Russia Update: Belarus Seeks Some Distance from Moscow as It Tries to Land IMF Funds

January 30, 2015
Screen grab from at 9:00 am January 30, 2015

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.

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The ruble exchange rate has fallen to 70 to the dollar. Belarusian dictator Aleksandr Lukashenka has said he may pull Belarus from the Russian-dominated Eurasian Customs Union if members are not “equal.”

Russian Railways Chief Sues New York Times for Libel, But Where’s the Notice?

RAPSI, the Russian legal news service, reported on January 26  that Vladimir Yakunin, president of Russian Railways, had filed a suit in Presnensky Court in Moscow against the New York Times.

The suit claims that the Times “accused Yakunin of violating the law.”

Politico reported, citing TASS, that the article which triggered the lawsuit was published last April and claimed Yakunin, a close associate of President Vladimir Putin, paid him large sums of money: see Sanctions Revive Search for Secret Putin Fortune.

The paragraph in question appears to be the following:

American diplomatic cables obtained by the antisecrecy organization
WikiLeaks show sustained attention to the subject. The cables tied Mr.
Putin not only to Gunvor but also to Surgutneftegaz, a large oil
company, and even to Gazprom, but they used words like “rumored.” In one
cable, for instance, diplomats cited a General Electric executive
working in the region who privately said that Mr. Yakunin, the president
of the state-owned Russian Railways, “has made sizable cash payments to
Putin” and estimated that the Russian leader was worth “well over $10

But perhaps the wheels of Russian justice turn more slowly than assumed.

The communications director of the US Embassy in Moscow asked Peter Baker, the author of the article if he had a comment:

Baker did not respond, but Stevens might have asked the author of the original US Embassy cable at the Embassy since the Baker’s source for the passage in question was a diplomatic cable published by Wikileaks. US government employees are prohibited from reading WikiLeaks cables, however, unless they have certain security clearances, a rule that seems absurd given how publicized they are now by WikiLeaks, which is still the subject of a grand jury investigation. The rule has been imposed by lawyers to maintain the claim that the material is classified.

Yakunin has brought lawsuits for libel before, for example, a 3 million ruble  libel suit ($83,000 at the time, and now about $43,00) against Boris Nemtsov and Leonid Martynov, regarding exposes in the Sochi report.

In this suit, however, Yakunin is not seeking any monetary damages, as it is a suit on defense of “honor and dignity,” says his lawyer, Aleksey Melnikov. He is asking for a retraction for what he says is an untrue statement, to be published in Russia, the US, Germany and Austria.

The New York Times was originally given a set of stolen cables by WikiLeaks in 2010.

The court is to hold a hearing in the case on February 19. RFE/RL reported that New York Times spokesperson Eileen Murphy confirmed that the Times had not been served any legal papers in relation to the
lawsuit and the newspaper’s legal department had not heard from Yakunin
or his attorney about their complaint.

Catherine A. Fitzpatrick

Russian Spies May Be Related to Canadian Aircraft Deal

An aspect of the recent case of Russian spies charged in New York City which has not received much attention is their possible relationship to a Canadian aircraft deal, Moscow Times reports:

Russia’s intelligence services may have pressured a Western labor union during negotiations with a major aerospace company in 2013 to win favorable terms for a state-owned Russian corporation, according to charges filed against Russian banker Yevgeny Buryakov by U.S. authorities on Monday.

In a 26-page U.S. Justice Department report, an FBI investigator presented evidence that Buryakov, while working as an employee at Russia’s Vnesheconombank offices in New York, was conducting active economic intelligence gathering on behalf of Russia’s Foreign Intelligence Service (SVR).

One of the cases presented by the FBI focuses on a multi-billion aerospace deal between an unidentified company based outside of the United States and Russia, and a large state-owned Russian company. The report says the non-Russian aircraft company would not only sell dozens of its planes to the Russian company, but establish localized production — which was opposed by the aircraft firm’s union representatives.

Through a series of telephone transcripts and FBI investigation notes referring to Buryakov’s intelligence gathering on “Company-1,” the report paints a picture with remarkable resemblance to a $3.4 billion deal between Canada’s Bombardier Aircraft and Russia’s state-owned defense technology behemoth, Rostec.

Read the rest at Moscow Times here:

Rostec is headed by Sergei Chemezov, a friend of President Vladimir Putin from his days in the KGB in East Germany. Rostec now holds about two thirds of the Russian industry. We noted that Rostec had obtained the contract to handle a major new Defense Ministry program to monitor social media.

The Kremlin has a long history of trying to influence labor movements in North America. Moscow Times said they were unable to get a comment from the Canadian Auto Workers about the deal. 

Interestingly, Jerry Dias, who assumed leadership of Unifor, the merged union made up of the Canadia Auto Workers and Communications, Energy and Paperworkers Union of Canada said he condemned Russia’s harsh anti-gay laws and personally wrote an appeal to Putin regarding the legislation.

