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  • Ceasefire in Syria and possible US land operation
  • Russian government launched budget cuts (also affecting defence) and anti-crisis plan
  • Kadyrov indispensable, albeit increasingly out-of-hand, for Kremlin

Ceasefire in Syria: Russia, the USA, and other powers have agreed to a cessation of hostilities in Syria and the delivery of humanitarian aid to besieged areas across the country. The agreed ceasefire did not apply to extremist groups including ISIL and al-Nusra Front. Although all sides have been accused of violating the agreement several times, the shaky truce has largely held up and the intensity of military conflict has eased. While US Secretary of State John Kerry raised the prospect for a potential ‘Plan B’ which might involve deployment of troops in Syria if the current diplomatic solution fails, Russian Foreign Minister Sergey Lavrov again warned against a land operation in Syria, asserting that it would only escalate the conflict and not eradicate  IS. And Russia reported a halt to bombing operations in the ‘green zone,’ an issue that was previously discussed with the USA. According to the latest opinion poll from the Levada-Center, the majority of Russians believe that Russia should continue its military engagement in Syria (59 percent in favour, 27 percent against). Compared to the results from autumn 2015, there has been an increase in the number of people who believe that Russia’s goals in Syria are to eradicate extremists and prevent the spread of terrorism to Russia (53 percent against 47 percent in October). A total of 24 percent of respondents think that Russia’s main goal is to defend al-Assad’s government and put an end to the series of ‘colour revolutions’ provoked by the USA throughout the world. Only 8 percent believe that Russia’s involvement in Syria relates to its aim to reverse Western sanctions and escape international isolation.

Medvedev signed anti-crisis plan, funding sources not finalized: After two months of deliberations and budget cuts, Prime Minister Dmitry Medvedev signed the anti-crisis plan on 2 March. The original plan proposed by the Ministry of Economic Development was heavily criticized by the Ministry of Finance for exceeding the available amount of financial resources. Tasked with avoiding a deficit and thus slowing down inflation, the Ministry of Finance highlighted the ‘inefficient use of the federal budget’ and is sceptical that the suggested financial investments, without structural reforms, will generate economic growth. The Ministry of Economic Development, whose first task is to stimulate economic growth, suggested employing half-measures, which would be contingent on attaining – the so far lacking – additional funding. Minister of Finance Anton Siluanov suggested further cuts and indicated that further resources could be requested from the reserves controlled by the President. With the latter proposal rejected, the confrontation between the two ministries – centred around the challenging task of increasing spending, while at the same time ensuring a balanced budget – will spill over to the Parliament’s spring session when the changes to the federal budget are to be adopted. Critics of the government also emphasized that Russia lacks a consistent economic policy. With decisions taken elsewhere, the best the government could produce is a set of incoherent measures that fall short of an anti-crisis programme.

Russia to cut military spending, seeks new sources of revenue: The Ministry of Defence will be exempt from the general ten-per cent sequestration, instead expecting its budget to be slashed by only five percent. This cut will, nevertheless, reverse the ‘untouchable’ status of the military budget and be the largest decrease in military expenditures since 2000 (see the graph of Russia’s military spending trend here). The specific cuts have yet to be revealed although sources within the government say that procurement expenditures, which are currently at 68 percent of the military budget, will be slashed by around seven percent, whereas personnel expenditures as well as funding for the Syrian operation will remain intact. Analysts estimate that the decision to reduce the current disproportionally large military budget is reasonable and will not harm the defence potential of the country, unless the cuts continue over the upcoming years. New revenue sources may also open up for Russia following the suspension of sanctions against Iran. Iranian Defence Minister Hossein Dehghan visited Moscow to allegedly sign an at least $8 bn deal to purchase Russian military hardware. Iran had sent its shopping list to Moscow prior to the visit to accelerate the discussion on the potential acquisition of Russian missile systems, fighter jets, helicopters, and other arms. The process might, however, beimpeded by two factors. First, Iran might lack the resources to pay for the order, while Russia cannot afford to postpone payments. Second, the UN arms embargo against Iran only permits the selling of conventional weapons to Iran unless they are approved in advance by the UN Security Council. Any agreement of this scale between Iran and Russia would likely be vetoed by the US.

