Russia Update: Patriots and Ultra-Nationalists Turn Out for Crimean Annexation Anniversary

March 18, 2015
Members of the ultranationalist group National Liberation Movement (NOD) unfurl a banner and raise an Anti-Maidan balloon at a concert and rally to commemorate one year since the Russian occupation and forcible annexation of the Crimea. March 18, 2015. Photo by Yod News

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.

ExxonMobil is demanding that Russia pay back millions of dollars in overpaid taxes.


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’
Former Russian Intelligence Officers Behind Boisto “Track II” Talks – and Now the Flawed Minsk Agreement.

See also our Russia This Week stories:

All The Strange Things Happening in Moscow
Remembering Boris Nemtsov, Insider and Outsider (1959-2015)
Ultranationalists Angry over ‘Capitulation’ of Minsk Agreement,
‘Anti-Maidan’ Launched by Nationalists, Cossacks, Veterans, Bikers

The Guild War – How Should Journalists Treat Russian State Propagandists?

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

South Ossetia and Russia Sign Alliance and Integration Treaty – But with What Implications?

Today a ceremony was held in the Kremlin to sign the integration treaty between Russia and South Ossetia, and President Vladimir Putin met with South Ossetian President Leonid Tibilov.

The treaty formally referred to both “alliance” and “integration,” but chose to focus more on the word “alliance” and stress military cooperation.

It was the signing ceremony that was supposed to happen on March 12 and didn’t, because Putin went missing the week before then.

But now this occasion, like his meeting in St. Petersburg with Kyrgyz President, and his chairing of the Victory Day planning committee meeting  yesterday, were meant to highlight how vigorous the president is supposed to be now.

As we wrote last week, excuses were made about the treaty-signing postponement, to the effect
that it was about lack of readiness of the documents, and the speaker
of parliament jumping the gun to release an early copy before Moscow did.

It was more likely related to the reasons for Putin’s disappearance
— which remain a mystery, as they might be related to illness, as
rumored, or some kind of power struggle or slow-moving coup in which
other figures, notably Sergei Ivanov, chief of staff, may have been
involved. A photo on showed Ivanov, whose duties do not include foreign affairs, was present. (Vyacheslav Surkov, the Kremlin aide responsible for relations with South Ossetia and Abkhazia did not appear to be present.)

Back on the 12th, the Russian army staged massive rocket artillery
drills — indeed, such combat readiness exercises are going on
throughout Russia recently.

The signing of this treaty was greeted with skepticism — even cynicism. It is noteworthy that Carnegie Russia, which usually hews to an establishment line on the Kremlin and is seldom sharply critical of Putin, had this to tweet:

It’s useful to go over the history again.

But the question is now whether Russia will see it as an advantage to essentially “swallow” South Ossetia or keep it as a rump state, not recognized by the US or the EU and recognized only by three Russian allies outside the “near abroad” — Venezuela, Nicaragua and Nauru.

The Latin American countries make such alliances as anti-American foreign policies; for Nauru, the recognition is part of its own self-identity and in tandem with its recognition of Kosovo, but also helped by $50 million in humanitarian aid from Russia.

Russia is likely to maintain at least the fiction of “independent statehood” for South Ossetia for these reasons:

1. Invocation of the “precedent” set by Kosovo’s independence is a major staple of Kremlin propaganda and was used in its takeover of South Ossetia and Abkhazia. If these breakaway states, recognized as part of Georgia’s territory, don’t actually get to be independent, the value of the Kosovo propaganda trope breaks down.

2. In the Soviet era, the Kremlin maintained the fiction that the Belarusian and Ukrainian soviet socialist republics were independent so that they could have separate votes at the UN; this gave the Soviet Union three votes instead of one, always in a bloc. For a number of potential international purposes, whether the Collective Security Treaty Organization or the Eurasian Customs Union or the Shanghai Cooperation Organization, Moscow might like to keep the options open to add to its voting bloc with another dependent independent state.

3. Russian public opinion is tepid about adding these breakaway territories for the practical reason that they add to the nation’s social and defense costs and become a burden, like financing Crimea’s pensions and other social costs.

4. Having soldiers deployed in Russia’s wars but not technically from Russia can have its advantages.

As always, it’s useful to go back over Paul Goble’s writings and see how support for annexation has been falling:

This pattern almost certainly reflects the concerns of Russians about the costs both direct and indirect Putin has incurred by annexing Crimea and likely means that there is far less support for absorbing parts of the former Soviet republics neighboring Russia than there may be for federalization or partition of them.

