Putin—crypto-miner. Sergei Shoigu is ready. Agreed to Disagree. The fall of the favorite?
January 27, 2022
Putin—crypto-miner
Quite unexpectedly, President Putin intervened in the discussion about the future of cryptocurrencies in Russia. As I noted yesterday, the debate is sudden and very young and being conducted among low-level officials. But perhaps the heat of the discussion was so intense that it engulfed the President’s inner circle, forcing him to take the initiative.
It was even more surprising to me when Putin started talking about crypto-mining and how he saw it as an opportunity for Russia.
“... the Central Bank has its position [on the issue of the future of cryptocurrencies in Russia]; it is related to the fact that, according to experts of the Central Bank, the expansion of this type of activity carries certain risks, and primarily for the citizens of the country... Although, of course, we also have certain competitive advantages here, especially in the so-called mining. I mean the surplus of electricity and well-trained personnel available in the country.
“I would ask both the Russian government and the Central Bank to come to a consensus during the discussion, and I would ask you to hold this discussion soon and then report on the results that will be achieved during this discussion.”
I think the President’s hint is clear: 1) cryptocurrencies should not be banned, 2) risks should be limited by increasing control and regulation, and 3) the creation of a state-owned mining company should be considered.
An answer was received. Waiting for a response
The U.S. and NATO have sent written responses to Russia’s security demands but said they did not want to make them public in order not to limit the space for negotiations. Earlier, Russian Foreign Minister Sergei Lavrov said Russia would not publish the answers it received unless the U.S. and NATO asked it to do so.
U.S. Secretary of State Antony Blinken and NATO Secretary-General Jens Stoltenberg outlined the main points of their documents, which can be boiled down to three: 1) some of the problems raised by Russia are recognized as reasonable, and the West is ready to discuss them, 2) the West has its demands on the issue of security, including among others, the withdrawal of Russian troops from Moldova, Georgia, and Ukraine, 3) the United States and NATO are not ready to abandon their basic principles, including the “principle of open doors in NATO.”
The Kremlin has not yet responded to the documents it has received. Secretary Blinken said he is ready to meet with Sergei Lavrov as soon as the latter is available.
I don’t know when Minister Lavrov will be ready for the meeting but his colleague, Minister of Defense, Sergei Shoigu, demonstrated he is ready!
More than 20 Black Sea Fleet ships left bases in Sevastopol and Novorossiysk, as previously announced Russian Navy exercises.
Units of the Baltic Fleet’s Guards Marine Corps compound, “raised on alert, marched on standard equipment to the exercise area in the Kaliningrad region and proceeded to carry out combat training tasks,” the fleet’s press service said, without specifying the number of soldiers or the number of vehicles involved in the exercise.
Agreed to Disagree
Advisors to the leaders of the four countries participating in the Normandy format negotiations (Russia, Ukraine, Germany, and France) to resolve the conflict in Donbas met in Berlin. After eight hours of talks, the sides agreed that:
1) the sides read the text of the Minsk agreements differently, which prevents them from meaningful negotiations,
2) the ceasefire on the line of contact must be maintained,
3) they should meet again in two weeks.
Ambassador may leave
Despite contacts between President Biden and Putin and between Sergei Lavrov and Antony Blinken, one of the problems in Russian-American relations continues to escalate. The issue is an agreement on the number of mutual diplomatic missions and the procedure of issuing visas for embassy staff.
Russian Ambassador to the United States Anatoly Antonov said that the U.S. State Department had raised the question of his departure from Washington.
“In recent meetings at the State Department, our staff has been told clearly that the Russian ambassador will be forced to leave the United States by April if we do not meet several U.S. conditions to provide visas for the guards of the American ambassador in Moscow.”
Oppression continues
Russian police have put Alexei Navalny’s brother, Oleg, on a federal wanted list. His lawyer, Nikos Paraskevov, said that “according to the report [from FSIN officers], Navalny didn’t get registered, and the wanted notice is because the inspection came to his place of residence and didn’t find him there.”
When asked if Oleg Navalny had left Russia, the lawyer replied that he did not know about it.
