The major stories you need
to understand Russia

An insider view, in 5 minutes

Photo: Wikimedia Commons

1. Goldman Sachs gives surprisingly good forecast for the Russian economy in 2018

What happened

The leading investment bank Goldman Sachs sees the Russian economy growing 3.3 percent in 2018, which would be a record since 2012.

  • This is almost twice as high  as the official forecast by the Russian Ministry of Economy, 2%.
  • In 2017, Russian GDP grew 1.4-1.8% for the first time since 2014. In 2015-2016, it fell  while the world economy grew by 2.5%..
  • The Russian economy is expected to grow despite the fact that the American government plans to release a new sanctions plan.
  • The Russian Minister of Economy Maksim Oreshkin said he doubted Goldman’s figures. We’d also stick to the government’s forecast. Goldman Sachs is often too optimistic: for 2016 it  estimated that the Russia economy  would l grow by 1.5%, while in the end the GDP fell by  by 0.2%.

Why the world should care

Russia remained a fairly good place to get earnings even with its GDP falling. Believe Goldman Sachs’ forecast or not, the national economy is rebounding, so next year it should become an even better place for the investors.

2. Under new legislation, the private army of the owner of the Russian Troll Factory would become legal

What happened

The State Duma is about to legalize private military companies. A similar bill failed twice, in 2012 and 2014, because  mercenary practice is literally banned by the Constitution. But now the PMC has as strong a backer as Foreign Minister Sergey Lavrov.

  • Despite the constitutional ban, Russia has a long history of private military companies, which have unofficial backing from the Ministry of Defense. The most famous is Wagner Group, which fought in Ukraine, Syria and now in Sudan.
  • The sponsor of the group is Evgeny Prigozhin, the owner of the St.Petersburg internet Troll factory, which was heavily involved in the 2016 U.S. presidential election. The Wagner Group’s fighters are trained at the Russian Ministry of Defense facility.
  • In the Syrian civil war, the Russian military was not officially involved in ground operations. But the Wagner Group was reported to be in the firing line at crucial moments like the siege of Aleppo, and proved to be way more effective than the officially fighting Assad army.
  • Under current law,  members of the officially unrecognized private military companies, face a prison sentence of 4 to 7 years.

Why the world should care

The official backing of the bill by Lavrov means that it is likely to pass which would mean that  the Russian government has approved the practice of getting into international conflicts with state-backed private companies.

3. The ICO of a Russian messenger sparks a rush in  Silicon Valley

What happened

Initial coin offering of Telegram, the messaging app founded by Russian social network pioneer Pavel Durov, is an instant success two months before its launch. The $2 billion ICO is to become the biggest token offering ever, and the private presale for large investors is overbooked so heavily, that a secondary market has emerged.

  • Telegram has raised the pre-ICO private sale amount from $500 to $850 million. Some investors, including Russian funds, have been  denied allocation. Three people managing Russian investors’ money told Bloomberg they either failed to get an allocation or received much less than they’d sought.
  • The funds lucky enough to get clearance are said to be reselling their options at a 40% margin, as the public sale price is expected to be 50% higher than at the pre-sale.
  • With a public ICO, due in March, Telegram now seeks to raise another $1.2 billion, which would value the offering as the biggest in history.
  • The money is being raised to create a digital payment platform based on blockchain architecture, which will be integrated with the messaging app that boasts 150 million users worldwide. The ICO white paper says it will soon rival Visa and Mastercard.

Why the world should care

The founder of Telegram Pavel Durov, first known as the creator of Russia’s Facebook clone Vkontakte, and then a founder of a secure messaging app with no apparent monetization, is now breaking new ground. The $2 billion offering would not only become the world’s biggest ICO, but would earn a place in the top 5 of Russian IPOs ever and would be the  sole tech offering among f natural resource companies and government owned banks.

4. Opposition leaders are openly feuding  two months before the presidential election

What happened

Two Russian liberal opposition presidential candidates, Alexey Navalny and Ksenia Sobchak, are coming close to an open conflict.

  • The backers of Navalny, who was not allowed to run inthe election, have a reason to suspect Sobchak, who was cleared to run and gets lots of air time on state-owned TV, of being a puppet candidate for the Kremlin.
  • In the beginning of the campaign, Sobchak said she was generally supporting Navalny’s cause, and even said she would drop out of the race, should  Navalny be allowed to run. The tensions between the candidates, who are addressing a similar Western-minded liberal audience, were still evident.
  • On Monday, the camps openly confronted each other for the first time, as Sobchak, accompanied by her cameramen, ran into Navalny’s campaign chief  Leonid Volkov on a radio talk show and accused him of tweeting fake news about her hosting a Russian millionaire’s party on Bali instead of campaigning. Work as a party host makes up a significant part of Sobchak’s income; she was formerly a national reality TVstar.

Why the world should care

The conflicts between the Russian liberal politicians are nothing new, be they Kremlin-controlled or truly independent. But this conflict might lay the groundwork for new feuds, for example in the next election, which may bemore competitive.

5. Independent TV network faces criminal charges in defamation case

What happened

Dozhd, the only independent Russian TV channel, has been charged with defamation over a report on an alleged criminal business in St.Petersburg in the 1990s, connected to Putin’s acquaintances, three sources familiar with the matter told The Bell.

  • The report was focused on Ilya Traber, a shadow dealer in the Soviet late ‘80s, and a government and crime-linked entrepreneur in St.Petersburg in the ‘90s, when Vladimir Putin was deputy mayor of the city. “The only criminal boss, which Putin has confirmed acquaintance with,”  the report said of him.
  • The report claims that Traber is involved in alleged criminal business in the ports in the Northwest  of Russia. According to the report, he has business ties with Nikolay Shamalov, whose son supposedly  may be married to Putin’s daughter, Katerina Tikhonova.
  • It is still unclear what consequences the charge will have for the  the TV network itself, but the police have already requested information about the reporters. No one i has been personally accused in any crime yet. The report was signed by four journalists, including Roman Badanin, editor in chief at the channel and now a John S. Knight Journalism fellow  at Stanford University.
  • Defamation has been  a criminal offense in Russia since 2012. According to the Criminal Code, the penalty is either a fine of up to 5 million rubles (ca. $90,000 USD), or l two years’ personal income, or community service of up to 480 hours.

Why the world should care

The Wall Street bankers may be too optimistic, and civil rights organizations depressed, but actually Russia remains the same as it used to be in the last 5 years: no freedom of the press, weird and hypocritical authoritarian politics, but still lots of high yield investment opportunities, especially for those who can spot the next Pavel Durov.

6. Pic of the week: Vladimir Putin’s pre-election Epiphany bathing

Photo: kremlin.ru

And here’s a videoBathing in freezing water to commemorate the baptism of Christ on Orthodox Epiphany is a tradition in Russia. It is not so widely observed now, but the presidential candidates can’t miss it — and Putin’s not the only one, here’s Ksenia Sobchak.

Peter Mironenko, The Bell editor