That in turn means that any Putin project for the restoration of a larger empire within the borders of a single state is likely to be far less welcome in Russia itself than many in the Kremlin and its partisans elsewhere think. A remarkable development, given the massive propaganda campaign the Russian president has unleashed on behalf of that idea.

“Integration” versus “annexation” still means that Russia has a defense relationship with South Ossetia and the most operative point is this language, as reported:

According to the draft treaty “separate units of the armed forces and
security agencies of the South Ossetian Republic will become part of the
armed forces and security agencies of the Russian Federation.”

Lots of South Ossetians have already been seen fighting in the war in Ukraine. Last summer, when the notorious Givi, head of the Somalia Battalion, commandeered a civilian apartment building across the street from the Donetsk Airport, reinforcements arrived waving the flag of South Ossetia.


Col. V. Kiselyev, deputy foreign minister of the self-proclaimed “Lugansk People’s Republic” decorated soldiers from South Ossetia in December 2014:


– Catherine A. Fitzpatrick

Russia Using INTERPOL To Target Russian Dissidents Living Abroad

In December, the Russian Investigative Committee opened a criminal case against Aleksandrina Markvo, the common-law wife of Vladimir Ashurkov, a key ally of Alexey Navalny.

The next day, Facebook, at the request of the Kremlin, censored Facebook pages supporting Navalny. Clearly, the charges against Markvo had more to do with politics than embezzlement.

Today, Ben Judah has published an article in Newsweek warning that even though Ashurkov and Markvo have fled to London, they may still be Putin’s next target:

Exclusive: Opposition Leaders in London Are Putin's Next Target

Finbarr O'Reilly for Newsweek The Kremlin's war on the Russian opposition has now become so savage it has torn up its own rulebook. Russian dissidents struggling against Vladimir Putin used to be sure of two things. The security services would not shoot them and they would not come after their families.

View full page >

Mar 18, 2015 22:32 (GMT)

Judah writes:

The Kremlin is coming after Ashurkov the same way it is coming after Navalny: with “lawfare”, using fabricated court cases as a weapon to silence and paralyse them. Putin’s regime has been mounting an escalating campaign on the opposition movement since 2012. The Kremlin first opened more than a dozen politically-motivated lawsuits against protesters who took part in a May 2012 rally that turned violent. Then it brought charges against Navalny, locking him into an ongoing, seemingly never-ending series of Kafkaesque trials. Many who had publicly donated money, often as little as 1,000 rubles (£11) to the campaign, have been harassed.

“Some of our strongest allies were even forced to leave the country,” says Ashurkov, “this wave of persecution even went as far as touching Russia’s leading economist and close government adviser Sergei Guriev, who was a public supporter of Alexei Navalny. The next wave of persecution now is they are trying to punish Navalny and myself by turning against our family members. This is their plan to stop us.”

Judah then explains that a “Red Notice” has been issued through Interpol encouraging member states to detain Markvo, which is preventing the couple from traveling out of fear of arrest and could become a major problem if their visas are denied.

Interpol, the International Criminal Police Organization, is a group of intergovernment organization consisting of 190 member countries, including the UK and Russia. But it’s “Red Notices” are voluntary. The tactic of issuing Red Notices for opposition leaders is something which is not new, even if Russia is using it more often recently. Just this week, INTERPOL announced that it is working with a human rights group, Fair Trials International, to review the practice of issuing and acting on Red Notices.

Below is part of Fair Trial’s statement, which says that changes at INTERPOL are specifically designed to prevent abuses by Russia and other states which may target dissidents through the criminal justice system:

The changes introduced are in line with recommendations made by Fair Trials, and also by the Commission for the Control of INTERPOL’s Files (CCF). Since September 2014, enhanced measures have been implemented by the General Secretariat in relation to compliance checks before any Red Notice is published or visible to member countries. This important change means that Interpol has the opportunity to weed out cases of abuse through computerised and manual checks before the wanted person alert is distributed across the global network of police forces. It will prevent cases like that of Bill Browder in which INTERPOL publicly refused Russia’s request for a Red Notice but only after the information had been circulated to INTERPOL’s 190 member countries.

In addition, at INTERPOL’s General Assembly which took place late last year, a resolution was adopted supporting a comprehensive review of INTERPOL’s supervisory mechanisms at all levels, including National Central Bureaus, the General Secretariat and CCF. Fair Trials has been invited to contribute to the working group established to oversee this review.

