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Russia Reform Monitor - No. 2153

Prepping for next year's elections;
U.S., Russian ties continue to fray

Edited by Amanda Azinheira, Evelyn Johns and Jack Verser
September 25, 2017

August 7:

Russia will launch nationwide health care reforms in time for the 2018 presidential elections,
The Moscow Times reports. The health ministry has announced that organizational reforms, piloted last year, could "reduce waiting times twelve-fold and boost consumer satisfaction by 10-15 percent." The Kremlin aims to start the reforms in question within months, presumably so that positive results will be seen in time for the March 2018 presidential election, notes the Vedomosti newspaper.

With over 130,000 campaign volunteers, thousands of dedicated activists, and 1.7 million online followers, Russian opposition candidate Alexei Navalny has a substantial platform ahead of the March 2018 presidential election. However, while he has no shortage of campaign slogans targeting the corrupt Putin government, Navalny lacks actual policy proposals for how to implement change, Lev Shlosberg, a liberal Russian parliamentarian,
tells the Financial Times. According to Shlosberg, Russia has suffered in the past by electing leaders for being "a personality... a symbol of change." For their part, Navalny and his team recognize the problem, and plan on releasing a set of detailed policy proposals by the end of August. Other than a desire to end the antagonism and fighting with Ukraine, however, Navalny's views on past foreign policy conflicts do not offer much hope for reconciliation with the West.

August 8:

According to Bloomberg, Russia's Finance Ministry has been given permission to swap up to $4 billion of debt from bonds maturing in 2018, 2028, and 2030. In light of new U.S. sanctions, the swap would help lower Russia's debt load and reduce the volume of payments due in the next year. While the sanctions do not prevent Russia from issuing new debt, they do block many state-owned companies with dollar-bound payments due in the next decade. The bond swaps will help Russia spread out its debt payments without concentrating ownership among a few investors, says Konstantin Vyshovsky, the Finance Ministry's debt chief.

August 9:

A Russian surveillance plane flew through secure airspace over Washington, DC on August 9th, presumably in order to gather intelligence. The flight is authorized under the Open Skies Treaty, which allows signatories to pilot unarmed aircraft for observation flights over the soil of fellow signatory nations, provided that an airman of the country being observed is aboard the flight,
according to the Washington Post.

August 10:

Aleksander Sokolov, a Russian journalist for RBK newspaper, has been sentenced to 3.5 years imprisonment for extremism,
reports Radio Free Europe/Radio Liberty. Prosecutors claim that Sokolov manages the website of the "Initiative Group for Holding a Referendum 'For Responsible Authorities,'" which is continuing the work of the People's Will Army, a hard-line nationalist group banned for extremism in 2010 for calling for a referendum to establish popular tribunals for Russian officials. Sokolov, however, contests the reason for his conviction and believes it to be tied to his anti-corruption efforts. Notably, his arrest came mere weeks after his publication of a report on cost overruns relating to the Vostochny Cosmodrome.

August 11:

Washington may shut down the Russian consulate in San Francisco in response to further deterioration of diplomatic relations stemming from Moscow's response to expanded U.S. sanctions. Only officially signed into law on August 2nd, the sanctions prompted the Kremlin to seize two U.S. properties in Moscow and demand the U.S. diplomatic mission in the country downsize to 455 personnel,
The Moscow Times reports. Sources close to the State Department say Washington views the seizures and expulsions as an unjustified escalation by Russia.

The Russian government has announced that the national economy grew by 2.5 percent in the second quarter of this year,
according to the Financial Times. This is the fastest growth in five years after the economy suffered a two year long recession (contracting by approximately three percent) stemming from a major drop in oil prices and the imposition of Western sanctions in 2014. The slow recovery highlights the risks posed by new U.S. sanctions, since many economists believe Russia is unlikely to exceed 2-2.5 percent annual growth rate without major structural reforms designed to attract investment and end its reliance on oil exports. Last quarter's strong growth, however, benefits the Putin government ahead of upcoming elections - especially since a 15 percent drop in real household incomes throughout the recession shifted the focus of the Russian people from pride in global status to concern about economic recovery.

Related Categories: Russia; Russia and Eurasia Program; Ukraine

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