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Russia Reform Monitor - No. 2119
A cyber-shakeup in Moscow;
Ukraine's energy woes
Edited by Amanda Azinheira and Kaitlyn Johnson
February 28, 2017
"Untethering" the ruble helped the Russian government get through a pronounced economic downturn brought about by low world oil prices and Western sanctions in 2014 and 2015. But now, Russia is prepared to reenter the global currency market. That, at least, is the signal being sent by the country's new Finance Minister, Anton Siluanov, who has called for a more "predictable" exchange rate as a way of boosting confidence in the country’s economy. To that end, reports Bloomberg, "the Bank of Russia is preparing to wade back into the currency market after an 18-month absence and soak up foreign revenue earned in excess of the $40 oil price assumed in the budget."
Russians are less productive than most other nations, data collected by the Organization for Economic Cooperation and Development (OECD) has determined. Paul Goble, writing in his Window on Eurasia blog, notes that "Russians work far more hours per year than do most other nations, but they are far less productive in terms of their contribution to their country's GDP than are the latter." The OECD data shows that Russian workers contribute less money to the GDP per hour than every country except Mexico. Much of this, describes Goble, is due to outdated equipment, a problem perpetuated by an unwillingness among employers to invest in technological upgrades and the difficult process of receiving loans.
In the wake of peace talks in Kazakhstan, Iran, Russia, and Turkey have agreed to jointly enforce a fragile cessation of hostilities in Syria. According to the Wall Street Journal, the talks leading up to the deal were a key test for the bilateral relationship between Russia and Turkey, which has experienced a thaw of late. They have also provided Russia with a new means to bolster its regional reputation, styling Moscow as a stabilizing force in the region despite its ongoing support of the regime of Bashar al-Assad.
A senior official in the cyber intelligence department within Russia's main domestic security service, the FSB, along with one of the country's leading private sector cybersecurity experts, have been arrested in Moscow on charges of treason. One of the men, Sergei Mikhailov, is believed by U.S. officials to have been in charge of Russia's hacking of the U.S. presidential elections. According to the New York Times, Western experts believe that Russian security services are giving criminal hackers free range on monetary hacking schemes in exchange for their expertise in carrying politicized computer attacks. Mikhailov and Stoyanov may have interfered with that cooperation, suggesting high-level turmoil over cyber issues within the FSB.
With winter temperatures continuing to plummet, Ukraine is facing a growing energy shortage. The country is predicted to use up its remaining reserves of natural gas by the beginning of March, long before the end of the cold season in that part of the world. Nor, notes the Observer, is Europe liable to help. With the continent in the grips of an unusually cold winter, the European Union has no natural gas to spare — a state of affairs which will likely force Kyiv to turn to Russia to make up for their gas deficit before the end of the winter. But here, problems abound, because Gazprom has refused to guarantee that it won't pocket Ukraine's advance payment as compensation for a debt Russia believes it is owed.
Despite continuing high rates of HIV infection within the country, the Russian Health Ministry has announced that it no longer plans to allocate additional funds for combatting the spread of the disease. Originally, the Russian Health Ministry planned to spend an additional 70 billion rubles ($1.2 billion) to treat HIV and slow its spread throughout the Russian Federation, but the plan was dropped after the Russian Finance Ministry claimed there was not sufficient money in the budget to go through with the proposal, reports The Moscow Times. With current available funding, only one third of Russians with HIV can receive drug therapy, and less than 20 percent of the population can be tested for the disease.