile units on standby to attack U.S. military bases in the South and the Pacific, after two nuclear-capable U.S. stealth bombers flew over the Korean Peninsula in a rare show of force.
"We expect that everyone understands that a recurrence of war on the peninsula is definitely unacceptable," Logvinov told RIA-Novosti.
When asked by reporters whether Pyongyang had the same understanding, Logvinov said: "Of course. We were in contact with the North Korean side."
U.S. officials said the B-2 bombers were on a diplomatic sortie aimed at reassuring allies South Korea and Japan, as well as at nudging Pyongyang back to dialogue.
"At least at this point, we see that the statements [of Washington] are rather restrained. The position of the American side is a bit reassuring," Logvinov told RIA-Novosti.
Russia warned on Friday that the heightened military activity was slipping into a "vicious cycle" that could get out of control.
Tension has been high since North Korea conducted a third nuclear weapons test in February in breach of UN sanctions and despite warnings from China for it not to do so.
As tensions rose close to Russia's eastern borders, President Vladimir Putin made staff changes within the Security Council, promoting Yury Averyanov, with experience of Far East affairs, to the first deputy of the top security chief.
Averyanov moved to the Security Council in 2006 after six years as Putin's deputy representative for the Russian Far East.

China's Favorite Junior Partner

27 March 2013 | Issue 5097

By Georgy Bovt

Klipping The Moscow Times

Whenever high-level talks are held between Russia and China, it seems the media always says  Moscow's foreign policy is focusing on the East. There is some basis for that, but it is also becoming increasingly evident that Russia is taking on the role as China's junior partner.
Moscow was undoubtedly pleased by the fact that newly elected Chinese President Xi Jinping chose Russia for his first official visit abroad, which both sides used to issue statements of friendship and strategic partnership. In contrast to Europe and the U.S., China does not give them condescending lectures about human rights abuses. The Chinese are masters of diplomatic etiquette and long ago learned to achieve their goals through skillful means, never seeking to deliberately humiliate their partner. In response to the pleasant-sounding talk of friendship, partnership, equal relations and respect, Russia makes concessions to China that it less frequently agrees to with the West.
Thanks largely to energy shipments, trade volume between Russia and China is constantly growing and reached a total of $88 billion in 2012. The main agreements that Xi signed during his recent visit to Moscow centered on energy shipments to China. Gazprom chief Alexei Miller said Chinese credit will fund construction of a branch line of a Siberian pipeline. According to Miller, gas deliveries to China would begin in 2018. The contract is scheduled to be signed in July even though an agreement has not yet been reached on the gas price. China wants to pay far less than European buyers for gas, but it seems that Russia, which is tired of the constant haggling of European buyers, might be willing to make concessions to China. After all, Moscow already supplies electricity to China at lower rates than it charges Russian consumers at home.
Russia also plans to increase oil deliveries to China. With Rosneft taking the lead, Russia will increase oil shipments to China from the current 15 million tons to 31 million tons within 20 years. Rosneft will use Chinese credit to increase output to meet the demand. The Chinese plan to build an oil refinery in Tianjin capable of refining 13 million tons of crude per year, 9 million tons of which will be supplied by Russia. This makes sense since Russia has all but stopped building new refineries, and its existing refineries produce an extremely low grade of oil.
Russia will also be selling coal to China, although China will be mining much of it on Russian territory. Just like China does in Africa, it will build access roads and power plants in Russia to support the coal-mining operations.
There is one more important factor that plays an important role in Russia-Chinese relations: Russian oil accounts for only 8 percent of Chinese consumption, and Russian coal represents an even smaller share. As a result, since Beijing can easily find other energy suppliers, China is in a strong position to dictate, or at the very least influence, terms to Russia in future negotiations.
Not long ago, Russia was a major supplier of equipment, weapons and technology to China. Today, the situation has changed dramatically — and not to Russia's advantage. Only 10 years ago, industrial goods and equipment accounted for 30 percent of Russia's trade with China. Now they represent less than 1.5 percent. Russia now buys Chinese metalworking machinery, something that only a few years ago would have been considered absurd. Only a short time ago, Russia was one of China's main weapons suppliers. Now China has practically no need of Russian arms, having copied whatever much of what it needs. The weapons that China has purchased from Russia could be used in a air war with Taiwan but not in a massive land-based operation against Russia. For example, China purchased only a small quantity of Su-27 fighter aircraft, and half of those were the training model. This small quantity is insufficient to equip the enormous Chinese army, but enough to train the flight crews of its air force. But not long ago, China rejected an offer to produce the Su-27 under license from Russia and instead began production of its own J-11B aircraft that draws on the Su-27 as well as on technology borrowed from the MiG and Israeli aircraft.
Amazingly, Moscow doesn't seem to have a problem with this rather strange, one-sided model of Russian-Chinese relations. Kremlin leaders seemingly pretend that the bilateral relations are equal and based on mutual respect and that China is actually prepared to team up with Russia to present a unified front against the U.S. If so, they have allowed themselves to be fooled: China will never allow itself to be used in foreign relations ploys — except the ones that it has designed itself.

Georgy Bovt is a political analyst.