Russia filed lawsuit against Ukraine over $3 bn default: Russia filed a lawsuit against Ukraine in the London High Court over $3bn in unpaid loans. The legal action followed unsuccessful attempts by Germany to negotiate the standoff between the two countries. Ukraine defaulted on the payment on the loans, which had been given to former President Yanukovich in 2013, following a decision by the Ukrainian government to forbid the provision of better loan conditions to Russia as compared with other creditors. Russia refused to participate in the restructuring of the Ukrainian debt, not wanting to abide by the same conditions as private Eurobond holders. Given that the IMF has officially recognized the Russian loan as sovereign, counter to Ukraine’s claims that it be treated as private, Russia insists that a 20 percent write-down and a delay in payment negotiated with commercial creditors is an unfair deal towards a sovereign loan. Russian Ministry of Finance Anton Siluanov highlighted that Russia has made multiple attempts to discuss an out-of-court settlement but ‘Ukraine was not ready to negotiate in a spirit of good will’. In November, Putin made a restructuring offer on conditions more favourable than the IMF asked for under the guarantees of the US, EU, or an international financial institution. The idea of guarantees was not appealing, however, to the potential guarantors. Both sides are confident that the court decision will be made in their favour. Ukraine’s Minister of Foreign Affairs Pavlo Klimkin claimed that Ukraine will prove that the loan was ‘a bribe in form and in content’. More relevant for the court than political charges, Ukraine might attempt to use legal doctrines of prevention, frustration (Impracticability), and fundamental change of circumstances that would require proving, for example, that Russia’s own actions – annexation of Crimea and involvement in Eastern Ukraine – caused Ukraine’s default on its obligation or that Russia already planned the military conflict at the time the contract was signed. While many agree that this politically-charged case will depend on numerous economic, military, and political considerations, lawyers assert that – with the IMF officially recognizing the debt as sovereign – Russia has a much stronger legal argument and is likely to win the case. However, even if Russia formally wins the case, it will encounter problems in forcing another sovereign state to actually implement the decision. Although Russia is struggling with keeping its finances afloat, it is seeking more than the mere repayment of debt. By filing the case to the High Court instead of the London Court of International Arbitrage where proceedings would have been held behind closed doors, Russia is pursuing an ‘open and transparent’ attention-drawing case. A ruling against Ukraine by an English court would be a significant political statement and victory for Russia. Meanwhile, to avoid a decision against Ukraine and the associated Eurosceptic rhetoric about another failure of the EU, the latter might not only impose more pressure on Ukraine to reach an out-of-court settlement, but also take more decisive action to end sanctions against Russia and mend economic relations between the EU and Russia.

Kadyrov indispensable, albeit increasingly out-of-hand, for Kremlin: Ramzan Kadyrov kept his high profile spot in the Russian domestic media and political space. Several weeks before his term ends on 5 April 2016, he announced on a popular Russian TV-network that ‘his time has passed’, thereby adding to his previous statements in which he expressed a will not to continue in office unless President Putin asks him to do so. The announcement was made on the anniversary of the assassination of Boris Nemtsov, a crime for which a top official – close to Kadyrov – in the security forces has been charged, together with other persons connected to Chechnya. On 23 February, one of the leaders of PRP-Parnas political party Ilya Yashin published a 65-page report called A Threat to National Security with the aggregate information on Kadyrov. Although there is nothing particularly new in the report that would not have already been published in the media in the past, it emphatically and timely re-raised concerns regarding Kadyrov’s increasing political ambition and power that is growing beyond the Kremlin’s control. His supporters launched a viral social mediacampaign ‘Rumzandon’tleave’ (#Рамзаннеуходи). While the Kremlin claims that it is too early to make any final decision about appointing Kadyrov as an acting Head of Chechnya until elections in September, analysts agree that Kadyrov is most likely to be allowed to run – and win. Publicly denouncing his personal interest and emphasizing his service to Putin and the people of Chechnya, Kadyrov is gaining weight in negotiations with the Kremlin on the conditions of his stay. Kadyrov’s successful record of reducing extremism in Chechnya, his control over local security forces, his connections to Muslim leaders and diaspora outside Russia, and his loyalty to Putin have made him indispensable, albeit increasingly out-of-hand, for Kremlin.

Patriarch Kirill met Pope Frances: Part of an almost two-week trip to Latin America, Head of the Russian Orthodox Church Patriarch Kirill met with Pope Frances, marking a historic, first in a thousand years encounter. The traditionally close-to-the-state Orthodox Church intended to help Russia mend its relations with the West, with which the Patriarchadmits the Church can help. This goal may even be the Patriarch’s personal mission. By organizing a historic event and successfully uploading much of traditional Russian Orthodox rhetoric into the joint declaration, the Patriarchdemonstrated both to Kremlin and other Church members his efficiency and indispensability. However, the move stirred another uproar among Orthodox fundamentalists who accused the Patriarch of apostasy, causing new divisions within the Church, and surrendering the true faith to the Vatican and even the Antichrist. On his far-reaching tour, the Patriarch, however, found a Heaven on Earth, the model of which might help build a better one at home. Visiting the only Orthodox church in Antarctica, he stated that the peaceful coexistence of many nations on the continent is ‘a physical image ofperfect society’. The exaltation culminated during the Patriarch’s encounter with penguins, who approached the Patriarch and thus reminded him of peace between all creatures – Heaven. These revelations and the Patriarch’s new congregation launched viral social media interpretations and memes: compilations are here, or here.

Edited by Alena Kudzko, Central European Policy Institute

            
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