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Russia Reform Monitor - No. 2078

Russia's growing soft power clout;
Putin's political bank, on the skids

Edited by Ilan Berman, Amanda Azinheira and Daniel Jimenez
July 20, 2016

June 14: 

Is Russia a country to emulate, at least in terms of influence? London-based strategy firm Portland recently published a ranking of countries on the basis of "soft power" - a measure of a country's global influence excluding military might. Russia, a new entrant to the list, came in at number 27, 
The Moscow Times reports. Despite the Kremlin's seizure of Crimea and ongoing aggression in eastern Ukraine, Russia's global media influence, worldwide enterprises, and contributions to culture and art helped boost the country's overall score. 

[EDITORS' NOTE: The ranking represents a victory of sorts for Russian President Vladimir Putin, who remarked back in 2012 that he wanted his country's foreign policy to be increasingly grounded in "soft power." Portland's ranking will no doubt be touted as example of success in this regard by Russian authorities.] 

NATO nations are planning a new military force to more effectively deter Russia, 
Reuters reports. According to the news agency, Britain, Germany and the U.S. have agreed to each send a battalion of troops as part of larger plans for mobilization along Russia's western flank beginning next year. The goal, according to British Defense Secretary Michael Fallon, is to "send a very strong signal of our determination to defend the Baltic states and Poland in the face of continued Russian aggression." 

June 15:

As the country's economy continues to deteriorate, Russia's president may be forced to put his pet projects on hold. 
According to Bloomberg, Vnesheconombank (VEB) - the Kremlin's bank of choice for funding priority political projects - is preparing to scale down its spending and sell shares in a last ditch effort to stay afloat. Among other things, VEB helped to underwrite the 2014 Sochi Olympics, and has been implicated in providing secret aid to pro-Russian forces in eastern Ukraine. But the plunge in global oil prices, coupled with ongoing sanctions from the EU and U.S., have caused dramatic cuts in the bank's budget. Already, 20 percent of the bank's staff is slated to be laid off, and VEB has sold off 3.6 percent of its stake in Gazprom for 132 billion rubles, just half of what it paid the gas giant a few years earlier. 

The VEB's existential crisis mirrors the Russian economy as a whole - short of cash and isolated internationally. The bank, created under Lenin and purposefully designed to be an extension of the Kremlin, is now at huge risk of default. As stated by Sergey Gorkov, VEB's new CEO, the bank is "more dead than alive."

June 16:

Russia's attempt at redemption among the international sports community does not look promising, 
reports the BBC. Just two days before a key decision regarding Russia's eligibility to participate in the upcoming Rio Games, WADA, the World Anti-Doping Agency, has provided new details of the lengths athletes went to in covering up their doping, complete with troubling reports of Russian military intimidation tactics against Drug Control officers trying to collect information. These latest incidents of Russian obstructionism follow a documentary by Germany's ARD television channel which outlined the extensive system of cheating employed by the Russian Sports Ministry.

Related Categories: Russia; Russia and Eurasia Program

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