Ruble Falls to New Low at 81 to US Dollar; Putin Finds ‘Opportunity’ for Russian Business

January 20, 2016
A Russian man whose mortgage was denominated in foreign currency chained himself to the door of DeltaKredit in Moscow to protest refusal of the government to restructure the loan despite the ruble crash. Several hundred people took part in such protests at banks and credit unions today. Photo by Albert Koshkarov/RBC.

LIVE UPDATES: The ruble fell in value on the Moscow stock market to 81 to the US dollar today, a new historical low not seen since the ruble crash in 1998.

Welcome to our column, Russia Update, where we will be closely following day-to-day developments in Russia, including the Russian government’s foreign and domestic policies.

The previous issue is here.

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Taliban Suicide Bombing in Kabul Appears Aimed at Afghan Journalists, Not Russian Embassy

Earlier today we reported on a suicide bombing in Kabul that was reported as “close to the Russian Embassy.”
In fact as we pointed out from geolocating photographs of the scene, the blast was some distance from the Russian Embassy, while on the same road, and was closer to the parliament.
Further news reports indicate that of the 7 civilians killed in the suicide bombing, six were from Afghanistan’s privately-owned TOLO news station, according to the Committee to Protect Journalists.
The attack on the staff occurred as they were returning in a minivan from work; 27 other persons including 26 TV staff were injured. TOLO was threatened by the Taliban last October, CPJ reported.
LifeNews, a pro-Kremlin TV station close to police and intelligence reported that the Taliban took responsibility for the attack and accused the journalists of being “Western spies.”
LifeNews earlier reported that the attack was on a van of Russian diplomats and near the Russian Embassy, based on initial reports on Twitter. The Russian Embassy denied the attack and said no Russians were injured or killed.
French freelance reporter @ChiefMarshallR reported at first that the Russian ambassador could have been targeted, but then corrected this to report that the attack was on the Afghan journalists.
— Catherine A. Fitzpatrick
Russian State TV Broadcasts Claims of Russian Girl Raped by Migrants in Germany, But German Police Deny
A story about a runaway Russian immigrant girl allegedly kidnapped and raped by migrants in Germany has been broadcast with increasing hysteria by Russian state TV, although German prosecutors have announced that while the girl ran away from home, no kidnapping or rape took place.
Russian media has heavily reported the New Year’s attacks in Cologne on German women by migrants, and propagandists have seized on it to propel their narrative by chiming in with the European far right about the impact on Europe of immigrants — which they blame on the US military responses in the Middle East crises, rather than acknowledging that the latest flow of refugees are mainly fleeing Russia’s bombing campaign in Syria.
Then, as if the content wasn’t enough to support their theses, earlier this week TV1 and other Russian state broadcast media seized on the story of Elizabeta Firsenko, 13, a girl who ran away from home but was returned the next day. Her aunt then gave an interview to Rossiya 24 in which she said the girl was kidnapped, beaten and raped by multiple immigrants. German police investigated the story but denied the girl was attacked. 
The Russian Defense Ministry TV Zvezda only doubled down on the story, now citing the girl’s relatives who said German police had dictated to the girl what to say, forcing her to perjure herself.

Demonstrations of hundreds of angry Russian emigres have taken place, and even more print and broadcast coverage of the story, fueling the Kremlin’s propaganda blast now claiming that Europe isn’t safe and only Russia is adequately dealing with terrorism and its aftermath.

The Kremlin’s premier propagandist Dmitry Kisilyev ran a broadcast alleging the rape on January 7 on Rossiya 24’s Vesti [News].

Yesterday, as we reported, after hearing a report of higher levels of attacks on European Jews during a meeting with the European Jewish Congress, Putin invited European Jews to move to Russia, including Jews who left Russia in the Soviet era.

Many of the Russian emigres now in Germany are Jews who were invited to emigrate during the Soviet era as part of Germany’s programs of restitution. 

Martin Luithl, a German lawyer, has filed a complaint against TV1 for broadcasting the fake story, under German laws penalizing incitement of ethnic hatred, Buzzfeed and Novaya Gazeta reported. He said 6 million Russian emigres in Germany could be affected by the story, reported by Russian journalist Ivan Blagoy (translation by The Interpreter from the Russian in Novaya Gazeta):

“The author of the false information works in Berlin. In this period, his broadcast with German subtitles on Facebook has been viewed by more than 1.3 million people. More than 28,000 of them have left nearly 3,500 vicious xenophobic comments. They incite hatred to refugees and encourage violence and other unlawful measures against the individual.”

