Russia Reform Monitor: No. 1832

May 12:

Plans for Russia’s Mediterranean task force have grown to include five to six warships, and officials say those plans may increase further to include nuclear submarines. “Depending on the scope of assignments and their complexity, the number of warships in the task force may be increased,” Navy Commander Admiral Viktor Chirkov told RIA-Novosti, adding that the force will also be used for missions in the Atlantic and Indian Oceans. As for nuclear submarines, Chirkov noted that “they were present there during the existence of the 5th squadron. Everything will depend on the situation.” Given that the 5th Mediterranean Squadron, which operated from 1967 to 1992, fluctuated between 30 and 50 warships, there seems to be considerable room for the fleet to grow. The taskforce is expected to be operational by this summer.

May 13:

Cypriot leaders are in talks with the Kremlin once more to relax the terms of its 2.5 billion euro loan. The Kremlin granted the bailout in 2011, reports the Wall Street Journal, but refused in late March to offer further Cyprus further financial assistance. New Cypriot finance minister Harris Georgiades, however, said the Kremlin had been “very positive” in discussions to relax the terms of the loan, and said that Cyprus’s government is “determined to do the job.” Russia promised only “to think about it,” according to the deputy finance minister, adding that Cyprus seeks to extend the duration of the loan. Cyprus was the first euro zone country to impose capital controls in an effort to prevent a banking collapse, CNBC reports, but those controls were relaxed after the country secured a 10 billion euro bailout.

May 14:

The recent cooperation between Russia and the United States sustained a blow after Russian officials announced the arrest of a U.S. official for allegedly attempting to recruit a representative of one of the Russian security services. On searching his apartment, officials claimed to have found a “spy arsenal,” including wigs, dark glasses, a compass, and a large amount of foreign currencies. A statement released by the Russian Foreign Ministry chided the United States, warning that “such provocative actions in the spirit of the Cold War does not contribute to building mutual trust.” CNN reports that analysts remain skeptical. “I very much doubt that a highly trained CIA operative is going to be walking the streets of Moscow wearing a really bad blond wig,” noted a former FBI counterintelligence officer. “It’s poor trade craft, and it looks like a setup to me.” Others suggest the arrest may have been staged to stir up anti-American sentiment once more, or to distract attention from some other event or issue. Ryan Fogle, the man arrested, worked as the third secretary of the Political Department of the U.S. Embassy in Moscow.

May 15:

Despite the Russian press’s extensive coverage of Fogle’s arrest, both U.S. Secretary of State and Russian Foreign Minister Sergei Lavrov refused to comment on the event as they met on the sidelines of the biennial meeting of the Arctic Council in Sweden. “I have nothing to add with respect to the situation regarding an embassy official in Moscow,” Kerry said, as he and Lavrov focused on joint efforts to organize a political settlement to the ongoing strife in Syria. In Russia, however, the New York Times reports that Fogle’s arrest became a spectacle, as the pro-Kremlin First Channel, Russia’s major news station, broadcast at least two segments dedicated to the case, including video of Fogle’s arrest. The station additionally played what officials claim is a recorded telephone conversation between Fogle and the Russian agent he is accused of attempting to recruit, in which Fogle offers up to $1 million a year. American Ambassador Michael McFaul was summoned to a meeting with the Russian Foreign Ministry, where officials accused the CIA of attempting to recruit a Russian security official as a spy. Several analysts suggest that the publicity surrounding the arrest is retaliation for the ring of Russian “sleeper” spies discovered in the U.S. in 2010.

May 16:

French plans to make Russia a cornerstone of its international banking expansion suffered a setback after Russia’s Investigative Committee opened a criminal investigation against the head of the French-owned Rosbank for allegedly accepting bribes. Vladimir Golubkov, Rosbank’s chief executive, was detained after a customer called authorities to complain that Golubkov requested a bribe of five million rubles ($159,000) to grant the customer a loan extension and a lower interest rate. Rosbank is Russia’s third-largest private bank by assets, reports the Wall Street Journal, and Société Générale, France’s third-largest bank, has spent billions to own an 82 percent interest in the bank. Retail and investment banks often consider Russia as an alternative to China for expansion, both because of the influx of money as a result of the oil industry, and because many Russian families own their own homes, which they can use as collateral to borrow money. However, in 2012 Rosbank’s net profit fell 4 percent despite a marked increase in revenue. Several other Western banks, including Barclays and HSBC Holdings, have tried a similar expansion, only to abandon the Russian markets.

May 17:

Russian officials drew criticism for sending missiles to the Syrian government as U.S. and Russian officials work to organize a summit to solve the Syrian civil conflict. The shipment of anti-ship missiles took place just ten days after Russia and the United States agreed to put aside their differences and push for a solution, Reuters reports. General Martin Dempsey, the most senior U.S. military officer, called the delivery both “ill-timed and very unfortunate,” adding that it risks prolonging the war, which has already killed more than 80,000 Syrian citizens. The anti-ship missiles, codenamed Yakhont, have a range of 200 miles, which could pose a threat to ships in the Mediterranean if the Western powers become involved. Although the Kremlin did not admit to the delivery, a spokesman insisted that Russia will continue to honor contracts to supply Syria.