Ebay Curtails Services, PayPal Suspends Transactions in Russian-Occupied Crimea

Ebay, the online auction service, announced today that it was unable to provide its full services in Crimea, TASS reported

We regret being unable to provide our clients in Crimea with high-level support. We informed all our clients there about the current situation and our service desk is ready to assist all of them. We apologize for the inconveniences and look forward to return to Crimea and support smooth operations of all our services when circumstances in the region change.

PayPal had already announced that it was suspending its services last week, said TASS.

“We regret to say we are unable to provide services to clients in Crimea for the time being,” a PayPal representative told TASS

Although the statement was not made explicitly in the corporate communications, the suspensions are related to US sanctions against Russia for the forcible annexation of Crimea.

Ebay is the owner of PayPal.

PayPal was used by some Russian businesses to make payments in foreign currency outside of Russia, and by Russian workers to send remittances home, although domestic services in Russia have had more usage. PayPal received a license to run transactions within Russia in rubles only in 2013.

Popular Russian blogger Rustem Adagamov, who lives in Europe, met the announcement with a shrug.

Translation: Ebay is also ceasing work in Crimea. Well, that’s a mosquito bite, Obama! Crimeans don’t use your American services. So there!
Georgia’s President Margvelashvili Meets with NATO Deputy Secretary Vershbow
Ruble Rate Falls to 70 to the Dollar
The ruble rate fell to 70 to the US dollar today, and 79 to the euro. Brent crude is at $48.98
Belarus Seeks Some Distance from Moscow as It Tries to Land IMF Funds

Belarusian dictator Aleksandr Lukashenka said today that he may consider leaving the Russian-dominated Eurasian Customs Union if the members are not “equal,” reported.

Lukashenka made the statement just as the announcement came out that the International Monetary Fund (IMF) is planning a mission in Belarus.

Thus, he may be distancing himself from Moscow at a time when the European Union has just extended sanctions against Russia for its war on Ukraine in the hopes of getting an infusion of foreign aid to help his country’s economy, which has caught the ruble flu.

Late last year, Minsk halted foreign exchange transactions when the ruble crashed to 65 to the US dollar; in recent days the ruble has sunk lower to 69 and 70 and is currently at 70.15. But earlier this week, Belarusian banks resumed foreign currency exchange transactions on bank cards denominated in rubles, increasing the limits from €300 to €500.

Lukashenka said (translation by The Interpreter):

The main point is that if the agreements that we reached will be observed, then we will piously fulfill everything that concerns the Eurasian Economic Union. If they will not be observed, we reserve the right for ourselves right up to an exit from this union.

Lukashenka also referenced the trade wars that have gone on in recent years between Russia and Belarus and Kazakhstan.

“These wars, as you call them in the media — milk, meat, candy…this can’t be, as just went on recently, and I had to raise my voice to resolve this matter.

When Western countries imposed sanctions on Russia, Moscow imposed embargoes on imports from the West, then caught Minsk re-exporting banned goods. Lukashenka denied the accusations and said that Belarus is unrelated to the Russian sanctions. Kazakhstan holds the same position.

On the other hand, Belarus pays a subsidized price for Russian gas — $134 for 1,000 cubic meters of gas (compared to Ukraine’s nearly $400).

Lukashenka is now recovering from the painful lesson of a misspoken word yesterday that sent bond markets plummeting in his impoverished country, Bloomberg reported.

Yesterday in speaking about Belarus’ debt, Lukashenko said:

“This year, we need to pay $4 billion of our debts. If it’s hard, we’ll raise the question, start a dialog on restructuring this debt this year.”

The word restrukturizatsiya sparked a “record selloff” in the bonds, says Bloomberg, leaving bonds due this August with a loss of 12.4 cents on the dollars. Lukashenka hastened to clarify:

“Please calm down,” he urged bondholders. “My wish was to refinance our debts – did I say this right? Refinancing our debt. I just said that we have to repay around $4 billion this year.”

“The mounting uncertainty about the fallout from Russia’s financial crisis across the entire CIS region naturally increases investors’ sensitivity to negative news flow,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London told Bloomberg. “Volatility has returned with a vengeance.”

Lukashenka says Belarus “trades more with the West than with Russia,” which now only has 42% of Belarusian foreign trade. Germany is Belarus’ next largest trading partner.

The IMF mission plans to come in March, and Belarus is hoping for help. Its gold reserves have fallen by nearly $1.6 billion this year — $761 million in December alone — and had just $5 billion remaining as of January 1.

Belarus received a “stand-by” loan from the IMF in 2009-2010 in the amount of $3.5 billion, most of which it says it has paid back. David Hoffman, IMF representative in Minsk, confirmed that the government of Belarus has asked for a new loan but has not revealed hte amount.

The US has imposed sanctions on Belarus in its own right due to a long-standing severe human rights violations, including a crackdown on the opposition in 2010 following rigged presidential elections. The EU last extended sanctions against Belarus for a year in October 2024, which mainly consists of a visa ban on some 200 officials.

Mykola Statkevich, an independent presidential candidate, remains in jail after being sentenced to 6 years of prison in 2011, as do a dozen other opposition and human rights activists.

Catherine A. Fitzpatrick