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Full investigation now the only way to clear Trump White House on Russia quid pro quo

The now-famous mural of Donald Trump and Vladimir Putin in Lithuania’s capital city of Vilnius.

With national security advisor Michael Flynn’s resignation and new reporting from The New York Times that Trump campaign officials had repeated contacts with senior Russian intelligence officials, it is time to ask the fundamental question about this administration’s underlying weakness over Russia:

Was there a quid pro quo between the Kremlin and the Trump campaign to help Trump win?

No one wants to believe this, of course, and it is an important moment to give Trump as many benefits of the doubt as possible. It is probably true that Trump would have defeated Hillary Clinton without any Russian cyber-shenanigans (though of course Richard Nixon would have easily defeated George McGovern in 1972 without ordering a break-in at the Watergate Hotel). It is also true that the leaks coming from the intelligence community could represent a serious threat to civil liberties, though it is not clear to me whether this information is coming directly from the intelligence community or secondhand from any number of potential investigations. There are many ‘known unknowns’ here, and there are potentially even more ‘unknown unknowns.’

But here is what we think that we know, as of February 15: Continue reading Full investigation now the only way to clear Trump White House on Russia quid pro quo

Putin wins Russian parliamentary elections despite economic woes

Both Russian president Vladimir Putin and Chechnya's governor Ramzan Kadyrov face "votes" on Sunday. (AFP)
Both Russian president Vladimir Putin and Chechnya’s governor Ramzan Kadyrov won their respective “elections” on Sunday. (AFP)

Earlier this month, voters went to the polls in Belarus to elect the country’s rubber-stamp parliament under its authoritarian leader Alexander Lukashenko and, in what amounts to democratic liberalization, two opposition MPs were elected to the 110-member assembly from the constituency that contains Minsk, the capital.chechnyaRussia Flag Icon

Last weekend, a higher number of opposition MPs were elected to the  state Duma (ду́ма), the lower house of the Russian federal assembly, when Russian voters took to the polls on September 18. Nevertheless, despite the unfair and unfree nature of Russian elections, an electoral rout for president Vladimir Putin’s United Russia (Еди́ная Росси́я) means that Putin will now turn to the presidential election scheduled for 2018 with an even tighter grip on the Duma after United Russia increased its total seats from 238 to 343 in the 450-member body. As predicted, Putin took fewer chances in the September 18 elections after unexpected setbacks in the 2011 elections that saw United Russia’s share of the vote fall below 50% for the first time. 

Moreover, nearly all of the remaining seats were awarded to opposition parties — like Vladimir Zhirinovsky’s Liberal Democratic Party (Политическая партия ЛДПР), Gennady Zyuganov’s Communist Party (Коммунистическая Партия) and Sergey Mironov’s A Just Russia (Справедливая Россия) — that long ago ceased to be anything but plaint, obedient and toothless in the face of Putin’s autocratic rule, whose party logos even mirror those of Putin’s United Russia party. Putin’s liberal opponents, operating under greater constraints than in past elections, failed to win even a single seat to the parliament.

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The drab affair marked a sharp contrast with the 2011 parliamentary elections, the aftermath of which brought accusations of fraud and some of the most serious and widespread anti-government protests across Moscow (and Russia) since the end of the Cold War, prompting demands for greater accountability and democracy. Today, however, though Russia’s economy is flagging under international sanctions and depressed global oil and commodities prices, Putin’s power appears more absolute than ever. He’s expected to win the next presidential election with ease, thereby extending his rule through at least 2024 (when, conceivably, American voters could be choosing the successor to a two-term administration headed by either Hillary Clinton or Donald Trump). 

Moreover, more than 18 months after opposition figure Boris Nemtsov was murdered just footsteps from the Kremlin, perhaps the most telling statistic was the drop in turnout — from around 60% in the 2011 parliamentary elections to just under 48% this year. That’s the lowest in a decade, even as reports emerged of ballot-stuffing and other dirty tricks that may have artificially boosted support for Putin’s United Russia. Turnout in Moscow and St. Petersburg, where opposition voices have traditionally been loudest, fell even more precipitously to well below 30%. Though the low turnout might have boosted the share of support that Putin and his allies won, it’s also the clearest sign of growing disenchantment with Putin’s regime and its record on the economy (which contracted by nearly 4% last year, and is expected to contract further in 2016) and on civil and political rights. Corruption, as usual, remains rampant, even if oligarchs no longer dominate the Russian economy as they did in the 1990s. 

Perhaps the most well-known opposition leader today, Alexei Navalny, a blogger who was at the heart of the 2011 protests, has been notably quiet (with his own ‘Progress Party’ banned from the election), though he is expected to contest the 2018 presidential vote — at least, if he’s not banned or imprisoned.

As a depressed number of Russian voters cast ballots in Sunday's parliamentary vote, president Vladimir Putin seems to have the upper hand in the cat-and-mouse game with Russia's long-suffering liberal opposition. (TASS)
As a depressed number of Russian voters cast ballots in Sunday’s parliamentary vote, president Vladimir Putin seems to have the upper hand in the cat-and-mouse game with Russia’s long-suffering liberal opposition. (TASS)

Notably, it was the first election since 2003 in which half (225) of the Duma’s seats were determined in single-member constituencies, with the other half determined by party-list proportional representation as in recent elections. Though United Russia won just 140 of the 225 proportional seats, it took 203 of the single-member constituency seats, which undoubtedly contributed to its 105-deputy gain on Sunday. One such new United Russia deputy is Vitaly Milonov, a St. Petersburg native who has battled against LGBT rights for years, including a fight to introduce a law in the local city parliament in St. Petersburg banning so-called ‘gay propaganda.’ (For what it’s worth, Russian authorities today censored one of the most popular gay news websites in the country).

