Russia Update: Medvedev Approves $35 Billion Rescue Plan for Stricken Economy

January 28, 2015
Prime Minister Dmitry Medvedev takes aim at a farm in Bryansk on January 27, 2014. Photo by Bryansk Today.

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, and see also our Russia This Week stories ‘Anti-Maidan’ Launched by Nationalists, Cossacks, Veterans, Bikers and The Guild War – How Should Journalists Treat Russian State Propagandists? and special features ‘Managed Spring’: How Moscow Parted Easily with the ‘Novorossiya’ Leaders, Putin ‘The Imperialist’ A Runner-Up For Time’s ‘Person of the Year’ and It’s Not Just Oil and Sanctions Killing Russia’s Economy, It’s Putin.

Please help The Interpreter to continue providing this valuable information service by making a donation towards our costs‏.


Prime Minister Dmitry Medvedev launched a $35 billion rescue plan for Russia’s failing economy. Rosneft, the state oil company is requesting 1.3 trillion rubles (US $19.16 billion) from Russia’s National Welfare Fund.

New Greek Government Stalling New EU Sanctions Against Russia

And so it begins… Last night we posted an article explaining that the new coalition government in Greece, and alliance between the far-left SYRIZA and the far-right ANEL parties, is really an alliance between two pro-Putin parties.

Today we’ve posted an update from Anton Shekhovtsov who explains that the infamous Russian illiberal and nationalist thinker Aleksandr Dugin has close ties to the Greek SYRIZA party, even suggesting to them that Greece should remain in the European Union just to advance Russia’s agenda there:

The problem: both the European Union and NATO rely on consensus, and there have been growing fears during the last week that the new government in Greece could block further deterrents against Russia, or even roll back current sanctions.

Today those fears are coming true. RFE/RL reports that the EU has failed to negotiate the passing of new sanctions against Russia because Greece objected to the moves:

But EU diplomats told RFE/RL that they were unable to reach an agreement because Greek officials opposed the text of the proposed conclusions.

Consensus among all EU member states is necessary to approve new sanctions or to extend the current ones.

The ambassadors are set to reconvene early on January 29 in a bid to secure an agreement on possible Ukraine-related sanctions ahead of a meeting of EU foreign ministers later that day.

The office of new Greek Prime Minister Alexis Tsipras this week complained that it was not consulted about EU leaders’ January 27 statement calling for further “restrictive measures” against Russia.

James Miller

Sakharov Center in Moscow Fined $7,350, But Russian Memorial Society Fends Off Justice Ministry Liquidation Suit

The Sakharov Museum and Center in Moscow has been fined 500,000 rubles under the “foreign agents” law ($7,350) for failing to register as a “foreign agent,” the organization reported on its Facebook page.

The Sakharov Center received a notice sent by mail on January 20 to appear in court this afternoon, January 28, and hurried to gather together their papers and deploy their lawyer, Sergei Lukashevsky, executive director of the Center said on his Facebook page.


They arrived in court to find out they had been handed the maximum fine under the law for failure to self-register as a “foreign agent,” a designation that is arbitrarily given to organizations if they engage in vaguely-specified “political activity” and also receive foreign grants.

The organization is planning to sue the Ministry of Justice for making the designation on the grounds that their civic activities do not constitute “political activity” as they do not participate in elections. The Justice Ministry indicated that several remarks made in public affairs panel discussions as well as an appeal to stop the Ukraine conflict on humanitarian grounds were evidently used to make the declaration of “political” activity.

At least 30 other organizations in Russia, many of them involved in human rights programs related to Russia or neighboring countries, have also been designated “foreign agents,” causing some of them to suspend their activities. 

And all non-governmental organizations have come under increasing government pressure.

The Russian Memorial Society, the national organization of Russia’s leading human rights movement, had at least a temporary victory at the Supreme Court today, which turned down the Justice Ministry’s motion to liquidate the group for “violations” of its own charter, reported.

