Kremlin may wait. But suddenly…There is nothing to blame Gazprom. Who has been intimidated?

January 14, 2022

Kremlin may wait. A week

On Thursday, the third round of strategic security talks initiated by Russia occurred. This time, within the Organization for Security and Co-operation in Europe (OSCE), with no news. 

The Kremlin seems to have realized it should not expect its proposals to be the subject of serious discussions. Of course, no one is yet talking about the failure of the talks, and Foreign Minister Sergei Lavrov even tries to exude restrained optimism, saying that he hopes to receive written answers from the U.S. and NATO within a week. 

“The Americans promised us to try—but we told them that we have to try very hard: to make our counter-proposals next week…I think it [NATO’s position] will come in sometime within about a week, too…After which we will report together with the Defense Minister to the Russian President because we are acting on his direct instruction; this is his initiative.”

Meanwhile, Lavrov’s deputy, Sergei Ryabkov, said Moscow sees no reason to hold a new round of talks with the U.S.

“We suggest going article by article on the text, working to bring them to a level where they were ready to sign. This is not possible today because the U.S. and its allies are actually saying ‘no’ to us on key elements of these texts. And where they say ‘yes, let’s keep discussing,’ we, in turn, note that while these subjects are important and serious, they are secondary to the same non-expansion of NATO. Here, in a way, is the impasse or difference of approach.

But I don’t see any reason to sit down in the next few days and reconvene and start these same discussions without clarifying whether there is at least some resource or some flexibility on the other side to work on the serious issues.

We have nowhere to retreat to. We can already see that we will use other measures and other methods against our opponents if they do not consider our demands and our needs.”

Putin’s spokesman, Dmitry Peskov, seems to believe that the past meetings have not brought the side any closer to agreement on matters of principle.

“Both at the first consultations and the second, there were certainly some positive nuances... But these nuances and elements were not the main purpose of the consultations and could not become a reason for such an urgent convening of these consultations. The talks were initiated to get a specific answer to the specific questions of principle which were raised. These are the central questions on which disagreement is fixed. This is not good. 

... [Russia] will not lack the political will to continue negotiations further. But with one understanding: There can be no process for the sake of process on these fundamental issues. There must be a specific result, a specific answer.”

Moreover, Peskov believes that the statements and actions of Western leaders further strengthen the Russian political leadership’s need to maintain (and possibly build up) tension between the sides.

“We hear NATO statements that NATO will expand further. We hear U.S. representatives who are beckoning new countries to join NATO. I mean Finland and Sweden. We hear statements from some NATO countries demanding more troops on their territory. Do we need to de-escalate against this background?”

Given what Russian officials have said, I am ready to assume that in just a few days we will hear more bellicose statements from the Russian leader, we will learn that additional units of Russian troops have been moved to the borders of Ukraine, and the shots being fired as part of the field exercises are getting louder. In short, the Kremlin will escalate tensions in the hope of spreading fear in Western capitals.

But suddenly…

After that, one of Sergei Ryabkov’s statements struck me as pigeonholed.

“Further escalation and confrontation often become simply dangerous. We should stop where we are and begin to rebuild trust in small steps.”

If we take this thesis seriously, we should scrap-heap the whole complex and dangerous game Vladimir Putin is playing.

The crisis is over

The situation in Kazakhstan is gradually calming down. President Tokayev has gathered all the levers of power and suppressed his political opponents. According to the official version, the instigator and organizer of the attempt to oust the acting president and seize power is the former head of the National Security Committee (KNB), Karim Massimov, who was charged with high treason. Along with him, his two deputies have been declared the main actors in the plot, as reported by the KNB press service.

“The National Security Committee of the Republic of Kazakhstan continues a pre-trial investigation into treason against former KNB Chairman Karim Massimov. Within the framework of this case, additional pre-trial investigations have been launched on the facts of actions aimed at the violent seizure of power and abuse of power.

In addition to Massimov, the former deputy chairman of the National Security Committee—the head of the special service A. Sadykulov and deputy chairman of the National Security Committee D. Yergozhin were also detained on suspicion of committing the crimes mentioned above.”

In such a situation, President Tokayev sees no need for foreign troops in the territory of Kazakhstan, which he was able to convince the Russian President of during a telephone conversation. Immediately after that, Vladimir Putin met with Russian Defense Minister Sergei Shoigu and ordered the withdrawal of Russian troops. “The CSTO peacekeeping forces played a significant role in stabilizing the situation in Kazakhstan... Everything worked like clockwork, quickly, smoothly, and efficiently... All in all—we should go home,” the President said.

At the meeting with the President, Sergei Shoigu uttered a strange phrase: “At the expense of such a pace of operation, it was possible in the first days to release about 1,600 members of the security services of Kazakhstan, who were actively involved in the fight against the bandits who had brought this chaos to the republic.” Considering that the total number of military personnel from CSTO countries that arrived in Kazakhstan was about 3,000, it turns out that two militaries served as one Kazakh policeman. It remains to be judged whether Kazakh police officers are doing an excellent job of protecting various objects… or the Russian military has no security skills?  

Have to share more, says the Kremlin

The Kremlin is consistently pursuing a policy of concentration of budget revenues in the federal budget, said Tatarstan President Rustam Minnikhanov. According to him, from 2010 to 2021, the gross regional product of the republic increased by 3.2 times [in nominal terms], while the provincial budget revenues grew by 2.4 times. This process continues today.

The budget of Tatarstan is traditionally one of the most stable regional budgets, which finances most of the programs on its territory from its revenues and receives almost no transfers from the federal budget.

“Those steps that are taken by our colleagues, who are responsible for the federal part, [lead to the fact that] there is a certain overflow... Last year we lost about 30 billion [rubles] ($400 mln., 7.5% of total revenues) because they changed [the taxation rules of the oil industry]: highly viscous oil was equated with classic oil. In other words, we produce [oil] by the thermal method [much more expensive], but we pay taxes as if we produced by the classic method. We were not heard. But this is our budget; we lost the profit tax... I understand that the federal budget also has big tasks. Here we need to find common compromises,” said Minnikhanov.

There is nothing to blame Gazprom. Not yet

Margrethe Vestager, deputy head of the European Commission, said that the Commission had not drawn any conclusions about Gazprom’s violations, mainly because it has not yet received answers from the Russian company.

“We are examining this case as a priority because it is unusual for a company to reduce deliveries in the face of increased demand. We have sent inquiries to companies in the energy sector, and we have received many answers, but we are still waiting for answers, including—with particular impatience—from Gazprom.”

Pandemic news

The Russian government has reported 21,155 new cases of coronavirus infection in Russia in the past 24 hours, which is 17.9% more than the day before. However, the government did not provide data on the number of tests carried out on the same day, making it impossible to conclude that this data reflects the beginning of a new outbreak. According to information for January 8-11, the share of positive tests remained stable, ranging from 4.5% to 5.5% of those tested.

Meanwhile, the leadership of Russia’s largest bank, Sberbank, decided not to wait for the new wave to arrive to try to mitigate its consequences. The bank’s president, Herman Gref, said that half of the bank’s employees would start to work remotely from the beginning of next week, and all meetings for the bank will be held online. 

Who has been intimidated?

I’m not sure that Vladimir Putin may seriously scare the U.S. and its allies enough to make them capitulate and accept the ultimatums written in the Kremlin.