For the Kremlin, though there’s some risk that the new constituency-elected deputies could be more independent-minded than party-list deputies, it’s a risk balanced by the massive supermajority that Putin now commands in the Duma.

Conceivably, as Moscow’s economic woes grow, there’s nothing to stop Putin and his allies from moving the scheduled presidential election to 2017 — and there are signs that Putin plans to do exactly that. (The weekend’s parliamentary elections were moved forward to September from an earlier plan to hold them in December, scrambling opposition efforts).

The elections came just a month after Putin replaced a longtime ally, Sergei Ivanov, as his chief of staff, a sign that the Kremlin is already looking beyond the next presidential race to what would be Putin’s fourth term in office (not counting the additional period from 2008 to 2012 when Putin’s trusted ally Dmitri Medvedev served as president, with Putin essentially running the country as prime minister).

Anti-gay crusader Vitaly Milonov won a member constituency race in St. Petersburg. (RIA)
Anti-gay crusader Vitaly Milonov won a member constituency race in St. Petersburg. (RIA)

For Putin, the flawed parliamentary vote also comes at a crucial time for Russia’s role in the international order. Increasingly at odds with NATO, Putin thumbed his nose at American and European officials when he annexed Crimea from Ukraine in 2014, then helped instigate a civil war in eastern Ukraine that continues even today. Increasingly, Putin believes that Russia has a geopolitical responsibility to all Russian-speaking people, even those outside Russia’s borders, complicating relations with several former Soviet states. Putin has also stepped up Russian military assistance to Syrian president Bashar al-Assad, providing crucial support against Sunni-dominated militias in Aleppo and elsewhere — even as Russian and U.S. officials try to extend a ceasefire in the country’s now five-year civil war.

Moreover, though the Russian parliamentary elections are hardly front-page international news, the results are relevant to the 2016 US presidential election, in which Russian influence and cyberattacks have played a prominent role. As Republican nominee Donald Trump continues to praise Putin as a ‘strong leader,’ it’s important to note that Putin’s strength comes in large part from a brutal disregard for the rule of law and the liberal and democratic values that have, for over two centuries, been a fundamental bedrock of American politics and governance. To the extent that the next president of the United States has to deal with Putin’s ‘strength,’ it will be derived in part from a parliamentary victory yesterday that bears no resemblance to the kind of democracy practiced in the United States today, but through a mix of authoritarian force and coercion.  Continue reading Putin wins Russian parliamentary elections despite economic woes

Obama’s top two foreign rivals could be vanquished in one week

putinnetanyahuPhoto credit to Kobi Gideon / GPO / Flash90.

It’s still irresponsible chatter to suggest that Russian president Vladimir Putin’s nine-day absence from public view is anything more serious than the flu.USflagRussia Flag IconISrel Flag Icon

But as Julia Ioffe wrote Saturday in The Washington Post, even if Putin’s absence is, as very likely, caused by something as mundane as the influenza epidemic currently sweeping through Moscow, it is becoming a more serious event because of the highly personalized system of Russian government where everything has become so micromanaged by Putin and his close allies. The longer Putin’s absence, the greater the chances of an internal coup or putsch, perhaps by the internal security forces, the siloviki, upon whose support Putin rose to power in the 2000s:

You can see why some in Russia are panicking right now—or veiling their discomfort in humor. It certainly doesn’t help that Putin’s disappearance comes at a particularly nervous time for the country. It is at war in Ukraine, its economy is shuddering under sanctions and historically low oil prices, and the opposition leader, Boris Nemtsov, was recently gunned down steps from the Kremlin. There is a sense in Moscow that the wheels are coming off. To Moscow’s chattering class, Putin’s disappearance confirms that impression.

Meanwhile, on Tuesday, in national elections, Israeli prime minister Benjamin Netanyahu’s center-right Likud (הַלִּכּוּד) is set to win fewer seats in Israel’s parliament, the Knesset (הכנסת) than the center-left Zionist Union (המחנה הציוני‎) of Labor Party leader Isaac Herzog and former justice minister Tzipi Livni. Though it’s too soon to write off a third consecutive mandate for Netanyahu, the March 17 vote is the toughest electoral fight for Netanyahu since he lost his first bid for reelection in 2001.

Even if Israeli president Reuven Rivlin, a former Likud speaker in the Knesset, convinces Likud and the Zionist Union to form a national unity coalition, polls show that Herzog, and not Netanyahu, would become prime minister. That would place deadening pressure on Netanyahu’s leadership of Likud, where capable replacements, such as former interior minister Gideon Sa’ar, are waiting in the wings.

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Remarkably, that means that US president Barack Obama’s two most nettlesome rivals in international affairs could be sidelined in the course of the same week — or even the same day. Continue reading Obama’s top two foreign rivals could be vanquished in one week

Why the West shouldn’t root for Russia’s rouble freefall

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It might be tempting today for policymakers in Berlin, Washington, Brussels and London to have a moment of schadenfreude at the Russian currency crisis, which seems to deepen by the hour.Russia Flag Icon

But as Russia’s economy significantly weakens, those same officials might regret their glee if it causes Russian president Vladimir Putin to double down on the nationalist rhetoric and geopolitical aggression that’s characterized his third term in office. The Guardian‘s Larry Elliott declared that with today’s collapse, the West has won its ‘economic war’ with Russia and otherwise christened it ‘Russia’s Norman Lamont moment,’ a reference to the British pound’s collapse in 1992:

Back in September 1992, the then chancellor said he would defend the pound and keep Britain in the exchange rate mechanism by raising official borrowing costs to 15%, even though the economy was in deep trouble at the time.

