You’re right, and you’re right. No need for observers. Why do you need to meet with the President?
February 9, 2022
You’re right, and you’re right
The negotiations between the Russian and French presidents on Monday dragged on, indicating Emmanuel Macron’s desire to intercept the role of chief negotiator with Russia on behalf of the European Union and his ability to hold Vladimir Putin’s attention for long periods.
The day after the talks, an unnamed source from the French delegation reported that Vladimir Putin had promised to reduce tensions on the Russian-Ukrainian border and withdraw some troops. This statement was disliked by Kremlin spokesman Dmitry Peskov, who said no agreement had been reached. As often happens, you are right, and you are right.
At a press conference after the meeting, the Russian President implicitly said that now he was ready to move toward a diplomatic solution to the crisis he had created.
“Now we will prepare a response to that paper that we received from Brussels and Washington... we will send to Washington and Brussels. There are really things there that can be discussed. They are indeed secondary, but nevertheless. But we will, of course, seek answers to the key questions.”
Of course, this cannot be taken as an agreement to de-escalate. Putin will stick to his announced tactic of “keeping the West in suspense,” and I would not be surprised if some actions by the Russian military soon would trigger a new wave of statements and publications about an impending Russian invasion of Ukraine. But with a strong desire, which President Macron has, the Russian President’s phrase can be interpreted as a promise to take a break. Moreover, Vladimir Putin’s words might have sounded more unambiguous during the one-on-one negotiations.
But Dmitry Peskov knows very well that his patron is not prepared to make firm promises at a moment when the game he has started is in its very early stages and when Putin has not yet won any serious prize that could be presented as his victory.
No need for observers
As expected, Russian authorities intend to keep the trial of Alexei Navalny as closed from public view as possible. The trial will start on February 15 and be conducted in the same prison where Navalny is being held.
Olga Mikhailova, Navalny’s lawyer, has said that holding the trial in a penal colony will make it harder to get objective information about the process and seriously hamper Navalny’s right to defend himself.
“The colony is a [special regime] secure facility; it is strictly forbidden to bring phones, computers, and other equipment into its territory. Given that, I don’t understand how our sessions will be held there and how we and the witnesses will get there.”
I think that the problem of lawyers’ access to court sessions will be solved, although I do not exclude that it will be done in a beastly way. And, as for representatives of mass media and foreign diplomats, they obviously will not be able to see the process with their own eyes.
Unattractive sphere
Vladimir Putin’s desire to establish Russia’s sphere of influence runs up against the rejection of the West and those whom the Kremlin wants to influence.
As soon as Belarusian leader Alexander Lukashenko announced that Armenia would move toward joining the Union State of Russia and Belarus, a loud cry came from the capital city, Yerevan: “No way!” Joining the Union State is not discussed in the country, Acting Speaker of the Parliament Hakob Arshakyan said. His statement was backed up by a rude comment from the Armenian Foreign Ministry:
“We are convinced that the original geopolitical analysis of Belarus’ President is aimed primarily at serving his domestic political agenda and has nothing to do with Armenia and its foreign policy.”
The unattractive nature of relations with Russia promoted by the Kremlin, the ineffectiveness of the Russian economic model and its inability to support the economic growth of allied countries, and the traditional stinginess of the Russian authorities in providing financial assistance to its satellites leave too little room for mutually beneficial cooperation. All that Russia can provide to potential allies today is a military machine that can protect against external attack (as in the case of Tajikistan) or a coup d'état (Kazakhstan). But at the same time, Russia is not ready to make strict commitments to provide a defense umbrella, as Armenia was convinced during the last war in Nagorno-Karabakh.
In such a situation, the Kremlin will have to solve a double problem: On the one hand; it must persuade the West to agree with the existence of the Russian sphere of influence; on the other, it must convince the countries that are, according to the Kremlin, part of this zone to stay within it. It seems that the first task will be easier than the second.
Cryptocurrencies to be
An information message on the approval of the Concept for the regulation of cryptocurrencies in Russia and the text of this document were published on the website of the Russian government. Contrary to ordinary bureaucratic practice, the status of this document is not clear. There is no government decree or order on this subject in the databases, and the paper itself does not bear the signature of the Prime Minister or his deputy authorized to do so.