The Geopolitics of Sheep in an Armenian Region

27 March 2013 | Issue 5097

By James Brooke

Klipping The Moscow Times

On the surface, it looks like a win-win. Iran faces a political population bomb: a young, growing, urbanized population that wants food — cheap and traditional. Iran's population has doubled in the last 40 years, hitting 75 million people today. Half of all Iranians are under 35 years of age, and 71 percent live in cities.
Immediately to the north lies help: the fallow grazing lands of Armenia. Fewer Armenian men want to make a living as shepherds, tending sheep on scenic but lonely mountain slopes. Armenia's agriculture ministry says that 70 percent of the nation's pastures are now without livestock — about 800,000 hectares.
Here's the deal: Iran's Ambassador to Armenia, Mohammad Reisi, offers to rent thousands of hectares of mountain pastures to provide grazing land for Iranian sheep. With the grazing leases, he has estimated that Armenia could increase its livestock fivefold. Within a decade, he says, Armenia could be exporting 2 to 3 million sheep a year to Iran.
Sounds good to me. After all, not too many people are lining up to invest in Armenia, a small, landlocked nation, with poor relations with two of its four neighbors. What's more, to the east, Armenia's borders with Azerbaijan are closed.
On some stretches of territory, soldiers of Christian Armenia and Muslim Azerbaijan face each other across trenches, poised on hair-trigger alerts. About once a week, a military sniper on one side kills a soldier from the other side.
To the west, Armenia's land borders with Turkey are still closed, a legacy of bitter feelings over Ottoman Turkey's genocide campaign against ethnic Armenians in 1915.
At first glance, the Iranian offer sounds like a win-win for Armenia. Yet as environmentalist Hasmik Evoyan told me one morning in Yerevan, this is naive. She walked me through the geopolitics of sheep. She showed me why many Armenians saw putting lamb dishes on Iranian dinner tables as a lose-lose for Armenia.
The sheep would largely graze in Armenia's southernmost region, Syunik. Long and as narrow as 30 kilometers wide in some places, Syunik is Armenia's lifeline to Iran. But it is strategically vulnerable, sandwiched between two territories of Azerbaijan.
Although Syunik is Armenia's ­second-largest region, it is also one of its least populated. With 15 percent of Armenia's land area, Syunik has less than 5 percent of Armenia's people. The population dropped in the late 1980s after ethnic fighting forced an Azeri minority to flee to Azerbaijan and northern Iran.
Without a large local population to draw on, the Iranian sheep project would mean importing Iranian shepherds and possibly their families. Depending on the age of slaughter — for lamb or mutton — an annual export of 2.5 million sheep could mean an Iranian flock of 5 million sheep in southern Armenia. Given the region's steep terrain, it would be hard for one shepherd to watch more than 500 sheep. So, back-of-the-envelope calculations point to as many as 10,000 Iranian shepherds. Where would the shepherds come from?
The memorandum of understanding was signed between Syunik and the neighboring Iranian region, a place with a name that sounds ominous to many Armenians — Eastern Atrapatakan, or Eastern Azerbaijan. With a population 20 times that of Syunik, Eastern Atrapatakan is a keystone for the northern Iran's Azeri minority, about 17 million people.
The Iranian sheep deal could come with as many 10,000 ethnic Azeri shepherds, their families, and their watchdogs. But there is another wrinkle: Over the past 20 years, the withdrawal of Armenian shepherds from the mountain pastures has allowed the nation's wolf population to surge. Armenian authorities now pay a $275 bounty for each wolf shot. So it stands to reason that Iranian shepherds would carry rifles to protect their flocks from wolves and other predators.
In a nutshell, Armenians say, the Iranian sheep deal would mean several thousand ethnic Azeri men, most of whom are armed with rifles, infiltrating into a strategic area.
"With the sheep, a couple of thousand people may come to Armenia, and may live in places that are strategically important for Armenia," said Evoyan, the environmentalist and a member of Armenia's PreParliament opposition group. "It's not only about the employment. As I said, it's about the  informal migration of other nationalities to Armenia that is not a strategically right choice for Armenia."
On Feb. 14, four days before Armenia's highly contested presidential election, Evoyan and others protested the sheep deal in front of Armenia's National Assembly building in Yerevan. I arrived in Armenia's capital the next day. But Gohar Abrahamyan, a reporter for the ­Armenia Now news website, covered the protest. She got environmentalist Silva Adamyan to say out loud what many Armenians are thinking quietly.
"I remember how the Azerbaijanis were quietly taking control of Syunik during the Soviet years," Adamyan told ­Armenia Now. "We have liberated it. And now, we want to give it to them again? Can't we really understand that it is the same Azeris — citizens of Iran — who would be coming back to Syunik with their families, and so the blood we shed for those lands would turn out to be for nothing?"
In Armenia's presidential election, incumbent President Serzh Sargsyan was re-elected. But the opposition candidate, who performed strongly and claims the results were falsified, has been leading street protests. By all indications, the Iranian sheep project will die a bureaucratic death, buried in the Agriculture Ministry.

James Brooke, based in Moscow, is the Russia/CIS bureau chief for Voice of America.

