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Russia Reform Monitor - No. 2202

An energy war against Ukraine;
Russia's costly Syria campaign

Edited by Ilan Berman and Margot Van Loon
April 3, 2018

March 2:

In an escalation of the Kremlin's pressure tactics against Kyiv, state natural gas monopoly Gazprom has imposed another indefinite cutoff on supplies to Ukraine.
The Kyiv Post reports that the new cutoff comes in response to the recent decision of the Swedish arbitration court presiding over the four-year legal battle between Gazprom and its Ukrainian counterpart Naftogaz over transit and supply disputes. The ruling obligates Naftogaz to purchase five billion cubic meters of gas annually through 2019 from the Russian state-owned giant, but also orders Gazprom to pay a net $2.6 billion in fines for its failure to deliver previously purchased transit gas volumes between 2009 and 2017.

Naftogaz has protested that the cutoff constitutes a violation of the court's ruling and an effective breach of contract. Ukrainian President Petro Poroshenko, for his part, has announced that he will use all available international legal measures to seize Gazprom's assets should it fail to pay the awarded damages.

The latest Gazprom cutoff will deprive Ukraine of roughly one-tenth of its daily energy consumption amid an unexpected late spring cold snap,
Reuters reports. In response, Ukrainian Energy Minister Ihor Nasalyk has directed a switch to fuel oil usage in thermal power plants, and imposed a four-day closure on schools and universities - measures that the Poroshenko government estimates will result in energy savings that could offset 75% of the cutoff-induced daily shortfall. Meanwhile, Gazprom has asserted that it has returned Ukraine's pre-payment and vowed to contest the arbitration court's ruling.

March 4:

How much has Russia spent on its military intervention in Syria? The actual figure is a closely-guarded Kremlin secret but,
Radio Svoboda reports, new estimates by a slew of monitoring organizations (including British defense consultancy IHS Jane's, the Bloomberg and RBC news agencies, and others) have attempted to quantify the exact costs of the Putin government's Syria policy. According to Jane's, the daily cost of Russia's military operations in the Syrian theater is now between $2.4 to 4 million.

That, however, doesn't provide a true picture of how much Russia has spent to date on its Syria policy. According to an analysis recently conducted by experts from the country's "Yabloko" political faction, "at the beginning of March 2018, budget expenditures for the Syrian campaign" - on things such as military equipment, maintenance and personnel salaries - "amounted to 172.3 billion to 245.1 billion rubles" ($3.01 to $4.28 billion). That sum, according to Radio Svoboda, "is the same amount allocated for the cleaning and preservation of the Volga region for a span of eight years," distributed among 17 of 85 regions.

Russia is responsible for the indiscriminate killing of civilians as part of its military operations in Syria, the Trump administration has charged.
London's Independent reports a formal statement from the White House as saying that Russian forces, operating in defiance of a month-long UN-mandated ceasefire, were involved in the killing "of innocent civilians under the false auspices of counterterrorism operations." Russia's activities follow the "same combination of lies and indiscriminate force" that empowered the Syrian regime to "isolate and destroy" the city of Aleppo two years ago, the statement laid out.

March 5:

Just days before the country's presidential election, Russia's president is ratcheting up his support for its intelligence community. "In recent years, as you know very well, there has been an increase in foreign intelligence agency activity,"" Vladimir Putin said in a speech before the board of Russia's main intelligence service, the FSB,
according to Reuters. "They are working diligently on Russia, using the most modern methods, spy craft and technical espionage means." The threat of foreign subversion, he emphasized, is extensive. "During the course of last year alone, the activities of 72 career intelligence officers and 397 agents of foreign spy services was thwarted."

If the West takes steps to disconnect Russia from the World-Wide Web, Russia would be ready with measures that would create a Russian-only Internet, a top Kremlin advisor has said.
Reuters cites German Klimenko, a top advisor to President Putin on internet matters, as telling the state-controlled NTV channel that - in the event that the West "locks out" Russia from the functioning of the internet, measures put in place by the Kremlin would allow Russians to continue "to live well and normally."