The video was posted by Anonymous with a German comment, and now has reached 1.6 million views.
Deutsche Welle reported that Kerstin Ismer, a Berlin police official denied the story:

“According to the results of the investigation, neither the kidnapping nor the rape took place.”

Buzzfeed also reported the German police statement on Facebook, and although Berlin authorities continued to investigate the claims, they stood by their assessment.
Leonid Bershidsky of Bloomberg News wrote a column in which he said Putin himself was attempting to exploit the incident.

The far-right parties are his allies in opposing Europe’s centrist governments, which have united to sanction Russia for its depredations in Ukraine. Activists of Germany’s Islamophobic movement Pegida often wave Russian flags at their rallies. Now, the Kremlin is also using its far-reaching propaganda outlets to whip up support for these movements among the Russian-speaking diaspora. 

What actually happened to the girl in Marzahn is the last thing that matters to those playing this game. Putin is acutely interested in stirring up trouble for Merkel in every way he can as he tries to wrong-foot her in talks on Ukraine and the sanctions. 

Bershidsky, himself a Russian emigre who lives in Germany, said security had been stepped up at his daughter’s school over the incident:

The emigres are worried indeed, though. Parents at the bilingual Russian German school my daughters attend have demanded increased security. Many believe the Russian TV report and distrust the Berlin police, believing them to be biased toward Middle Eastern immigrants for political reasons., an online news service which increasingly hews to the government line, reported on the allegations but also said that German police had confirmed that the girl was indeed missing for a few hours but was then returned home, and they found no evidence of the rape claims, asking people not to spread the false story.

A mass online news site, Argumenti Nedeli [Arguments of the Week] also reported that German police had refuted the rape story. But even with independent news sites and some pro-Kremlin sites willing to report the story accurately, the effect of hysterical TV broadcasting continues to spiral.

— Catherine A. Fitzpatrick 

French Toxicologist Finds Heavy Metals in Blood of Poisoned Opposition Journalist Kara-Murza, Jr.
A French toxicologist who examined samples from Russian opposition journalist Vladimir Kara-Murza, Jr. says he found heavy metals in his blood in higher concentration than normal, reported.
Kara-Murza,Jr., the coordination of Open Russia founded by businessman and former political prisoner Mikhail Khodorkovsky, was hospitalized May 26 and was put on life support and kidney dialysis after he collapsed while at a work meeting from suspected poisoning. He remained hospitalized for months before finally leaving Russia in July for further rehabilitation, then returned to work in Russia last fall.

Carl Schreck of RFE/RL published a thorough investigation of Kara-Murza, Jr.’s case this week in which he cited medical documents and statements from physicians that indicated Kara-Murza was poisoned, and that reaction to an anti-depressant that he had taken for some time could not have been responsible for the collapse of his organs.

As Schreck wrote:

Kara-Murza’s doctors, Yevgenia says, suggested that he may have suffered from an undiagnosed kidney problem that could have allowed the drug to build up to a dangerous level in his system. 

Yevgenia says the doctors also posited that the citalopram may have had a dangerous interaction with his allergy medicine, the nasal spray Flonase. However, several toxicologists told RFE/RL that the active ingredient in Flonase, fluticasone propionate, does not interact with citalopram. Nor does ranitidine hydrochloride, the active ingredient in Zantac, a common antacid he was taking, the toxicologists said.

Eran Segal, an Israeli doctor brought in by Khodorkovsky to monitor Kara-Murza shortly after his hospitalization, also cast doubt on the theory that citalopram had something to do with his illness.

“It is not the usual picture, whether an overdose is deliberate or inadvertent,” Segal told the BBC in June. “It could be a severe infection or maybe some other toxin we are not aware of. But there is no evidence of the cause,” Segal added.

Kara-Murza,Jr. told that the samples of blood, urine, hair and nails were taken on May 29, that is three days after he was first hospitalized and medical interventions to cleanse his blood had already been taken.