The Russian national organization was not accused of “foreign agent” activity but was targeted in the overall crackdown and as part of its relationship to two other Memorial societies which were given this designation, the Human Rights Center and the St. Petersburg society.

While the organization whose full name is “Russian Memorial Historical, Education and Human Rights Center” was registered in the 1980s and has been in existence for decades, the authorities have newly found fault with an aspect of the charter that previously didn’t bother them — the affiliation structure of chapters of the group in other cities and its informal nature. The organization did not even have a bank account, and reported its expenditures as “zero” every year.

As the movement was a grassroots effort that took place in many different cities as Russians struggled to commemorate the memory of the Communist period and its crimes against humanity, the affiliates took different forms, for example the research center of historians in St. Petersburg, where the Memorial organization has already been shut down under the “foreign agents” law, or a group focused on human rights issues in Ryazan, or survivors’ groups in other cities. Activities of the groups range from commemorating the victims of Stalin at annual events to sponsoring essay contests at local libraries for the grandchildren of the GULAG prisoners to write about their recollections of their grandparents.

The Justice Ministry wanted the organization to create one strong Moscow central office and manage the local chapters more closely, so for example city organizations like Pskov Memorial or Voronezh Memorial were supposed to convert from independently-registered groups to chapters subordinate to a central Moscow office, something that groups spread across Russia’s 89 subjects and separated by hundreds if not thousands of kilometers did not want to do.

The organizers in Moscow rejected this concept in principle as an undue interference in freedom of association guaranteed under the Constitution.

While the Justice Ministry filed documents indicating that in fact, Russian Memorial Society made amendments to its charter to remove the “violations,” the Justice Ministry didn’t withdraw its suit on technical grounds, saying the information wasn’t entered into a government registry.

Oleg Orlov, chairman of Memorial’s Human Rights Center, said that the group would go on working as before, although it now has more technical requirements to meet. He believes the suit was launched originally to close down his organization, but then the Justice Ministry softened its position. The Human Rights Center has been critical of human rights both in Russia and in Ukraine, filing reports on abuses by police in Chechnya as well as by both Ukrainian forces and Russian-backed separatist fighters in the Donbass.

A hurdle the group is now struggling to make is the requirement for the national office and the local organizations to open up bank accounts, which require a minimum of 100,000 to 150,000 rubles ($1,475 to $2,214) — beyond the budget of small provincial groups in particular.

In November, the organizations held a conference where the started the process to find a way to change the structure from city organizations to chapters of a national organization, Orlov told RBC. The organization asked to postpone the court hearing at that time because the process would take some time.

Over the weekend, Memorial condemned statements by the leader of the self-proclaimed ‘Donetsk People’s Republic,’ Aleksandr Zakharchenko, who made comments about no longer taking prisoners which Memorial said was a breech of the Geneva Convention:

Catherine A. Fitzpatrick
Russian Prime Minister Medvedev Launches $35 Billion Bail-Out for State Businesses, Banks

Russian Prime Minister Dmitry Medvedev signed into law an anti-crisis program of 2.34 trillion rubles (about $35 billion), the Wall Street Journal and reported. The Wall Street Journal reports:

Finance Minister Anton Siluanov said Wednesday that the cost to Russia
from its recent problems is around $200 billion. Mr. Siluanov cited falling oil prices
as one of the causes but didn’t elaborate on any others. Presenting the
anti-crisis plan to the upper house of parliament, he said that
Russia’s economy should now adjust to the new reality.

“Oil prices will remain at the low level and it’s highly unlikely
they will return to $100 per barrel. There will be no bouncing back any
time soon, like it was in 2008-2009,” Mr. Siluanov said.

The combination of sanctions and oil prices is expected to push Russia into a recession this year.
The Bank of Russia forecasts the economy will contract for the first
time since 2009, with gross domestic product shrinking by up to 4%.
Economists are even more pessimistic. Inflation has already reached
double-digits and isn’t expected to abate in coming months.