European and US governments slapped economic sanctions against several top Russian officials earlier this year, largely in retaliation for Russia’s annexation of the Crimean peninsula in March and the Kremlin’s continued role supporting separatists in eastern Ukraine. Even today, US president Barack Obama indicated that he would support even more economic sanctions against Russian weapons producers and other companies tied to the Russian defense industry after the US Congress overwhelmingly passed a new anti-Russia bill with bipartisan support.

The last Russian financial crisis in 1998 coincided with slowdowns across the developing world, an ominous sign for the struggling Brazilian, Indian and Chinese economies. It may have even precipitated the 1998-99 Asian currency crisis.

Much of Putin’s support in the last decade and in his first stint as president from 2000 to 2008 rested on the economy’s strong performance. After the embarrassing and impoverishing experience of the Soviet Union’s collapse, the Putin era brought an end to the grinding poverty that characterized the presidency of his predecessor, Boris Yeltsin. Buoyed by rising demand for Russian oil and gas, Putin presided over a boom in the mid-2000s that materially raised incomes across Russia, especially in cities like Moscow and Saint Petersburg.

That continued even through the presidency of Dmitry Medvedev, when Putin, barred from a third consecutive term, instead served as prime minister. But since returning to the Kremlin in 2012, Putin has faced an increasingly precarious economy, and as Max Fisher and other commentators have convincingly argued, the political basis for Putin’s government has shifted from economic grounds to increasingly nationalist and populist rhetoric. That explains the Kremlin’s machinations in Ukraine and its growing political standoff with Europe and the United States, a stand that’s boosted Putin’s previously flagging approval ratings.

If that’s true, though, the risk of Russian aggression is actually rising as its economy deteriorates. There are now several potential catalysts — the currency crisis could easily engender a wider economic recession, oil prices might continue their drop, or the United States and Europe could implement deeper sanctions. In such case, Russian president Vladimir Putin may respond by intensifying his saber-rattling against not only Ukraine, but the Baltic states, southern Europe, Moldova and Kazakhstan, to say nothing of Belarus, Georgia or elsewhere. Continue reading Why the West shouldn’t root for Russia’s rouble freefall

All you wanted to know about Ukraine’s Donbass region

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For the second time in as many months, Ukraine’s crisis threatens to spiral out of control, with the Ukrainian military now trying (mostly in vain) to secure several cities in the Russian-speaking east from a band of pro-Russian separatists. Russia Flag IconUkraine Flag Icon

Just over a month ago, Russia annexed Crimea, the peninsula region in the south of Ukraine with an overwhelmingly large Russian ethnic population. For all the bluster between Washington and Moscow, you’d have thought that Crimea was as important to the international world order in 2014 as Cuba was in 1963 or Hungary was in 1956.

But the world largely seemed to accept Russia’s annexation of a region that was, after all, part of Russia until 1954. Yesterday in Geneva, after as the United States, Russia, Ukraine and the European Union reached a somewhat thin agreement to reduce the current tension in eastern Ukraine, US secretary of state John Kerry tersely declared, ‘we didn’t come here to talk about Crimea.’

So what’s so different now? Will the latest framework, agreed just on Thursday, succeed? Was Crimea just a warmup act for a larger Russian annexation?

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RELATED: Why more protests won’t solve Ukraine’s political crisis — and why the Orange Revolution didn’t either
RELATED: What comes next for Ukraine following Yanukovych’s ouster

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Not to worry. Here’s everything (and more) you probably ever wanted to know about the Donbass, the eastern-most region of Ukraine that’s now center-stage in the latest round of the fake Cold War.

What is the Donbass?

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The Donbass — or the Donbas (It’s Донбас in Ukrainian, Донбасс in Russian, and if we’ve learned anything about linguocultural conflict, it that language matters a lot) gets its name from the Donets Basin, which is the coal-mining, heavy-industry heart of eastern Ukraine. As a formal matter, the Donbass includes just the northern and center of Donetsk oblast (an oblast is Ukraine’s version of a state), the south of Luhansk oblast, and a very small eastern part of Dnipropetrovsk oblast.  Continue reading All you wanted to know about Ukraine’s Donbass region

Gerhard Schröder: a wasted opportunity in the Ukraine crisis

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If there’s anyone the European Union could have sent to Moscow on a quiet trip to de-escalate tensions with Russia in February, it was former German chancellor Gerhard Schröder.Germany Flag IconRussia Flag Icon

Schröder served as Germany’s chancellor between 1998 and 2005, when he led two consecutive governments led by his center-left Sozialdemokratische Partei Deutschlands (SPD, Social Democratic Party).  As chancellor, Schröder cultivated strong economic ties with Russia, and in 2003, he led Europe’s opposition to he US invasion of Iraq, a cause that also found Schröder in alliance with Russia and its president Vladimir Putin, who Schröder once called a ‘flawless democrat.’

But Schröder’s comments about the growing crisis have been far from discreet, greatly angering his successor, Angela Merkel. He has criticized the European Union’s approach to Ukraine, defended Russia’s right to annex Crimea, and validated Putin’s view that the NATO military action during the 1999 Kosovo War (an action Schröder supported in his first term as chancellor):

Mr. Schroeder told a discussion forum hosted by Germany’s Die Zeit newspaper that as someone who was aware of history, Mr Putin had certain justifiable “ fears about being encircled” and that since the end of the Cold War there had been “ unhappy developments” on the fringes of what was once the Soviet Union. He also claimed that the European Union appeared not to have “the remotest idea” that the Ukraine was “culturally divided” and had made mistakes from the outset in its attempts to reach an association agreement with the country.

Mr. Schroeder accepted that Russia’s intervention was in breach of international law but compared the Kremlin’s action to his own government’s military support for the NATO bombardment of Serbia during the Kosovo crisis in 1999. “We sent our plans to Serbia and together with the rest of NATO they bombed a sovereign state without any UN security council backing,” Mr Schroeder insisted, adding that he had since become cautious in apportioning blame.