Fair Trials has been campaigning for simple changes to make INTERPOL a more effective crime-fighting tool since 2012, and these reforms are a really positive step. Our 2013 report and subsequent work have shown the devastating impact a Red Notice can have on refugees and exiled dissidents who are targeted by countries who misuse INTERPOL’s alert systems. There is, however, still work to be done.

In addition to these changes, our report outlined other steps that would help to strengthen respect for human rights, as well as strengthening INTERPOL, making it a more effective crime fighting tool. It is still possible that abusive alerts could be missed by the system and while this remains the case, there still needs to be an effective and transparent process in place so that people who have been affected are able to challenge the alerts. Currently, the way to have a Red Notice removed is an arduous and unclear process. The CCF remains the only realistic avenue that victims can apply to have their reconsidered, and this committee meets just three or four times a year for a few days. You can read more on our recommendations for reform here.

James Miller

‘Happy Russians’ in Moscow Rally for Crimea – But Why So Few in Crimea Itself?

As we reported earlier, some 40,000 people turned out for a state-sponsored rally and concert to commemorate the one-year anniversary of the forcible annexation of the Crimea..

State media has broadcast many pictures of happy Russians with accordions and folk dancers and t-shirts and posters saying “Crimea is Ours.”

But as Yod News and other independent media and bloggers have pointed out, why aren’t there such happy crowds in Crimea itself?

Turnout indeed seems to be sparse at events arranged in Simferopol, Sevastopol — where it was snowing — and other towns.

Only men in uniform are visible in some of the pictures.

Translation: #Simferopol today the occupiers marked in formation through empty, wet streets.
Translation: Yalta now.
Translation: In Moscow along more people turned out than throughout the whole Crimea. It’s immediately apparent for whom this is a holiday, and for whom it’s disappointment and sorrow.
Translation: I clearly was too hasty in my last post. Here is the very peak of the festivities of the occupation in Yalta.

As Yod quipped in showing this tweet below, “In Yalta, there is also joy and mass strolling”:

Translation: Yalta now.

Translation: Simferopol today.

Yod also collected examples of what appeared to be evidence that people were turned out from their schools, and that they were paid to attend the events:

Translation: we are going to a rally in honor of Crimea from school with @KamLiza. What sort of crap are we doing?)

Translation: Line for 300 rubles for Crimea.

— Catherine A. Fitzpatrick

Twelfth Cancer Suicide in Moscow

Edmund-Mikhal Lyude, a professor at the Bakluyev Center for Heart Surgery, committed suicide today, after leaving a note that he couldn’t stand to suffer from cancer, Yod News reported.

He was the 12th such person since February to opt for ending his life rather than to undergo treatment in the Russian health care system, where pain medications are severely restricted.

Lyude jumped from the window of his 7th floor apartment.

Since February, 11 other persons sick with terminal cancer have committed suicide.

Yod has published a lengthy investigation on the failure of Russia to develop palliative medicine to address the suffering of patients and their relatives.

Leonid Pechatnikov, deputy mayor for social development at first said that these suicides were the result of psychiatric illness and claimed that there wasn’t a problem obtaining painkillers in Moscow.

But Yod found many indications of terminally-ill patients reporting difficulties in obtaining pain medicine; others who aren’t dying have even more obstacles.

Georgy Novikov of the Yevdokomov State Medicine and Dentistry University told Yod about 700,000 to 1,000,000 patients in Moscow need palliative care, and of these about 2/3 are ill with cancer.

It’s not just that patients are denied medicine; authorities actively prosecute those whom they suspect have obtained medications illegally.

Mariya Ilina, a resident of a town in the Volga Region has been investigated for the last half year on suspicion that she obtained painkillers for her severely ill mother, after the chief physician at the district hospital where here mother is a patient filed a complaint.

Ilina said the doctor informed on her after she said in desperation during one visit that if he didn’t prescribe medications to help her mother, who had suffered from a stroke and has a brain tumor, she would go and buy medicine herself on the black market. After her mother died, she continued to be hauled in for interrogation.

This punitive climate means that doctors themselves fear prescribing painkillers.

Western activists have pushed for Russia to adopt not only better palliative medicine with access to painkillers, but a different approach to drug addiction that emphasizes “harm reduction” such as providing clean needs to drug users to prevent the spread of AIDS, rather than focusing on prevention and cures.

Authorities have rejected such models as sanctioning drug use, which is rampant in Russia. Last year, the director of the Russian Federal Drug Control Service blamed Afghan heroin for the deaths of at least 500,000 people in 13 years. Illegal drug trafficking business is estimated at $100 billion a year, he said.