U.S. and Russia Aim to Reconvene Stalled Missile Defense Talks

26 March 2013 | Issue 5096

Reuters

Klipping The Moscow Times

WASHINGTON — Russian and U.S. defense chiefs have signaled their intention to reconvene long-stalled missile defense talks, the Pentagon said, following a change in U.S. missile defense plans for Europe that has been met cautiously by Moscow.
There have been no meetings at the deputy minister level since 2011, when six were held, a U.S. defense official said Monday. Talks set for 2012 were canceled because of scheduling conflicts, he said.
The Pentagon said that Russian Defense Minister Sergei Shoigu had expressed a desire to reconvene the talks and that U.S. Defense Secretary Chuck Hagel assured him they would continue and would be carried forward by the Pentagon's policy chief, Jim Miller.
"We are very interested in further developments on European missile defense, and our minister offered to restart regular consultations on that between deputy ministers," Anatoly Antonov, a deputy of Shoigu, said in comments carried by RIA-Novosti.
The news came after a March 16 announcement that the United States would station 14 new anti-missile interceptors in Alaska in response to North Korean provocations, but at the same time forgo a new type of interceptor that would have been deployed in Europe.
Moscow and Washington have long been at loggerheads over the shield in Europe. U.S. President Barack Obama's move in 2009 to scale down earlier, Bush-administration plans only offered a short-lived respite. Russia's main concern is that the European shield would weaken its nuclear deterrent.
Russia's point man for U.S. relations, Deputy Foreign Minister Sergei Ryabkov, said last week that the Obama administration's planned changes brought a new element to the issue.
He called for further dialogue, noting that Moscow still had concern that U.S. missile defenses could threaten its security.
U.S. Admiral James Stavridis, NATO's supreme allied commander in Europe, noted Russia's concerns in an article published on NATO's website on Monday but said: "We strongly disagree."
"And [we] feel that the system is clearly designed to protect populations against Iran, Syria and other ballistic-missile capable nations that threaten the European continent," Stavridis wrote.

The Cyprus Crisis Is a Postmortem for Russia

25 March 2013 | Issue 5095

By Anders Aslund

Klipping The Moscow Times

Suddenly, the Cyprus crisis blew up, but now it may have been settled. Of course, Cyprus itself loses the most out of this crisis, but Russia comes in second. Russian deposits of close to $4 billion have probably been lost, and the remaining Russian deposits are subject to rigorous capital controls. It did not have to be like this. All involved should all have acted earlier, but in the end, the European Union found a solution.
Contrary to multiple Russian comments, Russia does not look like an innocent victim. This crisis shows the country's inherent dysfunction and its poor relations with the EU. As in the crisis of 2008, Russia is financially vulnerable in spite of its resources because of its own ineffectiveness. Since Russia is excessively bureaucratic, Cyprus has effectively operated as Russia's department for foreign payments for a large number of Russian enterprises.
Cyprus has developed all relevant financial services at reasonable prices. The presence of English law is crucial, but its application is even more important. In Moscow, a group of masked "law enforcement" agents may storm into your office and ask your staff to lie down flat on the floor, taking whatever they desire. That is no way of running a modern country. Until Russia reforms and controls its "law enforcement," Moscow cannot become a financial center.
Prime Minister Dmitry Medvedev pinpointed Russia's legal weakness with his proposal to "create a special zone in the Far East," implicitly suggesting that Russia cannot reform itself sufficiently to manage international financial services. Fortunately, former Finance Minister Alexei Kudrin rebuked him and said it can. What Russia needs is reform of its system, not offshore zones.
Finance is crucial for Russia's national security. Russia spends about $60 billion a year, roughly 3 percent of its gross domestic product, on security services other than defense. These expenses do not grant security. On the contrary, they undermine it because the all-powerful, unpredictable and often arbitrary security services drive Russia's financial sector abroad. Russia would have been better off if it had spent one-third of its annual security budget to bail out Cyprus.
This crisis also highlights the weaknesses in EU-Russian relations. President Vladimir Putin used to have three good friends among the EU leaders: Italian Prime Minister Silvio Berlusconi, German Chancellor Gerhard Schröder and French President Jacques Chirac. Now all three are gone. Berlusconi and Chirac have been prosecuted for corruption, interestingly enough, and Gazprom hired Schröder immediately after his demise in an ethically dubious deal.
Putin's personal relations with the current EU leaders could hardly be worse, and he does nothing to improve them. Most conspicuously, the president insists on taking his big black Labrador Retriever Koni to his meetings with German Chancellor Angela Merkel, despite knowing that she cannot stand dogs. It is no surprise that Merkel keeps him at a distance. Such infantile pettiness belongs to the sandbox and harms Russia's national interests. As newly re-elected president, Putin skipped the Group of Eight summit at Camp Davis last May, offering a pathetic excuse that nobody believed.
On March 18, Putin's public statement on the first Cyprus agreement was memorable: "Such a decision, if it is adopted, will be unfair, unprofessional and dangerous." Little wonder that Merkel did not call Putin during the Cyprus crisis. Regardless of a few desperate Cypriot calls to Moscow, Russia played no role. As usual, the outsider has to pay to the insiders.
Gazprom has reinforced the European engrained view of Russia as a dangerous bully through its multiple threats to East European countries and its cuts of gas supplies to many countries in 2006 and 2009. These practices have led to a steady reduction of its sales to Europe. The European Commission has little choice but to fight Gazprom's monopolistic practices.
According to the quote attributed to Tsar Alexander II, Russia's only allies are its army and navy. The sad thing is that this is pretty much true today. It is difficult for Russia to win over friends when it displays hostility. Russia can ill afford an aggressive foreign policy. After all, the EU economy is 10 times larger than  Russia's, and its aggregate defense expenditures are almost five times larger. The weak need to be good diplomats.
Arguably, Cyprus is Russia's only true friend in the global arena. In many ways, it incorporates author Boris Akunin's ideal of a law-abiding middle class. But Russia failed to bail out its friend. Ever since the write-off of the Greek debt in March 2012, it was obvious that the Popular Bank and the Bank of Cyprus needed at least substantial recapitalization or probably liquidation.
Last May, I went to Cyprus to look into the impending crisis. At the central bank, officials were still in a state of happy denial, hoping for a Russian bailout or a private deal, although the situation was unsustainable. Considering its great financial interests in Cyprus, the Russian government had as much reason as the EU to act, but it did nothing while the EU solved the crisis late in the day. Russia defended neither its national interests nor its close friend.
On March 21, in the midst of this crisis, European Commission President Jose Manuel Barroso went to Moscow and met with Medvedev. Once again, the only thing Barroso received from Russia was a public scolding. Medvedev called the EU's original bailout idea "to put it mildly, surprising … absurd … preposterous." Russia has not been constructive or shown good will, whereas it has reinforced its reputation as a malign spoiler.
Sergei Aleksashenko, former first deputy head of the Central Bank, noted that this did no harm to the EU-Russian relations because "it's not possible to damage what does not exist." The Cyprus crisis has been a vivid lesson to Russia on why it needs close relations with the EU.
But the EU needs Russia as well. As Germany surges, Russia no longer seems too big to enter the EU. With a GDP of nearly $2 trillion, Russia matches Britain, France and Italy, and it is only slightly smaller than Germany. The current concern within the EU is that Germany is becoming too dominant. As a member of the EU, Russia could help rebalance the forces within the union.
The Cyprus affair shows how unsustainable Russia's current policies are. Economically, Russia is ripe for the EU, but before it can be considered for membership, Russia first needs to become democratic, cooperative and law-abiding.