That puts his position almost entirely in line with Putin’s — and almost entirely at odds with the German government’s. Needless to say, that has also ruined whatever value Schröder may have had in soothing German and European relations with Russia.  Continue reading Gerhard Schröder: a wasted opportunity in the Ukraine crisis

Pre-Sochi required reading list: McFaul’s foibles and Putin’s Olympics

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If you read nothing else before the opening ceremony of the 2014 Winter Olympics in Sochi, you could do much worse than these two brilliant pieces in Foreign Policy and Politico Magazine that explain in majestic scale the state of Russia today and the nature of US-Russian relations in the 2010s, even as journalists started arriving in Sochi earlier this week and reporting the (sometimes humorous) problems with infrastructure. USflagRussia Flag Icon

The first is a profile of Michael McFaul (pictured below), the US ambassador to Russia, who announced earlier this week that he will step down following the Winter Games in Sochi, after just two years as the US envoy to Moscow.  Just the second non-career diplomat in US history to hold the post, Michael Weiss writes in Foreign Policy about both McFaul’s successes and failures, but especially McFaul’s failures, evident from the first sentence:

The Kremlin, for instance, will be sad to see the nicest, most eager-to-please man to ever inhabit Spaso House quit the joint after only two years of floundering and squirming under the Kremlin’s systematic, Vienna Convention-violating sadism.

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McFaul (pictured above with Obama), a  professor of political science at Stanford University, previously served as US president Barack Obama’s special assistant and senior director of Russian and Eurasian affairs.  The ‘reset’ concept with Russia at the beginning of the Obama administration was McFaul’s brainchild — though the US secretary of state at the time Hillary Clinton, memorably presented her Russian counterpart with a reset button inscribed with the word peregruzka (‘overload’) instead of perezagruzka (‘reset’).  But it’s important to remember that McFaul was also instrumental in the successful negotiations to enact deeper nuclear non-proliferation through the New START treaty with Russia enacted in May 2010.

Weiss’s piece makes clear just how difficult it was for McFaul to adjust between ‘advocate’ mode and ‘diplomat’ mode, and most of the major ‘gaffes’ of McFaul’s tenure relate to the gap between advocate and diplomat — over-reliance on social media; meeting with a wide group of the Kremlin’s political opponents for his first official meeting; dissembling over the Magnitsky Act (which ties US-Russian trade to human rights abuses) and encouraging Russia’s accession to the World Trade Organization; or even the time he tweeted about ‘Yoburg’ (which translates to ‘Fuckville’ in Russian) instead of ‘Yeakaterinburg.’

McFaul had a style that was hard to account for or justify, as when he admitted, by way of an apology, that he was “not a professional diplomat.” This, too, had the merit of being true; but what, it prompted many to wonder, was he doing in the most difficult diplomatic posting on the planet advertising as much?

Though John Beyrle, the career diplomat who served as ambassador between 2008 and 2011, would not have made those same mistakes, he also wouldn’t have tweeted a message of support (‘I’m watching.’) to opposition figure Alexei Navalny last summer during a politically-motivated trial on trumped-up charges.  Part of the charge against McFaul is that he didn’t follow the rulebook of international diplomacy, but that runs both ways — one man’s diplomatic faux pas is another man’s bravery.  If, a decade from now, we look back at the August 2013 confrontation with Syria as the start of a successful model for US-Russian cooperation, the Obama-McFaul reputation on Russian relations will look drastically better  (of course, that depends mostly on the cooperation of Syrian president Bashar al-Assad in dismounting his chemical weapons program and the ability of the OPCW and UN personnel to evacuate them from a country in the midst of a civil war).

Ultimately, though, the McFaul tenure coincides with what seems today like a stark deterioration in bilateral relations, even from the headier days of 2009 and 2010.  Here’s the devastating kicker:

Unfortunately, he’s leaving with the Russian media portraying America as a country that tortures orphans to death, brainwashes children into becoming homosexuals, supports al Qaeda terrorists in the Middle East, eggs on neo-Nazis to overthrow the government of Ukraine, and otherwise behaves as both a bumbling colossus and a serially defrauded and discombobulated mug in world affairs.

The second piece you should read is Leon Aron’s piece in Politico Magazine explaining how the Winter Games initially came to Sochi (partly a rare English-language speech from Putin to the International Olympic Committee in 2007):

But it mostly explains why, at a price tag of between $50 billion and $55 billion, they’re the most staggeringly expensive Olympics ever (more than even Beijing’s 2008 Summer Games and more than all previous Winter Games in Olympic history):  Continue reading Pre-Sochi required reading list: McFaul’s foibles and Putin’s Olympics

Putin ally Sobyanin holds on for full term as Moscow mayor in race against Navalny

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In case you missed it (and there’s much more important news coming from Russia this week), Moscow mayor Sergei Sobyanin has won reelection heartily in what will be the biggest election this year in Russia.MoscowRussia Flag Icon

But don’t get your hopes up — Sobyanin’s reelection has long been certain since announcing what amounts to snap election earlier this summer.

Sobyanin, Moscow’s acting mayor since 2010 and formerly Russian president Vladimir Putin’s chief of staff, easily defeated opposition activist Alexei Navalny by a margin of 51.37% to 27.24%, just enough to avoid a runoff between the two candidates.

Sobyanin, who is Siberian (so not a native Muscovite), replaced longtime Moscow mayor Yuri Luzhkov, who was fired by then-president Dmitry Medvedev in October 2010.  Sobyanin has demonstrated more energy as Moscow’s new mayor, and many Muscovites compare him to Luzhkov in his first years as mayor in the early 1990s — Sobyanin has worked to install bike lanes, develop parks and reduce traffic congestion within Moscow.

