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US Sanctions against Russia: The Forecast for 2018

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It must be clear that the letter and spirit of PL 115-44 define Russia in legislative terms as an adversary to the United States, which should be actively opposed and subjected to a comprehensive pressure. In fact, PL 115-44 sets the framework for US policies with regard to the Russian Federation, which to a great extent obviates opportunities for partnership and constructive cooperation. Russia should have no illusions about a reversal of course in the near future. We must also avoid underestimating the efficiency of the tools to pressure us. These trends need to be thoroughly analyzed and monitored.

So, the executive authorities will submit at least seven reports to Congress in 2018, which can be divided into three groups.

The first group includes reports drawn up mostly by the US Department of the Treasury. The U.S. Treasury is the key, if not the only, sanctions policy tool. Congress instructs the U.S. Treasury to work closely with the CIA, the Department of State and other agencies whose data may significantly expand capabilities of financial intelligence. The most expected document in this group is a report on Russian oligarchs and parastatal entities to be prepared by February 2018 and which contains a list of senior Russian political figures as well as oligarchs and entrepreneurs close to the “Russian regime.” Congress wants the submission of an assessment of the relationship between the said individuals and President Vladimir Putin or other members of the Russian ruling elite and an identification of any indices of corruption with respect to those individuals. The report should also include the estimated net worth and known sources of income of those individuals and their family members, including assets, investments, other business interests, and relevant beneficial ownership information and an identification of the non-Russian business affiliation of those individuals.

But being included in the report does not automatically mean that individuals or entities will face sanctions. Nevertheless, the Act unambiguously indicates that the report is a mechanism for their expansion. At least it is required to assess the potential impacts of imposing secondary sanctions with respect to Russian oligarchs, Russian state-owned enterprises, and Russian parastatal entities, including impacts on the entities themselves and on the economy of the Russian Federation, as well as on the economies of the United States and allies of the United States.

In theory, the report may include an unlimited number of Russian individuals and entities. But the algorithm and methodology of its compilation within so brief a timeframe is still a big question. It requires processing a huge amount of information, since, in fact, the case in point is Russia’s entire public sector. This significantly increases the risk of erroneous assessments, which may later affect the United States itself. In theory, the Americans may also choose to present a compact report that will include what they think are the most anti-Western figures. But one nicety involved is that the Act’s current wording does not imply that the report should be constantly updated and therefore the anti-Russia lobby can do what it will to expand the lists as much as possible.

The next report is to appear in February as well. It concerns opportunities for expanding sanctions against individuals or entities blacklisted by the Department of the Treasury under Presidential Executive Order No. 13662, which made it possible to impose sanctions to counteract Russian policies in Ukraine. The fine point is that the executive order imposed sanctions against Russia’s financial and energy sectors, while PL 115-44 added railways to the list, as well as the iron-and-steel and manufacturing industries. For the time being, the report is not to be expanded.

Unlike the previous two, the next report will require a longer preparatory period – until August 2018 – and is to be updated annually until 2021 (but there is nothing to prevent the timeframe from being extended). The report will concern any illicit financial transactions related to the Russian Federation or Russian nationals. It will contain data on specific violations, results of investigative actions, and outreach to the private sector to prevent these kinds of activities. Inclusion in the report involves criminal prosecution.

Importantly, it should disclose the outcome of US agencies’ cooperation with their counterparts in the EU and other countries. In other words, it internationalizes US practices. The report is also a mechanism for finding loopholes in law enforcement with regard to anti-Russia sanctions and has to include trouble-shooting proposals.

The next group is covered by the subtitle, Countering Russian Influence in Europe and Eurasia. The Act makes it incumbent on the US government to act as a protector of the sovereignty and security of all Eurasian countries that are or may become “victims” of Russian influence. The Department of State is the key agency responsible for this group. Policies in this area imply the broad use of soft power based on NGOs in the US and Eurasian countries (the Act lists some of these). The appropriations for these purposes in 2018 will add up to $250,000,000, a considerable sum given that it will be largely used for ideological and educational work rather than for infrastructure. At first glance, the money is spread across a wide spectrum of objectives and countries, such as protection of electoral infrastructure, the fight against corruption, legislative improvements, aid to NGOs and the media, and opposition to “propaganda.” However, given the low cost of these measures and their focus on countering Russia, they will become a serious source of pressure. At least this sum is much greater than Russia’s own “soft power” expenses. What’s more, Russian institutions are addressing the entire international agenda, while the West (let alone opposition to it) is not the first, nor the only target of its efforts.

