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  • Visa system operates in Crimea as Russia finds ways to avoid US sanctions
    EUROMAIDAN PRESS Olena Makarenko 2016/01/28

    The cards of the international payment system Visa are now operating in occupied Crimea. This news appeared on the site of Russia’s Genbank on 20 January 2016. It states that Visa cards will be accepted both for payment and cash withdrawal. However, the bank itself is under sanctions of U.S. Department of The Treasury and Visa together with MasterCard officially stopped working on the peninsula a year ago. How did this operation become possible?

    Genbank is a Russian bank which started operating in 1993. On 1 March 2015, the bank’s assets amounted to over RUB 18 bn (USD 229.86 mn), own capital – RUB 1.95 bn (USD 24.9015 mn). At the end of 2014, Genbank‘s net profit was RUB 305 mn (USD 3.89 mn).

    Now the bank describes itself out as “a base bank of the Crimean government (in August 2015, the executive authorities of the Republic of Crimea and the city of Federal significance Sevastopol became 50% of the shareholders of JSC Genbank) […] Today on the peninsula over 170 branches have been opened, the bank has more than 580 ATMs and 960 POS terminals.”

    When the self-proclaimed government of Crimea received 50% of nominal capital of the bank, Sergey Aksyonov, the “prime-minister” of Crimea said that “authorities” of Crimea use equity participation in the nominal capital of Genbank for the development of new banking products, including loans for small businesses. The bank activities in occupied Crimea could not have been left unnoticed.

    International payment systems Visa and MasterCard refused to operate with Russian banks in occupied Crimea already in December 2014. However, Russia found a way to work with the cards and avoid sanctions: by creating the inner National System of Payment Cards (NSPK). Banks should have transferred the traffic to NSPK by 31 March 2015.

    MasterCard passed traffic in time, but Visa only on May 27. Formally, the traffic was handed over the cards of both systems, but, according to Russian media, only MasterCard worked in Crimea.

    Visa was promised that problems with its operation would be resolved in the nearest feature. It’s noteworthy that MasterCard and Visa use different technologies of transmitting information, according to the Russian outlet Vedomosti referring to the words of an employee of a large bank. According to him, with MasterCard, it was easy, but to start operations through NSPK by Visa, sanctions banks had to “crack” Visa files and NSPK learned to do it only at the end of 2015. “Banks which are under sanctions are served under such scheme,” concluded the employee.

    Such an approach is dangerous for banks through which an international payment system is connected. International payment systems can send a notification to a principal bank that its partner bank violates sanctions, and the former may stop or reduce cooperation.

    Overall, information about the operation of MasterCard on the peninsula is contradicting. In the end of May 2015, Russian media hurried up to inform that it works, but some sources wrote about complaints of people who did not manage to receive their money using the card.

    At the end of December 2015, the USA released its new list of sanctions. As Genbank was in it, international payment systems Visa and MasterCard stopped working with the bank. In fact, it does not matter anymore if the system of NSPK really works. So that the happy message of “Genbank” on it’s site appeared because of solving technical problems with VISA and NSPK which they faced before the new sanction least appeared.

    Visa started to work in Crimea only now because its traffic was not fully localized before. “When Genbank‘s transaction data was transmitted from Crimea to the NSPK, it did not pass because NSPK sent a part of the information to Visa and it blocked the operation,” a banker told to Vedomosti. Also, according to Kommersant journalists, the new list of sanctions even accelerated the process of finding new ways to work with Visa, as before the operations were conducted not fully bypassing Visa and the difficulties with cards of Russian banks could appear only abroad.

    Now the message of Genbank states:

    “1. In all trade and service enterprises connected through JSC Genbank Visa cards of all Russian issuing banks are accepted within the National System of payment cards;

    2. In all cash machines of Genbank Visa cards of all Russian issuing banks under the National System of Payment Cards are accepted.”

    The question which remains is: if the system of NSPK really works, how can sanctions against Russian banks be implemented in practice?
    Visa system operates in Crimea as Russia finds ways to avoid US sanctions -Euromaidan Press

    ==================================

    Visa says sanctions against Crimea-based Genbank maintained
    28.01.2016 | 14:13 UNIAN

    VISA International Service Association has confirmed it did not lift sanctions against Russian Genbank following the bank's earlier statement that it had resumed servicing of Visa cards in Crimea, according to Ukrainian newspaper Europeiska Pravda.

    In its official statement sent to Europeiska Pravda, Visa confirmed it had suspended servicing of Russian banks operating in Crimea over U.S. sanctions, according to the report. In particular, the sanctions were imposed against Russian Genbank, the major banking institution in the peninsula, established by the de facto "executive authorities" in Crimea.

    Visa representatives claim the restrictions have been maintained as required by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. Any cooperation with JSC Genbank will be suspended until OFAC lifts its sanctions, the report said.

    However, Visa did not comment on how Genbank was able to launch transactions with Visa cards.

    As UNIAN reported earlier, Russian Genbank, which has been included on the international sanctions list, announced that it had started Visa card servicing in the temporarily occupied Crimea via the National Payment Card system on January 20, 2016.
    Visa says sanctions against Crimea-based Genbank maintained : UNIAN news

    Last edited by Hannia; 28th January 2016, 13:57.

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    • A Ferrari for a 13-Year-Old Boy: OSINT Methods in a Ukrainian Corruption Investigation
      Jan 27, 2016 BELLINGCAT Aric Toler

      On January 23, the 112 Ukraine television channel aired an investigation into a former Ukrainian prosecutor who, among other things, reportedly purchased a Ferrari for his 13-year old son. This former prosecutor, Aleksandr Nikolayevich Bondarenko (Oleksandr Mikolayovich in Ukrainian), was appointed during the years of Viktor Yanukovych’s presidency in Ukraine, and was lustrated in late 2014. Bellingcat provided support to the investigators of 112 Ukraine, led by Julia Makarenko, in researching the lustrated ex-prosecutor via open source intelligence (OSINT). In conjunction with a wide-ranging use of open source research methods, 112 Ukraine used traditional investigative journalism to follow up leads. Much like a previous Bellingcat post on OSINT methods used by Aleksey Navalny’s FBK group, this post will explore the open source research techniques employed by Makarenko and her team at 112 Ukraine in their investigation of the assets of the seemingly corrupt ex-prosecutor and how this research can complement traditional investigative methods used in newsrooms across the world.

      The subject

      The subject for the investigation is Aleksandr Bondarenko and his assets. As seen on the Ukrainian Ministry of Justice’s lustration website, Bondarenko was subject to lustration in late 2014 and is described as an employee of the general prosecutor of Ukraine. His job duties included, among other things, combating corruption and crime in the transportation department of the general prosecutor’s office.

      The subject for the investigation is Aleksandr Bondarenko and his assets. As seen on the Ukrainian Ministry of Justice’s lustration website, Bondarenko was subject to lustration in late 2014 and is described as an employee of the general prosecutor of Ukraine. His job duties included, among other things, combating corruption and crime in the transportation department of the general prosecutor’s office.