Along with Oleg Navalny, Oleg Stepanov and Oleg Yemelyanov, former coordinators of Alexei Navalny’s headquarters in Moscow and Kazan, were put on the wanted list. The police did not give any information about the reasons for this decision; we can only speculate that it is related to the continuation of a large criminal trial for the prosecution of activists of Alexei Navalny’s organization. In August, a court declared Navalny’s headquarters an extremist organization, which gives grounds to prosecute all those who participated in their work. In late December, coordinators of Navalny’s headquarters in four cities faced various forms of harassment (searches, interrogations, confinement).
Stepanov left Russia several weeks ago, while Yemelyanov decided not to follow.
COVID news
The number of reported COVID cases in Russia has reached almost 75,000. This week, Rospotrebnadzor resumed publishing data on tests conducted, which indicates that the proportion of positive tests continues to rise and has approached 15%. Last week, the government began publishing data on coronavirus-related hospitalizations—the ratio of hospitalizations to the number of cases detected is 15%-20%—but due to the brief period of observation, it would be incorrect to draw any conclusions.
The position of Russian authorities remains inconsistent and contradictory. The Duma leadership has decided to cancel almost all plenary sessions for the coming month (three are left on the schedule). Deputy Prime Minister Tatyana Golikova urged the regions to impose additional restrictions. Health Minister Mikhail Murashko reported that the healthcare system across the country is facing serious staffing constraints, and that “...today more than 81,000 professors, teachers, and residents are working in the healthcare system, including junior students—as volunteers.” (Golikova reported about 87,000 during the meeting with the President.)
However, as soon as the Moscow Health Department imposed a ban on planned hospitalizations of children for the next three weeks, President Putin demanded that this decision be reversed.
The fall of the favorite?
At a meeting with President Putin, Kamchatka Governor Vladimir Solodov decided to lobby the interests of gas company Novatek openly. He said Novatek refused to conclude long-term contracts for LNG supplies to Kamchatka because the company did not have enough proven gas reserves. Vladimir Putin said that now the government is allocating gas fields on the Yamal Peninsula between different companies and promised that he would take Novatek’s interests into account when making the final decision.
It should hardly come as a surprise that the Russian President is personally involved in the allocation of gas fields—his love for the topic is well known. He knows the situation in the Russian gas industry and on the European market well and deeply. I would note that lobbying for Novatek’s interests was undertaken by a little-known official (Putin appointed Vladimir Solodov as acting governor of Kamchatka in April 2020), rather than by the company’s second-largest shareholder, Gennady Timchenko, an old friend of President Putin. Has he fallen out of favor?
Carrot and stick
One of the goals of the Kremlin’s foreign policy is to destroy Western countries’ unity and drive as many wedges as possible between different countries, different politicians, and different business groups. The arsenal that the Kremlin uses is not diverse. It could even be said that it is limited to one very powerful tool—money, profit.
Somebody can be bought with a seat on the board of directors of a large state company, such as former German Chancellor Gerhard Schröder or former French Prime Minister François Fillon. Some can be bought by lower gas prices, such as big German businesses or the President of Serbia. Like Marine Le Pen’s party, some can be bought with a non-repayable loan from a below-the-radar Russian bank.
On Wednesday, Vladimir Putin held a virtual meeting with representatives of big Italian businesses that actively invest in the Russian energy sector. At this meeting, the Russian President quite frankly hinted that he was ready to offer these companies attractive new business projects.
Would you say that businessmen should have heeded the advice of Italian Prime Minister Mario Draghi and turned down this meeting? That unity in the West when growing political conflict with Russia is much more important? In their hearts, those who took part in the forum with Putin understand this very well. While in their minds, they know that Putin has sticks in addition to carrots and that if they refuse the offer of the Russian President, they put their businesses in Russia at risk, which may result in loss of investment for the companies and criminal prosecution of managers working in Russia. And the Italian prime minister will not be able to help you in either case.
So you decide what is the right thing to do.
Effective, but not necessary
Speaking in the State Duma, Russian Foreign Minister Sergei Lavrov said Russia has secured itself against Russian banks being cut off from the SWIFT system by creating a national alternative to the Financial Message Transfer System (SPFS—a Russian abbreviation) of the Bank of Russia.
“The Central Bank invented the Financial Message Transfer System, and it is functioning. Those who use it, my acquaintances—I am specifically interested—say that it works quite effectively. Yes, it needs more polishing, it’s not as established as SWIFT, but it works.”
It sounds very naive.