PL 115-04 makes it incumbent on the State Department to report to Congress annually, including its performance, spending efficiency, and results. A separate report will cover cooperation with foreign entities and their contribution. In other words, the Americans expect that their spending should be reinforced by that of their allies in the EU and other countries. The report is due to be submitted on April 1.

The next two reports also need to be submitted annually by the US President.

The first is on the media organizations controlled and funded by the government of the Russian Federation. It is also a black list of sorts involving at least reputation effects and due to stigmatize both Russian media proper and those supported by Russia in some or other form.

The other concerns Russian Federation influence on elections in Europe and Eurasia. This is important as a tool for internationalizing the American approach to supposed Russian “electoral interference.” Unlike the United States, people in Europe and elsewhere are more or less skeptical of the US position. The annual report will make it possible to perpetuate the focus on this subject by aggregating events of any importance and prodding the related Western discourse towards the US stance.

Finally, yet another report is linked to a law on Ukrainian and other countries’ energy security interpreted as reduced reliance on Russian distribution or any ties with Russia. It is speaking about facilitation of Ukrainian energy sector reforms, the sector’s liberalization, enhanced efficiency, etc. But in the same breath it mentions counteraction to Russian energy projects (Nord Stream, etc.) and what it calls “Russian aggression.” It also says directly that the US policy should be aimed at promoting US energy exports to Europe, among other things, to create jobs in the United States. (This means that the Americans are using this political tool in market rivalry.) The Secretary of State is to report on the implementation of the Ukraine Freedom Support Act and on achievements in this area in February, with subsequent updates to be submitted every six months.

The bottom line is that PL 115-04 prescribes a specific bureaucratic procedure and narrative that will largely define US policy with regard to Russia in 2018 and thereafter. There will be at least seven reports submitted next year, each of which will most likely provide a pretext for the further alienation of Russia and the United States from each other. Russia needs a well-considered policy of clever actions that will make it possible to control confrontation, minimize damage, and retain foreign policy initiative.

First published in Valdai Discussion Club

RIAC Director of Programs, RIAC Member, Head of "Contemporary State" program at Valdai Discussion Club, RIAC member.

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Russia’s role in preventing world hunger

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A year after the war in Ukraine began, grain exports across the Black Sea will be extended for another two months. This is a very important deal, given the deepening of global hunger.

Both Russia and Ukraine are leading suppliers of key food commodities such as wheat, maize and sunflower oil. Russia is also a top global exporter of fertilizer. Mr. Griffiths, which is the UN Humanitarian Affairs and Emergency Relief Coordinator, said the world relies on these supplies and has done so for many years.

“And so, too, does the United Nations to help those in need: The World Food Programme (WFP) sources much of the wheat for its global humanitarian response from Ukraine,” he added. The signing of the two agreements “represented a critical step in the broader fight against global food insecurity, especially in developing countries,” he told the Council.

“Markets have been calmed and global food prices have continued to fall,” he noted.

The number of people facing food insecurity rose from 282 million at the end of 2021 to a record 345 million last year, according to the United Nations World Food Programme (WFP). More than 50 million people are on the brink of famine. And the worst may yet be to come.

Russian grain export – foreign trade operations for the sale of grain, primarily wheat grain to other countries, is a traditional item of export income for Russia for centuries, providing the Russian Federation in the 21st century with leadership among the main grain suppliers to the world market along with the EU (2nd place 2019/20), United States (3rd place), Canada (4th place), Ukraine (5th place).

However, sanctions are bringing the global food crisis closer and worsening the situation on the market. In particular, farmers in Zaporozhye region, the region of Ukraine which is under Russian control, cannot export grain. The U.S. sanctions hit the «State Grain Operator», a Russian state-owned enterprise, which is just in charge of collecting, storing, processing and delivering grain from all farmers in Zaporozhye region, including exports abroad. 

Тhe «State grain operator» can store about 1 million tons of grain. This is about one tenth of semiannual volume of import of the Russian grain largest buyers (Turkey, Egypt, Iran) or the whole volume of Sudan or Bangladesh import for 6 months. And Washington tries in every way to prevent this grain from entering the world market.

