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France was one of the most reluctant European Union countries to agree to impose sanctions on Russia for grabbing Crimea off Ukraine. So it’s perhaps not altogether surprising to see a French investor hobnobbing with Vladimir Putin on the Black Sea peninsular this week and offering to build a tourist attraction in the region.

France’s Puy du Fou International has agreed to build a historical theme amusement park in Crimea that will celebrate the history of Russia and the Black Sea peninsular, the government of Crimea said on Friday. Continue reading »

Pity any Russians wanting to sit down to their regular Sunday lunch of kangaroo steak, medium-rare. Thanks to the trade restrictions Vladimir Putin announced last week, Australia – along with the EU, US, Norway and Canada – found its food exports to Russia blocked forthwith.

As it happens, uninterrupted access to the Russian market is not something any food producer can take for granted. Russia, Australia’s largest market for kangaroo meat, also suspended trade (on bogus health grounds) between 2009 and 2013. And while Australian kangaroo exporters may bound off happily into other markets, Moscow’s consumers will struggle to source their marsupials from Russia’s remaining trading partners. Continue reading »

By Andrew Foxall of the Henry Jackson Society

The “stage three” sanctions announced by the US and the European Union against Russia last week are designed to bring about change in President Vladimir Putin’s behaviour by targeting Russia where it is most vulnerable – its economy.

Earlier rounds of sanctions – which primarily targeted government officials and businesses owned by those officials – were not taken seriously by their targets. Being sanctioned was seen a “badge of honour” by senior Russians. Continue reading »

First western sanctions stopped billionaire Gennady Timchenko from flying around in his luxury jet, now they’re hurting budget Russian air travelers as well. Aeroflot grounded Dobrolet, its fledgling low coster airline, after companies in the European Union suspended co-operation agreements.

Owing to “unprecedented pressure” the low cost carrier had no option but to suspend flights and ticket sales, Aeroflot said. However, analysts said that Russia’s national airline, having already spent about $20m of the $100m budget allocated for Dobrolet, was unlikely to allow the sanctions to force it to give up on the low coster altogether.

“The company has the option of signing new leasing and technical servicing agreements with Asian counter parties, including Chinese ones, according to experts, wrote Sberbank Investment Research in a note on Monday, adding that “this will probably take months and incur additional costs.” Continue reading »

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 »