So even while Navalny demands a recount of the vote (and it’s suspicious that Sobyanin won 1.37% more than he needed to avoid a direct runoff with Navalny), there’s a credible basis to the notion that Sobyanin commands the support of a majority of Muscovite voters.  Though there’s not much evidence of fraud in an election that had elements of competitiveness, Sobyanin’s campaign controlled the state media and used other advantages to enhance benefits of incumbency.

That hasn’t stopped Navalny, who is already demanding a runoff on the basis of alternative surveys of Sunday’s vote:

Exit polls conducted by the opposition leader’s campaign office suggest that Navalny has claimed 35.6 per cent of the vote, with Sobyanin receiving 46 percent. The opposition candidate announced that there will be a second round of voting in the mayoral election. He vowed to call on his supporters “to take to the streets” if it does not take place.

What’s most striking is that Navalny did so well — the 37-year-old blogger and anti-corruption crusader started off the race as an asterisk.  When the race began in June, Navalny was polling less than 10% in surveys, but that was before the Russian government harassed Navalny in myriad ways, most notably through a conviction of embezzlement on charges that Navalny stole around $500,000 out of a timber company in Kirov.  As a popular uproar against Putin surged in protest of what many Russian believe was a politically motivated trial, the government provisionally released Navalny, allowing him to continue his campaign.  But Navalny faces imprisonment if his conviction isn’t overturned, which could sideline him in Russia’s next legislative elections for the State Duma (Госуда́рственная ду́ма) in 2016 or even the next presidential race in early 2018.  Continue reading Putin ally Sobyanin holds on for full term as Moscow mayor in race against Navalny

Opposition critic Navalny’s conviction, in Putin’s Russia, is a badge of authenticity

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So right on time, the Russian government has engineered a conviction of Alexei Navalny, the outspoken critic of Russian president Vladimir Putin.Russia Flag Icon

His conviction stems from a truly bizarre accusation that he embezzled around $500,000 out of a timber company in Kirov, an industrial town hundred of miles northeast of Moscow, and all signs indicate that the conviction is politically motivated to remove Navalny as a Putin critic whose following is growing — and his conviction is likely to only enhance his attraction.

Navalny now faces five years in Russian prison far away from Moscow, where Navalny was running to contest the mayoral election on September 8, an election that’s now even more likely to be won by incumbent Sergei Sobyanin, a Putin ally who took power after former mayor Yuri Luzhkov was pushed out of office by then-president Dmitry Medvedev in 2010.  The election’s sudden timing effectively prohibited prominent billionaire Mikhail Prokhorov from arranging his complex international finances in order to contest the race, leaving Navalny as the leading prominent challenger.

Prokhorov, who owns the New Jersey Nets, and who waged a presidential campaign in March 2012, has shown that his opposition is a much more delicate dance with the Kremlin than Navalny, who led full-throated protests in Moscow protesting the presidential vote and credible allegations of fraud in the December 2011 elections to the ду́ма (Duma), Russia’s lower legislative chamber.  In contrast to Navalny’s sledgehammer opposition, Prokhorov has been more hesitant to cross Putin and Putin’s allies, and it was even speculated last year that Prokhorov’s opposition was entirely manufactured by Putin’s allies.  That’s probably not true — after all, Prokhorov, as a good businessman, has much more to lose from a full-throated attack on the Kremlin than Navalny — and he’s forged links with other credible opposition figures like former Russian finance minister Alexei Kudrin.

Navalny had become such a radioactive political figure in recent days that Prokhorov even refused to back Navalny in the Moscow mayoral race, instead endorsing Sergey Troitsky, the lead singer of a Russian heavy metal band, ‘Corrossive Metal,’ and who is most well-known by his stage name, Pauk, which means ‘spider’ in Russian.

But Navalny’s conviction today means that he’s likely to leapfrog the tentative Prokhorov and other anti-Putin activists as the central figure of the Russian opposition.  Russian prisons are notoriously brutal places, rife with violence and diseases, including drug-resistant tuberculosis, and Navalny faces some amount of peril in the years ahead.  Navalny’s conviction is already drawing international condemnation, and Putin will now have succeeded in elevating a one-time gadfly into a political figure empowered with the authenticity of someone who’s willing to face down Russia’s horrible prisons as the price of speaking out against Putin.

Navalny tweeted and blogged to his supporters, encouraging them to keep up his fight against Putin’s dominant Еди́ная Росси́я (United Russia) party, which he famously referred to as a ‘party of crooks and thieves.’

After the verdict, Navalny tweeted: “So that’s it. Don’t get bored without me. Most importantly, don’t sit around doing nothing. The toad won’t get off the oil pipe by itself.”

In his LiveJournal blog on Wednesday Navalny said: “The current authorities are not a big, healthy fish, but rather a bloated fish or Latin American toad, which puffs itself up when it sees danger, with the help of television.”

Utlimately, Navalny’s trial and conviction are another indication that the Putin administration intends on being as fully authoritarian as it needs to be to hold onto power, in the same way that prominent opposition leader and former prime minister Yulia Tymoshenko remained — and still remains — in prison over politically motivated charges in neighboring Ukraine during last October’s parliamentary elections.

But Putin, in attempting to silence a 21st century critic with ham-fisted 20th century methods, risks that his strategy will backfire by bringing Navalny even more notoriety and credibility.  Just witness the international attention that the politically motivated trials against oligarch Mikhail Khodorkovsky commanded, the sudden 2006 murder of prominent anti-Putin journalist Anna Politkovskayaor even the suspicions of foul play in the apparent suicide earlier this year of exiled oligarch Boris Berezovsky in London.

