March 14, 2022

War

During an evening news program on Russian television’s Channel One, a young woman walked into the studio with a placard reading “No to War.” Marina Ovsyannikova worked as an editor at the channel and was arrested immediately after her action.

The same day, she posted her video message on social media, explaining the reasons for her action: She considers the war that Russia started a terrible crime. 

If we look at the fighting map, we can conclude that almost nothing has changed in recent days. Russian troops have apparently slowed down their advance, and we can only discuss possible hypotheses as to why this has happened. Perhaps poor planning of the military operation and defects in logistics are to blame. Perhaps Russian troops paused to regroup and bring up reserves. Maybe the resistance of the Ukrainian army and Territorial Defense Forces was much more severe than the Kremlin thought.

On the other hand, the quantity and quality of weapons in the Ukrainian army do not allow it to take advantage of the enemy’s logistical failures and turn the tide of war.

With each passing day, the Russian army’s problems, which I mentioned before the war began, become more and more apparent: Seizing territory is only the first part of an offensive; managing occupied territories is a much more difficult task. In cities that have been captured and not destroyed, Ukrainian citizens are coming out in mass protests, information about which is spreading on the internet. In cities destroyed by rocket and artillery fire, everyday life is impossible. Episodes of guerrilla warfare are becoming more and more frequent in the territory occupied by Russian troops, which so far are associated with the actions of individuals. Still, it is only a matter of time before they unite into groups. 

Military analysts say that Russia has engaged at least half of the combat-ready units at its disposal in the first phase of the war. So far, no one understands whether the Russian army can increase its pressure beyond the more intensive use of missiles, bombs, and shells. Or whether the war is moving into a positional phase, where morale is the main factor.

Artificial stability

There has been relative calm on the Russian currency market: The dollar exchange rate fluctuates between 115 and 120 rubles. The banking system has adapted to the fact that some banks have lost the ability to use their correspondent accounts for cross-border payments.

Russian authorities introduced severe restrictions on residents’ and non-residents’ access to the purchase of foreign currency, which also plays a vital role in creating the appearance of stabilization. Trading at the stock exchange is closed for another week, and there is no indication that anything will change next week. The volume of foreign exchange trading on the Moscow Exchange fell by more than three times compared with the last week of January. The dollar exchange rate on the interbank market was 4% higher on Monday than on the Exchange, indicating a lack of free access to exchange trading.

Instagram banned in Russia

Roskomnadzor officially added the social network Instagram to the register of banned sites, and access to it began to be blocked in Russia on Sunday. Still, the network continued to work throughout Monday, even without a VPN. 

In addition, on Friday, March 11, the Russian Prosecutor General’s Office sent a lawsuit to the court to recognize Meta as an extremist organization and ban its activities in the territory of the Russian Federation. The formal reason for this was the company’s statement that it would not remove appeals to violence against Russian soldiers participating in the war against Ukraine. 

The final decision on this lawsuit could be made in about two months, and it could cause severe problems for ordinary Russians. If the Supreme Court upholds the prosecutor’s suit, having a Facebook or Instagram app on a smartphone could lead to administrative liability (a fine and confiscation of the smartphone). In addition, posting ads on Facebook can be considered the financing of extremist activity, which entails criminal liability.

License to steal

President Putin has signed a law that allows Russian airlines to register the rights to foreign aircraft they lease and issue them Russian airworthiness certificates in Russia. This will allow Russian companies to deprive leasing companies of ownership rights and operate these aircraft on domestic routes. In addition, these aircraft will be serviced without compliance with technical regulations and authorial supervision from the manufacturing companies.

As Vladimir Putin often does, this decision allows solving a tactical problem (maintaining air traffic inside the country) at the expense of a colossal strategic loss. In the future, all Russian airlines that use a legalized scheme of theft will face lawsuits and substantial financial losses. And for those companies that avoid this, or newly emerged companies, access to the leasing market will become much more expensive.

After solving the problem of airplanes, the Russian government decided to take a similar path about using copyrights, first of all for computer programs. The Ministry of Industry and Trade has drafted a bill that would allow government agencies and companies to use unlicensed versions of software developed by companies from states that have joined the anti-Russian sanctions in Russia. 

These proposals of the Ministry of Industry and Trade would apply to any licenses and other types of rights to the results of intellectual activity with the cancellation of compensation to companies that own copyrights.  

I do not own anything!

Sanctioned Russian oligarchs will continue to rapidly “sell off” their companies to get them out from under sanctions pressure. There is no doubt that these deals are a sham, but the EU authorities may have a different point of view. 

Dmitry Mazepin, who has fallen under EU sanctions, reduced his stake in Uralchem (fertilizer producer) below control, selling a 52% stake in the parent company to an unknown person. Mazepin also stepped down as CEO but remained the owner of a 48% stake in the company.

Granada Capital CY Limited, a structure indirectly controlled by Vadim Moshkovich, under EU sanctions, sold 7.22% of Rusagro shares. Thus, Moshkovich’s effective stake in Rusagro became less than 50%, the company said. The stake buyer was Russian citizen Yury Zhuravlev, about whom nothing is yet known.

Before the deal, Moshkovich owned 57% of Rusagro.

Russian oligarchs who were not under sanctions decided not to wait until this moment to “stop” owning their assets. Thus, Iskander Makhmudov and Andrei Bokarev ceased to be the controlling beneficiaries of UGMK (Ural Mining and Metallurgical Company), Kuzbassrazrezugol, Vostochny Port, and Rosterminalugol and left the boards of directors of these companies.

The Ural Mining and Metallurgical Company is one of the largest Russian producers of copper cathodes, zinc, lead, and rolled non-ferrous metals. The group consists of more than 40 companies, including several machine-building enterprises.