Last month, regional media covered the near-death of a Russian man in Lithuania who overdosed on “spice” on the day a funeral was held for his friend, who died of spice.

Twitter is filled with references to spice both from users and government propagandists trying to curb its use.

Spice is a cannabis substitute made with herbs and synthetic drugs that many heroin addicts have turned to, but have found as equally addicting. At least 25 deaths and 700 overdoses have been recorded in the last year from spice.

Recently a famous circus performed died of a spice overdose.

Translation: After smoking spice, a famous circus performer died in Yaroslavl. Two others were severely poisoned.
Translation: Friend of overdosed performer: Spice was sold to us by a former circus worker.
Translation: #Murderer of 7 people nicknamed #Mosgaz warns youth of using spieces – VIDEO

Russia also rejects the approach of methadone maintenance for heroin addicts, which causes some of them to turn to dangerous alternatives.

The combination of a poor health care system with further cuts to spending due to the economic crisis; the abusive criminal justice system; and lack of adequate treatment facilities mean that the problem of both drug addiction and failure to provide pallatiative care are likely to worsen in Russia.

– Catherine A. Fitzpatrick

Navalny Says ‘Financial Restrictions for Oligarchs Would Hit Putin’s Regime Harder than Drones” for Ukraine

Opposition leader Alexey Navalny is causing a stir again today with an interview for the Washington Post in which he declined to offer support for arming Ukraine – although he did not make a call against it.

Asked about his response to the murder of his fellow leader in the opposition movement, Navalny said:

This murder was sanctioned by the leadership of Russia one way or
another, and this act of scaring people is aimed not at people like me,
but those who are still hesitant. People who are probably around
Vladimir Putin or members of the ruling elite.

The basic
compromise of the authorities has been violated. Because they killed a
person from the system, a person who once almost became the president of

 What will the opposition do now?

I do not want to be a dissident, like in Soviet times. I don’t like this
role. However, in the current situation, we have to use recommendations
and the experience of those times. So now the issue is not about
organizing, not politics, but probably morals. We should do what we
believe in.

Birnbaum then raised the question of arming Ukraine:

In Washington there’s a discussion about arming Ukraine to
increase the cost for Russia. Is this a good way to help Ukraine? Is
this a good way to calm the situation?

Navalny replied:

I do not think that supplies of weapons, well, lethal weapons, will
change the situation dramatically. Just because the fact is that a
military victory of Ukraine over Russia is impossible. Putin will get
new facts that Americans are fighting the war in Ukraine and not
Ukrainians. But I cannot assume that the Ukrainian army, even armed with
American drones, will win a victory over the Russian army.

The supply of weapons is a somewhat popular step inside the United
States. This is something for the American public opinion. “We armed
Ukrainians so that they could resist.” I would say that introduction of
visa and financial restrictions for oligarchs would hit Putin’s regime
harder than drones.

While clearly Navalny didn’t make a specific call here, and said
in his view arming Ukraine was futile because it would inevitably lead
to war with Russia which the West would decline, his statement is
already being picked up and twisted to emphasize  that as a Russian nationalist,
Navalny is out of step with liberals at home and abroad.

Navalny in fact merely said personal sanctions on those closest to Putin would be a more effective way to deter Russia.

No opposition leader of any political persuasion in Russia has called for arming Ukraine.

Read the rest of the Washington Post interview here:

Today, Navalny left Moscow for the first time in three years ( except for one trip to give testimony in the Kirovoles case), to visit his brother, Oleg, who was sentenced to 3.5 years of labor colony. The charges against him related to a mail order business contracted by the French firm Yves Rocher were  widely viewed as fabricated, as Yves Rocher said they had no claims against the Navalny brothers.

Navalny has repeatedly said that he views the imprisonment of his brother, who was not involved in opposition activity, as a way of “taking a hostage” to put pressure on him.

He posted some pictures on his blog.


Yesterday, a Moscow court turned down a request from the Federal Corrections Service to turn Navalny’s own suspended sentence in the Yves Rocher came into time he must serve. The request was turned down due to a failure to fill the forms out correctly, and it’s possible the request will be resubmitted. Because Navalny has been arrested a number of times since the suspended sentence for picketing and leafletting without permission, he could face jail time.