      While Aleksandr Bondarenko himself does not maintain any detectable online presence, his actions did leave a footprint, along with the social media profiles of his family members.

      The Ferrari

      The investigation was triggered by an very obvious clue: a shiny, red Ferrari outside of the Monacco () restaurant in central Kyiv. The photograph was taken in October 2014 and provided by an anonymous tip to the television station, providing an opportunity to employ OSINT in conjunction with traditional investigative journalism.

      continue read https://www.bellingcat.com/uncategor...investigation/


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      • Russians who borrowed in foreign currencies turn to protests, demanding restructured loans
        MEDUZA 13:35, 27 January 2016 TV Rain

        Russian debtors of the Austrian-owned Raiffeisenbank who borrowed in foreign currencies staged a protest yesterday, January 26, at a branch in downtown Moscow, demanding that the bank refinance their loans.

        According to a report by the independent television station Dozhd, demonstrators came with leaflets reading, “Raiffeisenbank is the gas chamber for the Russian borrower,” “During the Second World War, Raiffeisenbank serviced concentration camp accounts,” and “Raiffeisenbank is the victory of usury over common sense.”

        Protesters demanded that the repayment rates for their loans be converted to 40 rubles for $1. (The current market exchange rate is more than 77 rubles to a dollar.) A representative of the protesters told the radio station Govorit Moskva that Raiffeisenbank's managers and staff refused to meet with them.

        Borrowers throughout Russia are now seeking to restructure their loans in foreign currencies, as a result of the ruble's sharp decline. With increasing regularity, protesters are staging demonstrations at banks, demanding a review of their credit conditions. On January 25, roughly 50 people assembled at one of the Moscow branches of Absolut Bank. Before that, there was a protest at one of Delta Bank's branches. In St. Petersburg, borrowers recently protested outside a VTB24 bank. https://meduza.io/en/news/2016/01/27...ructured-loans

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        • Opinion: ‘Russian Spring’ in wintertime - Could the former leaders of ‘Novorossiya’ become a ‘third force’ in Russian politics?
          MEDUZA 12:26, 27 January 2016 Vedomosti

          With the currency collapsing in Russia and Moscow's bombs falling on targets in Syria, it's not so easy these days to find people outside Ukraine still thinking about the military conflict in the Donbas, where two breakaway republics with support from Russia still exist, regularly exchanging gunfire and artillery shots with Ukrainian troops. Today's continued violence, however, isn't generally seen as the “real fighting” that occurred a year ago, when scores of people were dying in combat. Many of the men who helped make that bloodshed possible were Russian “volunteers,” come to eastern Ukraine to mobilize their brothers in arms. Now most of those people are back in Russia, and recently they've signaled their readiness to get involved in national politics. In an opinion piece for the newspaper Vedomosti, editor Pavel Aptekar examines the dangers this creates in a country that has known horrific political violence in the past. Meduza translates that text here.

          The former leaders of “Novorossiya” and their supporters want to be a third force in Russian politics—a nationalist opposition. Igor Girkin, the former defense minister of the unrecognized Donetsk People's Republic, and a group of other public figures and propagandists of the so-called “Russian Spring” recently announced the creation of the January 25th Committee, which declares itself to be a “third force,” simultaneously fighting against pro-Western liberals and the state's “dead-end guardians.” Not so long ago, Girkin said he was ready to help the authorities in the fight against the “fifth column” (the protesters in the opposition and the liberals in Russia's bureaucracy). Now he says the authorities are sick, too.

          This new committee looks threatening, says Alexander Verkhovsky from the SOVA Center for Information and Analysis. There's a real demand for a political party that claims to represent “Novorossiya,” he says. In 2014, a good chunk of the country embraced Russia's “patriotic” propaganda, and today the thousands of volunteers who fought in eastern Ukraine and other supporters of the “Russian Spring” have realized that the authorities abandoned the Novorossiya project (which was, perhaps, a fiction from the outset). The romantics who dreamt of restoring the empire now feel cheated. According to a survey conducted by the Levada Center sociological agency, 29 percent of Russians support the idea of former leaders from rebel eastern Ukraine getting involved in Russian national politics.

          Girkin could try to make a go of things on his own, but the Russian intelligence agencies clearly control what he's able to do. More likely is that the nationalist leaders are offering to the state their services as a new “Black Hundreds” (the ultranationalist movement that staunchly, and violently, supported the Tsarist House of Romanov), says political analyst Alexei Makarkin. But Girkin's group is unlikely to win any serious support. If influential state officials don't endorse the project, Girkin and his allies won't be allowed on television. Nationalists' supporters are loyalists, and they don't like it when their leaders quarrel with the state and its top officials.

          It's also noteworthy that this “third force” has emerged just seven months before parliamentary elections. Given the timing, it's not impossible that this is all a project by Russia's so-called political technologists, either to discredit the political opposition or to criticize the establishment's “guardians.”

          In any case, a project like this poses an undeniable threat to the public. Men back from an undeclared war struggle to return to civilian life, coming home with a skewed concept of limits on justified violence. The emergence of an organization that can unite them again and put them back to work begs the question: what's the job? https://meduza.io/en/feature/2016/01...-in-wintertime

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          • FORBES Kenneth Rapoza Jan 27, 2016 @ 02:58 PM 17,718 views
            Russia Sanction Relief 'Will Be Massive'

            European investors are waiting for the day, hopefully sometime in July, when Brussels axes sanctions on Russia.

            “I don’t think lifting sanctions changes things in the short term for the Russian economy, but for investor sentiment it will be absolutely massive,” says Martin Charmoy, managing director of Prosperity Capital Management, a $2 billion investment company whose entire fortune hangs in Russia. “I know that there are funds that will not invest there so long as there are sanctions in place. They don’t want to be sanctioned for investing in a country that faces sanctions. When that risk no longer exists, Russia investors will be rewarded.”

            BNP Paribas was sentenced to five years probation by a U.S. judge in April in connection with a $8.9 billion settlement resolving claims that it violated sanctions against Sudan, Cuba and Iran. A U.S. court in Manhattan ordered the French bank to forfeit $8.83 billion and pay a $140 million in fines for violating sanctions.

            No one wants to be BNP. When the iron curtain of Western sanctions lift, investment firms will tip toe back in steadily.

            Global investors, especially those in Europe that have close business ties to Moscow and St. Petersburg, have watched Russian stock prices remain cheap. The Market Vectors Russia (RSX) exchange traded fund trades at seven times earnings, the cheapest of the big four emerging economies.

            On Monday, Bloomberg reported that Secretary of State John Kerry was leaning a tad more towards Moscow than Kyiv. And in Germany, Chancellor Angela Merkel has a lot on her plate. Mediating the bitter divorce between Ukraine and Russia and who gets to keep what piece of real estate (as in Crimea and the Donbass) are being trumped by the migrant crisis. Merkel is looking for a solution in Ukraine and her counterpart, Petro Poroshenko, is struggling to convince his parliament that Donbass should be allowed to vote. For Kyiv, giving Donbass autonomy is one step closer to watching it go the way of Crimea, which seceded from Ukraine in March 2014. The U.S. and European Union say Russia annexed Crimea by force.