The Concept establishes that Russian banks will monitor and control all transactions with cryptocurrency. For at least five years, they will keep data on customers and transactions, including passport data, customer photos, phone numbers, addresses, and bank account numbers. Russian crypto exchanges will be obliged to open legal entities and foreign ones—representative offices in Russia and provide the authorities with all data on transactions of Russian clients. The topic of mining regulation was not reflected in the government document, although it was of great interest to Vladimir Putin.
In my opinion, there are three good pieces of news and four lousy ones in this document.
The first good news is that approving the Concept did not take weeks or months. I must admit that I was surprised by the speed of the decision; I did not expect it. Any certainty is better than uncertainty. The second good news is that the government did not support the idea of the Bank of Russia to ban cryptocurrency operations in Russia and equated cryptocurrencies with financial assets. The third good news is that the government could decide without Vladimir Putin’s participation. Or Vladimir Putin agreed to give the impression that the Russian government can make independent decisions. Either way, perception is reality.
There is more bad news. First, the whole Concept is built along the lines of the securities market regulation, which can exist entirely in paperless form. Unlike securities, the right to own a cryptocurrency can be fixed on paper or data storage (“cold wallets” or memory cards). The Russian authorities obviously will not prohibit it by their power or by the law adopted in Russia.
Second, many Russians remember, in the ’90s, the Ministry of Finance (based on the tax intentions) forced the banks to register all details of currency exchange operations, including passport data, and obliged banks to issue sale/purchase statements on paper. This idea quickly degenerated into profanity because the government did not dare prohibit the Russians from exchanging currency among themselves. A few years later, this regulation was abolished. The government proposes restoring the rules for currency exchange transactions regarding cryptocurrencies, seemingly unaware that it is unnecessary to use intermediaries to buy and sell cryptocurrencies.
Third, the government puts a massive burden on Russian banks to process transactions, control them, and store information. At the same time, there is no phrase in the Concept that information about transactions with cryptocurrencies will be equated to bank secrecy and will be protected accordingly. Information about the numbers of cryptocurrencies’ wallets, their owners, and volumes of funds will be lovely for potential criminals. Judging by the document, the state is not worried about this topic.
Last but not least. The proposed regulatory scheme is very complicated from a technological point of view, and I doubt that the government lawyers will adequately spell out all the terms, situations, and relationships. In addition, the cryptocurrency universe is developing rapidly. After a while, many ideas written by the government may become hopelessly outdated, but by becoming law, these ideas will create severe hurdles for everyone.
Why do you need to meet with the President?
Less than a month ago, Dmitry Mazepin, the owner of Uralchem, met with President Vladimir Putin and discussed the prospects for his business. A reasonable question: What could the President of Russia discuss with a private business person in the middle of a severe geopolitical crisis? The official version: They discussed limiting domestic prices for fertilizers produced by Uralchem. Another topic of conversation was the possibility of circumventing the U.S. and EU sanctions imposed on Belaruskali—both companies produce potash fertilizers and compete in foreign markets.
But Dmitry Mazepin’s main objective was to get Vladimir Putin’s permission to acquire a controlling stake in TogliattiAzot (ToAZ), one of the biggest nitrogen fertilizer producers in the country. Previously, the control over this company (71% of shares) belonged to the family of Vladimir Makhlay, who was the company’s director during the Soviet period and privatized it in the early ’90s.
Dmitry Mazepin’s “Uralchem” bought 7.5% of the company in 2008 and soon began a fight to control it, accusing Makhlay and its top managers of stealing money. “Uralchem” claimed that a significant portion of the exported products went to the hands of affiliated traders with a considerable discount. “Uralchem” decided not to go to arbitration, and in 2012 requested to launch a criminal investigation. In July 2019, a court found the ToAZ owners and top managers guilty of fraud and sentenced them to long prison terms in absentia. Two and a half years after that (two weeks after Putin and Mazepin met), the court decided on Makhlay’s personal bankruptcy. Don’t be surprised; it was “Uralchem” who initiated the suit.
At Tuesday’s auction, in which only two companies affiliated with Uralchem took part, one of them purchased 39% of the ToAZ shares; the auction for a 32% stake will be held in 10 days. Guess who will become their buyer?