Russia Update: After Nuclear Program Agreement, ‘Iran Will Undercut Russian Oil’

April 3, 2015
Iran's oil rigs. Photo by Jae C. Hong/AP

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.


Special features:

Alexey Navalny On the Murder of Boris Nemtsov
Theories about Possible Perpetrators of the Murder of Boris Nemtsov
Novaya Gazeta Releases Sensational Kremlin Memo: ‘It is Seen as Correct to Initiate Annexation of Eastern Regions of Ukraine to Russia’

See also our Russia This Week stories:

Can We Be Satisfied With the Theory That Kadyrov Killed Nemtsov?

All The Strange Things Happening in Moscow
Remembering Boris Nemtsov, Insider and Outsider (1959-2015)
Ultranationalists Angry over ‘Capitulation’ of Minsk Agreement

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Blogger Shows Stark Contrast Between Towns in Finland, Norway and Russia’s Karelia, Murmansk Regions

Karelia is one of the most beautiful places in the world, although it has a history of many wars between Finland and Russia which ended with territories ceded to the Soviet Union.

Go on any Russian-language social media and look up the name for this region split between Finland and Russia and its environs, and you will people sharing gorgeous pictures of pristine, rocky lakes and quaint Russian Orthodox churches and old-fashioned wooden homes in Russia’s Karelia.



Valaam, an ancient hermitage that changed hands in bitter struggles over the centuries among Sweden, Finland and Russia, is now a spiritual destination for many Russian Orthodox, particularly after President Vladimir Putin began making regular flights to the isolated island to visit his spiritual adviser.

One of the “Easter Eggs” on Yandex Panorama is a “swim” through the rocky lakes north of Valaam.


After he was forced to flee Slavyansk in July 2015, the Russian-backed separatist leader Col. Igor Strelkov was found to have retreated to Valaam last summer, in the company of his patron, businessman and Russian Orthodox philanthropist Konstantin Malofeyev and other supporters such as ultranationalist Aleksandr Dugin.

A “tourist” caught them by the Church of the Transfiguration in a video in this secluded location — although judging from the very clear photographs of the same scenes that showed up later on alternative media sites, Russian intelligence may have helped.

So it’s with this context — lots of sharing of the beauty of Russia’s Karelian Republic on Russian social media and the increasing sacred role of Valaam and the sense that Karelia is “essentially Russian” — that a LiveJournal blog post by Tbilisi-based writer Yura Yakunin comparing the towns in Finland and Norway near the towns in Russia’s Karelia and the adjacent Murmansk Region came as such a shock.

Note: this page hasn’t been loading for some days and it may be subject to one of LJ’s notorious slow-downs in Russia. It can also be accessed in Google cache or through the monthly archive.

It’s almost as Yakunin he went behind the facade of some of the postcard-perfect scenes and found the real scenes.

First, he shows some colorful, tidy towns on the Finnish side of the border with their many stores and new cars driven by citizens, and also includes a Norwegian town.

Then he shows the dilapidated, muddy poverty of Russian towns which 75 years ago belonged to Finland, where now there is “massive urban decay” or industrial blight in Murmansk Region, near the Norwegian border. This decline is something that can’t be blamed on the harsh winters, as he notes, as the areas are part of the same northern region.

Yakunin comments (translation by The Interpreter):

March 13th was the 75th anniversary of the end of the Winter War (known also as the Soviet-Finnish war). After the USSR attacked Finland in 1939, few believed that the Finns would manage to defend its independence. However, the little country displayed an unexpected determination in the war against the Soviet empire.

Several months after bloody battles, a peace treaty was signed between Helsinki and Moscow. Finland recognized the lost of part of Karelia, Laplandia and the territories of the Kola Peninsula, but was preserved as an independent state. Several Finnish towns were handed to the USSR, and then Russia. To be sure, 75 years after the war, it is hard to find anything Finnish.

Today, studying the towns on both sides of the Finnish border, it is not just hard to believe that this was once one country. The difference is colossal. And it is clearly not in the favor of the Russian Federation.

The following are some of the pictures Yakunin showed on his blog, and his comments.

Here’s a map of all the locations in Russia, Finland and Norway.


Finnish Towns


The town of Joensuu was founded by Russians (Tsar Nicholas II) but is part of Finland. Its neighbors in Naystenyarvi, unfortunately, have it all the opposite — that’s a village of Finns vegetating now in the Russian Federation. Who was luckier — judge for yourself.

Joensuu is where the legendary Finnish butter Valio is made and the tractors of the American company John Deere known to some Ukrainian farmers. In Naystenyarvi, only lumber is produced.





Four hours’ drive (300 km) from Pechenga (see below) there is another village — the Finnish town of Ivalo with a population of just 4,000 people. This is a famous tourist center in Finland. Russians love to travel there on vacation.




To the annoyance of the hurrah-patriots, Kandalakshi
has a brother city in Finland, Kemiyarvi from whom it is worth studying
city planning and city management. The most northern town in Finland,
although it is four times as less as its brother, it looks far more
decent. There is a celluloid and paper plant in the city, and the
tourist business is being developed. The European championship for
snowball fights is regularly held here.