Anders Aslund is a senior fellow at the Peterson Institute for International Economics in Washington.

Obama's Flexibility Not Enough to Please Putin

19 March 2013 | Issue 5090

ByAlexander Golts

Klipping The Moscow Times

It turns out that PresidentVladimir Putinwas right after all not to trust U.S. President Barack Obama. After passing the Magnitsky Act, the U.S. has now hit Russia in its most vulnerable spot by abandoning a key phase of the planned missile defense system in Europe.
Initially, newly appointed U.S. Secretary of Defense Chuck Hagel was vague about U.S. intentions, saying that he wanted to push back the deployment of the fourth phase of the European missile defense program to 2022. It seems that Hagel's explanation was only an attempt to buy time to delay being attacked by Republicans for whom missile defense, including the fourth phase, is sacred.
Yet Under Secretary of Defense James Miller quickly gave away Hagel's secret. Shortly after Hagel's statement, Miller said: "In the fourth phase, in the previous plan, we would have added some additional type of interceptors: the so-called SM-3 IIB would have been added to the mix in Poland. We no longer intend to add them to the mix." According to the Kremlin, those interceptors in Poland would have been capable of destroying Russia's intercontinental ballistic missiles, although most Western military analysts and independent analysts in Russia asserted that this would have been impossible to accomplish from a technical point of view.
The Kremlin's fear was that fourth-phase U.S. interceptors stationed in Europe would allow the U.S. to take out Russian missiles in the boost phase of their trajectory. According to this argument, that is why Washington wanted to station its missile defense facilities as close as possible to Russia's nuclear missile installations. Putin's advisers conveniently overlooked two crucial facts: first, missile defense installations in Poland were located too far away to intercept Russian missiles during their boost phase, which only lasts several hundred kilometers; and second, the U.S. in 2009 already concluded that it makes no sense whatsoever to try to intercept missiles during their boost phase and rejected this option outright as part of its missile defense strategy.
It would seem that Obama kept promise that he made in early 2012 to then-PresidentDmitry Medvedevwhen he said that, if re-elected, he would be "more flexible" on missile defense. It is no surprise, however, that the Kremlin is not celebrating this diplomatic victory.
The Kremlin and Foreign Ministry will surely respond by saying that the U.S. rejection of the fourth phase is not enough and that the first three phases still disrupt the "strategic parity" between Russia and the U.S. The same thing happened four years ago when Obama rejected the missile defense architecture proposed by former U.S. President George W. Bush. Moscow insisted that the interceptors shouldn't be stationed in Poland and the radar in the Czech Republic if they were designed to intercept Iranian missiles. Obama responded by placing a radar facility in Turkey, yet the next day Russian officials began complaining that the new radar installation will allow Washington to surveil large swath of Russia's territory.
Now, Hagel has himself given fuel to the Russian critics by announcing that the money saved from canceling the fourth phase in Europe will enable the U.S. to deploy an additional 14 interceptor missiles in Alaska and California. That would give the U.S. a total of 44 interceptor missiles that can shoot down long-range missiles. Moscow responded by claiming that Washington's missile defense capabilities are only gaining in strength. But most military specialists maintain that five or as much as 10 interceptors are required to guarantee the destruction of a single nuclear warhead, meaning that the U.S. would be able to take out no more than from four to nine incoming warheads. That would be woefully inadequate to defend against a nuclear attack from a major power like Russia, which has an arsenal of more than 1,500 deployed warheads. At the same time, 44 U.S. interceptors would be more than enough to deal with the potential threat of several North Korean missiles. In addition to its fervent anti-U.S. rhetoric, Pyongyang is actively developing a missile program and has already conducted its third successful nuclear test. But it will take many years before North Korea can produce more than a few long-range missiles.
At the end of the day, the Kremlin desperately needs U.S. missile defense for propaganda purposes. The very existence of the U.S. missile defense program — even a scaled-down version — offers a perfect pretext for Putin to voice his frustration with the U.S. Just like NATO expansion, the European-based U.S. missile defense program is an ideal bogeyman for Moscow to claim that its national security is being undermined by U.S. warmongers in Congress and the White House. What's more, Putin sincerely believes that the U.S. wants to topple him using the technology of a "color revolution." To contain what he sees as Washington's global geopolitical and military ambitions, Putin needs something he can use to artificially return to the Cold War-era concept of mutually assured destruction, however absurd that might appear today. This is precisely why the Kremlin will never give up the opportunity to quibble over missile defense, even while the U.S. eliminates phases and otherwise reduces the scope of its missile defense program.
Mark my words: In the coming days, weeks and possibly months, we will hear Kremlin-friendly analysts with stern facial expressions warn that Obama's refusal to implement the fourth phase of the European missile defense program is just a clever, cynical trick intended to mask its true intention: to secure and maintain a strategic advantage over Russia.