            “There have been clear signs of a ‘pacification’ process recently,” Simon Quijano-Evans, chief emerging markets strategist at Commerzbank told Bloomberg this week. “It does look as though all sides are starting to push more markedly for resolutions to the current geopolitical mess.” http://www.forbes.com/sites/kenrapoz.../#5de2a33838e7

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            • Ukraine Needs European Marshall Plan and to defeat corruption
              WORLD POST 01/27/2016 10:22 am ET | Updated 21 hours ago

              Diane M. Francis
              Senior Fellow Atlantic Council Eurasia Section in Washington DC, Adjunct Faculty Singularity University in Mountain Vie the National Post in Canada, a Distinguished Professor at Ryerson University’s Ted Rogers School of Management, author of 10 books
              --------------------------------------------------------------

              Ironically, it was a breakfast panel hosted by a Ukrainian oligarch, Victor Pinchuk and his Pinchuk Foundation, that yielded the most candid and interesting remarks as to what to do about Ukraine's struggle against Putin and internal corruption.

              "The reforms have been impressive," said former European Union president Jose Manuel Barrossa at the Friday event. "But the most important problem is still corruption. Ukraine must outlaw conflicts of interest in politics (oligarch influences); do asset recovery; reform taxation and customs; reverse illegal privatizations; and stop concealment of assets offshore. If not done, it will not succeed."

              Barrossa, who helped negotiate Ukraine's entry into Europe, said another risk is that the "focus on Syria" has turned attention away from Russian aggression against Ukraine. (This week, U.S. Secretary of State John Kerry said sanctions against Russia could be partially lifted if implementation of the Minsk2 ceasefire terms occurred. This was worrisome, given that Russia has never kept its promises and flouted all Minsk2 terms since 2014, killing some 9,100 Ukrainians so far.)

              But the backdrop to all of this is that, if Ukraine collapses, millions will migrate to the European Union, more than has already occurred from Syria and Africa, as I wrote in September. "If Ukraine collapses, another migration of a few million people to the EU will occur," said financier George Soros during the panel discussion. "The German finance minister proposed an EU-funded Marshall Plan to help with its migration issues. That should include funds to help pay for Ukraine's important role in defending Europe against Putin."

              Last week in Davos, German Finance Minister Wolfgang Schaeble made the surprise suggestion about a Marshall Plan.

              Soros said Ukraine deserves to get such aid, and that it also undermines Moscow's regional ambitions.

              "I propose a winning strategy for Ukraine: Besides imposing sanctions on Russia, a counterbalance of financial support for Ukraine should be made," he said. "Sanctions only reinforce Putin's (false) narrative that sanctions are due to the hostility of the western powers who are denying Russians their rightful places in the world.

              "(Why) he (Putin) is credible in Russia is there are only sanctions, and this is why large-scale financial support to Ukraine would undermine his narrative. Then the Russian people will see Russia's going down and Ukraine's rising," Soros said.

              But Ukraine must deliver anti-corruption measures first. The principal problem is judicial and legal reform. In a catch-22, Ukraine's Rada, or parliament, has voted to replace the judiciary and prosecution, but has been denied the approval of the Supreme Court to amend the constitution.

              "I believe an elegant solution is to give the president additional powers to do this, but with a sunset clause ... just for two years," Soros suggested on Friday. "In two years, the presidential powers would expire and a new constitution would be in place."

              Soros' suggestion is intriguing because, in two years, a complete housekeeping could be undertaken. But, short of that, the country cannot eradicate corruption.

              Outside the legal sector, the gains have been significant. Ukraine's gas monopoly Naftohaz is no longer buying Russian gas (removing arbitrage and political games by Moscow) and has hiked gas prices to world levels (removing subsidy frauds by oligarchs).

              Ukraine's Finance Minister, Natalie Jaresko, has restructured the country's debts, gotten bailout funds from the IMF, replenished reserves, verified social payments, put all treasury payments online and implemented electronic VAT and excise tax systems, saving $1 billion in fraud in 2015.

              But full tax reform is needed, Jaresko said, to capture revenue from the country's underground economy, estimated to be equivalent to half of Ukraine's official GDP. But this is difficult.

              Likewise, Economy and Trade Minister Aivaras Abromavicius implemented the Naftohaz reforms, launched fully transparent procurement systems and is preparing to privatize 1,824 state-owned enterprises. "But the main obstacle (to attracting investors) is the lack of the rule of law."

              The public is not happy with the new government and has staged two street revolutions in the last decade. As former boxing champion Vitaly Klitschko, now mayor of Kyiv, said to the assemblage, the problem is the corrupt judiciary and prosecution system.

              "The people are unhappy. Nobody goes to jail. They think it's a big illusion," Klitschko said Friday.

              "Ukraine is on the verge of victory, but its economy is dominated by oligarchs and a civil service that exploits the people," said Soros.

              The world must not abandon Ukraine and must maintain its focus and pressure on measures to defeat Putin's predation as well as the internal corruption that has crippled the country, Europe's largest. So far, so good.

              Ukraine Needs European Marshall Plan and to defeat corruption

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              • 9:33 28.01.2016 INTERFAX-UKRAINE
                Ukraine seeks permanent international monitoring of Crimea – Klimkin

                Ukraine's Foreign Ministry will insist on permanent monitoring of the situation in Russia-occupied Crimea by representative offices of international organizations in accordance with the Geneva Convention, Ukrainian Foreign Minister Pavlo Klimkin has said.

                "We worked with international organizations, primarily with the Council of Europe [CoE], and we secured, despite Russia's resistance, [decisions] to send a preliminary mission to Crimea. We have agreed with Thorbjorn Jagland [CoE Secretary General] that this will be the first step. But I will press for a conventional mechanism in Crimea," Klimkin told Interfax on Wednesday.

                Since the year began, Kyiv has been trying to lend a new dynamic to the issue of retaking Crimea and is taking a number of steps in this direction, in particular, it will insist on a broader Geneva format, the minister said.

                "We saw Jagland's statement on Russia's violation of the human rights convention, we saw clear reports by international organizations regarding Crimea. And it is based on this that we must build a discussion format for the Crimea problem: we believe it should a 'Geneva plus' format since you cannot exclude Turkey as a serious player and campaigner for Crimean Tatars' rights," Klimkin said.

                The current visit to Crimea by CoE Secretary General's special envoy Gerard Stoudmann is "the fist step where one person, a special representative of the CoE secretary general, goes to Crimea for the first time to look at the situation," the minister said.

                "But we believe there should also be the CoE European commissioner for human rights and the monitoring must be permanent. This is what we must come to and that is crucial," Klimkin said.