The Lapland community of Sodankyla
is at almost the same latitude as Kovdor. It also has rich natural
resources – copper and nickel ore deposits. Even so, it actively profits
from tourism — sleigh rides, fishing, gold-mining, bird-watching, and
many other serious forms of relaxation. You wouldn’t say that these
cities are next to each other.



Town in Norway


8 km from the Russian Norwegian border (or an hour from Nikel — a distance of 55 km) there is a tourist and shopping mecca for the residents of Murmansk Region — the Norwegian city of Kirkenes. For Russians it is attractive not only because of the hyper-markets with the high-quality, accessible goods (clothing and footwear, above all). Russian fishing ships come here to unload their catch and for repairs.

The lack of bureaucracy and corrupt services, and the openness to business enables them to spend 40 minutes on filling out documents and gaining permission to enter the port. In Murmansk, ship-owners spend an entire three days on that procedure.

In Kirkenes there are so many Russians that even the signs are doubled with the Russian language. It is clearly more pleasant here for them than in Nikel. Although it is apparently the same climate.




Russian Towns


The territory of the village of Nikel was once part of Finland, but after World War II, “reunited” with the USSR. The village of Nikel and the city of Zapolyarny are next to each other. Between them is located the Pechenganikel, a mining and smelting plant founded in the pre-Soviet period by a Canadian-Finnish firm. Since nature and ecology are clearly not a priority among the local residents, the territory of these populated areas is scorched earth made by pollutants. Travelers in fact call this area “Mordor,” and the local residents, when they land in nearby Kirkenes and Finland think they have ended up in heaven.







On the border of Finland there is located another Russian industrial town — Kovdor. The Kovdor Mining Processing Plant, besides the iron ore and the apatite concentrate is the only producer in the world of baddeleyite concentrate (which is used in ceramics and the manufacturing of refractories). This is a unique plant of its type.

But it looks as if the presence of such a plant does not affect the welfare of the city in the slightest. There is practically no business. Out of 800 million rubles in the city budget(about $12 million), taxes from small business make up only 1%.





This regional center was always “primordial Russian” going back to the XVI century. Since then, it has not changed very much. But the central government in Moscow doesn’t hasten to help the local Russians. They’re rescuing for now some other Russians in far-away warm Crimea.




The once Finnish village of Petsamo (now Russian Pechenga) is interesting for the fact that next to it is an army base in which is located the 61st Naval Infantry Regiment of the Northern Fleet. With their slogan “Where we are, there is victory,” they take part in the war for the Donbass, “defending” Russians from Ukrainian nationalists.


Most likely, they understand well in Pechenga what “civilization” they are bringing to Ukrainian towns. But they don’t see anything bad in that. The main thing after all is an awareness of one’s own military might, and not clean streets and food in the stores.



This village was minding its own business in Finland when by a “miracle” in 1944 it ended up in the economic embrace of the Soviet Union. Now there is a school, a post office and a Sberbank there. The local residents chop wood, which is sold abroad. True, the wealth of the nature here for some reaon has not brought prosperity to the population.



The bleakness of these scenes helps explain why there has been increasing unrest in Karelia, culminating in a demonstration in Petrazavodsk, as Paul Goble describes in a post synidcated on the Interpreter, demanding the ouster of Governor Aleksandr Khudilaynen.

— Catherine A. Fitzpatrick

Aeroflot Announces 10% Office Staff Cuts

Aeroflot has become the latest Russian company to announce staff cuts in the wake of the economic crisis.

According to a report by, Andrei Sogrin, public liaison for Aeroflot announced today that up to ten percent of office staff will be cut.

The total number of Aeroflot employees is 17,500, and officers make up 10-15% of this total.

“Only office staff will be affected by the optimization. I emphasize, they make up the minority by comparison with pilots, air technicians and ground services staff,” said Sogrin.

Late last month, Vitaly Savelev, general director of Aeroflot, had already announced cuts in Aeroflot as well as Donavia, Orenburg Airlines, and Rossiya Airline. He also emphasized on a Rossiya 24 newscast that the reductions would not include pilots, engineers, technicians or ground crews.

Last year, Aeroflot gave raises of 15.5% to its staff. Although the company had a 9.9% rise in profits, it also suffered losses of more than 17.1 billion rubles ($300 million) which were described in an annual report as “over-estimate of obligations in financial leasing and other one-time ‘paper’ corrections including currency rate fluctuations.”

Shamil Kurmashov, deputy general director for finance, said in Aeroflot’s annual financial report that Russian airliners were faced with the drop in the value of the ruble as well as a weakening of consumer demand for flights and a drop in international tourism to Russia.

— Catherine A. Fitzpatrick

Labor Colony Fire in Chelyabinsk

Fire broke out in Labor Colony No. 8 in Chelyabinsk last night, reported, citing TASS.