Alexander Golts is deputy editor of the online newspaper Yezhednevny Zhurnal.

Read more:http://www.themoscowtimes.com/opinion/article/obamas-flexibility-not-enough-to-please-putin/477069.html#ixzz2O4DnVNuR
The Moscow Times

Putin's Vertical Duma

20 March 2013 | Issue 5091

ByVladimir Ryzhkov

Klipping The Moscow Times

The expulsion of Gennady Gudkov and his son Dmitry from the Just Russia party last week puts an end to any illusions that might still remain about the "systemic opposition" in the State Duma, which consists of the Communist Party, Just Russia and the Liberal Democratic Party. The situation wasn't entirely clear a year ago, when members of two of those parties took part in the mass protest rallies on Bolotnaya Ploshchad and Prospekt Akademika Sakharova last year. But that short-lived period of "systemic protest" ended abruptly earlier this year, when all three pro-­Kremlin Duma parties joined United Russia in a street rally to support the "Dima Yakovlev law" that banned U.S. adoptions of Russian orphans.  Their unanimous support last week to oust Dmitry Gudkov for speaking at a conference in the U.S. was the latest reminder of how subservient these "opposition parties" are to the Kremlin.
The December 2011 campaign to vote for any party but United Russia gave the Communist Party, Liberal Democratic Party and Just Russia millions of additional protest votes. Coupled with the mass protest rallies on the streets of Moscow, this created the illusion that the regime of PresidentVladimir Putinhad become seriously weakened and might even be on the edge of collapse. The influence of the protest movement became so great at one point last year that presidential candidatesGennady Zyuganovof the Communist Party and Sergei Mironov of Just Russia even called for early Duma elections and radical political reforms in their campaign platforms. Now, one year later, not a trace remains of their former oppositional stance.
In Vladimir Lenin's 1920 treatise, "'Left-Wing Communism: An Infantile Disorder," he clearly formulated the concept of the authoritarian corporate state, firmly setting it as a priority for Russia's future. According to Lenin, the "dictatorship of the proletariat" and its patron, the Communist Party, was to rule the country and society with the help of trade unions, the media, workplaces and other party cells, all of which were to be created or strictly controlled by the state. Any person or organization that refused to play its designated subservient, loyal role as a cog in the larger party machine was subjected to harassment and punishment.
During Putin's 13 years in power, he has created an entire system of obedient cogs in the form of pro-Kremlin "opposition" parties, state-­controlled and censored media, pro-Kremlin nongovernmental organizations, the All-Russia People's Front and the so-called Open Government.
Outwardly, the systemic parties look very different from each other, like cogs of differing colors: the Communist Party is red, the Liberal Democratic Party is yellow and Just Russia is orange. But they all work together to put the same Kremlin political machine into motion. When necessary, they all sing the same tune, whether the lyrics happen to be anti-U.S., anti-liberal, anti-gay or anti-­Georgian, whatever the Kremlin commands.
Meanwhile, genuine, Kremlin- independent opposition parties have been sidelined. They have become victims of an organized campaign by the authorities to discredit its members and place under house arrest or jail its leaders on trumped-up charges.
After his return to the Kremlin on May 7, Putin has been tightening the screws on his vertical-power structure. He skillfully introduced a system of reward and punishment to keep the government cogs more closely attuned and proactive in cracking down on the protest movement. The four Duma parties all received a 250 percent increase in funding from the federal budget. Liberal Democratic Party member Alexei Ostrovsky became governor of the Smolensk region, Just Russia member Konstantin Ilkovsky was made acting governor of the Zabaikalsky region, and the Communists have reportedly been promised continued control over the Vladimir region, currently headed by Governor Nikolai Vinogradov.
The Kremlin has been able to maintain strict control over the members of the three systemic opposition parties in the Duma through its powerful administrative resources that include the freedom to sell seats in electoral lists and access to Kremlin-controlled television for those who support and defend the Kremlin. At the same time, if they ever get out of line they face the threat of expulsion, a smear campaign or criminal charges.
In the end, the Kremlin has effectively made fools out of millions of angry voters who cast their ballots for "any party but United Russia" in the December 2011 Duma elections. It turns out that they voted for different-colored cogs of the same political machine, a system that controls all the power and property in Russia and is run but a single man sitting in the driver's seat.