                It was reported that at an economic forum in Davos on January 20 Ukraine's Finance Minister Natalie Jaresko announced Ukraine's plans to create a forum similar to the Geneva format, which would include Russia, Ukraine, the European Union and the United States, to launch dialogue over Crimea's return.

                Russian Foreign Minister Sergei Lavrov responded by saying on January 26 that Russia is not in talks with anyone over return of Crimea, which is a Russian territory, so there is nothing to return. Ukraine seeks permanent international monitoring of Crimea – Klimkin

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                • RADIO FREE EUROPE January 28, 2016
                  EU Court Strikes Down Sanctions On Yanukovych Allies

                  BRUSSELS -- An EU court has ruled that the bloc was wrong to freeze the assets of five close associates of ousted Ukrainian President Viktor Yanukovych.

                  The ruling on January 28 by the EU’s General Court concerns former Ukrainian Prime Ministers Mykola Azarov and Serhiy Abruzov, Azarov's son Oleksii, former Energy Minister Edward Stavytskyi, and businessman Serhii Klyuyev.

                  The EU in March 2014 placed the five on a blacklist of individuals suspected of stealing Ukrainian public funds before Yanukovych was brought down by street protests.

                  The EU’s General Court said on January 28 that the five were included on the blacklist based solely on a letter from the Ukrainian Prosecutor-General’s Office.

                  But the letter dated from March 2014 “provides no details concerning the matters specifically alleged against the five Ukrainians or the nature of their responsibility,” the Luxembourg-based judges argued.

                  The ruling can be appealed within two months before the European Court of Justice.
                  EU Court Strikes Down Sanctions On Yanukovych Allies

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                  • Transmission RADIO FREE EUROPE Merhat Sharipzhan Jan 26, 2016
                    Putin’s Selective Reading Of Soviet History

                    Russian President Vladimir Putin often accuses the West of distorting history. But in his latest comments about Soviet founder Vladimir Lenin and his successor, Josef Stalin, Putin’s penchant for reshaping the past to suit his goals was on stark display.

                    Speaking to pro-Kremlin activists in the southern city of Stavropol on January 25, Putin -- for the second time in a week -- accused Lenin of setting a time bomb that blew the Soviet Union apart in 1991. He also seemed to conflate Russia with the entire U.S.S.R., saying:“They placed an atom bomb under the building called Russia, and it later exploded.”

                    The bomb, Putin said, was Lenin's concept of the Soviet Union as a federative state, with each of its republics having the right to secede. He said Lenin was on the wrong side of a dispute with Stalin, who he said opposed giving the largely ethnic-based republics that right.

                    According to Putin, Lenin’s concept was one of the major causes of the Soviet collapse.

                    Putin’s remarks were striking because the former Soviet KGB officer has been known to be very cautious when talking about Lenin, whose embalmed corpse still lies in a mausoleum on Red Square 92 years after his death -- and who is still revered by millions across Russia.

                    Putin’s attempt to portray Stalin as a wiser leader -- one who opposed the republics’ right to part with the U.S.S.R. -- is badly undermined by a look at the dictator’s record on the issue.

                    Here’s why:
                    The first Soviet Constitution, adopted by the Second Congress of Soviets on January 31, 1924 -- 10 days after Lenin’s death -- enshrined as law the 1922 Treaty on Creation of the Soviet Union.

                    Signed by the Russian Soviet Federative Socialist Republic, the Belarusian Soviet Socialist Republic, the Ukrainian Soviet Socialist Republic, and the Trans-Caucasus Soviet Federative Socialist Republic, the treaty granted each of those entities the right to leave the union. At the time, Stalin was one of several men jostling for power in the wake of the Bolshevik leader’s death.

                    In 1936, when Stalin’s autocratic power was at its peak and his Great Terror purge campaign in full swing, the Soviet Union adopted a new constitution that changed the legal status for Central Asian ethnic autonomous republics within the Russian Federation, which are currently Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, and turned the Trans-Caucasus Federation into three separate republics, Azerbaijan, Armenia, and Georgia.

                    The number of the republics with so-called union status within the U.S.S.R. was increased from four to 11 by Stalin. In other words, at a time when Stalin could potentially have used his power to strip Soviet republics of the right to secede, he instead extended that right to a total of 11 republics rather than four.

                    If Stalin indeed opposed the right of ethnic republics to secede from the Soviet Union, he had more than enough clout to change the constitution in the opposite direction, turning the U.S.S.R. into a unitary state. But that never happened.

                    In 1940, the Baltic states of Latvia, Lithuania, and Estonia were forced to join the Soviet Union along with Moldova, bringing the number of republics to 15 -- though many Western countries never recognized the Baltics as part of the Soviet Union.

                    Stalin died in 1953 and the right the republics to leave the Soviet Union was reiterated in the Soviet Constitution adopted under Leonid Brezhnev in 1977.

                    In 1991, they all left the Soviet Union -- a right granted them, in part, by Stalin.

                    Ethnic republics that had only autonomous status remained within the larger union republics -- Chechnya, Daghestan, Tatarstan, and Buryatia within Russia, for example, and Karakalpakstan within Uzbekistan.

                    Exactly why Putin criticized Lenin in public and once more praised Stalin may be known only to Putin.

                    Was it another attempt to justify Russia’s seizure of Crimea from Ukraine in March 2014, and its backing for separatists in eastern Ukraine? Was it another attempt to glorify Stalin among ordinary Russians?

                    Although Putin said in Stavropol that the issue of Lenin’s burial is not on the agenda, his bold statements regarding what he suggested were Lenin’s “mistakes” -- including the destruction of Russia as a state and the killing of Tsar Nicholas II and his family -- sounded like an attempt to revise Lenin’s role in Russian history in general.

                    The answers could come soon, with the centennial of the Great October Revolution of 1917 approaching next year.

                    Will Russia bury Lenin by then? Putin’s Selective Reading Of Soviet History

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                    • The Power Vertical Brian Whitmore January 25, 2016
                      The Daily Vertical: The Fear Regime
                      The Daily Vertical: The Fear Regime

                      The Power Vertical Brian Whitmore January 26, 2016
                      The Daily Vertical: The Mask Is Off
                      The Daily Vertical: The Mask Is Off

                      The Power Vertical Brian Whitmore January 27, 2016
                      The Daily Vertical: Lavrov's Cost-Free Reset
                      The Daily Vertical: Lavrov's Cost-Free Reset

                      =====================================

                      The Power Vertical Brian Whitmore January 25, 2016
                      The Briefing: Moscow's Disobedient Client

                      It appears that Russia can't deliver the one and only thing the West wants from it in Syria -- the orderly exit of Bashar al-Assad.

                      According to a report in the Financial Times, late last year Putin dispatched General Igor Sergun, head of Russia's military intelligence. to Syria to persuade Assad to step aside. And Assad refused.

                      On the latest Power Vertical Briefing, we take a look at how Moscow's lack of influence over Assad influences efforts to resolve the Syria conflict.

