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After G20 bonhomie with Obama, Medvedev renews calls to replace the US dollar. The latest of the Chechen president’s enemies is murdered in Dubai. RusAl restructures, Kodorovsky goes back on trial, Aeroflot CEO is ousted, Russians drink more than ever and DeNiro to open Moscow Nobu.
Top News: Russian President Dmitry Medvedev held a friendly first meeting with U.S. President Barack Obama ahead of the G20 summit in London. Both sides pledged to work to reduce their nuclear arsenals, a key point of cooperation that many U.S. officials have been hoping will be the first positive step to launch a more constructive U.S.-Russia relationship. Lest Russia watchers get too optimistic that the age of enmity was over, Medvedev left the meeting with Obama and swiftly returned to the subject that had been dominating Russian headlines in the lead-up to the summit — the suggestion, since supported by China, that the world develop a new currency to replace the dollar.
While Medvedev was in London, his foreign ministry spokesman warned Washington against helping re-arm ex-Soviet Georgia, saying it would be “extremely dangerous." U.S. support of Georgia and Ukraine, and its support for their membership in NATO, remain the biggest sticking point in U.S.-Russia relations.
Domestically, Russian news was dominated by the murder in Dubai of Sulim Yamadayev, the member of a strong clan in Chechnya that has presented the biggest challenge to the republic’s hardline pro-Kremlin president, Ramzan Kadyrov. Sulim Yamadayev is the third brother in the family to be killed, and the latest Chechen exile to be murdered abroad. All signs point to the involvement of Kadyrov, who is said to keep a list of enemies that are systematically being taken out.
The killing came as Medvedev said it was time to review Chechnya’s strict security restrictions — meaning Chechen security forces would replace those deployed by Moscow. Whether this will improve security or boost the ruthlessness of Kadyrov’s regime is not a difficult question.
For all the talk of glitzy Moscow, it’s easy to forget that Russia remains full of restive regions. In Dagestan last week, 21 people were killed during clashes between security forces and rebels, some of them foreign. Dagestan, like Chechnya, is a mainly Muslim republic with a history of separatist sentiment. Unlike Chechnya, it is ruled by a chaotic leadership.
This week saw the start of the second trial against Mikhail Khodorkovsky, the former head of Yukos oil company and once Russia’s richest man. Khodorkovsky has called as witnesses Prime Minister Vladimir Putin and his powerful energy advisor, Deputy Prime Minister Igor Sechin, but few expect prosecutors to fulfill the request. The trial is framed in western commentary as a test of Medvedev’s pledge to enforce rule of law and an independent judiciary, but is more likely to keep Khodorkovsky, a Putin foe, in jail for up to 22 more years.
Violence against the democratically minded continued. Lev Ponomaryov, 67, the country’s leading human rights campaigner, was badly beaten as he was returning home Tuesday night. The assault came as another newspaper worker was attacked in the northern Moscow suburb of Khimki. Sergei Protazanov, a page designer for Grazhdanskoye Soglasiye, who was said to be working on an issue about corruption, died after the attack.
Ahead of mayoral elections in Sochi later this month, opposition candidate Boris Nemtsov was hit in the face with ammonia acid by an activist believed to be with Kremlin-supported youth group Nashi. Meanwhile, suspected killer Andrei Lugovoi dropped out of the race.
Money: RusAl, the aluminum giant controlled by oligarch Oleg Deripaska, one of the biggest victims of the financial crisis, said it would slash costs and production. The company is saddled with $16.8 billion in debt that it is seeking to restructure, and this week reached a deal with Mikhail Prokhorov, now Russia's richest man, to restructure the bulk of a $2.8 billion debt package, increasing Prokhorov's stake to 4.5 percent. Prokhorov, sitting on an enormous cash pile after selling out of most of his assets last year, also offered to buy embattled financial news service provider RBC, which is on the brink of bankruptcy.
Finance Minister Alexei Kudrin prepared the country for another downturn, after a brief rise in stocks and oil prices last month. Russia was hit with a host of bad projections this week, with the World Bank warning that the economy would shrink by 4.5 percent next year and the OECD further slashing the country's growth forecast to -5.6 percent. Pyotr Aven, president of leading private lender Alfa Bank, warned that hundreds of Russian banks would fail in the crisis.
The sort of thing that won't encourage Western investors is the firing this week of longtime Aeroflot CEO Valery Okulov, a pilot and son-in-law of the late Boris Yeltsin. He was replaced with Vitaly Savelyev, the extent of whose experience in the airline industry appears to be the fact that he has flown on many planes. Savelyev was plucked from his position as vice president at IT conglomerate AFK Sistema. But before that, he worked at Bank Rossiya, the bank that launched a thousand Putin allies, all of them hardline statists. Savelyev is close to hardliner Sergei Chemezov, the head of Russia's arms export agency and the newly formed Russian Airlines, which Chemezov hopes will rival Aeroflot as Russia's leading airline. You can now expect him to be successful, but market economics it is not.
The secretive leader of the hardline faction, Igor Sechin, gave his first ever interview to the western press this week, stating what could be called a mantra of the country's hardline, or siloviki, faction: Why diversify when we've got oil?
Sechin, chairman of state oil firm Rosneft, also praised Surgutneftegaz, Russia's fourth largest oil producer with a murky ownership srtucture, as the country's best private oil firm. Surgutneftegaz has long been hoarding cash, believed to be between $18 and $24 billion, neither investing much in its own fields or making acquisitions at home or abroad. This week it made a surprise bid for a 21 percent stake in Hungarian refiner MOL. It seems that, with state energy firms Rosneft and Gazprom saddled with debt, Surgut is now the Kremlin's choice for acquisitions abroad, which it sees as necessary to follow through on building new export pipelines to Europe.
On a visit to the Avtovaz car factory in Togliatti this week, Putin not only promised the carmaker $734 million in state help, but also told workers that he'd just bought himself a Russian-made Niva. Whether it will replace his favored Mercedes is as yet unknown.
Elsewhere: The crisis may be hurting all sectors of the economy, but it looks like Russians are spending more than ever on alcohol. Whereas they used to spend 10 percent of their earnings on beer and vodka, the number has now risen to 15 percent (this is also partly due to decreased wages).
Russians were glued to their TV screens last weekend to watch “Olympus Inferno,” a Hollywood-style film that featured a Russian-born American scientist teaming up with a hot Russian blonde who made it their mission to prove that the August war over South Ossetia was in fact started by Georgia.
Robert DeNiro is due to arrive in Moscow this week to officially open the Russian branch of his famed sushi restaurant Nobu. The unofficial opening party was last week, and the restaurant is likely to become the latest hotspot in sushi-obsessed Moscow.