Continue reading Opposition critic Navalny’s conviction, in Putin’s Russia, is a badge of authenticity

Putin ally Sobyanin maneuvers to hold onto power in Moscow in snap September election

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Though it’s sometimes easy to forget in the post-Cold War era, Moscow is still the most populous city in Europe and one of the five most populous cities in the world — it not only Russia’s capital, but Russia’s central city for power, politics and finance. Russia Flag IconMoscow

That makes the city’s mayor one of the most powerful official in the entire Russian federation and, with snap elections due for Moscow’s mayor in September, it gives some of the most unpredictable voters in Russia the opportunity to make a rare popular statement with five years to go until another presidential election, despite fears that the vote may be titled in favor of the incumbent mayor, an ally of Russian president Vladimir Putin.

Earlier in June, Moscow’s current mayor Sergei Sobyanin announced his resignation, despite the fact that his term runs through 2014, setting up snap elections for September 8 that seem increasingly likely to be an easy victory for Sobyanin as his most viable rivals have either stepped aside or face an uphill challenge even making it to the ballot.  Critics immediately called Sobyanin’s resignation and the early elections a ruse to avoid real competition, thereby cementing control over Russia’s largest city within Putin’s grasp.

Elections for Moscow’s mayor are themselves a new phenomenon, given that then-president Dmitry Medvedev and the Russian Duma only reintroduced direct elections for governors and other positions last year, after president Vladimir Putin suspended gubernatorial elections in 2004 on the somewhat dubious rationale of national security and anti-terror efforts.  Under the new direct elections law, however, new hurdles have been introduced that require candidates to have the support of other lawmakers in the region.  Given that Putin’s United Russia (Еди́ная Росси́я) is by far the dominant political party in Russia, that means Putin will continue to have at least some influence on gubernatorial and local elections.

Moreover, earlier this year, Putin pushed through another law allowing regions to avoid direct elections through an alternative process whereby each party in a regional legislature submits three candidates to the Russian president, the Russian president chooses three finalists, and the regional legislature elects a governor from among the three finalists. (You can’t make this up!)

The man who was most widely anticipated to challenge Sobyanin — former presidential candidate and billionaire Mikhail Prokhorov — opted out of the mayoral race in mid-June when it was clear that he would not be able to meet the legal requirements in time for the snap race.  Prokhorov, who formed Civic Platform (Гражданская Платформа), a liberal political party in June 2012 in the wake of his relatively successful presidential race.  But Prokhorov, who is the owner of the New Jersey Nets professional basketball team in the United States, would have run afoul of requirements that require his assets to be repatriated prior to serving as Moscow’s mayor. Continue reading Putin ally Sobyanin maneuvers to hold onto power in Moscow in snap September election

Cypriot-‘troika’ deal means that Cyprus is leaving eurozone in all but name

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Another late Sunday night in Brussels, another eurozone bailout plan for Cyprus — and it seems likely that the new deal between Cyprus president Nicos Anastasiades, and the ‘troika’ of the European Commission, the European Central Bank and the International Monetary Fund will endure much longer than last week’s disastrous plan, though capital controls to be implemented by the Republic of Cyprus’s government seem likely to lead to a backdoor eurozone exit for the nation of 1.15 million people.
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The Cypriot-troika deal in brief

The deal will shield depositors with under €100,000 in savings from a ‘haircut’ levy, but depositors with funds over €100,000 now face an even more painful result –what amounts to a haircut for depositors and creditors alike at the troubled Bank of Cyprus (the largest Cypriot bank), and an even deeper haircut for Laiki’s depositors and creditors, who will take huge losses as Laiki is wound down.  Laiki (also known as the Cyprus Popular Bank, the country’s second-largest bank) will be split into a ‘bad bank’ and a ‘good bank,’ the latter to be folded into the Bank of Cyprus.

All creditors at the Bank of Cyprus will see their interests restructured into a long-term equity interest and uninsured depositors will take an expected haircut of around 35% or 40%, with their deposits also held up for some time to come.

All the same, as Joseph Cotterill at FT Alphaville writes, the deal is better on two counts:

But there were two major injustices in the first Cyprus-Troika deal which made a mockery of the bail-in principle. Without debate, and upfront, it “taxed” depositors below the insured €100k limit alongside the uninsured. Then the tax was applied to either irrespective of bank. Why should small depositors in Barclays Nicosia or VTB Limassol take pain off large ones in Laiki or BoC, for instance. Well, finally, now we know. They shouldn’t have. The two unjust parts are gone.

Bonus points, I guess (if you’re a eurocrat), for structuring the deal in such a way that it can be implemented directly under Cyprus’s banking authority, so no need for another vote from the Cypriot parliament, which overwhelmingly rejected last week’s plan.  That plan featured a 6.75% levy on all depositors with savings under €100,000 in any Cypriot bank.  The parliamentary run-around, however, will only fuel the ‘democratic deficit’ hand-wringers throughout the European Union and breed resentment inside Cyprus and beyond.

The worst of the Irish and Icelandic precedents

Though the deal is ostensibly narrowed to focus on Cyprus’s two largest banks, and it’s better than last week’s plan, the deal essentially features the worst elements of the Irish and Icelandic examples.

Like Iceland, some of the Cypriot banking sector will be allowed to fail — Laiki’s uninsured depositors are out of luck, no matter whether they are Russian or Cypriot or whatever.  That’s exactly how Iceland approached its banking sector failure.

But unlike Iceland, Cyprus does not control its own monetary policy, so it won’t be able to devalue its currency and take the kind of independent monetary policy steps to rebalance its economy in the way that Iceland has.  Though Iceland is no longer the financial center it was before 2008, it has returned to GDP growth (around 3% in 2011 and 2.5% in 2012) and features relatively low unemployment — just 5.3% as of November 2012.  In contrast, Cyprus remains trapped in the ECB monetary policy straitjacket.