The analysis of the samples was made on May 30 in a laboratory in France by Dr. Pascal Kintz and were reviewed by The findings were as follows regarding four heavy metals found in his blood:

– 59.5 times the normal level of manganese (33.9 nanograms per milligram of hair);

– 1.8 times more copper than normal (112 nanograms per milligram);

– zinc 2.25 times normal (473 nanograms per milligram);

– and mercury, 1.2 times normal (2.01 nanograms per milligrams).

At the same time there was found 19 times less than the minimum amount of iron (0.68 nanogram per milligram).

The French expert said he had also found other medications, including a flu medication, which they said could not have caused his illness. He also said no illegal drugs were found in the samples.
It appears that Kara-Murza, Jr. waited to announce the findings until he could formally present them to Russian investigators.
Kara-Murza, Jr. told (translation by The Interpreter):

“I am absolutely convinced that this was an attempt at murder with the purpose of cutting off my civic and political activity. There is no doubt that tihs was a poisoning, since that was the official diagnosis. It doesn’t happen that a healthy person, out of nowhere, within a few hours, could have all his basic life-sustaining organs shut down.”

Kara-Murza, Jr.’s lawyer Vadim Prokhorov said that the results of the French analysis were sent to the Investigative Commitee’s office in Khamovniki District in Moscow.

“We do not have a ready-made hypothesis for what Kara-Murza was poisoned with. But apparently some deliberate poisoning took place, as follows from this data.”

On December 11, 2015, Kara-Murza, Jr. requested that Russian investigators open a case into his poisoning, and that investigators should attempt to determine who poisoned him, and with what. He said it wasn’t an ordinary poisoning but something “complex”:

“As a rule, access to such poisons is available only from the relevant special [intelligence] agencies, or those who have left these agencies.”

Yesterday, the Investigative Committee interrogated Kara-Murza, Jr. in the presence of his lawyer for two hours regarding all the pepole he met with during the two days before his hospitalization, and all the meals he ate, reported.
Kara-Murza,Jr. said that he believed investigators planned to question everyone who was in contact with him that day and also request medical documents from the Moscow hospitals where he was treated. He also requested that a toxicologist be appointed to review the French samples.
It is not clear if the Investigative Committee has opened a formal criminal case or is only making a preliminary probe; ideally Kara-Murza, Jr. said the case should be opened under Art. 105 and Art. 30 of the Russian criminal code, which deal with assassination attempts for motives of political or ideological hatred. Recently the Investigative Committee refused to characterize the assassination of opposition leader Boris Nemtsov, a close associate of Kara-Murza, Jr.’s on that grounds, despite evidence to the contrary.

— Catherine A. Fitzpatrick

400 German Companies Have Left Russia
Four hundred German companies have left Russia in the past year, leaving 5,583 still registered, the Russian-German Foreign Trade Chamber (FTC) reported, according to Vedomosti.
According to Mikhail Kharms, chairman of the Russian-German FTC (translation by The Interpreter):

The chief reasons for their departure were the devaluation of the ruble, the reduced purchasing capacity of Russian clients of German firms.

He said smaller firms were the ones to leave and the “main players” remain in Russia and continue to view it as a “strategic market.” He said automobile companies were faring worse than those involved in chemicals and pharmaceuticals as well as agriculture were doing better.

Earlier this month, Volvo recalled 4,804 vehicles manufactured in Russia due to engine problems, Reuters reported. Volvo is among the German companies that have said they will “stick it out” in Russia, even though Volkswagen and other firms have pared back production.

— Catherine A. Fitzpatrick 

Putin Jokes About Russian Entrepreneurs Unable to Afford Davos Tickets; Sends Far East Rep to Forum
At a forum titled “Small Business – National Idea?” today, President Vladimir Putin joked about Russian business people who could no longer afford to go to the prestigious Davos World Economic Forum, reported.
At the for sponsored by a group called Bulwarks of Russia, Putin said (translation by The Interpreter):

“I see here a large number of my colleagues from the government. It’s not clear who went to Davos to go skiing in the mountains. Before, people used to go with great desire; not they don’t go. Apparently they don’t have the money for the tickets. They’re cutting costs. They’re spending wisely; home is where they should be working.” ran a story with the headline “Kremlin Top Brass Bails on Davos,” noting that the top Kremlin leadership was ignoring Davos for the third consecutive yar, and had sent the presidential envoy to the Far East Federal District, Yury Trutnev. says this could be “intended to embody Russia’s pivot to Asia,” but it could also be a snub to the West by sending an official associated with the Far East. A source told it was about the Asian outlook but confirmed the anti-Western position:

“Russia has no common agenda with the West aimed at the development of bilateral economic ties. And the appearance of Trutnev is a signal that Russia continues its pivot to the East, including within the framework of the Silk Road.” quipped that the Russian delegation would present “the agenda of the Far East, exotic for the Swiss resort.”  quoted Klaus Schwab, head of the Davos meeting, as saying to Reuters, “I am shocked at such a low level of representation of Russia in Davos.” (The Interpreter was unable to find this quote on any Reuters story about Davos.)
Sources within the government said that Russia’s interest in Davos has fallen, said Last year Shuvalov only used the foreign forum to “solve internal problems,” i.e. to give signals about a “hard landing” for some Russian officials and business people. 
What participants want to hear about more than investment opportunities in Vladivostok is how Russia is faring under sanctions, sources told There is one session at Davos, “Forecast for Russia,” where Trutnev, former Finance Minister Aleksei Kudrin, and chairman of the board of Vneshekonombank Vladimir Dmitriev will talk about “macroeconoic pressure and low prices for energy.”
Last year First Deputy Prime Minister Igor Shuvalov attended but skipped the forum this year. Instead, he made an announcement today that people should stop paying attention to the falling ruble value and no intervention was required by the Bank of Russia.

“Everything seems to be normal. What interventions? You should watch the [currency] rates less.”

Participants expressed anxiety as the Davos Forum opened today about the drop in the price of oil, the Chinese slowdown and turbulence in financial markets, AP reported.

— Catherine A. Fitzpatrick
6 Killed, 24 Wounded After Suicide Bombing ‘Near Russian Embassy’ In Kabul
A suicide bombing has taken place this afternoon in the Afghan capital Kabul, “in an area close to the Russian embassy,” Reuters reports.

The blast took place on Darulaman Road, on which the embassy is located. 

But Russia’s LifeNews channel reports that a representative of the embassy had denied the bomber had targeted their building.

According to the embassy, the bomb went off 1-200 metres from the embassy “opposite the Afghan parliament.”

Indeed, we have compared photographs of the scene with Google’s satellite imagery of the area and, while the match is offset by the age of the Google Earth photos (which date from 2011), we can verify that the blast took place some distance down the road, closer to both the Polish embassy and the parliament: 


Click here for full scale image.

— Pierre Vaux

Ruble Falls to New Low at 81 to US Dollar; Putin Finds ‘Opportunity’ for Russian Business
The ruble fell in value on the Moscow stock market to 81 to the US dollar today, a new historical low not seen since the ruble crash in 1998, reported. The euro reached 88.48. Currently the ruble-to-dollar rate is 80.78, and the ruble is 88.11 euros, reports.
The official rate of the dollar at the Central Bank was 79.46, and the euro was at 87.03.
President Vladimir Putin continues to try to spin this crisis as an opportunity to develop domestic business. reported that at the All-Russian Forum of Entrepreneurs today, he said the fall in the value of the ruble opens up “additional opportunities, meaning the rate difference and some opportunities on the markets” for Russian business people (translation by The Interpreter):

“The last two years have been rather difficult for the economy, objective difficulties affected practically all her sectors, but it must be noted that on the whole, business withstood it, including small business.”

He added that there was “a certain positive dynamic” in the number of new businesses appearing.

Interestingly, by saying “two years,” Putin may be tacitly acknowledging that Russia’s problems pre-date Western sanctions for the annexation of the Crimea in March 2014.
Russia’s crisis is tied to the price of oil, which is now down to $28.15 a barrel for Brent crude, and ongoing sanctions, but also huge deficits run up by provinces to make good on Putin’s 2011 campaign promises, lack of legal guarantees for private property, and corruption.

Some analysts expect the ruble to fall further in value, even to 100 per dollar, but others think it may have hit bottom with 80 to the dollar, said RBC. 

About 150 people whose housing loans were denominated in foreign currency gathered to protest at DeltaBank today, demanding that their loans be restructured, reported. Several of them chained themselves to the building. Authorities have enabled debtors with loans in rubles to restructure them, but have refused to do the same for those who took loans out in dollars or euros.

A similar protest was reported at BTB24 bank branch involving 50 people who demanded to speak with bank official to re-negotiate their loans, reported. 

 — Catherine A. Fitzpatrick