April 14, 2022
It sunk
Because of the nail
A hawk in the Kremlin
New pivot to the East
Everyone turned away
Don’t be surprised by looting
The need to justify
The next issue will appear next Tuesday, April 19, 2022.
What happened? It sunk
Because of the nail
For want of a nail, the shoe was lost,
For want of a shoe, the horse was lost,
For want of a horse, the rider was lost,
For want of a rider, the battle was lost,
For want of a battle, the kingdom was lost,
And all for want of a horseshoe nail.
This poem by Samuil Marshak popped out of my memory when I read a tirade by Federation Council Speaker Valentina Matvienko:
For me, for example, it was something of a revelation; I am now trying to get to all sorts of little things; we have imported nails! I will not name the country, but you can guess three times. We don’t even make our own nails in a country that makes so much metal. Give small and medium-sized businesses an order; they will produce enough nails to fill the entire country.
I’m not going to talk about “give the business an order”: The Gosplan has not yet been restored in Russia, and I don’t understand who else can give a job. And Alexander Shevelev, the CEO of Severstal, told the third official in the Russian political hierarchy about nails. According to him, about 77% of the consumption of nails in Russia is provided by Russian manufacturers; moreover, Russia is a significant exporter of this product, primarily to the CIS countries. But, he added, Russia is an importer of nails made of high-tech steel with unique properties, such as corrosion- and weather-resistance, which his company is ready to start producing, “if there is a guaranteed demand and the financial support by the government.” Dmitry Miridonov, CEO of the company producing self-tapping screws, supported his colleague by saying that it is easy to make nails, but the cost of wire used for nails is too high, and the final cost is higher than the final price. “Therefore, it is not financially feasible to make nails in Russia,” Miridonov said.
This short story clearly shows two fundamental characteristics of Russia’s current economic policy. On the one hand, the authorities are convinced that it is possible to build a self-sufficient economy in which everything that is consumed is produced. On the other hand, Russian business is ready to fulfill any authorities’ wish, but only if its zeal is well paid.
And so he thought:
From here we shall now counter Sweden
The Bronze Horseman (Alexander Pushkin)
Dmitry Medvedev, the former President and former Prime Minister of Russia and current Deputy Chairman of the Security Council, is assiduously acquiring the role of a hawk in Russian politics. To all appearances, the idea that he has a chance of getting back into the president’s chair has not left him, despite one of the possible reasons he doesn’t have a chance is that in 2012, Vladimir Putin decided to return to the Kremlin. And because one of the possible reasons for Vladimir Putin’s decision to return to the Kremlin in 2012 was Medvedev’s “weakness” in abstaining from the UN Security Council vote on the military operation in Libya, the former President is now more aggressive than Vladimir Putin at every opportunity. Suffice it to recall his article published last October, in which he said that “Ukraine’s leaders of the current generation are people of absolutely no independence... How can we negotiate and agree with them in such a situation? You can’t.... It makes no sense for us [Russia] to deal with vassals. Business should be conducted with a suzerain.”
Today Medvedev decided to speak out about Sweden’s and Finland’s possible NATO membership, and he chose to lay out on the table the Kremlin’s main trump card, the nuclear threat.
If Sweden and Finland join NATO, the length of the alliance’s land borders with Russia will more than double. Naturally, these borders will have to be strengthened. The grouping of ground forces and the air defense system will have to be seriously maintained, and considerable naval forces will be deployed in the waters of the Gulf of Finland. In this case, we cannot speak about any non-nuclear status of the Baltic states—the balance should be restored.
In addition, Medvedev made two statements showing that these statements were his initiative and had not been coordinated with the Kremlin. First, he acknowledges the connection between the two countries’ desire to join NATO and Russia’s aggression against Ukraine, although he stipulates that “attempts to drag them into the alliance have been made before. And then he states, “...we have no territorial disputes with these countries as we do with Ukraine.” What disputes, Medvedev did not explain, but the Kremlin’s official position is that the issue of Crimea’s Russian status is “closed forever and not subject to discussion,” and that the attack on Ukraine was not aimed at seizing part of that country’s territory but at helping the separatist entities in eastern Ukraine, whose independence Russia has recognized.
Presidential spokesman Dmitry Peskov confirmed that the Kremlin has begun to prepare for the new reality:
...Let’s remember that there is a current presidential instruction to the Defense Ministry to submit proposals to strengthen our western flank against the background of NATO’s military buildup near our western borders.
At the same time, judging from his words, Medvedev ran ahead of the locomotive when putting forward the idea of deploying nuclear weapons in the Baltics.
...once such a plan for strengthening our Western borders is worked out, it will contain a whole list of all the necessary measures and steps taken, which will be considered at a separate meeting with the President.
New pivot to the east
Vladimir Putin held an announced meeting on the oil and gas complex. The Kremlin website has published only the opening and closing remarks of the Russian President—it is evident that the Russian authorities have no desire to talk about the problems and difficulties.
Putin confirmed that Russian companies are facing problems with sales and payments for export supplies, while his aide Maksim Oreshkin said that the proposals to convert prices for gas into rubles, which Gazprom will have to offer for negotiations with consumers, will be aimed at “securing the finances of our companies, securing the finances of our country so that we don’t deliver gas to the European market for free... when the final payment to European consumers is made in Russian currency, we freeze European consumers.”
As a result of the meeting, Putin demanded to revise Russia’s Energy Strategy, which the government approved less than two years ago. The main direction of these changes is the reorientation of export flows.
It is necessary to accelerate the implementation of infrastructure projects—railroads, pipelines, ports—which in the next few years will allow to redirect oil and gas supplies from the West to promising markets—to the South and East... it is necessary to provide for the construction of new oil and gas pipelines from the fields of Western and Eastern Siberia, the increase of oil trans-shipment capacity in the Arctic and Far Eastern ports, and the inclusion of the Power of Siberia and Sakhalin-Khabarovsk-Vladivostok gas pipelines in the Unified Gas Supply System.