Vladimir Ryzhkov, a State Duma deputy from 1993 to 2007, hosts a political talk show on Ekho Moskvy radio and is a co-founder of the opposition RP-Party of People's Freedom.

Read more:http://www.themoscowtimes.com/opinion/article/putins-vertical-duma/477147.html#ixzz2O4DB31ze
The Moscow Times

Nabiullina Will Be Superior Central Bank Head

20 March 2013 | Issue 5091

ByMartin Gilman

Klipping The Moscow Times

Last week's announcement by PresidentVladimir Putinthat he was appointingElvira Nabiullinaas the new head of the Central Bank surprised many observers. In fact, the appointment, subject to confirmation by the State Duma, makes sense and is consistent with precedent in post-Soviet Russia. It may come to be seen as more than just a sound choice for the post.
Russian and foreign observers have given mixed reviews over the past week to Putin's choice, but Nabiullina's superb technocratic skills, sharp intellect and serious approach to public policy issues make her an excellent candidate to lead the Central Bank.
Let's start with the precedents. Over the past 20 years, two heads of the Central Bank were insiders: Viktor Gerashchenko and Tatyana Paramonova. Neither one had a sterling reputation in running the bank, although they both deserve more credit than is commonly assumed, given the difficult circumstances in which they operated. The other two Central Bank heads, Sergei Dubinin and Sergei Ignatyev, came from the Finance Ministry. Dubinin, appointed in 1995, was sacrificed as a consequence of the 1998 default, but was largely responsible for transforming the bank into the most professionally managed public institution in the country.
Ignatyev, who took over from Gerashchenko in 2002, continued this process. Before his surprising transformation into a central banker, he had been an academic and a first deputy finance minister. His areas of expertise included neither monetary economics nor banking. The same could be said for Alexei Ulyukayev, the current first deputy chairman of the Central Bank, who was, above all, a fiscal expert, first at the Gaidar Institute and then at the Finance Ministry. Both were credited with doing a reasonable job of managing Russian monetary policy through a challenging period and are considered to be respected central bankers. What's more, both will remain at the Central Bank if Nabiullina is confirmed.
Above all, Nabiullina is a highly qualified technocrat. She is valued for her broad experience, competence under fire and hard work. Less than a year ago, she was still the economic development minister. Her period in the Kremlin was all too brief to be much of a respite. It seems that Putin chose her because he wanted all of those qualities plus a keen sense of pragmatism.
Since Nabiullina is smart and will appreciate what is at stake, she will adapt well to her new job. There is no reason to believe that the political process would try to interfere directly in monetary issues. After all, Putin respects competent, career technocrats like Ignatyev and former Finance MinisterAlexei Kudrin. Nabiullina will also benefit from her highly professional staff  who will advise her on the intricacies of credit channels and banking regulation. Since monetary policy is only a part of a country's macroeconomic framework, she will be in a good position to coordinate a consistent set of policies with her colleagues in the government.
One of the sounder arguments for choosing a pragmatic technocrat is that presumably she will not come with an a priori theory of monetary economics or banking. The same could not be said for some of the other candidates considered for the job whether from banking or politics.  Russia certainly does not need someone running its Central Bank as an economic experiment.
There is another reason why Nabiullina is a good choice. Like Ignatyev and Ulyukayev, Nabiullina was in a top policy position at the time of the August 1998 default, serving as the deputy minister of economy and effectively heading the government's commission on economic reform. She resigned when Yevgeny Primakov became prime minister in September 1998. As a policy veteran of that tumultuous era, she knows first-hand what price is incurred for financial instability. Whatever the prevailing view about economic growth, Nabiullina understands that confidence in a country's money is critical to the maintenance of economic health. She also appreciates from her time as the head of the Center for Strategic Reform in the early 2000s that future growth depends upon productive investment by a dynamic private sector.
Perhaps greater than any local political pressure to loosen the monetary reins, the real problem may come from an unlikely quarter: the Group of Seven central bankers have thrown away the rulebook and are printing money in a desperate attempt to revive their economies. So what happens when she meets her foreign counterparts at the monthly meetings in Basel or at the International Monetary Fund?
Actually, central banks in countries like Russia should have modest ambitions. Sure, in the extreme, a central bank could implement a policy that destroys its currency and economic credibility. Even now, one can see examples of this from Argentina to Venezuela to Zimbabwe.
Otherwise, having a sound technocrat in charge and a professional staff seem to be the right approach. It is essential to appreciate just how little maneuvering room any head of the Russian central bank actually has in practice. This also applies to other central banks of major emerging market countries with supposedly more flexible exchange rates and stronger inflation-targeting credentials such Poland, Turkey, Hungary, Mexico, Brazil, India and South Africa.
These countries all seem to understand that since they don't have the privilege of printing a reserve currency; they have to keep monetary policy relatively tight. Yet they want to avoid a sharp real appreciation of their exchange rates. In fact, the Central Bank followed the same nominal flexibility as these other so-called floaters before the crisis from 2005 — and exactly the same flexibility afterward. Like Russia, they also were running a "quasi-peg" for the past 10 years with similar results. They tried to prevent a rapid appreciation of their currencies, despite the supposedly large differences in inflation-fighting credibility among the central bank governors involved.
So why did Russia have a much greater inflation problem? Because the Central Bank printed a lot more money than the others. But Ignatyev really had little choice. All of the seven other countries had current account deficits, so they were just sterilizing capital inflows. Russia had a much bigger problem: It was running a current account surplus equivalent to 10 percent of gross domestic product so the monetization created by that positive foreign balance was much greater.  Since 2010, what has really facilitated Ignatyev's life and helped to bring inflation down has been a decline in the current account surplus combined with capital outflows. Any other reasonable Central Bank head would have done the same.
To see how Nabiullina will perform, it would be useful to know the future path of oil prices and Russia's balance of payments rather than her predilection for monetary or real sector economics.