But like Ireland, the rest of the Cypriot banking sector will be essentially nationalized by the Cypriot government, with a European bailout that is likely to require additional bailout assistance and will come with increasingly stringent austerity measures that Cyprus’s government will be forced to take that will invariably depress its own GDP growth.  No one’s optimistic about Cyprus — it seems fated to suffer a fierce GDP contraction and a massive uptick in unemployment, joining Greece and Spain as one of the eurozone’s most troubled economies, no thanks to the Eurogroup’s clumsy policymaking.

Self-inflicted wounds to the European project

It’s worth repeating that the damage from the first Cyprus plan remains and cannot easily be reversed — Cyprus’s banking sector has now been decimated, probably permanently.  As one unsentimental Moscow economist put it, Cyprus’s beaches-and-banks economy is now just beaches.  The best hope for Cyprus’s economy is the rapid development of natural gas deposits that could bost its economy back after what will likely be a double-digit recession. But the ultimate scope and richness of those deposits are still unknown, and there’s no assurance that natural gas will be the country’s economic savior.

Brussels has so thoroughly undermined Anastasiades that he allegedly threatened to resign Sunday at one point, so it’s not clear how much legitimacy he’ll have in the next four years and 49 weeks of his five-year term, especially given that his own center-right party Democratic Rally (DISY, Δημοκρατικός Συναγερμός or Dimokratikós Sinayermós) controls just 20 of the 56 seats in the Cypriot House of Representatives (Βουλή των Αντιπροσώπων).

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In addition to the obvious ammunition that eurozone leaders have handed to euroskeptics, no one in Spain or Italy or Slovakia or Latvia should be feeling very good these days about keeping their money in national banks, deposit insurance or not.  Already today, Jeroen Dijsselbloem, the newly elected president of the Eurogroup of eurozone finance ministers (pictured above with IMF managing director Christine Lagarde), has released a statement walking back earlier comments that appeared to hail the Cypriot bailout as a precedent for future deals.

It’s been a horrible start for Dijsselbloem, who succeeded Luxembourg prime minister Jean-Claude Juncker — Juncker has already (very gingerly) criticized the Eurogroup’s post-Juncker approach to Cyprus, and it’s hard to believe that Juncker would have made some of the more glaring errors that  Dijsselbloem has made — unlike Juncker, who was Luxembourg’s finance minister from 1989 to 2009 and has been prime minister since 1995, Dijsselbloem has served as the Dutch finance minister for barely over four months. It’s starting to look like the decision to appoint Dijsselbloem as a sort of compromise Eurogroup president (he’s a pro-growth member of the Dutch Labor Party who’s implementing an austerity regime in an otherwise budget-cutting government led by center-right prime minister Mark Rutte) may have been a poor one.

Capital controls are a backdoor Cypriot eurozone exit 

While it’s far from an original observation — more sophisticated financial commentators and economists have made the same point — the biggest takeaway from the weekend is that Cyprus has essentially been booted out of the eurozone, in large part due to the capitol controls that Cyprus looks set to enact tomorrow when banks in the country reopen — here’s a short summary of the menu of options from Yiannis Mouzakis, based on the capital control bill that Cyprus’s parliament passed over the weekend.  There’s optimism that the controls will be ‘very temporary,’ and will be somewhat lighter than originally feared, but it’s worth noting that Iceland’s controls are still in place even today, over four years after their imposition in late 2008.

The inescapable conclusion is that a ‘Cypriot euro’ is no longer the same thing as a euro throughout the rest of the eurozone.

As former banker Frances Coppola wrote over the weekend, the imposition of capital controls transforms Cyprus into something far short of an equal member of the eurozone:

Once full capital controls are imposed, a Euro in Cyprus will no longer be the same as a Euro anywhere else in the Euro area. It cannot leave the island. The Cyprus Euro will in effect be a new domestic currency. The imposition of capital controls in Cyprus is therefore the end of the single currency in its present form.  Continue reading Cypriot-‘troika’ deal means that Cyprus is leaving eurozone in all but name

Putin inaugurated for third term, announces Medvedev as PM, amid Moscow protests

Vladimir Putin was sworn in as president today, amid protests across Moscow, following his election on March 4 in a vote widely seen as problematic and fraudulent.

Putin, whose term will run through 2018, also appointed former president Dmitri Medvedev as his prime minister — the appointment had been expected, but was not entirely certain.  Medvedev served as prime minister previously under Putin until his election in 2008 as president.  Putin, in turn, had served as prime minister during the entirety of Medvedev’s presidency.

Perhaps the more important story, however, are ongoing protests in Moscow, which flared over the weekend and drew tens of thousands in protest of Putin’s inauguration:

A number of demonstrators were injured by riot police, who wielded batons in clearing crowds from Bolotnaya Ploshchad, the site of a planned opposition rally Sunday evening to protest Monday’s presidential inauguration. Seventeen people requested medical care for injuries sustained during the event, a hospital source told Interfax.  Around 450 protesters and opposition leaders Alexei Navalny and Sergei Udaltsov were arrested, police said….

Despite the event’s ambitious name, “March of Millions,” organizers did not expect Sunday’s event to draw the estimated tens of thousands who attended.  City Hall had given advance approval for 5,000 participants to take part in the march  and rally.

Protestors came out in force after last December’s blatantly fraudulent parliamentary elections, as well as in the days leading up to and immediately following the March 4 presidential vote, although a show of force on the streets of Moscow on March 5 had appeared to stall the momentum from any such protests — until this weekend.

Ironically, as police were clashing with protestors who were demanding a more democratic Russia, Putin promised in his short inauguration speech to ‘strengthen Russian democracy.’

 

Next steps for the Russian opposition?