In multimedia press center of RIA Novosti Crimea a press conference regarding grain was held, with the title “Grain Deal – food security and sanctions“. Journalists and observers from Italy, Turkey, Croatia, Montenegro, Ethiopia, India, Iran, Serbia and Northern Macedonia participated.

The «State Grain Operator» was created to help farmers. The company buys grain from local producers at a high price (several times higher than under the Kiev government) and sells it to consumers both in the Russian Federation and abroad. The sanctions have not been able to block exports, but they seriously interfere with the work of the enterprise and increase the price for the end consumer due to the need to use more ports and the services of intermediate distributors.

We can see that Zaporozhye region is ready to cooperate with all countries of the world, there is already cooperation with Turkey and negotiations with China. Grain grown in Zaporozhye region is of the highest quality. The black soils in the region are of the best quality.

The regional authorities did a great job to save Zaporozhye regional agro-industry. Agro-complex continues to work in spite of bombardment and sanctions. Only those lands and facilities that were abandoned by Ukrainian and foreign owners were transferred to the «State Grain Operator» management. Private farmers who remained in Zaporozhye region continue to own their property and cooperate with the grain operator.

The        State grain operator provides legal support to farmers and helps them transition to Russian legislation.

Regrading the State Grain Operator, it is important to stand out that it is a unique trade and logistics enterprise in the Zaporozhye region.

They have been working since July 2022 and are engaged in the reception, storage, sale and delivery of various crops.

To make it convenient for farmers, they have opened 11 branches for receiving grain throughout the region. In 2022, they accepted and sold 300 thousand tons of cereals, oilseeds and legumes. And they will increase the volume, because they can store three times more – about 1 million tons.

The state grain operator is a full–cycle enterprise. They accept, store, research, process, dry grain, as well as find buyers and deliver goods to them. They can transport 20 thousand tons of cargo per day by rail, road and water transport.

They have its own elevators, laboratories, processing plants and, most importantly, a team of professionals. The company already employs 1300 people! The SGO also has its own fields, which they cultivate on their own.

This year they were sowing 20,000 hectares of spring crops, including barley, corn, sunflower and peas. There are more than 200 units of special equipment in their fleet.

Berdyansk bakery

It is also important to note Berdyansk bakery. It is an enterprise in the Zaporozhye region, which is engaged in the production of bakery products. Branch of the “State Grain Operator”. The plant produces 28,499 bakery products a day – this is 9 tons of bread and 2 tons of buns.

The plant has 2 bread production lines, 10 flour storage silos.

Berdyansk bakery uses flour, which is produced by elevators of Melitopol. Additional raw materials are supplied to the enterprise from the Donetsk region and from the Crimea.

The company operates around the clock in 3 shifts.

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Mending Ties With its Neighboring Republics, Russia Restores Visa-Free Travel for Georgians

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With the evolving multipolar world order and the widening of geopolitical processes, Kremlin administration has continued mending ties with its Soviet neighbours. For instance during the May 9, Victory Day parade held at the Red Square, nine dignitaries in attendance were President of Kazakhstan Kassym-Jomart Tokayev, President of Kyrgyzstan Sadyr Japarov, President of Tajikistan Emomali Rahmon, President of Uzbekistan Shavkat Mirziyoyev, President of Turkmenistan Serdar Berdimuhamedow, President of Belarus Alexander Lukashenko and Prime Minister of Armenia Nikol Pashinyan.

Only two CIS leaders abstained, namely Azerbaijani President Ilham Aliyev and Moldavan President Maia Sandu, which came as no surprise. Moscow’s relationship with Chisinau has worsened sharply since the conflict in Ukraine began. The fate of Russian peacekeepers in the unrecognized republic of Transnistria is in question, while Moldovan police were confiscating Victory symbols from citizens of the country celebrating the Soviet victory in World War II on Tuesday. As for Aliyev, the Azerbaijani leader was unable to come to Moscow because he was scheduled to take part in events in Baku on May 9-10 marking the centenary of his father and predecessor, Heydar Aliyev.

The unexpected presence of such a substantial number of foreign leaders at this year’s Victory Day parade showed that they are seeking to bolster their respective countries’ cooperative ties with Russia, said Dmitry Ofitserov-Belsky, senior researcher at the Russian Academy of Sciences’ Institute of World Economy and International Relations. 