                      Joining me are RFE/RL Senior Editor Steve Gutterman and Pavel Butorin, managing editor of RFE/RL's Russian-language television program Current Time.

                      Enjoy...
                      The Briefing: Moscow's Disobedient Client

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                      • Expert: Putin and Assad support Hezbollah terrorism
                        EUROMAIDAN PRESS Kseniya Kirillova 2016/01/28

                        A few days ago in Israel a conference organized by the Research Institute of National Security took place. The participants, Israel’s Chief of Staff, as well as the Defense Minister of Israel, agreed that the main enemy of the Jewish state is not Daesh but Iran, as a major threat at the moment is its attempt to gain a foothold in Syria in alliance with Hezbollah.

                        According to the analyst Avraham Shmulevich, a rabbi and president of the Institute of the Eastern Partnership (Jerusalem), in the recent decades Hezbollah has built a very efficient structure with the help of Iran, and is armed with up to a hundred thousand missiles. Hezbollah is one of Iran’s official army units. According to the analyst, one of the main reasons why Iran supports Assad is to prevent a disconnection between him and Hezbollah, as the connection currently goes through Syria with the connivance of the authorities.

                        “Iran has the power to establish its hegemony in the Shia world, and now seeks to create a Shiite belt of countries under its protectorate from the Persian Gulf to the Mediterranean Sea,” the analyst said.

                        Meanwhile, experts differ in their opinions regarding the Russian-Iranian alliance. Analysts from the Belorusian Institute for Strategic and Foreign Policy Studies think that Moscow is not cooperating with Tehran, but rather provoking instability in the Middle East, and is ready to support all parties in the conflict in this quest. However, Avraham Shmulevich believes otherwise.

                        “First, we do not see any real steps on Russia’s part to promote the replacement of Bashar al-Assad to a figure more acceptable in the West. Of course, Assad is not a ‘sacred cow,’ but even if Russia agrees to replace him, it is only under condition of saving the current Syrian regime. As the Turkish leadership said, Russia is planning to set up a puppet state in the Alawite province of Latakia, which would be completely loyal to Iran and Hezbollah. Meanwhile, Moscow is both a military and economic ally of Iran. The Kremlin recently credited Tehran with a loan of five billion dollars, and according to the most recent information, Russian officers cooperate directly with Hezbollah, delivering arms. Russian aviation coordinate their flights directly with the militants of Hezbollah, the Russian instructors teach its members, that is, we can say they have formed a kind of ‘Combat Brotherhood’,” the expert said.

                        By the way, just last November, Mihail Bogdanov, special envoy of the Russian President for the Middle East, said that Russia does not consider nor intends to consider Hamas and Hezbollah as terrorist organizations. Also, recently Brigadier General Moni Katz, former commander of IDF Galil regimen wrote in an article for the Washington Institute for Middle East Studies that the Lebanese group Hezbollah significantly strengthened its offensive capabilities as a result of joint action with the Russians in Syria.

                        According to Avraham Shmulevich, Iranian troops, Hamas, Hezbollah, and Assad troops operate in close alliance, and Russia actively supports this alliance, guided by not the most logical motives.

                        “You have to understand that Russia is a fairly irrational country. A normal state is committed to the economic well-being and prosperity of its citizens, but dictators have different logic. I assume that Putin and his followers can really like the very fact that their aircraft every day kill people somewhere. Such dictators perceive warfare outside its territory as a sign of a great power. In addition, Putin seems to actually believe in a confrontation with the United States, and he cannot allow Americans to enter territories he thought theoretically might be occupied by his troops. Meanwhile, all this does not exclude a financial interest. It is known that in the ‘90s Arabs paid very good money for such co-operation with the Russians, including big paychecks sent directly to individual deputies of the State Duma. The financial interest also includes rollbacks, obtained from the military deals with Iran,” the expert said.

                        Summarizing all of the above, Shmulevich indicates that the air force protection that Russia provides to Hezbollah, as well as the supply of arms and trainers, air support, etc. significantly strengthen Arab terrorists.

                        “At the moment, in fact, a Shiite coalition has formed. Shiites in Afghanistan, Iran, Yemen, Lebanon, and Syria (Bashar Assad) form a united front which Russia joined. At the moment it is not its main party, but I think that Iran will do everything possible to bolster Russia’s involvement in the war. If this happens, such involvement would inevitably lead to deterioration of relations between Russia and Israel, since the growing ‘Shiite axis’ is perceived as a direct threat to Israel’s security,” the expert concluded.

                        Many analysts, especially Ukrainian ones, consider lifting international sanctions from Iran in exchange for giving up its nuclear program that took place on January 16 to be rather good news for Ukraine, since it leads to further oversaturation of the oil market and therefore decreasing oil prices, which would further weaken the aggressor, namely Russia.

                        However, according to Shmulevich, there may be more negative consequences of this decision than may seem at first glance.

                        “I do not believe that Iran’s nuclear program will be phased out. Tehran would suspend it temporarily, since it needs money for its development. Now, after the lifting of sanctions, it will have access to about USD 50 bn that were frozen in its accounts. Moreover, it will get access to various credit programs and modern weapons. So, Iran will return to its nuclear program as soon as it pumps up its muscles. Oil prices already were falling all last year and a half, reaching $30 per barrel, before sanctions against Iran were lifted. Also, Russia’s economy is already in a state of profound crisis. At the same time, Putin destroyed the market for Russian gas with his own hands. In these circumstances, I see no logic in lifting sanctions, which entails a very serious risk of arming Iran in the near future with nuclear weapons, which will increase instability in the Middle East even more,” Shmulevich warns.
                        Expert: Putin and Assad support Hezbollah terrorism -Euromaidan Press |

                        SOURCE: Source: Radio Liberty’s Crimea edition

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                        • Moscow Patriarchate losing parishes to Kyiv church and its dominance of Ukraine’s religious life
                          EUROMAIDAN PRESS Paul Goble 2016/01/28

                          The Moscow Patriarchate may have succeeded in intimidating the Universal Patriarch of Constantinople not to grant autocephaly to its rival in Ukraine, the Kyiv Patriarchate; but as a result of the war and the attitude of the two churches to it, an increasing number of parishes are shifting their allegiance from Moscow to Kyiv.

                          The Moscow Patriarchate still has far more parishes in Ukraine than does the Ukrainian Patriarchate, 12,515 to 4,877 respectively, but the shift of some 60 parishes on their own volition from the first to the last is “unprecedented,” according to Ukrainian analyst Ivan Verstyuk.

                          Never before have so many parishes transferred allegiance in this way; and this shift, while still relatively small calls attention to two important developments: the growing strength of Ukrainian identity and opposition to Moscow, and the fact that in Ukraine, Moscow parishes are now vastly outnumbered by those of the Kyiv Patriarchate and other Christian denominations.

                          According to Ukraine’s culture ministry, there are now approximately 16,000 Christian church parishes in that country not subordinate to Moscow, compared to only 12,500 that are. As a result, Moscow Patriarch Kirill’s talk about Ukraine as “the canonical territory” of the Russian Orthodox Church has ever less of a foundation in reality.

