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By Dalibor Rohac of the Cato Institute

One can only hope that Vladimir Putin’s war against Ukraine, which has claimed, among others, the lives of the passengers of flight MH17, will come to an early end. But is it possible that the conflict, for all the suffering and senseless destruction it has brought, could have a silver lining?

The past 20 years, during which many Ukrainians thought of their country as a bridge between the West and the East, without any obvious enemies, were years of complacency and failed economic policies, which ultimately resulted in the capture of the government by special interests. Continue reading »

By Ievgen Vorobiov of PISM

Three months of the Russia-led proxy war in Ukraine have claimed the lives of hundreds of Ukrainian servicemen and civilians. Until now, Western media have lazily ignored the complexity of the security crisis, while public opinion in the West has had more pressing concerns than an unfolding war on the edge of the European Union. EU politicians have had an easy ride in pretending to handle it.

But the downing of flight MH17 by pro-Russian militants is slowly changing perceptions in the West. It is still a war in a “faraway nation” but now with a dramatic number of foreign civilian casualties. If you had told a western European diplomat two weeks ago that EU citizens would be the next victims of Russia’s slowly-unfolding massacre in Ukraine, they would have dismissed you as paranoid and manipulative. Not any more. Continue reading »

Of course, it all goes back to Peter the Great at the turn of the eighteenth century. On the one hand, the Russian Tsar worked in the Dutch shipyards incognito to import modern boatbuilding techniques to his empire. On the other, he systematically seized the estates of unhelpful nobles in a manner which suggested that western European notions of property rights had yet to sink in.

Russia’s traditional simultaneous fascination with and repulsion towards foreign ideas and institutions, the latter generally winning out at times of stress, is reflected in the difficulties the EU and US have encountered in trying to shift Moscow’s behaviour in Ukraine.

 Continue reading »

By Taras Kuzio of the University of Alberta

Vladimir Putin, Russia’s president, has tough decisions to make this week that will have a profound impact on his legacy and on Russia’s future. His two choices are both unpalatable for the anti-Ukrainian strategy he has pursued since last November. Then, he led Viktor Yanukovich, Ukraine’s president at the time, to turn away from Europe, supplied weaponry for Ukraine’s security forces used against protesters, occupied Crimea and launched a proxy war to break up Ukraine by detaching the so-called “New Russia” (Tsarist Russia’s name for east Ukraine). Continue reading »

If EM investors were looking for a trigger for volatility, this must surely fit the bill. The downing of flight MH17, whoever is found to be responsible, appears certain to cause an escalation of geopolitical tensions already at a high level over Gaza, Iraq, Syria and Ukraine itself. Investors, whose attention has been focussed almost exclusively on the US Federal Reserve and the prospect of rising interest rates, must surely now put more political risk into their calculations.

But look at the reaction on markets and you have to conclude: not a bit of it. Continue reading »

Medvedev out

Gazprom has been struggling to adapt to the tectonic changes in global gas markets and has finally decided a fresh face is needed at its foreign trade division. After 12 years in service, Alexander Medvedev has lost his job as head of Gazprom Export and been replaced by one of his former deputies.

Elena Burmistrova, formerly deputy director general for petroleum products, LNG and new gas markets at Gazprom Export has been appointed deputy director of Gazprom Export, replacing Medvedev, Gazprom said on Wednesday. Continue reading »

Rosneft has raised the stakes in its campaign to strip Gazprom of its monopoly over Russian gas exports. In a sharply worded statement on Tuesday, Russia’s state oil company threatened to take Gazprom to court unless it opened up a planned pipeline to China to rival gas producers.

Gazprom has been gearing up to build the Power of Siberia pipeline since signing a $400bn gas export contract with China in May. Linking vast Gazprom controlled gas fields in east Siberia with the Russian Pacific, the 4,000km pipeline will feed gas to domestic consumers and to the Chinese border. Continue reading »

By Monica Ellena of bne in Tbilisi and Clare Nuttall in Bucharest

Georgia and Moldova are due to sign their free trade and association agreements with the EU on June 27. The two countries have defied Russian pressure and opposition at home and have made a firm choice in favour of European integration, but alongside the opportunities the deals will mean tough new requirements for domestic producers of goods and services.