Martin Gilman, a former senior representative of the International Monetary Fund in Russia, is a professor at the Higher School of Economics.

Read more:http://www.themoscowtimes.com/opinion/article/nabiullina-will-be-superior-central-bank-head/477137.html#ixzz2O4CYsT9e
The Moscow Times

European Parasites Feed on Cyprus and Russia

20 March 2013 | Issue 5091

ByYulia Latynina

Klipping The Moscow Times

The European Union robbed depositors in Cypriot banks of several billion dollars. Brussels compelled the country's new president, Nicos Anastasiades, to agree to a levy on deposits in return for a loan of $10 billion. Under the deal, depositors with fewer than 100,000 euros ($130,000) in a Cypriot bank would pay a 6.75 percent tax and those with more than 100,000 euros would pay 9.9 percent.
I don't mind that most of the deposits in question are owned by Russian crooks, but I'm against Cyprus's decision in principle. Private property has always been inviolable in Europe, a principle that has helped it attract global investment over the past 50 years. And now Europe is resorting to confiscating people's holdings.
This is not the first time such things have happened in Europe. Long ago, Venice extracted compulsory loans from its citizens during the war with Genoa, and hyperinflation appeared in Germany following World War I. But all of these ruinous taxes and enormous public debts occurred as a result of war.
Is Europe at war? Did I miss something? Where did these insane debts and excessive taxes come from? Did France just finish a war with Germany? Were the Italians of Lombardy at war with their Sicilian compatriots?
In reality, the monstrous European debt and the horrendous taxes are a direct result of universal suffrage. For decades, European politicians have been promising their constituents more than the countries were producing in revenues. The European financial crisis is not an economic crisis: It is a crisis of civilization.
European civilization was once based on respect for ownership rights. Now it is based on socialism, regulation and bureaucracy. Socialism always ends in the government's confiscation of assets and property.
The last great politicians of the Western world were former U.S. President Ronald Reagan and former British Prime Minister Margaret Thatcher. But ever since they caused the economic collapse of the Soviet Union and rid the world of the "evil empire," the West has been led by dim-witted socialists, clowns and corrupt politicians.
To expand their electoral base with voters expecting government handouts, these leaders opened the floodgates to foreigners wanting to immigrate to Europe. As a result, Paris has turned into an Arab city and officials levy unfair taxes on working families and use the money to support drug- addict mothers with five children. In addition, rather than improve the business environment, European politicians regulate the shape of cucumbers, obsess over CO2 levels and waste their time on giving gays the right to marry.
That is what always happens when the state interferes with the free market to subsidize its populist policies. This policy inevitably gives birth to an oligarchic system that exploit those policies to enrich themselves, thus becoming society's main parasites.
The primary European and U.S. parasites are banks that repackaged debts generated by freewheeling populist policies. Now those banks are begging for bailouts before they go belly up. This provides another lesson of history: Populism always begets a plutocracy.
If anyone thinks that the situation in Cyprus is the end of the story, they are in for an unpleasant surprise. Cyprus is only the beginning. Now that it has taken the plunge, the EU will not stop there. In this war between the consumerist majority and the minority producing goods, the main winner will be authoritarian China. What if the future belongs to authoritarian regimes, such as China or the Islamist leadership in Turkey that at least pursues a rational economic policy. This is truly a disturbing picture.

Yulia Latynina hosts a political talk show on Ekho Moskvy radio.