Russia has lost half the value of its ruble compared to foreign currency rates in the last year, as the price of oil has dropped with increasing US reserves; Brent crude is at $49 a barrel today.

Capital flight from Russia has doubled to $151 billion in 2014 compared to 2013, Business Insider reported today.

Medvedev went back to Putin a second time after the budget was approved in principle, this time with a higher estimate. The details are still being worked and the final version is expected to be published today. He also said 170 billion rubles ($2.5 billion) remain from the original anti-crisis fund of 193 billion rubles ($2.8 billion).

Russia will be attempting to tap into its reserves cautiously, but already the demands by oligarchs to keep their state businesses afloat have been high, as we reported regarding Rosneft’s request for $19 billion from the National Welfare Fund.

As English-language TASS reported yesterday:

“Our task is to avoid spending sovereign reserves thoughtlessly,” the
finance minister [Siluanov] said. “Measures for optimizing the budget and
implementing structural reforms are stipulated in the anti-crisis plan,”
he said.

“The plan is intended for about one year and stipulates the
preparation of new structural reforms so that we can have a new quality
of state governance, a new quality of the budget and so that we can keep
our reserves instead of spending them in a year or two,” he said,
adding the anti-crisis plan had been approved by the country’s

The $35 billion also includes a $15 billion bail-out for banks, which have been under Western sanctions since Russia’s forcible annexation of the Crimea. reports:

Last Friday, Russia’s Agency for Deposit Insurance approved a
list of 27 lenders that’ll get the bailout money including VTB
Group ($4.5 billion, which is around 310 billion rubles),
Otkrytie group ($1 billion or 65.1 billion rubles) and
Vnesheconombank (VEB) ($300 million or 20.4 billion rubles).

— Catherine A. Fitzpatrick

Rosneft Asks to Take $19 Billion from Russia’s National Welfare Fund

Rosneft, the state oil company, has requested 1.3 trillion rubles ($19.16 billion) from Russia’s National Welfare Fund (NWF) for 28 projects, Vedomosti reported.

Nikolai Podguzov, deputy minister for economic development, said the amount supplied by the NWF makes up 40% of each project, except for the Zvezda ship-building complex. The total budget for these projects is 3 trillion rubles ($44.26 billion). Currently, the Fund has a limit of 40% on investment in Russian assets but a total of no more than 1.16 trillion rubles ($23.67 billion). Rosneft’s request thus exceeds the quota allocated for infrastructure projects.

Of the 28 projects, only the Zvezda project has been approved as strategically vital. The total cost of the project is 110 billion rubles ($1.6 billion), and 89 billion ($1.3 billion) is requested from the NWF. The rest of the projects are related to oil extraction and processing. Not all of the projects outlined by Rosneft may be approved, cautioned Podguzov, as the government also has to determine how the Fund must be used for all its anti-crisis measures.

But the fact that Igor Sechin, a hardliner a close associate of President Vladimir Putin, is going to be allowed to take a healthy chunk of the NWF lets us know how the Western sanctions work: they don’t drive oligarchs away from Putin, they don’t cause them to put pressure on him to stop the war in Ukraine, because he is willing to tap into the country’s resources to pay them off. (See our analysis Are Putin’s Oligarch Pals Chilling on Him? And Will It Help Stop the War in Ukraine?

Yesterday, Dmitry Medvedev signed an anti-crisis plan which will require 550 billion rubles ($8.10 billion) to capitalize state banks and VEB (Vneshekonombank). (An earlier version of Vedomosti‘s stories said “VTB, and Gazprombank” but this was changed to the more general term “state banks”).

An official who remained anonymous told Vedomosti that Rosneft really had no acceptable projects worthy of investment from the NWF, and should have used money from Rosneftegaz, the related gas company, to fund its projects.

As Russian Finance Minister Anton Siluanov said, the NWF should be spent cautiously as it makes up part of Russia’s foreign exchange reserves and is the “safety pillow” for the economy, reported.