                          Most of the shifts in subordination have taken place in Western Ukraine, although intriguingly some have occurred near the front lines. And more are in prospect given a shift in popular attitudes. In 2011, 31.1% of Ukrainians said they supported the Kyiv Patriarchate while 25.9% said they supported the Moscow one.

                          Now, those figures have shifted, with 44.2% of Ukrainians declaring that they support the Kyiv Patriarchate and only 20.8% supporting the Moscow church. If Constantinople recognizes the Kyiv Patriarchate as independent, the number of churches which will change size will rise dramatically.

                          Given that, Moscow, both the church and the state, is doing everything it can to block such a move. At present, the Moscow Patriarchate’s 12,500 parishes in Ukraine constitute more than a third of all its parishes in the world. If it loses them to Kyiv, the Moscow Patriarchate will be marginalized not only internationally but at home as well.

                          http://euromaidanpress.com/wp-conten...01/002_021.jpg
                          Orthodox Churches switching from the Moscow Patriarchate to the Kyiv Patriarchate: The numbers in solid green circles represent the number of parishes that switched completely. The numbers in semi-transparent circles represent churches that switched partially. (Data: The Religious-Informational Service of Ukraine; Image: NV.ua)

                          Moscow Patriarchate losing parishes to Kyiv church and its dominance of Ukraine’s religious life -- EUROMAIDAN PRESSEuromaidan Press |

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                          • A story of Ukrainian exports to Europe: walnuts served to the Dutch royal family
                            EUROMAIDAN PRESS Irina Koval 2016/01/28

                            This article was selected by the Evropeiska Pravda newspaper, the section of Ukrainska Pravda dealing with aspects of eurointegration, as a winner in the contest of stories from regional journalists. It was originally published in the Cherkasy newspaper newspaper Nova Doba.
                            ---------------------------------------------------
                            The tumultuous economy of the 1990 s affected Ukrainians in very different ways: some lost virtually all they had, succumbing to panic and depression, but others seemed to quickly navigate among new opportunities and reorient to new markets. Anatoliy Pohrebniak, head of Koopzovnishtorh Enterprise, managed to keep the business ties he had established during Soviet times, and developed a lucrative business in Cherkasy, collecting, processing and exporting agricultural crops. The mainstay of his export business was not wheat, barley or sunflowers, as would be typical among Ukrainian agricultural exporters, but rather pumpkin seeds and walnuts. Opponents of Ukrainian ties to the EU decry the lack of competitiveness of many Ukrainian products, but the quality of Cherkasy walnuts is so high that they have been served at Dutch royal tables for over 20 years.

                            Food for astronauts

                            It is well known that the possession and sale of foreign currencies in the former Soviet Union were criminally prosecuted. However, there were those in Cherkasy who dealt in hard currency flows quite legally. The trade cooperative Sozuykoopzovnishtorh, and its representatives in Cherkasy in particular, did so in connection with the agricultural products and medicinal plants they exported to Europe, North Africa, and Japan.

                            Only two regions of Ukraine (Cherkasy and Khmelnitsk) had direct connections with the Soviet export-import trading cooperative Sozuzkoopzovnishtorh — and that was because they provided the largest share of Soviet exports. Cherkasy alone accounted for almost 5% of total exports.

                            ”However, with the collapse of the Soviet Union, Soyuzkoopzovnishtorh disappeared and no one was in a hurry to replace it in Ukraine. So I took the initiative to create a private joint stock company, Koopzovnishtorh, that allowed us to keep and further develop a network of business contacts—and that in the process was providing two hundred jobs,” Anatoliy Pohrebniak told Nova Doba.

                            In Soviet times, the Cherkasy Oblast exported pumpkin seeds, walnuts, chestnuts, fruit and berries, as well as medicinal plants, including Tatar potions and the “plant-parasite,” mistletoe. Five factories in Cherkasy processed those products, and one of them, the Uman experimental cannery, produced food for the first Soviet cosmonauts.

                            Initially, Koopzovnishtorh tried to continue exporting the entire range of Soviet-era products, and by entering the Ukrainian Grain Association, exported sunflowers, wheat, barley, and even fertilizers. But over time it chose to stick with only the most promising and profitable crops.

                            This turned out to be walnuts, also called Greek nuts in Ukrainian — which actually grow in Ukraine.

                            ‘In 1997,” recalls Pohrebniak, “no one believed that you could amass a collection of nuts in large volumes. We started out small – 18 tons, but quickly increased production up to 600–700 tons per year, and most recently up to one thousand tons.”

                            “Considering that shelled walnuts on the world market are worth $ 3-3.5 per kilogram, this can be a very profitable business, if you successfully develop commercial nut orchards, reduce tax pressures, and remove the corruption component,” he adds.

                            Let’s Go to a Walnut Orchard

                            Today, Ukraine may not boast serious walnut plantations. Its 2,500 hectares is significantly less than Moldova’s 14,000. And it is far behind the more serious players in the business, such as the USA.

                            As explained by Pohrebniak, “Ukraine is in the top 10 exporters of shelled walnuts. The first three are the USA, Canada and China, followed by Japan, France and Turkey. Moldova is growing dynamically, which is gradually pushing us from the market. This is very annoying because, without a corresponding governmental policy, Ukraine could very quickly lose its share on the world market.”

                            What prevents Ukraine’s walnut business from evolving?

                            Pohrebniak almost never mentions problems with foreign partners. The main problems are the significant tax burden and the black market, which makes the products of honest entrepreneurs less competitive.

                            “To work with foreign partners,” he says, “is a real pleasure. They adhere to legal requirements and keep their word. For twenty years we have been working with Agrìcol-Sammy, an Italian company, Yarden, a large French processing company, and Rabat end, another French company, which has offices in Syria and Lebanon in association with the Austrians and the Dutch. In difficult times, when we did not have enough resources, we negotiated with foreign partners over prepayment and they tried to fulfill all their obligations. The real problems are Ukraine’s flawed legal framework and questionable export schemes that allow about half of our nuts to be smuggled into Turkey, Syria, and Russia.”

                            Mr. Pohrebniak considers the period from 1995 to 2009 as the best years for his enterprise. During that time, the company invested about a million hryvnias annually into development, purchasing four isothermal rooms and fully equipping them. Now the processing, sorting and calibration of nuts is carried out at two production facilities. And while the number of workers at the enterprise has been significantly reduced, the company has been trying not only to sustain its current volume of production for export but to actually increase it.

                            ” Now I employ only 15 workers. Of course, some operations are performed by machines. At the same time, a machine that sorts the nuts by color costs half a million euros,” he says.

                            However, sorting nuts is a delicate operation. In most stages this is a manual work, because the machines do not provide the desired quality.

