Russia Policy Monitor No. 2669

HOW GROZNY IS GAINING LEVERAGE OVER KYIV
Russia's restive republic of Chechnya is reportedly now holding more than 150 Ukrainian prisoners of war. Ukraine's Coordination Headquarters for the Treatment of POWs has accused Chechnya of buying Ukrainian prisoners from Russian military units to use as bargaining chips in negotiations, although RFE/RL has been unable to independently verify the claim. For his part, Chechen strongman Ramzan Kadyrov asserts the soldiers were captured by Chechen military units. Kadyrov has both threatened to use POWs as human shields to protect Grozny from Ukrainian drone strikes and attempted to negotiate a POW exchange in return for the removal of U.S. sanctions against himself and his family. Some Ukrainian captives have already been exchanged for Chechen fighters through informal swaps on the battlefield in Ukraine, allegedly at the direction of Kadyrov. (Radio Free Europe/Radio Liberty, February 21, 2025)

A NEW LEASE ON LIFE FOR NORD STREAM... MAYBE
Matthias Warnig, a former spy and close ally of Russian President Vladimir Putin, has reportedly been pushing a plan to restart the Nord Stream 2 natural gas pipeline with backing from U.S. investors. The initiative by Warnig, who until 2023 ran Nord Stream's parent company, reportedly involved outreach to the team of President Donald Trump through American businessmen. Some Trump administration officials are aware of the proposal, and a U.S.-led investor group has even outlined a potential post-sanctions deal with Russian state energy giant GAZPROM. European officials, however, have raised concerns about the potential arrangement, given the pipeline's controversial history and the EU's shift away from Russian gas.

One of the Nord Stream 2 pipelines remains intact but unused in the wake of sabotage attacks in 2022. Its revival, however, would require a lifting of U.S. sanctions and approval from Germany. Despite President Trump's previous criticism of the project, some in his circle see it as possible leverage in prospective peace negotiations over Ukraine. However, the deal faces significant hurdles, including European opposition and skepticism from U.S. corporations about reentering Russian markets. (Financial Times, March 2, 2025)

WHO ARE RUSSIA'S ISLAMIC RADICALS, REALLY?
Russia, like in much of the rest of the world, has long held the belief that Islamic radicalism is driven by privation, poverty and a lack of economic choice. As elsewhere, however, it is becoming clear that this is a misperception. "[T]hat assumption has been challenged in recent times by the participation of children of elites in Islamist violence in Dagestan," writes Paul Goble in his Window on Eurasia blog. "And it has been shattered by those like Akhmet Yarlykapov, a specialist on the North Caucasus at Moscow’s MGIMO, who are impressed by a study that found that'about 80 percent of the supporters of radical ideology and forms of struggle [there] are children of the siloviki, businessmen, and employees of the administration.'" The causes, human rights activists note, is widespread disillusionment with the prevailing political conditions in Russia and their gravitation to radical Islam "as a means of escaping from that conflicted situation and 'the shackles' it imposes." (Window on Eurasia, February 18, 2025)

EUROPE TAKES AIM AT FROZEN RUSSIAN ASSETS
Despite early resistance to the idea, France and Germany have recently begun discussing anew ways in which more than €200bn in frozen Russian assets could be used by Europe. Paris has put forward the idea of leveraging the escrowed assets to prevent potential violations of a ceasefire, threatening Moscow with asset seizure in the event of further aggression. The discussions come as European nations, led by France and the UK, scramble to create a peace plan in response to President Donald Trump's direct negotiations with Moscow.

Although G7 allies froze around €300bn in Russian Central Bank assets in 2022, only the income from those assets is currently being used to repay G7 loans to Ukraine, while the underlying assets remain untouched. Although there is growing support in Europe for a more comprehensive asset seizure, a number of nations remain hesitant, citing international law and the potential consequences on the Euro's status as a safe option for foreign reserves. (Financial Times, March 3, 2025)

THE HAVES AND HAVE-NOTS OF PUTIN'S WAR
Russia's war economy has deepened economic inequality in the country, a new investigation by opposition outlet The Insider has laid out. Although government defense spending now fuels parts of the national economy, it primarily benefits Kremlin-affiliated elites rather than ordinary citizens. Government contracts and high interest rates have disproportionately benefited the top 10% of Russian society, The Insider notes. Furthermore, the top 1% of Russians now controls a greater share of national income than it did before the war. Despite official claims of rising wages, the vast majority of Russians are struggling under the burden of inflation, rising costs, slowing wage growth, and increasingly limited business opportunities for small enterprises. Sanctions and market disruptions have further exacerbated the divide, boosting Kremlin-affiliated elites while harming the country's middle and lower classes. (The Insider, February 19, 2025)