“The conflagration occurred apparently as a result of a short circuit of an electric cable which ran across the roof of a building,” said a source in the regional branch of the Emergencies Ministry.

The area of the fire was 800 square meters. Convicts and staff had to be evacuated from the area. The fire was brought under control, and there were no injuries.

— Catherine A. Fitzpatrick

Russian Orthodox Activists Put Pig’s Head on Steps of Moscow Art Theater to Protest Oscar Wilde Play

Activists from a radical Russian Orthodox group placed a pig’s head on the steps of the Moscow Art Theater (MKhT)on April 1, and reported.


Dmitry Enteo, header of Bozh’ya Volya [God’s Will] Russian Orthodox Civic Movement, said the protest was against Oscar Wilde’s “An Ideal Husband.”

Enteo has staged a number of protests against LGBT marches and liberal protests against the government and also protested against the Charlie Hebdo cartoons. In a statement to the media, he said (translation by The Interpreter):

More than a year ago, Russian Orthodox activists have submitted more than 20 statements to law-enforcement agencies with a request to remove the blasphemy which occurs on the stage of the state theater at the expense of the tax-payers. After the inaction of the representatives of the government, the activists of the movement have come on the stage of the MKhT during the theatrical performance of “Ideal Huband” and appealed to the audience, explaining why blasphemy is not permissible.

Enteo said that the Tversky Investigative Department told him their experts had not found anything offensive to the views of Russian Orthodox Christians in the play.

He said his movement was also protesting the staging of Tannhäuser in Novosibirsk.

Novosibirsk opera director Boris Mezdrich was fired after he failed to make changes to Tannhäuser accommodate religious protesters. A Russian Orthodox priest filed a complaint against him with the prosecutor, but the prosecutor’s office has decided not to press charges. A court has ruled that the case against him is closed due to lack of evidence, Novaya Gazeta reported. But he has already been replaced in his job by fruit merchant and Mikhailovsky Theater director Vladimir Kekhman.

Now Kekhman himself is dealing with law-enforcers; premises said to be related to his JFC fruit importing company were searched but he said it does not belong to him.

— Catherine A. Fitzpatrick

After the Agreement on the Nuclear Program, ‘Iran Will Undercut Russian Oil’ –

Yesterday April 2, we noted the somewhat subdued reaction to the Iran nuclear deal on the part of the Russian Foreign Ministry.

On the one hand, Russia often allies with Iran, which borders former Soviet republics Azerbaijan and Turkmenistan that are its regional partners, and Turkey, with which it increasingly trades.

In recent years, Moscow has exploited the West’s antagonism to Iran and positioned itself better in the “multi-polar world” as a regional friend and broker. At the UN Security Council, Western ambassadors and some of their supporters in the Group  of 77 would often say they “need Russia” to help them with Iran, and that would serve as a reason why Russia couldn’t be opposed on other things like Georgia.

Just as it did with deal to get Syria to give up chemical weapons, Moscow is taking full credit for formulations in the final deal with Iran — which of course still has far to go before it is implemented

But there’s another reason why Russia isn’t completely thrilled with the prospect of peace with Iran — further depression of oil  prices, which has already slammed the Russian economy this year and exacerbated an already-existing economic crisis.’s headline this morning says frankly, “Iran Undercuts Russian Oil” (translation by The Interpreter):

Today Brent crude is at $55 a barrel with the news of the agreement
regarding the Iranian nuclear program and the ruble is at 57 to the
dollar. Under the agreement, sanctions against Iran are to be gradually
lifted, which means millions of more barrels on the world market every

A full-fledged return of Iran to the oil market will lead to
the collapse of already low prices and the sharp growth of competition,
say experts.

The price of Brent crude fell after the reports
about the achievement of the preliminary agreement between Iran and “the
six” regarding the question of the nuclear program. At the first news
of the agreement, which presupposes the gradual removal of sanctions,
including the oil embargo, hydrocarbons fell 5% in price, and then
“black gold” somewhat won back its position  and as of 23:00 on April 2
the cost of Brent was $55.21.

In 2012, the government of the IRI
stopped selling oil to the US and Great Britain in response to the
sanctions of Western countries, and in early 2013, to the European Union.
Before the sanctions, Iran exported almost 2.5 million barrels. Now
Iran produces 2.85 million barrels; it is the fourth largest in the
world in producing oil (Bloomberg’s data) and exports only 1 million
barrels a day, mainly to China and other Asian countries. However, Iran
has already expressed readiness to increase deliveries if the
restrictions will be removed.

Despite the fact that the
agreements to remove the sanctions are of a preliminary nature,
observers believe in the possibility of the growth of supply, and that
means the fall of prices this year. “The return of Iran to the global
oil market will bring a collapse of prices on ‘black gold’. Iran will enter the market with new volumes and likely will dump oil in search of
buyers,” says Sergei Pigarev, analyst at Rye, Man & Gor Securities.

the return of Iran, the situation for the rest of the world oil
producers will grow acutely worse, above all for Russia, which is already suffering from record
law prices on oil.

— Catherine A. Fitzpatrick