 

In the wake of Vladimir Putin’s outsized 64% win in the first round of the Russian presidential election earlier this month, the initial protests against likely fraud — and fraud in December’s legislative elections — have fizzled as Putin and the Russian government quickly made clear they had little appetite for too much protest, deploying a near-military police presence throughout Moscow.

In the subsequent weeks, however, third-place finisher billionaire Mikhail Prokhorov (pictured above, middle) has made good on his promise to keep up the pressure for a more democratic Russia — and appears to be teaming with former Russian finance minister Alexei Kudrin (pictured above, at top) in that effort, leading some amount of credibility to his efforts.

Prokhorov’s campaign was greeted with a healthy amount of skepticism; Prokhorov had previously been on fairly good terms with the Kremlin and his was one of very few candidacies permitted to proceed (unlike longtime liberal reformer Grigory Yavlinksy, who was alleged not to have gathered up enough signatures in the runup to the presidential vote).  Since the election, Prokhorov has also ruled out serving in any future Putin cabinet as well.

Kudrin resigned as finance minister last September over a fight with President Dmitry Medvedev over budget issues, having previously served in the role since 2000.  Kudrin presided over the economic boom that lifted Russia out of the dire economic conditions of the 1990s.  Indeed, notwithstanding the turbulence of the financial crisis in 2008 and onwards, Russia today remains in much better economic condition than in the 1990s in no small part due to Kudrin’s stewardship.  In his 11 years as finance minister, Kudrin prioritized the repayment of Russian’s significant foreign debt accumulated in the 1990s and steered wealth from the oil boom of the mid-2000s into a stabilization fund for Russia.  At a time when Russia became politically more ostracized from the United States and Europe, and as the Putin-Medvedev regime became disturbingly less tolerant of dissent and less respectful of democratic norms and freedoms, Kudrin’s prudence as finance minister won plaudits from global investors.

Since his resignation, Kudrin has expressed enthusiasm in working with Yavlinsky (picture above, at bottom) to consolidate the liberal movement in Russia, supported the protest movement in the wake of December parliamentary elections and established a fund to promote democratic reforms in Russia.

Prokhorov, who owes his fortune to the sale of his share in Russia’s largest nickel mining operation and who owns the New Jersey Nets, could bring a lot of financial firepower to the Kudrin effort and a potentially young, energetic and popular face to the liberal movement — he finished second to Putin in Moscow and St. Petersburg.

The troika of Kudrin, Yavlinsky and Prokhorov would be perhaps the strongest pro-democracy front in Russia’s post-Soviet history and would present a center-right opposition against both Putin’s siloviki state of former military and security officers and the dwindling leftist movement led by the Communist Party (its perennial presidential candidate, Gennady Zyuganov, finished second and attracted almost 20% of voters). Continue reading Next steps for the Russian opposition?

Official Russia results

Official results are in from Russia’s Central Election Commission, notwithstanding reports of massive fraud, as reported widely on Sunday — including the use of “carousels” of voters bussed from one voting district to another with the purpose of casting multiple votes.

To no one’s surprise, the results make clear that Vladimir Putin will be returning to the Kremlin after just the first round of the presidential election, and Putin tearfully declared victory in a Sunday night victory rally.  Putin’s campaign manager Stanislav Govorukhin said the election was the “cleanest in the history of Russia,” notwithstanding thousands of individual reports of fraud.

As previously noted by commentators inside and outside Russia, however, the key question was not the election result, but rather how the Russian populace responds in the coming days, weeks and months to the victory and how the Kremlin, in turn, responds to any protests.

The Moscow Times notes that protests against fraud in both Duma and presidential elections are likely to continue through the summer. It predicts that while President-elect Putin may keep his promise to appoint outgoing president Dmitry Medvedev as prime minister, he could quickly replace him with former finance minister Alexei Kudrin, who has threatened to form a new liberal party in Russia.  Such a move could be seen as a concession to reformers.  Although it seems unlikely that Putin would allow Duma elections to be run again, it is conceivable that he might permit the direct election of state governors, a practice curtailed in 2004 in favor of Putin’s appointment of regional governors in the name of anti-terrorism and state security.

In The Moscow Times live blog of the vote returns, it notes a turnout of 99.59% in Chechnya, the one-time breakaway province that’s been the subject of much brutal force directed from Putin and Boris Yeltsin before him.  Astonishingly, 99.73 of Chechen voters have supported Putin.

In Moscow, Putin was held to under 50% of the vote, with just 48.25% to Prokhorov’s 19.39% and Communist Party leader Gennady Zyuganov’s 18.96%. Prokhorov threw a party in Moscow Sunday, and declared “victory,” but was remained uncommitted to attending any rallies in protest of the vote on Monday.

Putin 2018: Looking beyond Sunday’s election

The Economist‘s cover story this week features “The Beginning of the End of Putin,” with a thoughtful piece looking beyond Sunday’s election and a companion piece about how different Russia is today from the Russia that first elected Putin in 2000 — it is presumed that Putin will win, likely in the first round, and likely with some amount of electoral fraud, which was so comically and blatantly deployed in the December 2011 parliamentary elections to the Duma.

Meanwhile, on the eve of the election, there’s some doubt as to whether Putin will countenance any of the rising protests of the Russia middle class:

  • Putin is already making noises about running for reelection in 2018, which would keep him in office until 2024.
  • He’s refused to a re-run of the Duma elections from December, which were notoriously fraud ridden, sometime to comic effect, as shown in clips on YouTube.
  • News reports have placed in doubt whether current President Dmitri Medvedev, one time a proponent of more liberal reforms in Russia, will return to the prime minister’s office when Putin returns to the Kremlin.

All of which means that the popular response to Sunday’s vote matters more than the actual vote itself.

The fundamental question is not whether the inevitable Russian protests following the vote will grow, but whether the standoff will end like in Iran in 2009 or Tunisia in 2011. Stay tuned.