“The National Welfare Fund is the
same as the Reserve Fund, a source in the case of a reducing
revenue base,” he said.

— Catherine A. Fitzpatrick

UPDATED: US Professor Stephen Cohen’s Falsehoods on the War in Ukraine on Thom Hartmann Show

Stephen Cohen, professor emeritus of New York University and Princeton University, appeared on the Thom Hartmann “progressive” radio show on January 26, falsely claiming that the US was training “extremely right-wing” fighters in the Ukrainian military and Americans were fighting alongside them.

Neither claim is true, but are based on Kremlin propaganda outlets such as which may have a small audience on television, but gain a wider circulation from an Internet site and YouTube channel disseminated through social media.

To understand why Cohen could be receptive to such claims, it’s helpful to know that he has a long history of tilting toward the Kremlin in his critique of the American government, and in recent years has been openly supportive of President Vladimir Putin.

Cohen also believes that World War III is about to break out, as he told Thom Hartmann during the show:

Washington is determined to strike at Russia, short of militarily — but maybe that, too — as hard as possible. Europe is divided. About half of Europe wants the sanctions to end against Russia partly because they’re having an economic blowback in Europe.

In fact, it’s not really “half of Europe” but as even Russian propagandists are forced to concede, just seven countries highlighted in recent weeks which are believed to be advocating the lifting of sanctions, but which have not prevailed in internal EU debates. They include Austria, Hungary, Italy, Cyprus, Slovakia, France and the Czech Republic — countries either heavily dependent on Russian gas, or who do significant business with Russia, or where right-wing governments have allied with Putin.

As we reported today, Greece has just joined this group with the election of a new government, an alliance between the far-left SYRIZA and the far-right ANEL parties, two pro-Putin parties now stalling the EU’s effort to extend sanctions over Russia’s war in Ukraine.

Cohen spoke of an “Archduke Ferdinand” scenario where “the dominoes crash, and you end up with World War III.” It starts, he says, because “oil glues the economies of these countries” in the European Union dependent on Russian gas and oil.

Cohen describes how fierce fighting was renewed in a large and important city last weekend (he means Mariupol) — and says while Washington is blaming Russia for this escalation, “it’s not clear.” He then contends:

Now we get reports — confirmed — that an American general…Benjamin Hodges, has arrived in that area to train what they call the National Guard. This is in effect these battalions — often extremely right-wing — some would say neo-fascist — I won’t say that but there is that suspicion fighting against the Russian-backed rebels in the eastern Ukraine.

“The renewed fighting in the Ukraine might mean such a domino,” he says, as a political dispute in Ukraine becomes a Ukrainian civil war. He claimed to have predicted that “the two sides would align with Russia and Washington, and would become a proxy war,” and that now this “proxy war could lead us to a Cuban Missile crisis situation.”

In fact, as Defense News explains, American soldiers will begin training four companies of the Ukrainian National Guard only in April, as Lt. Gen. Hodges, head of US Army in Europe said during his first visit to Kiev on January 21. There are no trainers in Mariupol now.

Russian war propaganda repeatedly ties the ultranationalist group Right Sector to the National Guard, but has not substantiated claims of atrocities.

And the companies that the US will be training are in the National Guard, not the volunteer battalions per se. There has been no indication that this training relates to two volunteer battalions, Aidar and Azov, heavily covered in some Western and Russian state media, and implicated in some abuses such as kidnappings. They are described as using Nazi-like insignia and espousing “fascistic” views.

Aidar Battalion is a “territorial defense battalion” and reports to the Ukrainian Defense Ministry and Azov Battalion reports to the Interior Ministry. These battalions, made up of volunteers, are members of the National Guard, and as such, are a reserve component of the Armed Forces of Ukraine under the jurisdiction of the Ministry of Internal Affairs. They are not just a band of partisans.