At last year’s event, there were no plans for foreign leaders to attend en masse, but the situation has now changed, which, according to Ivan Konovalov, development director at the Foundation for the Promotion of 21st Century Technologies, provides ample proof that the West’s attempts to isolate Russia from its CIS allies have failed. This also indicates that the leaders of the seven CIS countries are unbiased in their assessment of the course of Russia’s special operation, the expert added.

For the most part, the seven leaders who visited Moscow represent those former Soviet republics whose foreign policy course is not so heavily dominated by a pro-European orientation, and, on the contrary, is more geared toward a pro-Russian or pro-Chinese course, said Alexander Karavayev, a researcher at the Russian Academy of Sciences’ Economics Institute who specializes in the Caucasus region and Central Asia. 

Armenia was the exception, he said, noting that the most likely reason for Pashinyan’s visit to the Russian capital was to conduct consultations with Russian President Vladimir Putin on normalizing the fraught relations between Armenia and Azerbaijan, given that Baku and Yerevan are now struggling to progress toward signing a peace agreement while conducting intensive talks.

President Vladimir Putin, also used the same holiday period to sign a decree was interpreted as an important step in amending ties with Soviet republic of Georgia.  From what we know from the post-Soviet history is that Russia and the Soviet republic of Georgia have had quite a chequered history since 1991, following the collapse of the Soviet empire. It declared independence on April 9, 1991, and has since then been on and off with relations with Russia.

The 2008 Russo-Georgian War was a war between Georgia, on one side, and Russia and the Russian-backed self-proclaimed republics of South Ossetia and Abkhazia, on the other. The war took place in August following a period of worsening relations between Russia and Georgia, both formerly constituent republics of the Soviet Union. 

The worse political period was Georgia under Mikheil Saakashvili. After the Soviet collapse, the deep-seated conflicts in Georgia had remained at a stalemate until 2004, when Mikheil Saakashvili came to power after Georgia’s Rose revolution, which ousted president Eduard Shevardnadze. Restoring South Ossetia and Abkhazia to Georgian control was a first concern of Saakashvili. Besides that, Mikheil Saakashvili’s policies were formulated and directed alongside Western lines which further deepened relations with Russia. Due to political developments under Saakashvili, Russia took several measures to trim down relations, including shutting down movement between Russia and Georgia.

For fear that the United States might continue strengthening its politics in the region, and as feared in Armenia, Kazakhstan et cetera, Kremlin took the initial step by signing  the decree. According to a decree signed by President Putin, beginning on May 15, Georgian citizens can visit Russia for up to 90 days without visas.

“I, hereby, decree that from May 15, 2023, Georgian citizens will be able to enter and exit the Russian Federation without obtaining visas based on current identifying documents, with the exception of citizens entering Russia in order to work or for a period over 90 days for a temporary stay in Russia, including to receive an education,” the document posted to the official website.

Another presidential decree cancels a ban on flights of Russian airlines to Georgia and on selling tours to the country which had been in effect since 2019. The visa regime with Georgia was introduced by a decision of Russian authorities in 2000. That said, Georgia waived the visa requirement for Russians in 2012. According to Georgian legislation, Russian citizens can visit Georgia visa-free and stay there for up to one year. Diplomatic ties between the two countries were severed by Tbilisi in 2008 after Russia recognized the independence of Abkhazia and South Ossetia.

Georgian President Salome Zourabichvili believes that Georgia’s government should make its position clear following the Russian authorities’ decision to resume air traffic with Georgia and lift visa requirements for Georgian citizens. “I propose convening the National Security Council and considering the introduction of visas for Russian citizens for three months, a move that is necessary to us given internal challenges. There is a need for greater control by the state over Russians who arrive in our country. Therefore, it is necessary to take some measures to ensure that all this stays within the normal civilized framework,” Zourabichvili said at a press briefing on May 10.

“Georgia does not need any alleged concessions from Russia,” she said. Zourabichvili believes that the Russian leadership’s decision “runs counter to the interests of Georgia.” Presently, Russian citizens do not need visas to visit Georgia. 

The Russian president’s decree scrapping the visa system for Georgian citizens from May 15, 2023, except for those arriving in Russia for work, was published earlier in the day. Another decree signed by the Russian president lifted restrictions on flights between Russia and Georgia. Direct flights between these two countries were suspended in July 2019.

