Russia Monitor

Rosneft's Problem with Venezuela

Venezuela, ruled successively by Hugo Chavez and Nicolas Maduro, has become Russia’s main ally in the Western Hemisphere. The alliance appears to be quite costly as Russia actually subsidies Venezuela's socialist-managed economy. Russia’s state oil giant Rosneft plays the main role in the alliance while its CEO Igor Sechin has become the principal liaison between Moscow and Caracas. However, the country’s dramatically worsening economic situation increases the risk of Russian investments and loans in the local oil sector. The assets of Venezuela’s state-run PDVSA concern were in the pinnacle of Western creditors, and Rosneft is no longer interested in paying money to support a bankrupt. Such complete collapse of Venezuelan economy along with the political change in Caracas may even end up with losing billions of dollars invested by the Russians.


More U.S. Marines to Be Deployed in Norway? Russia Protests and Threatens

The government in Oslo has recently suggested that the United States double the number of U.S. marines stationed in the country as well as deploy them closer to Russia's borders. Such move has already triggered a violent response from Moscow as it strongly disapproves of any steps aiming to strengthen the military potential of NATO countries in the north. For several years, Russia has been intensively developing its military capabilities in this area, mostly by expanding infrastructure facilities as well as increasing the number of troops stationed there. The Norwegian Arctic is very important for Russia as evidenced by the country has recently set up another its fifth territorial military district. So it does not come as a surprise since the region is located very close to the U.S. territory while the North Sea holds enormous oil and gas reserves.


No Major Changes in the Kremlin. FSB Officers Join Putin's Administration

On June 13, Vladimir Putin issued a package of decrees on nominations and dismissals in his presidential administration. In fact, he reappointed the entire management. Interestingly, Mr Putin decided to fire his aide in charge of personnel as well as he appointed two silovikiwho had hitherto served in the FSB structures. In turn, such presidential advisors as Yury Ushakov and Vladislav Surkov will retain their positions; such a situation does not mean any revolution in the Kremlin's foreign policy.


Ukraine Hits Gazprom’s European Assets

Russia's Gazprom has not fulfilled the decision of the Stockholm arbitration tribunal. According to the final verdict announced in February, the Russian company will have to pay Ukrainian state-owned energy firm Naftogaz 2.56 billion dollars of compensation. The enterprise has not met its obligations yet and Naftogaz demanded the execution of the court's decision in all European countries where Gazprom has its assets. In this way, the Ukrainians seek to get the money owed by the Russian giant. So far, such situation has not affected Gazprom's operational activity; nevertheless, it has serious impact on the company's image, which may even lead to losing Russian assets all around Europe.


Excise Duties on Gasoline: Russian Government's Failure

The Russian authorities are currently considering reducing the excise duties on gasoline and diesel fuels; the increase in prices was expected to constitute a part of wider tax changes in the energy sector. The government was afraid of social discontent that might be caused by the sharp rise in prices at gas stations. The decision will trigger decline in budget revenues from the reduction of excise taxes on fuel as oil companies are overtly against paying more. Nevertheless, the policy led by such oil giants as Rosneft contributed to lower amount of petroleum products on the domestic market. However, the solutions adopted by the government are conducive to the largest market players and, at the same time, endanger small independent gas station chains.


Spain’s New Eastern Foreign Policy Is Yet to Come

The fact that an officer known for his pro-Russian views was appointed Director General of Spain's Department of National Security has recently caused a wave of speculation that thanks to such a nomination, Madrid might introduce more favourable policy towards Moscow. However, it is too early for such claims. There is no doubt that Spanish socialists have always been closer to Russia than right-wing politicians, but the current political situation in the Iberian Peninsula seems so complicated that the final conclusions could be drawn only after the elections scheduled to occur next year.


Top U.S. and Russian Generals Meet for Talks

The top U.S. military chief held a meeting with his Russian counterparts in neutral Finland. Nevertheless, it does not mean any change in the military cooperation of both countries, which can be now considered as very limited one. The main purpose of the talks was to clarify the recent tensions in Syria as well as to discuss the need to improve information exchange mechanisms in order to avoid potentially dangerous situations. It is the second meeting of high-ranking militaries of the two countries that has lately taken place. In April Gen.Valery Gerasimov met with NATO’s top military officer, U.S. Army Gen. Curtis Scaparrotti in Azerbaijan.