Amnesty International documented four incidents of kidnappings in a report last year and suspects more based on some citizens’ testimonies, but these allegations, while serious, are minimal compare to the thousands reported by the UN and OSCE regarding the Russian-backed separatist fighters, for example in a report by the UN High Commissioner for Human Rights regarding 812 kidnappings, some involving torture and even death, released last year.

Even without investigations by international monitors, the Russian-backed separatists’ own war propaganda films amply record their torture of POWs, as we reported on those taken after the battles at the Donetsk Airport and at Krasny Partizan.

Whatever units that Hodges’ officers do train, we can be sure that this operation will receive maximum scrutiny not only from US media, but Congress, given the numerous press claims that certain battalions in Ukraine have mistreated POWs.

That will be far more scrutiny than Russian tanks and troops get from the same media, although as have been reporting, there is ample proof of Russian military presence in Ukraine, both in the form of volunteers and contract soldiers that are regular recruits re-booked as contractors to maintain “plausible deniability” that Russia’s “little green men,” as they have come to be called, are not “really” in Ukraine.

Cohen also made the false claim that “Americans are fighting in Ukraine”:

Yesterday, there were video reports, that seemed to indicate, by the voices speaking, Americans, fighting with Ukrainian forces. So let’s say this is true, and an American is killed by somebody — a sniper — by his own troops — Ukrainian troops, in Ukraine, that’s the kind of tripwire, with NATO, the United States and Russia not quite eyeball-to-eyeball but let’s say witihn shouting distance militarily, in Ukraine, eastern Ukraine, that could lead to this horrible scenario.

This is based on disinformation widely publicized in recent days regarding a man in camouflage with a backpack filmed after the city of Mariupol was shelled by Russian-backed forces, headed by a Russian Grad crew commander.

We investigated the claims and found that the Mariupol TV video, and another video made by the Azov Battalion showed the same man, who turned out to be a British citizen named Chris “Swampy” Garrett from the Isle of Man.

Garrett, an expert on de-mining, was in Ukraine to help remove unexploded ordnance, including Grad rockets that had not detonated discovered on the playground of Day Care Center No. 42.

Garrett denied that he was any “American mercenary”; he is a volunteer who just wanted to help the Ukrainian people.

Russian propagandists have also made much of an American citizen named Mark Paslawsky (@BSpringnote on Twitter) who was killed in the battle of Ilovaisk last August. Paslawsky, a US citizen of Ukrainian heritage who hailed from New Jersey, moved to Kiev some years ago where he worked in finance. He also decided on his own to join the Donbass Battalion., the best-known Kremlin mouthpieces has made much of the fact that Paslawsky was the nephew of Mykola Lebed, a Ukrainian resistance fighter convicted, and imprisoned for the murder of Polish Interior Minister Bronislaw Pieracki, in 1934, who escaped and was accused of collaboration with the Nazis in the 1940s.

Lebed’s history has been debated over the years, as Ukrainians claim that the Soviet KGB tried to discredit those who opposed Soviet rule with the Nazi label. Even so, Lebed’s group may indeed have been involved in the murder of Poles and Jews. There’s another principle here, however, which is that a nephew should not be responsible for his uncle’s actions — a point never acknowledged by the Russian government.

Other than Paslawsky, we’re not aware of any Americans who fought in Ukraine or died — and we can point out that when Paslawsy was killed last August, no American military response followed.

That hasn’t stopped Russian disinformation shops from periodically peddling the story that “hundreds” of American mercenaries are fighting in Ukraine.

Last summer, the notorious Col. Igor Strelkov claimed grotesquely at a new conference that the bodies of dozens of black American fighters were strew across the fields of the Donbass and he could prove this to reporters. He never did. In the end, only one terrified prisoner of the “DPR” was released — a British citizen named Mohammed Yahia Abu El Gasim, 21, who had been studying medicine in Donetsk, who later told the story of how he was arrested and forced to perform slave labor to the British press.

UPDATE: sent us an email:


— Catherine A. Fitzpatrick