The agreements mark the beginning of a process to deepen political and economic relations with the EU. Georgia and Moldova will be gradually integrated into the EU’s internal market, the world’s largest.

Politically they have equally great significance, as the fulfilment of a long-held dream in both countries. The ouster of former Ukraine president Viktor Yanukovich and the consequent crisis in the country after he dropped plans to sign a similar EU deal in favour of closer ties with Russia means the progress of Georgia and Moldova has become an important element in the new conflict between Russia and the West. Domestically, it is a clear choice between the Soviet past and a European future. Continue reading »

As international budget airlines begin to make headway in the Russian market, Aeroflot has launched its own version of easyJet. Passengers crammed aboard the maiden flight from Moscow to – guess where? – Crimea on Tuesday were waved off by Dmitry Medvedev, Russia’s prime minister. Continue reading »

By Andrew Foxall of The Henry Jackson Society

The prospect of Russia invading Ukraine may be receding, but Russia’s standoff with the West continues to affect the Russian economy by damaging its banks’ ability to access funding. It has also led Russia to step-up its efforts to decrease its dependency on the West, as part of which it plans to establish a joint rating agency with China.

After the imposition of Western sanctions against Russia in March, Igor Shuvalov, Russia’s deputy prime minister, warned that the biggest damage to Russia would come not from the targeted sanctions but from “hidden” measures, such as political pressure on rating agencies. Continue reading »

Tough times ahead for Russian smokers and for the international tobacco groups that feed their obnoxious habit: a ban on smoking in government buildings introduced last year was expanded to include all public places at the weekend, as the Kremlin stepped up the war on Russia’s estimated 40m cigarette addicts. Continue reading »

As Russia steps up control of the internet, electronic payment processors are feeling the heat. Qiwi and PayPal cited security concerns when they halted co-operation with RosUznik, a Russian charity that supports political prisoners, this week. RosUznik suspects political motives.

Founded in late 2011 as a wave of anti-government protests erupted in Moscow, RosUznik collects charitable donations to help fund legal aid for opposition activists undergoing trial or in detention. Continue reading »

By Susmita Mohanty of Earth2Orbit

Elon Musk, CEO of SpaceX, is suing the US Air Force for awarding a no-bid military contract to United Launch Alliance, a 50-50 venture of Boeing and Lockheed. The contract, for 36 rockets to launch defence payloads such as satellites, went to ULA on a sole-source basis last December. By 2030, the Pentagon expects to spend almost $70bn on the program. While the two old aerospace monopolies sulked, many in the industry quietly cheered Musk, a California-based new generation immigrant entrepreneur, for challenging the lucrative contract awarded without open competitive bidding.

But Musk’s actions may have grave and unintended consequences. Continue reading »

As western governments impose sanctions on Russia, international majors with interests in the country have stayed out of the fray, saying it’s business as usual. France’s Total, for one, was not going to let the Ukraine crisis halt plans to finalize a deal with Russian Lukoil this week that paves the way for exploration of tight oil reserves in western Siberia.

Total has entered a joint venture with Lukoil to explore the tight oil potential of the Bazhenov formation in western Siberia, the French company said on Friday. Lukoil will have a controlling 51 per cent interest of the project, with Total holding the remaining 49 per cent. After conducting seismic surveys this year, the partners expect to begin drilling in 2015. Continue reading »

As Gazprom bullies Ukraine to settle its $3.5bn gas arrears, Russian domestic gas consumers are also running up multi-billion dollar debts. Ukraine is broke and Russian buyers, hit by the economic downturn, will struggle to pay up. Just as well then that Gazprom has finally clinched a $400bn gas contract with China which opens up a new potential market in the east from 2018.

Gazprom’s customers owed Rbs115.8bn ($3.35bn) for gas at the end of 2013, almost 40 per cent more than on December 31st 2012, Kirill Seleznev, director general of Mezhregiongaz, Gazprom’s gas distribution subsidiary, told reporters in Moscow this week. Continue reading »