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Russia Reform Monitor - No. 2222

Reshuffling for competitiveness;
Moscow denounces Trump's Iran deal decision

Edited by Ilan Berman and Margot Van Loon
June 13, 2018

May 7:

As Vladimir Putin enters his fourth term in office, his ambitious designs to overhaul the Russian economy are directly shaping official priorities and the composition of the Kremlin's senior leadership.
Bloomberg reports that Putin's first post-inaugural decree outlines a strategy to propel Russia up the rankings of world economies from its current twelfth-place position to fifth via revitalization of domestic education, health care, and infrastructure. To lead these structural reforms, Putin has nominated Dmitri Medvedev to continue in his role as Prime Minister. Medvedev in turn wants to move budget hawk Anton Siluanov from Finance Minister up to First Deputy Prime Minister in charge of implementing the new development agenda. Former Finance Minister Alexei Kudrin will likely assume a newly created post at the helm of the economic stimulus, a role that will involve improving economic relations with the United States and the European Union. Yet, per Bloomberg, Putin's planned reforms are likely to face significant obstacles in the form of diminished political will among elites for cooperation with the West and mounting dissatisfaction among ordinary Russians.

Russia's expansion of its regional military presence throughout the course of the Syrian conflict has dramatically altered conditions for NATO forces in the Eastern Mediterranean.
The Associated Press cites comments by NATO's southern commander, Admiral James Foggo, who has described a "congested" operating environment caused by an influx of aircraft and ships to the Russian base in the Syrian port city of Tartus. Generally, Foggo says, deconfliction efforts in this environment have been successful, but he noted that Russian aircraft have engaged in "unsafe or unprofessional" behavior on several occasions.

May 8:

President Putin's newest decree on national competitiveness comes with a hefty price tag,
RBC reports. Prime Minister Dmitri Medvedev has outlined at a parliamentary meeting that Putin's May decree, issued upon his re-inauguration, will cost "at least eight trillion rubles" ($127.5 billion, at current exchange rates) through the year 2024. But these funds, Medvedev was quick to assure lawmakers, have already been found - despite Russia's deteriorating economic conditions, and ongoing sanctions leveled at the country by the United States and Europe.

Russia is reacting negatively to the Trump administration's decision to back out of the 2015 nuclear deal with Iran.
Radio Svoboda reports Russia's Foreign Ministry as expressing "deep disappointment" with the U.S. decision. In a formal statement, the Ministry charged that Iran's nuclear activities were "absolutely legitimate," and that the Trump administration's decision to unilaterally abrogate the agreement was simply a "screen" for settling "political accounts" with Tehran.

May 9:

Will Russia interfere with future Israeli military operations in Syria? Israel's Prime Minister doesn't think so. Ahead of his latest meeting with Russian President Vladimir Putin in Moscow, Israeli Prime Minister Benjamin Netanyahu has reiterated the need for continued coordination between Moscow and Jerusalem over Syria - and expressed confidence that the Kremlin will not stand in the way of Israeli military action in that theater, should it be taken. "Given what is happening in Syria at this very moment, there is a need to ensure the continuation of military coordination between the Russian military and the Israel Defence Forces," Netanyahu told reporters before departing for Moscow in comments
carried by Reuters. "In previous meetings, given statements that were putatively attributed to - or were made by - the Russian side, it was meant to have limited our freedom of action or harm other interests and that didn't happen, and I have no basis to think that this time will be different."

May 11:

In Russia's most recent attempt to probe U.S. airspace, two TU-95 "Bear" strategic bombers penetrated the U.S. air defense identification zone off the coast of Alaska.
The Washington Free Beacon describes Friday's encounter, in which two U.S. F-22 fighters intercepted the bombers over the Bering Sea. A NORAD spokesman confirmed that no violation of U.S. or Canadian air space occurred during the incident. However, the intrusive flight path is noteworthy because of its proximity to Fort Greely, a hub for the Ground Based Interceptors that constitute a key part of the U.S. missile defense architecture – and which are a major source of aggravation for Moscow.

Former Pentagon official Mark Schneider told the Free Beacon that the close encounters adjacent to U.S. airspace do not reflect a realistic use of the TU-95's long-range nuclear capabilities. Russia more likely intends the probing missions to be a display of nuclear coercion and intimidation, rather than a training exercise. "Threatening people with nuclear weapons is Russia's national sport," Schneider remarked.

Related Categories: Russia; Democracy & Governance; Russia and Eurasia Program; Ukraine

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