– Catherine A. Fitzpatrick

Patriots and Ultra-Nationalists Turn Out for Large Rally and Concert on Anniversary of Crimean Annexation

The mass rally and concert at Vasilyevsky Spusk (St. Basil’s Descent) under way now has attracted at least 37,000 people, according to Mob Counter, a group that estimates crowds on the basis of the numbers who pass through mandatory metal detectors. TASS claims that there are already 110,000 in the crowd.

The independent media has reported that, a site that recruits people for mass meetings, has placed aids offering [payment to some participants. There is also evidence that letters have gone out to offices and schools telling administrators to turn out people.

The event has attracted both ordinary state TV watchers caught up in patriotic fervor as well as organized ultranationalists.

Translation: More than 110,000 peole have gathered to attend the rally and concern “We Together” in the center of Moscow.

Translation: “In expectation.” #Moscow, Vasilyevsky Spusk.

The woman is wearing a t-shirt that says “Thank you for Crimea” and the man has a t-shirt with a stencil of Putin in dark glasses that says “Most Polite People.” This is a reference to the soldiers in camouflage without any distinguishing marks that took over public buildings and military bases in Crimea last year who were dubbed by state media as “polite people.”

Translation: Enormous flag of NOD (National Liberation Movement).

NOD was founded by Russian Senator Yevgeny Fyodorov who is infamous for his YouTube speeches about how the Kremlin has been taken over by Western intelligence.

– Catherine A. Fitzpatrick

37,000 Attend Rally and Concert on Anniversary of Crimean Annexation –

This evening at least 37,000 people have gathered to attend a rally and concert to mark the one-year anniversary of the forcible annexation and occupation of the Crimean peninsula in Ukraine.

Mob Counter, a group that counts crowds by the number of people who pass through mandatory metal detectors for mass events, puts the number at 37,000, although other estimates were as high as 45,000.

Translation: At this moment about 37,000 people have gone through the metal detectors. The flood of people is too large to give more precise figures.
Translation: About 45,000 people awaiting a concert, “We Together.”
Translation: Broadcast  of Vasilyesky Spusk.
Translation: in a few minutes the holiday concert in honor of annexation of the Crimea with Russia will start on Vasilyevsky Spusk.
Translation: We are happy to be together with the Crimea – they say there are 37,000 people on Vasilyevsky Spusk (according to @mob_counter)
Translation: A concert and rally at Vasilyevsky Spusk is starting in honor of annexation of the Crimea. We have live online broadcasting.

Translation: About 45,000 people have gathered for “We Together,” a rally and concert on Vasilyevsky Spusk.

The location of Vasilyevsky Spusk (St. Basil’s Descent) near St. Basil’s Cathedral by Red Square has been a venue for concerts in the past, for example a famous Pink Floyd concert in 2006.

But friends, family and supporters of Boris Nemtsov are disturbed at the choice of venue, which is right near where he was assassinated on February 27.

Several photos have appeared on Twitter shot from the Bolshoi Moskvoretsky Bridge (see above), where Nemtsov was killed, showing memorial flowers that still remain at the site, with a giant screen of Putin looming in the background by the Kremlin wall.

President Vladimir Putin has appeared on a giant screen with a speech. Leaders of parliamentary parties and various civic figures and performers are planned to appear including Grigory Leps, Aleksandr Marshal, Trofim, Larisa Dolina, Lyubyo and others.

Ekho Moskvy had an excerpt of Putin’s speech, which The Interpreter has translated:

“It was obvious that we would encounter not so much the objective difficulties of the transitional period but with attempts at external influence. That is what happened, a whole number of Western countries have imposed so-called sanctions and restrictions both against Crimea and against Russia as a whole.  It must be said that our neighbors also are not distinguished by any particular inventiveness — they shut off the water, or they create some other problems. All of this, of course, is not fatal, but naturally has some damage to ongoing work.

— Catherine A. Fitzpatrick

Northern Lights Over Russia

There was a spectacular northern lights show last night in the European part of Russia, and media today is publishing pictures. has a photo gallery here and Ekho Moskvy has photos.

Translation: There’s just serious northern lights in #Ivanovo…  It was 2015.

—  Catherine A. Fitzpatrick

Concert on Anniversary of Forcible Annexation of Crimea Today At Vasilyevsky Spusk, Near Where Nemtsov Was Murdered

When Putin was missing last week, observers grew anxious when they saw a lot of trucks and commotion on Red Square.

It seems all the construction activity was about was the dismantling of the big skating rink by the GUM department store, which is run every year from November 30 to March 9.


