[Beginning with our next issue, AFPC Vice President for Policy Ilan Berman will assume the editorship of the Russia Reform Monitor. We are deeply grateful to Jonas Bernstein for his outstanding stewardship of this publication over the past five years, and wish him the best of luck in future endeavors.]
October 22:
Russia’s Strategic Rocket Forces has announced it test-fired an intercontinental "Stilet" missile as part of the checks needed to extend the missile's service until 2010, Reuters reports. The missile, which belongs to a type commissioned in 1979 and is known in the West as the SS-19, was fired from the Baikonur space center in Kazakhstan, which Russia rents. “Prolonging the exploitation time for Stilets allows freeing up considerable funds for other important state needs,” the forces said in a statement. Earlier this month, President Dmitry Medvedev observed the test firing of a "Topol" ICBM (SS-25), which has been in the country's arsenal for 21 years.
The New York Times, quoting U.S. officials, reports that Adm. Mike Mullen, chairman of the Joint Chiefs of Staff, met his Russian counterpart, Gen. Nikolai Makarov, in Finland on October 21st. According to the newspaper, the meeting, held just outside Helsinki, was aimed at pushing “strained” relations back on track in the wake of the August war between Russia and Georgia, and was organized at Moscow’s request. “Clearly the relationship has changed because of what happened in Georgia,” Mullen said after the meeting. “But by no means should it end. I don’t think it can resume exactly where it was before Georgia, but we also covered areas of mutual concern.”
First Deputy Prime Minister Igor Shuvalov has said that VEB, the state-owned development bank, will take shares in companies as collateral for bailout loans and, if the borrowers default, they will forfeit the collateral. The Financial Times notes that as a result of Russia’s financial turmoil, many of the country’s oligarchs are in dire financial straits and $50 billion of aid has been made available to finance their external debts as part of a $200 billion-plus Kremlin plan for national economic bailout measures. Shuvalov stressed that the government has no plans to “nationalize” the forfeited shares and will seek to sell them as soon as market conditions improve.
October 23:
Russia’s stock market has again dropped steeply following news that Standard & Poor’s lowered its outlook for Russia from stable to negative as the government continues to bail out the country’s troubled banking sector, NEWSru.com reports. “The outlook revision reflects the likelihood of a downgrade if costs to the Russian government of the bank rescue operations continue to increase, amid rising capital outflows as confidence in the financial system and the monetary regime declines,” S&P analyst Franklin Gill wrote in a report. Meanwhile, NEWSru.com reports that fears of an economic crisis has sparked a run on staple goods in the city of Ryazan, where resident have rushed to stores to buy pasta, canned goods, salt, matches and candles.
Ukraine has turned down a Russian proposal to extend the lease for the naval base used by Russia’s Black Sea Fleet in the Crimean port of Sevastopol, the Associated Press reports. Russian Foreign Minister Sergei Lavrov said on November 21st that Russia would approach Ukraine with specific proposals on the issue when the time draws closer to the expiration of the current lease deal in 2017. However, Ukraine’s Foreign Ministry said the issue “cannot be a subject of discussion” and that Russian ships will have to leave Ukrainian waters in 2017.
October 24:
Russia’s Federal Anti-Monopoly Service has blocked Google from buying the Russian online ad service ZAO Begun, the Los Angeles Times reports. Google said in July that it would spend $140 million to buy ZAO Begun from Rambler Media, which runs one of the most popular Web portals in Russia, to improve service for users, partners and advertisers in Russia, which has a fast-growing digital advertising market.