                            Overall, the company owns five sorting machines, with which workers cleanse the nuts from impurities and additives (in accordance with European standards, 10 kg of nuts must contain no more than 4-8 grams of shell; and, of course, rot and gaps between the ‘butterfly’ halves are unacceptable).

                            Next comes sorting by sizes, which may vary according to a scale of 20 indicators, including ‘butterfly’ halves, quarters, eighths and crumbs.

                            The nuts are also sorted by color. The accepted color spectrum consists of 10 shades, from straw to coffee.

                            Cleaned, calibrated and packed nuts must be certified by health and quarantine services and must receive a certificate of origin. Samples are first sent to Europe, and, after negotiating with foreign partners, the main supply of the goods is then exported.

                            “The pickiest experts in the process of checking the quality of the finished products are our partners from Germany and Austria, but even from them any complaints are rare,” says Mr. Porebnyak.

                            A proposal from the Netherlands has even been made to award products from Koopzovnishtorh a “Quality Mark” because nuts from Cherkassy are on the menu at even the Dutch Royal Court.

                            “Our nuts are used for making exclusive pastry products and expensive cheeses. Usually it takes about 720 to 800 halves to constitute one kg of final product,” says Mr. Pohrebniak.

                            Nuts grown in Cherkasy are environmentally friendly, and manual cleaning, sorting and sizing allows them to compete with similar products in Europe and America. However, the lack of state subsidies is a problem—it’s an obvious disadvantage in comparison with European competitors who regularly have the financial support of their governments.

                            In Europe not only is the cultivation of grain subsidized, but also the cultivation and processing of pumpkin seeds and the commercial harvesting of nuts. By contrast, in Ukraine, unlike farms in many European countries, growers are subject to an additional layer of taxation.

                            This situation encourages more and more farmers to sell their nuts to black market intermediary buyers, who smuggle them abroad without going through customs. As a result, not only do legitimate Ukrainian export operators suffer, but the country’s treasury suffers the loss of thousands of dollars in lost tax revenues.
                            Our prospects

                            Based on their experiences with their European colleagues, Cherkasy farmers and export businesses have not lost hope in their goal to pursue their businesses honestly and successfully. These hopes in fact led Cherkasy residents to found the All-Ukrainian Walnuts Association.

                            The current annual production of walnuts in Ukraine (taking into consideration only those areas that are currently in use) is estimated to be 70,000-80,000 tons. Officially, however, only about 15,000-20,000 tons go through customs. With a hundred seedlings per hectare, a farmer should be able to generate annual revenues of approximately USD 4,000-5,000, and nuts do not require care as thorough or expensive as do other crops.

                            Today a portion of Ukraine’s nut production is sold on the domestic market, mostly to confectionery and bread bakeries in Rivne and Lviv. Some private business owners of small cafes and restaurants buy them too. However, the European market remains a priority. According to Mr. Pohrebniak, “I am already 30 years in this business, but now (after signing the Association Agreement with EU) new horizons are opening up and, consequently, everything is just beginning.” A story of Ukrainian exports to Europe: walnuts served to the Dutch royal family -Euromaidan Press |


                            Source: Eurointegration.com.ua

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                            • ATLANTIC COUNCIL Aleksandra Garmazhapova January 27, 2016
                              Putin a Victim of His Own Creation
                              Chechen leader, Ramzan Kadyrov, tests the Kremlin with his terror tactics

                              “I ask Ramzan Akhmatovich for forgiveness and thank him for not yet killing me.” This is an example of the messages Russian opposition members have been posting on their social media pages. They are appealing, of course, to the leader of the Chechen republic Ramzan Kadyrov.

                              The story of this social media campaign begins on January 12, when Kadyrov declared that all members of the “non-systemic opposition”—those who truly oppose Russian President Vladimir Putin—are “enemies of the people.” In response, opposition parliamentarian, Konstantin Senchenko, wrote on Facebook that Kadyrov was “the shame of Russia.” In the post, Senchenko said that the Chechen leader discredited everything that was great about Russia. Kadyrov demanded an apology. On January 15, Senchenko allegedly spoke with some “serious” people from Chechnya and then immediately apologized to Kadyrov in front of a camera. His hands shook and his voice trembled.

                              Some opposition members were disappointed by Senchenko’s apology, but others quickly rose to his defense, reminding the others of the fate that often befalls Kadyrov’s enemies. In the aughts, Kadyrov’s bodyguard, Umar Israilov, fled to Europe and publicly revealed his former boss’ many crimes, linking him to a series of murders, kidnappings, and torture between 2003 and 2005. In 2006, Israilov was given political asylum in Austria. Three years later, he was shot at the entrance of a supermarket in Vienna. Whoever ordered the shooting was never found because the Russians refused to cooperate with the Austrian investigators. Kadyrov ignored the incident.

                              On September 24, 2008, Ruslan Yamadaev, who was reportedly being considered as Kadyrov’s replacement, was shot dead in Moscow. After the murder, one of Ruslan’s brothers, Sulim Yamadaev, fled to the United Arab Emirates where he, too, was fatally shot on March 28, 2009. He died two days later. A third Yamadaev brother, Isa, accused Kadyrov of ordering the murders. An attempt to assassinate Isa failed.

                              The assassination of Boris Nemtsov, the prominent Russian opposition politician, marked the most significant recent attack on a Kadyrov opponent. Nemtsov was shot directly across from the Kremlin on February 27, 2015. Chechen criminals have been accused in the assassination. The person who ordered the shooting has so far not been identified. Ilya Yashin, a close friend and colleague of Nemtsov’s, and many others are convinced that the trail leads to Kadyrov.

                              Russian politicians are too terrified to talk about Kadyrov’s alleged connection to such crimes. Still, many popular liberal bloggers, politicians, and journalists publicly support Senchenko’s statement that Kadyrov is the shame of Russia. They are showing their support using the hashtag #KadyrovShameofRussia (#). The movement is gaining momentum and the attention of Chechen elites. A day after the hashtag was launched, Chechen elites started their own, #KadyrovPrideofRussia (#).

                              The head of the Chechen parliament and Kadyrov’s close ally, Magomed Daudov, posted a photo on Instagram of Kadyrov’s guard dog Tarzan who, according to Daudov, is ready to tear to pieces all enemies of the people. In the same post, Daudov listed the names of journalists and politicians that he considers traitors to Russia.

                              In a lighthearted response, opposition members posted on their social networking accounts photos of their own pets, including furry cats, ostensibly ready to face Tarzan head on.

                              This barrage of threats has been taking place under the Kremlin’s nose. No one in Moscow—not Putin, not Prime Minister Dmitry Medvedev, not Duma Chairman Sergei Naryshkin, not Federal Assembly Speaker Valentina Matviyenko—has commented publicly on Kadyrov’s behavior. Kadyrov appears to be untouchable in Russia today.