War in Syria: Putin's Words Stained with Blood

According to Vladimir Putin, Russia will still be one of the main participants of the Syria. Russian president was asked about the country's participation in the conflict during his annual Q&A show. The declaration was followed by the raid of Russian aviation in the Idlib province.


War with Ukraine: Putin Responds (Not Only) to the Russians

For many, Vladimir Putin's annual live television call-in show did not appear to be surprising. The broadcast's main idea reflects the foreign, internal, security and economic policies carried out during the new presidential term. Also statements on the Ukrainian conflict aroused some strong emotions. Some observes even claim that Russia's president has threatened to destroy Ukraine's statehood. But is that really true?


Putin's Important Declaration: What Will He Do in 2024?

According to Russia's constitution, Vladimir Putin is bound to leave the Kremlin when his current term ends in 2024. Nevertheless, the law may be subject to changes. Such an idea has been recently suggested by Chechen lawmakers. Mr Putin claims that he has no intention to amend the constitution in order to satisfy his own needs. But does he? As vaguely stated by Russian President, he may envisage such a solution. But it does not really concern the idea to lift the limit on two consecutive presidential terms.


Putin in Austria: Friendly Visit among the Gas Fumes

It is not a coincidence that Vladimir Putin headed to Vienna to make his first foreign trip since being sworn in for a fourth term. Austria has always been considered as one of Russia's friendlier EU member states. Now cooperation between both countries can be reinforced thanks to the presence of the pro-Russia Freedom Party (FPÖ) in the Austrian government. But regardless of ideological issues, gas cooperation is the main foundation of Vienna's good relations with Moscow. And for Mr Putin, a visit to the capital of Austria is part of a new policy of warming relations with Europe in order to abolish sanctions.


Worse Forecasts for Russia's Economy

This year, Russia's economic growth will be much lower than it has been previously assumed. The analyses of the subsequent Western investment banks were confirmed by Alexei Kudrin. Regarded as the leader of the reform campaign camp, chairman of the Accounts Chamber admitted that poorer forecasts had been triggered by American sanctions introduced in April.


Turkmenbashi Sea Port: New Road to Central Asia

The launching of a large commercial port on the Caspian Sea coast has a great signifiance not only for Turkmenistan whose authorities have been pursuing a strategy of economic opening to external markets. The Turkmenbashi terminal means an increase in the export of hydrocarbons to Europe, but it also constitutes an opportunity for greater trade exchange of the Central Asia with external markets and could be perceived in terms of an important part of the new Silk Road linking Europe with China. However, the port needs to struggle with the competition of neighbouring Kazakh ports.


Nord Stream 2 and Turkish Stream. Geopolitics and Putin's People Profit

Gazprom's big infrastructure projects are another way of transferring state funds to the pockets of Vladimir Putin's friends. It is not the first time when geopolitics (understood as the desire to seriously harm the rebellious Ukraine) serves to conceal Russia's kleptocracy. As in the case of the organisation of the Sochi Olympic Games or the construction of a bridge on the Crimea, implementing Nord Stream 2 and Turkish Stream projects seems to be extremely profitable for subcontractors, mostly companies belonging to people from Putin's inner circle. The financing is provided by state-owned banks (and therefore the Russian taxpayer's money is guaranteed) as well as Western companies.


Timchenko vs. Sechin. A Conflict between Putin’s Friends

A private Novatek and a state-owned Rosneft are connected by the struggle with Gazprom’s monopoly. But this is only a tactical alliance, as for example in the field of petrochemistry interests of Gennady Timchenko and Igor Sechin are contradictory. Rosneft plans to increase the chemical production, which threatens the dominating position of Sibur, in which the main role is played by Timchenko and his long-time partner Leonid Mikhelson. A conflict in the chemical sector confirms the rising tension in the Russian elite connected with fewer and fewer opportunities to grasp thanks to good relations with the Kremlin.