Putin’s idea is clear: He is preparing for a protracted military-political-economic confrontation with the West and wants to minimize the dependence of Russian exports on European consumers. By June 1, he demanded that the government present him with a plan to “expand export infrastructure to Africa, Latin America, and the Asia-Pacific region.” Simultaneously with the construction of new oil and gas pipelines (which will be handled by his friends Timchenko and Rotenberg), Putin intends to abandon Western currencies to pay for Russian exports. His assistant in this task will be Bank of Russia Governor Elvira Nabiullina, who has proposed creating a system of multilateral clearing, obviously with the participation of India and China.
Sad, but real
First Deputy Chairman of the Bank of Russia Dmitry Tulin has contributed to the gloomy picture of the future of the Russian economy. According to him, the loss of half the capital in the banking sector now appears to be a very likely scenario, but this does not scare the Bank of Russia. Let me remind you that a week ago, such an assessment of losses was given by the heads of the two largest banks in Russia, Sberbank and VTB.
Everyone turned away. Even China
President of the Russian Academy of Sciences, Alexander Sergeev, said that Russian scientists had been cut off from international contacts.
Our colleagues, the heads of the academies of sciences in several countries, simply refuse contacts. Moreover, after exchanging various proposals, holding meetings, of course, on the internet, various discussions, they simply postpone or disrupt these events, saying that the Academy of Sciences is also an organization that is in the political field, that ‘it is challenging for us to do this, we are forbidden to do it.
But much more surprising to academician Sergeev was that Chinese scientists joined this boycott.
If we’re talking about the southern or eastern directions, unfortunately, I can say directly that our Chinese scientific colleagues have also pressed pause. We can’t get into such serious discussions for the last month, even though we have had excellent cooperation with regular communication.
War is a good time to gain
The Rostekh State Corporation, headed by Vladimir Putin’s old friend Sergey Chemezov, has decided to take advantage of the situation and seize the tidbit from the state: The controlling stake in Rostelecom.
Rostec was created in late 2007 to consolidate defense enterprises into a single complex. At the initial stage, the list of the companies whose shares were to be transferred to Rostec consisted of 300 items. Still, by the time of signing the presidential decree on the establishment of the corporation, it had increased to 400. According to a special law, the property and shares transferred to Rostec can be sold without regard to the requirements of the law on privatization, and the proceeds become the property of the corporation, which is exempt from profit tax.
Appetite comes with a meal, says the Russian proverb. Sergey Chemezov’s desire came gradually: “Rostec received from Putin stakes in microbiological companies; as a result of financial machinations, the corporation became the controlling shareholder of AvtoVAZ, Kamaz, and the Russian titanium manufacturer VSMPO-AVISMA; Chemezov lobbied for a law that made Rostec the monopoly operator for the incinerator plant construction program. Today, Rostec includes more than 700 companies.
Rostelecom is one of Russia’s largest providers of broadband internet access, interactive television, cellular communications, and local and long-distance telephone service. In 2013, Russian authorities forced the Swedish company Tele2 to sell its Russian business, incorporated into Rostelecom in 2014. The state owns 35.9% of Rostelecom’s capital, while two state-controlled financial structures (VEB and VTB) own another 11.1% of the company.
In March, Sergey Chemezov appealed to Putin with a proposal to bring the state block of shares of Rostelecom into Rostekh’s capital and transfer the stake owned by VTB and VEB to the corporation. His idea, Chemezov explained, is that the state corporation and the state company solve problems in related areas. “Rostec consolidates competencies in creating and developing 5G networks and developing telecom equipment.” In the context of sanctions, “tight coordination and concentration of resources by the state and the domestic industry are necessary,” Chemezov wrote.
Today, the Ministry of Finance reported that the ministry “does not support this initiative because the pros of the proposed scheme are not quite clear, and the risks that arise from the change in the management model are assessed as very significant, especially in the current environment.” Several experts believe that Chemezov’s idea will not be implemented, saying that the wording of the President’s order “was soft.” I, however, believe in the old friendship and think that Vladimir Putin’s trust in his old friend will outweigh the views of the technocrats in the government.
And, by the way, do you still wonder that Russian soldiers have taken such pleasure in looting in Ukraine? As Russians say, the fish rots from the head down.
Much needed justification
In recent weeks, governors of Russian regions neighboring Ukraine have reported more and more shelling from Ukraine.
On April 1, the Governor of the Belgorod region described the shelling of an oil depot by Ukrainian helicopters.
On April 5, the Governor of Kursk Oblast reported that a group of Ukrainian fighters fired mortars. Although the mines did not reach the Russian territory, according to the Governor, “the Russian border guards’ return fire suppressed the firing points.”
On April 13, he also announced the shelling of a border checkpoint. Although, according to the Governor, “there were no casualties or damages, fire from Russian border guards suppressed the firing points.” On the same day, the Governor of the Bryansk region reported the shelling of the border checkpoint.
Today, the Governor of the Belgorod region reported the shelling of two Russian villages, and the Governor of the Bryansk region told of the shelling of a Russian town.
The shelling described by the governors was of a chaotic, non-targeted nature, causing no casualties or destruction; none of it was aimed at military targets. After the Russian Ministry of Defense stated on Wednesday that “If such incidents continue, the Russian Armed Forces will strike at decision-making centers, including those in Kyiv, which the Russian army has so far refrained from doing,” I was strengthened in my opinion that Russian authorities orchestrated these shellings.
The Russian army continues to launch missile strikes against Ukrainian social and industrial infrastructure located in various cities. Now, apparently, it is time to destroy Kyiv.