                              Experts offer several explanations for the harassment of the opposition by Kadyrov and his inner circle. According to one explanation, Chechnya’s economic crisis is driving its leadership to prove its loyalty to the Kremlin. But this argument overlooks Kadyrov’s wild card: a massive personal army that is loyal to Kadyrov alone. In these circumstances, Moscow’s support and influence is increasingly irrelevant in Chechnya. If federal authorities attempt to arrest Kadyrov, a third Chechen War will break out—a conflict that the Kremlin can ill afford. Putin has become a prisoner of his own creation.

                              Another argument, and one that is closer to the truth, states that Kadyrov is trying to see how much he can get away with. He acts and waits to see what the Kremlin’s reaction will be, or more precisely, whether the Kremlin will react at all. Kadyrov is testing Putin, making sure that his own power is truly uncontested.

                              Opposition figure Alexei Navalny offers another convincing theory on Kadyrov. He proposes that as the first anniversary of Nemtsov’s murder approaches, the Chechen leader is trying to divert attention away from his own implication in the case by starting a war of words with the liberal opposition.

                              Considering that there has been no information so far on whether or not Kadyrov is included on any sanctions lists (with the exception of one report in 2013 that said he was on a “classified list” of targets of US sanctions), the odious politics out of Chechnya may not just be a problem for Russian opposition leaders: nobody knows who Kadyrov will consider an enemy tomorrow.

                              Despite threats, the opposition is not backing down. Last week, Yashin announced that he and his team had completed a new report on Kadyrov, tentatively titled, “Kadyrov: A Threat to National Security.” Yashin will launch the report on February 23, a symbolic day in Russia as it celebrates the “Defenders of the Fatherland”—veterans and those who have served the country. So far, few Western media outlets have reported on the ongoing threats to the Russian opposition and the men and women brave enough to stand up to Russia’s Chechen mafia. As the anniversary of Nemtsov’s murder approaches, this must change before more brave Russians fall to the same fate.
                              Putin a Victim of His Own Creation
                              Last edited by Hannia; 28th January 2016, 22:14.

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                              • ATLANTIC COUNCIL Stephen Blank January 27, 2016
                                In Ukraine, Putin Tries to Cash in Before Luck Runs Out

                                Ukraine has become the object of high-stakes diplomacy. This does not mean that fighting has stopped—quite the opposite. Russian forces continue to launch probes and violate the cease-fire agreement; they have substantially reinforced themselves, as have the Ukrainian forces arrayed against them. Nevertheless, a major diplomatic campaign is occurring.

                                Russian President Vladimir Putin has taken complete political control of the separatist forces by sending veteran troubleshooter Dmitri Kozak to take over Russia's relations with the so-called Donetsk People's Republic (DNR) and the Luhansk People's Republic (LNR). He also sent another confidante, Boris Gryzlov, former chairman of the Duma, to negotiate with Ukrainian President Petro Poroshenko in Kyiv, and a third gray eminence, Vladislav Surkov, has met with US Assistant Secretary of State Victoria Nuland in Kaliningrad. Although we do not know the outcome of these discussions, they represent an effort to achieve some sort of diplomatic solution whose details will gradually unfold.

                                But these maneuvers do tell us a great deal. It appears that Putin has long since reached Russia's "culminating point," to use Clausewitz's term, where it is no longer possible for Russian forces to advance: they have gone too far beyond the sources of their power. Given the deepening economic crisis, Russia cannot sustain a protracted war against Ukraine—although it can preserve the current "frozen conflict."

                                But doing so entails its own severe costs. Sanctions remain in place while Russia is supporting Crimea, the DNR, and the LNR. These costs have mounted to the point where Russia has had to forego not only vital infrastructure projects and defense programs, but also major energy and infrastructure investment opportunities in China and Central Asia. Meanwhile, poverty, inflation, and unemployment continue to grow at home. And although Russia can sustain its Syrian adventure, those costs have doubled to $8 million a day.

                                While Moscow has forced Washington to treat it as an equal in Syria, and clearly hopes to achieve a similar outcome regarding Ukraine, Putin must relieve the pressure on Russia and erode the sanctions regime if he can. Although he is doing everything possible to achieve this goal, the EU's steadfastness has surprised him.

                                Thus, like any good gambler, Putin now seeks to cash in his chips and get out of the casino before his luck turns. This is where the diplomacy becomes intense. A major sticking point is Putin's demand that Ukraine accept Minsk II. Another is his push for a reform of the Ukrainian constitution that would grant the Donbas not just autonomy but virtual independence from Ukraine and subordination to Russia. Ukraine would have to absorb all of the costs, while Russia could use its leverage at any time to undermine the possibility of an independent Ukrainian state, much as it has done in Moldova through Transnistria. This recipe is one that has long since been perfected by tsars and commissars alike to expand the Russian empire. Thus Putin seeks not only an end to sanctions, but also a de facto solution that would allow him to keep Crimea, undermine Ukraine's statehood, and resume business as usual with Europe and the United States.

                                For both Ukraine and the West, that outcome would represent what Lenin called a rotten compromise. Not only must Russian troops fully leave Ukraine and the rebels be disarmed, but Ukraine's authority over these provinces must be solidly unchallengeable. While Kyiv should disperse power away from the center to provincial governments, creating virtually sovereign statelets that are vulnerable to future Russian annexation will hardly resolve the current crisis.

                                Second, the West should insist that Russia leave Crimea. The referendum in Crimea, which occurred under the shadow of Russian bayonets, was a sham, and Crimea is no more part of Russia than the New York neighborhood of Brighton Beach, where many Russian and Soviet emigres live.

                                The withdrawal might be arranged in stages and the issue of NATO membership tacitly postponed for some acceptable length of time, since in any case NATO will not take Ukraine at present. But Ukraine's integrity, sovereignty, and independence must not be abridged in this settlement. Any solution that does not return Crimea to Ukraine merely postpones the next day of reckoning and opens up a veritable Pandora's box of demands for ethnic and border rectifications all over Eastern Europe, while allowing Russia to retain the gains of aggression and potentially threaten the Balkans and Turkey.

                                Ukraine's membership in the European Union also must be addressed. Entry into the EU is the work of generations. But we have seen that no neighbor of Russia is safe unless it is part of a solid security system like NATO or the EU. Brussels, as part of its plan for the long-term reconstruction of Ukraine, should make membership available to Kyiv, provided it follows through on the requirements laid out in the EU's Acquis Communautaire.

                                Even if it takes a generation to reach this destination, the failure of the Eastern Partnership demonstrates that only conditionality and the promise of actual membership in the EU will ensure meaningful and lasting reform. This same observation holds true for NATO, but that might be a bridge too far for purposes of achieving an agreement. Ukraine will not be safe as a buffer, especially if Crimea is not returned.

                                Building a Europe that is whole and free depends not only on the outcome of this diplomatic initiative, but also on realizing the hard lessons of this war and driving them home to Moscow. Whatever emerges from Putin's attempt to leave the gaming tables, we cannot grant him undeserved and unsustainable rewards. As this war shows, without a secure Ukraine, European security is unthinkable.
                                In Ukraine, Putin Tries to Cash in Before Luck Runs Out

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