This is how the rink looks – the user probably uploaded a picture taken earlier because it seems it was taken down last week:

People surmised that bleachers were being built for some kind of event to be held today, March 18, when the Kremlin will officially celebrate the forcible annexation of the Crimea.

But while it is already noon on Red Square, there has no sign of any event being prepared today, although there were some lights.

In fact, yesterday, March 17, a top pro-Kremlin propagandist Anton Korobkov-Zemlyansky tweeted that a concert to mark the occupation of the Crimea would take place today at 17:00 at Vasilyevsky Spusk.

Then Ekho Moskvy confirmed that there would be a concert today.

Translation: In Moscow, on Vasilyevsky Spusk, there will be a rally and concert on the occasion of the anniversary of the annexation of the Crimea.

This news dismayed friends and followers of opposition leader Boris Nemtsov, assassinated February 27, because it is near the place he was murdered.

As Ekho Moskvy pointed out, the stage will face the Bolshoi Moskvoretsky Bridge where he was gunned down.

Vasilyevsky Spusk (St. Basil’s Descent) is the path to St. Basil’s from the bridge. It is a place where concerts have often been held, for example, Pink Floyd in 2006:


In 2011, Linkin Park played Vasilyevsky Pusk:


In 2005, there was a drive to halt concerts in the area out of concern for damage to historical buildings.

Back then, Kommersant quoted none other than Boris Nemtsov at the time regarding the space, which Nashi, the Kremlin-sponsored youth movement, had taken over for a concert in memory of the children killed by terrorists in Beslan;

Editor-in-chief of MTV Russia Ilya Bachurin
objected that there were no other sites in central Moscow for
appearances by international stars or celebration of holidays. “It would
be better if the authorities thought about establishing the
infrastructure that would allow concerts to be held on Vasilyevsky Spusk
comfortably and safely for all,” he opined. Federal commissar of the
pro-presidential Nashi movement Vasily Yakemenko commented that “those
who need to hold events there will be able to do so.” Only political
organizations close to the state have been allowed to use the space for
the past several years. Boris Nemtsov, advisor to the Ukrainian
president and a participant in the massive pro-democracy demonstrations
on Vasilyevsky Spusk in the 1990s, commented “Today one thing is
prohibited by request of the workers, and tomorrow something else. The
Russian regime continues to turn into the Belarusian one. But the
democrats have to get Vasilyevsky Spusk back, even if it’s a long fight.”

Yesterday, the State Duma refused to hold a moment of silence in memory of Boris Nemtsov.

– Catherine A. Fitzpatrick

ExxonMobil Demands Russia Pay Back Millions in Overpaid Taxes

The US company ExxonMobil is demanding that money overpaid for taxes on
profits gained from implementing the Sakhalin-1 project be returned, Kommersant and reported.
The amount may number in the “tens of billions of rubles” (the rate is
currently at 61 rubles/$1) and is for taxes paid for six years.

The Interpreter has a translation:

new conflict may emerge in Russia with a major foreign investor. As
Kommersant has learned, ExxonMobil is demanding that the percentage of
taxation on the profit for the project Sakhalin-1 be lowered from 35% to
20%, and that tens of billions of overpaid rubles be returned. The
question arose even six years ago, although until now, ExxonMobil, which
received the status of a strategic partner of Rosneft in 2011, did not
raise it acutely. But sanctions have brought cooperation to nil, and
according to Kommersant, two months ago ExxonMobil began to harden its
rhetoric sharply, threatening to file suit in the Stockholm Arbitrage
Court. Lawyers consider ExxonMobil’s position justified, and Russian
authorities are hoping for a compromise.

According to Kommersant’s sources, Rex Tillerson, president of
ExxonMobil, is slated to meet with Anton Siluanov, finance minister,
vice premier Arkady Dvorkovich and Igor Sechin, president of Rosneft.
The main topic on the agenda will be Sakhalin-1 where ExxonMobil is the
operator and owns 30%; the Japenese company Sodeco owns 30%; Rosneft
owns 20% and the Indian ONGC owns 20%.

Sakhalin-1 is a project
located at three gas and oil fields: Chayvo, Odoptu and Arkutun-Dagi in
the northeast shelf of the island of Sakhalin. The potential yield is
307 million tons of oil and 485 billion cubic meters of gas. The project
began to turn a profit in 2008 and began paying taxes of 35% in 2009.

Sources told Kommersant they
thought ExxonMobil had a good chance of recovering its funds because
“few would take Russia’s side now in international courts.” 

– Catherine A. Fitzpatrick