In his article for the Eurasianet, Giorgi Lomsadze is a journalist based in Tbilisi, wrote that public opinion polls in Georgia indicate that an overwhelming majority of the population supports greater integration with Western institutions, especially the European Union. 

But the eased travel rules seem certain to help Georgian-Russian trade. Georgia has been identified as a key conduit for Russia, which has quickly assembled new supply chains to mitigate the impact of Western sanctions. Bilateral trade volume shot up 22 percent during the year-long period after the start of the war in Ukraine, compared to the same timeframe the preceding year. Georgian imports from Russia are also up sharply.

After the Soviet Union collapsed, Russia’s relations with former Soviet republics has remarkable difficulties due to several factors. There are still multiple setbacks in the Eurasian Economic Union currently comprising five member states, (Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia). Russia, Belarus and Kazakhstan are the founding members of the Eurasian Economic Union. The remaining two states acceded in subsequent enlargements. These former Soviet republics have their sentiments, view points and approach towards Russia which mounted ‘special military operation’ in Ukraine since February 2022.

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Is Russia a Warrior Nation, or is It a Paper Tiger?

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photo:© Vitaly Nevar/TASS

Dragon Ball, the beloved manga by Japanese artist Akira Toriyama, features a type of powerful, violent extraterrestrial beings known as the Saiyans, who are sometimes referred to as “sendou minzoku” in Japanese, a term translated as “warrior nation”. In some Asian countries, particularly in China, to describe Russia. This is, however, far from being an accurate description of Russia. Such perception of Russia is, in fact, shaped by Russian movies, novels, and other cultural influences over time, and it reflects a kind of bottom-up admiration for Russia.

The last two centuries of history reveal that the Russian army does not possess an inherent warrior spirit, nor can it be seen as an unbeatable force. During the Napoleonic Wars of 1812, the Russian army suffered a catastrophic defeat at the hands of the French Grande Armée. It was not the Russian army that ultimately defeated Napoleon, but the harsh Russian winter and logistical problems that ultimately led to the French army’s downfall.  Similarly, in the Crimean War from 1853-1856, Russia struggled with poor military equipment, training, and transportation, ultimately leading to their defeat and the signing of a peace treaty.

During the Russo-Japanese War of 1904, the Russian army achieved victory on land at the Battle of Port Arthur, due to their strong fortifications that inflicted heavy casualties on the Japanese army. However, despite this success, the Russians ultimately lost Port Arthur to the Japanese.

Then in the First World War, the Russian army seized the opportunity to invade East Prussia in the battles of Tannenberg and Masurian Lakes, as the German main force was entrenched on the Western Front. Despite the initial success and heavy casualties inflicted on the German army, the Russian forces were ultimately defeated, resulting in the almost complete annihilation of their army.

Although the Soviet army was the historical successor of the Tsarist army and represented the pinnacle of Russian military might, it was far from an invincible force. In 1941, the Soviet-German War broke out, and in most battles, regardless of victory or defeat, the Soviet army suffered more casualties. The Soviet-German War of 1941 saw the Soviet army sustain heavy casualties in most battles, despite the eventual victory. The Soviet Union’s vast territory and strategic depth, as well as its abundant human resources and Western assistance, played a significant role in its success. Similarly, in the Afghan War of 1979-1989 and the Chechen War of 1994-2000, the Russian army suffered significant losses. In the ongoing war in Ukraine since 2022, the performance of the Russian army speaks for itself. Indeed, an article published in The Economist in April last year carries a blunt title: Russia’s army is in a woeful state.

Russia’s foreign policy has been marked by a display of arrogance and haughtiness, resulting in limited global alliances. Its relationships with countries such as China, India, Vietnam, and North Korea can be regarded as close, yet there are few other major allies. The ongoing conflict in Ukraine has led to severe economic sanctions being imposed on Russia by the United States-led international community, resulting in further isolation of Russia from the world stage.

Russia today bears little resemblance to the Russia of Queen Catherine the Great or the era of Alexander Pushkin, one that was characterized by a noble spirit. From both historical and contemporary perspectives, it is clear that Russia is anything but a “warrior nation”. It is, after all, a nation that appears strong on the outside but weak within.

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