GRU and Kursk Brigade: MH17 Hits Putin’s Plan

The political course introduced by Vladimir Putin at the beginning of his new presidential term has already appeared to be quite unsuccessful. The case of MH17 crash seems to indicate that the Kremlin will find it extremely difficult to “warm up” its relations with the West as Moscow does not intend to admit violating international law or to acknowledge its criminal activities in Ukraine. It is likely that Mr Putin will not be able to persuade even a part of European countries to “reset” if he does not make any personal or image concessions.


Russia’s Costly Alliance with Assad Ends up with Bloody Slip-up

At least nine killed soldiers and mercenaries were killed in the battle against jihadists in eastern Syria. The bloody fight ended with Moscow’s another slip-up that occurred less than a week after Syrian President Bashar al-Assad visit to the Black Sea resort city of Sochi. As previously, reassurances on progressive stabilization and military successes have been confronted with the frontal reality. To make matters worse, the United States is not likely to withdraw its troops from Syria.


Gazprom-Germany: Acceleration in St. Petersburg

Talks between the leadership of Gazprom with CEO’s of German gas companies is another sign that both parties want to accelerate the realisation of their joint projects. An outright opposition of the USA and American allies in Europe and a threat with sanctions on European companies engaged in the Gazprom’s projects complicate the Russian-German plans. But for now, there are no signs that Berlin would yield. Moreover, talks in St. Petersburg signalise the opposite.


Lukoil Retreats from Iran

Trump’s decision to withdraw from the Iran nuclear agreement and to re-impose sanctions on the country is now changing strategies of many companies around the world. Russian enterprises are no exception to the rule; the country’s oil company Lukoil has recently announced that it would withdraw from two of its Iranian projects. Nevertheless, the oil giant is likely to retreat from any plans at all as it may be afraid of American sanctions.


Brussels Merciful to Gazprom. The End of the EU Energy Solidarity

After the proceeding, which lasted for several years, the European Commission stated that Gazprom was using monopolistic practices on the EU market. In the agreement made lately with Russians, Brussels confirmed that the EU was divided into two categories of states for years. Western countries, with Germans ahead, were receiving gas for a much lower price than Eastern and Central European countries. But the Commission did not impose any fine on Gazprom, and the mistreated companies will not get any compensation. The assurance that the Russian company will have to treat Poland or Estonia in the same way as the Netherlands or Italy is nothing more than empty words. Why? Because many Eastern and Central European countries aim to diversify their gas import in order to maximally limit their cooperation with Russia. The European Commission itself treated Eastern and Central European countries as members of the B category. It is the final end of the European energy solidarity. It is also a…


New Generation of Siloviki in the Cabinet

When looking at the composition of a new cabinet presented by Prime Minister Dmitry Medvedev to President Vladimir Putin, special attention is drawn to two new faces among ministers. Both politicians are associated with special services, for both the promotion to the cabinet is yet another important step in the development of their political careers. They both belong to a new generation of putinokrats, to whom the current president and his colleagues are gradually handing over power.


Rosneft – China. Another Conflict

Igor Sechin’s reassurances about the tightening cooperation between Rosneft and China are becoming less and less real. Not only did the sale of Russian company’s shares to the Chinese fail, but also Beijing fiercely criticised Rosneft’s operations in another country; it concerns extraction works on the South China Sea shelf within one of Vietnam’s projects. Until now, China was avoiding public criticism of their Russian partners. The case of South China Sea, therefore, is a sign of troubles in their relations.


Russia’s Petroleum Policy: Prognosis

The composition of the new government and situation on the world oil market suggest that the present course of Russia’s policy in this economic sector will be maintained. It can be proven by the agreement on limiting oil extraction; in accordance to the rule that if something functions well and brings profits, it should not be improved.


Trump, Iran and More Petrodollars for Russia

World oil prices together with incomes to the Russian budget are rising. This is great news for Vladimir Putin and government at the beginning of new presidential term. Currently, Russian oil exporters earn one third more than six years ago. And prognoses for Moscow are optimistic. Does it mean that funds for realisation an ambitious “May decree” will be attainable?