Read more:http://www.themoscowtimes.com/opinion/article/european-parasites-feed-on-cyprus-and-russia/477136.html#ixzz2O4AKyG3I
The Moscow Times

Putin Could Lose Big If He Dissolves Duma

18 March 2013 | Issue 5089

ByVladimir Frolov

Klipping The Moscow Times

Could PresidentVladimir Putinbenefit politically by disbanding the State Duma and calling an early parliamentary election?
A recent report by Governance and Problem Analysis Center, a conservative think tank co-chaired by Putin ally and Russian Railways president Vladimir Yakunin, hints as much. It says the 2011 Duma election results were falsified with the Communist Party finishing first with 30 percent, while United Russia came in second with a paltry 21 percent.
But the upside for Putin of getting rid of this Duma may seem substantial. It would defang the opposition's key demand of new and fair elections. It would remove the discredited group of deputies whose glaring hypocrisy and undeclared foreign luxury real estate holdings infuriate the public and undermine Putin's authority.
In addition, disbanding the Duma would take full advantage of the new election rules according to which half the Duma will be elected in single-mandate districts, a move that will help secure an overwhelming pro-­Putin majority in the Duma.
It would also undermine United Russia as a possible political base for Prime MinisterDmitry Medvedevand his team of "United Russia liberals." It would also embellish Putin as a crusader against crooks and thieves. Finally, it could remold Russia's political elite in Putin's image by drafting Popular Front nationalists with no compromising exposure to the West.
But risks of dissolving the Duma are huge. First, this would delegitimize the entire power structure, including Putin himself, since it would mean his 2012 election would have been held under an ostensibly illegitimate political regime.
Second, a new Duma election may create a rallying point for the anti-­Putin forces within the disgruntled elites to field a viable opposition ticket to shatter Putin's dominance.
Third, sacrificing United Russia for the Popular Front could be devastating to Putin's entire system. United Russia is an essential element in Putin's vertical-power structure. Humiliating the United Russia elite would exponentially increase the number of people holding a grudge against Putin.
The Popular Front is a motley collection of sycophantic opportunists and anti-Western fanatics. As such, it would be impossible to transform the front into an effective party of power. More ominously, it might signal the transition to a personalistic totalitarian regime. This could backfire against Putin because he himself could be expendable if the elite do not consider him to be brutal enough.
It's a dicey bet.

Vladimir Frolov is president of LEFF Group, a government relations and PR company.

Read more:http://www.themoscowtimes.com/opinion/article/putin-could-lose-big-if-he-dissolves-duma/476993.html#ixzz2NyCK2t6S
The Moscow Times

The FSB Opens a New Foreign Front

18 March 2013 | Issue 5089

ByAndrei Soldatov

Klipping The Moscow Times

The Federal Security Service will be given a detachment of agents to be assigned to permanent duty in foreign states. Their task will not be to protect Russian diplomats from spies but to work with local intelligence agencies in the "struggle against international crime."


According to the explanatory memorandum to the bill that PresidentVladimir Putinhas submitted to the State Duma, FSB operatives are now being dispatched to foreign states for up to six months "to provide advice and guidance to their intelligence and law enforcement agencies in conducting operational, search and other special activities." For the time being, those detachments will be sent only to Abkhazia, South Ossetia and Kyrgyzstan. The goal is to give them the opportunity to serve as permanent advisers. According to the memorandum, a group of 15 agents will be sent to each of the three countries, although the FSB would like to expand the list of states "in need of its help."


In 2007, a presidential decree granted the Interior Ministry the right to include 41 of its representatives in Russia's diplomatic missions abroad. In 2009, it was decided that such officials would serve for three years at a time with the possibility of extending their stay by an additional year. At present, however, only about 10 interior officials are posted abroad. What's more, only one is assigned per country as compared to the 15 FSB agents designated for each host state.


But the FSB initiative differs fundamentally from the practice of the Interior Ministry and seems to be an attempt to revive the Soviet custom of posting its secret police to the intelligence agencies of Eastern Europe. These advisers were sent to friendly countries from 1949 through 1991. The advisers could number up to several dozen people. Apparently, the FSB officers are also providing "practical advice" to the intelligence agencies of Abkhazia, South Ossetia and Kyrgyzstan.
It is also obvious that the FSB contingents in those countries are charged with preserving the ruling regimes and not with fighting, for example, terrorism and the international trafficking of drugs and illicit arms. It is also obvious that FSB officers stationed in Sukhumi, Tskhinvali and Osh will have a better chance of achieving their goals if they will serve at their posts for several years rather than rotating the staff every six months.


It might initially seem surprising that the Kremlin sees the FSB in that role rather than the Foreign Intelligence Service. But back in the mid-2000s, the FSB was given its own intelligence agencies for working in the former Soviet republics, and so the decision is wholly in keeping with that logic.


It is widely known that the FSB performed much worse than the Investigative Committee during the peak of the 2011-12 protests. Putin complained that the FSB was not providing enough information about opposition forces and changes in the political situation.
When this happens, the FSB usually counters by complaining that its powers are too limited and requests broader authority. Not surprising, a new law broadening the definition of treason was signed by Putin last year in what many view as a nod to the FSB. The law also made it much easier for the FSB to conduct surveillance and wiretapping.


The current initiative to send permanent detachments of security officers to help the intelligence services of friendly regimes apparently falls under the same category. Apparently, it is better to let the FSB fight hostile forces in distant lands than in Russia.



Andrei Soldatov is an intelligence analyst at Agentura.ru and co-author of "The New Nobility: The Restoration of Russia's Security State and the Enduring Legacy of the KGB."

Read more:http://www.themoscowtimes.com/opinion/article/the-fsb-opens-a-new-foreign-front/477005.html#ixzz2NyBtSclT
The Moscow Times