Russia Reform Monitor No. 2265

A TERRITORIAL TRUCE IN THE NORTH CAUCASUS
Two of Russia's restive North Caucasus republics - Chechnya and Ingushetia - have settled a long-running territorial dispute. Chechen leader Ramzan Kadyrov and his Ingush counterpart, Yunus-Bek Yevkurov, met in Magas, the capital of Ingushetia, in late September and signed a document delineating the common border between the two Russian regions. The meeting between the two regional heads was presided over by Alexander Matovnikov, President Putin's official envoy for the North Caucasus Federal District. Under the terms of the new deal, which is designed to bring to an end decades-old territorial claims on both sides, "a part of the Nadterechny district was returned to Chechnya, and Ingushetia [received] an equivalent territory on the border with the Malgobek district." (Kommersant, September 27, 2018)

CRISIS AVERTED, BUT RUSSO-ISRAELI TENSIONS STILL SIMMER
The crisis over the September 17th downing of a Russian military plane by Syrian air defenses - an action Moscow has blamed on Jerusalem - may be receding, but Russo-Israeli ties have emerged significantly worse for wear. In the latest sign of official Kremlin displeasure, Russia’s Deputy Prime Minister, Sergei Vershinin, has publicly warned the Israeli government to tread softly in Syria. “We hope Israel will act carefully in the region,” Vershinin told Russian state television channel Sputnik. The Kremlin is now working to concretely constrain Israeli actions in the Syrian theater through the deployment of units of its advanced S-400 air defense system there. (Algemeiner, October 4, 2018)

RUSSIA'S RISING APPEAL IN EUROPE
The Kremlin is experiencing a resurgence of influence in the Balkans and Central Europe, buoyed by what observers have termed an "upsurge in populism" which has brought nationalist and pro-Russian leaders to the fore in such places as Serbia and Latvia. Russia, in turn, is viewing these countries strategically - and is trying to "harness and magnify existing tensions" in order to prevent pro-Western and pro-NATO steps by those nations. In this objective, the Kremlin has been greatly aided by Europe's inconsistent approach to its eastern territories, a recent report by the European Council on Foreign Relations has charged. "In Russian eyes, the EU's approach toward the Western Balkans is neither serious nor systematic, and so offers Moscow opportunities to create leverage," the study says.

Moscow's influence in the Balkans, moreover, is poised to increase dramatically. "We saw that [the] referendum has not succeeded in Macedonia," notes Serbian analyst Bosko Jaksic. "We can see it now in Bosnia, where the Republika of Srpska became the bastion of the Russian interest [sic]. We saw it before in Montenegro, and we are seeing it in Serbia. This is helping Russians to invest the minimum and get nearly the maximum of their political influence." (Associated Press, October 9, 2018)

(SLIGHTLY) BRIGHTER ECONOMIC HORIZONS AHEAD
Is Russia's economy on the rebound? The latest data from the International Monetary Fund suggests so. The IMF, in its latest global projections, has raised its forecast for Russian economic growth, and done so despite the persistence of U.S. and European sanctions. "Considerable progress was made in Russia in recent years to shore up financial stability, including by closing weak banks, introducing reforms to the resolution framework, enacting measures to reduce dollarization, and increasing the risk weights of unsecured consumer and mortgage loans," it notes in its latest Global Economic Outlook. As a result, the Russian Federation is now expected to grow by 1.7 percent this year, and by 1.8 percent in 2019. (The Moscow Times, October 9, 2018)