Weekly 17 July 2021

Growing media crackdown

Hello! Our top story this week is another assault on independent media with the effective ban of investigative journalism outlet Proekt. We also look at Putin’s 5,000-word historical essay on Russians and Ukrainians, a billion-dollar IPO for a leading private healthcare provider, and the chart-topping success of Russian-made action film Major Grom that became Netflix’s most-watched offering.

Russia seeks closure of top investigative outlet Proekt

The Russian authorities dramatically escalated their battle against independent journalism this week. Until now, independent journalists and media outlets have been designated ‘foreign agents’ — which affects their financial viability and complicates their existence, but does not automatically spell closure. But this changed Thursday when investigative outlet Proekt was branded an ‘undesirable organization’. Anybody who continues to work for Proekt now faces up to six years in prison.

  • When Russian officials began a crusade against independent media in May with the designation of outlet Meduza as a ‘foreign agent’, it was obvious Proekt, which focuses on exposing corruption in Putin’s inner circle, would soon also find itself in the crosshairs. As Proekt is a ‘non-profit’ and does not sell advertising, there was little merit in branding it a ‘foreign agent’ — Meduza’s experience shows the biggest issue with that status is the immediate exodus of advertisers and the collapse of an established business model.
  • It became clear Thursday that the Kremlin had thought of this – and found an alternative. The Prosecutor General’s Office announced Proekt would not be designated a ‘foreign agent’ but an ‘undesirable organization’ – a far more extreme step. Undesirable organizations are prohibited from working in Russia and individuals who cooperate with them can be fined or jailed for up to six years. Even quoting or re-posting material from Proekt puts individuals or organizations at risk of a fine.
  • Proekt’s editorial board responded by saying that its U.S. legal entity, Project Media Inc., has been dissolved, but said their investigations will go on. “We will announce later how our team of journalists will continue their work,” they said in a statement. However, lawyers interviewed by The Bell fear this will not reduce the risks. If Proekt’s journalists remain in Russia, it’s likely they will run into serious problems — and will be fortunate to escape with just fines. Three Proekt employees are already witnesses in a criminal libel case.
  • Even if Proekt closes down entirely, its journalists face an uncertain future. Five members of staff were listed Thursday as ‘foreign agents’ alongside two directors of Otkritie Media, a media outlet set-up by exiled billionaire Mikhail Khodorkovsky. Now all of them (even if they cease to work in journalism) must inform the Ministry of Justice about their earnings, while their social media posts must be accompanied by long disclaimers that look like this.
  • Imposing ‘undesirable organisation’ or ‘foreign agent’ status does not require a court hearing and nobody is obliged to publicly explain the reasoning behind such a decision. But in Proekt’s case it’s clear how the process unfolded: first, state-owned RT published an article about Proekt’s foreign funding. Then, Vitaly Borodin, the pliant head of the Federal Security and Anti-Corruption Project (judging by its name, this is a spoiler for opposition leader Alexei Navalny’s Anti-Corruption Foundation) asked the Prosecutor General to look into Proekt. His formal request listed Proekt’s employees and claimed that “all of them are supported by the U.S., and work in [America’s] interests.”

Why the world should care

It’s getting more dangerous for Russia’s journalists to do their job with every passing month – and there are still two more months until parliamentary elections. Proekt is unlikely to be the last independent media outlet to fall victim.

Putin’s new historical interest: Russians and Ukrainians

President Vladimir Putin has a new historical focus. In a 5,000-word article published Monday, he looked at the historical ties between Russia and Ukraine, criticizing recent Ukrainian laws on indigenous peoples, and the distribution of agricultural land. There are, in fact, similar laws in Russia — something conveniently omitted by Putin.

  • Published on the Kremlin website in Russian, Ukrainian and English, the article went back over a thousand years of history and included a healthy dose of Soviet nostalgia. Turning to modern politics, Putin lamented that policymaking in Kyiv has apparently been dictated by nationalist extremists with aggressively Russophobic views since Ukraine’s 2014 revolution.
  • Putin said later that he decided to write about Ukraine and Russia when Ukraine passed a law earlier this month about indigenous peoples (autochthonous ethnic groups that don’t have their own state outside of Ukraine). According to the document, the indigenous peoples of Ukraine are: the Crimean Tatars, and the Crimean Jewish groups of Karaites and Krymchaks (all but wiped out by the Nazis). Putin’s ire was raised because Russians were not included on the list.
  • The law caused a storm of indignation in Russia. The country’s delegation lodged a protest with the Parliamentary Assembly of the Council of Europe (PACE), human rights ombudsman Tatiana Moskalkova said the law violated the rights of Russian speakers and called on the United Nations and the Council of Europe to intervene. The Russian Orthodox Church also got involved, saying it was “nonsense” that Russians had been excluded
  • Putin himself has repeatedly attacked the legislation. In his article, he said the law was “passed under the guise of large-scale NATO exercises in Ukraine” and that it forces Russians to “renounce their roots”.
  • While observing this, it’s interesting to remember that Russia has a 1999 law guaranteeing the rights of indigenous peoples that closely resembles the Ukrainian law. Russia’s law defines indigenous peoples as those “living in territories traditionally settled by their ancestors” (there are about fifty such groups, mostly in the Arctic and the Far East). However, Putin did not draw this parallel in his article — settling instead on a comparison between Ukraine and the Third Reich.
  • Putin’s article also mentioned a Ukrainian law on the sale of agricultural land, claiming NATO was, yet again, behind the legislation. In Russia, a similar law on agricultural land has been on the statue books since 2002.

Why the world should care

It’s easy to laugh at Putin’s criticisms of Ukrainian laws which closely resemble their Russian equivalents. But it’s hard to shake the suspicion that articles like this will be used to justify new territorial claims against Ukraine — especially when it was reportedly made required reading for all Russian military personnel.

Private healthcare provider EMC valued at $1.1 billion in IPO

The European Medical Center (EMC)  — the hospital of choice for many foreign visitors to Moscow — was valued at $1.1 billion Thursday in its initial public offering. One of Russia’s largest healthcare providers, EMC raised $500 million as investors were drawn to its three-decade transformation from a group of Soviet-era clinics into a premium hospital chain. It’s the first IPO in Russia’s private medical sector for almost 10 years. .

  • Operated by United Medical Group, EMC is well-known among foreigners as medical insurance at most Western firms in the Russian capital will include treatment here. EMC was founded in 1989 when French firm Europ Assistance set up clinics to treat foreigners based out of the Intourist medical centers that cared for foreign visitors to the Soviet Union (and helped the KGB keep tabs on them). However, the company was unprofitable and was bought out by Andre Kobouloff, a French radiologist with Russian ancestry, who later appointed influential physician Leonid Pechatnikov as EMC’s chief doctor. The company hired European medical staff and pioneered a process whereby the patient was guided through a whole course of treatment, from diagnosis to recovery.
  • Kobouloff sold EMC for about $20 million in 2006, and Pechatnikov moved on in 2010 when he accepted an invitation from Moscow Mayor Sergei Sobyanin to lead the city’s public health department. Companies linked with EMC soon started to win big state contracts, although Pechatnikov denied allegations of corruption. Be that as it may, from 2008 to 2020, EMC’s value increased 10-fold. Its ownership has changed repeatedly and its current shareholders include billionaire Roman Abramovich who has a 6.9 percent stake.
  • But EMC’s shareholders won’t net stellar returns from the IPO as the placement was very much at the lower limit of the price range. The more modest than anticipated valuation is because EMC is a niche player in a premium segment, and investors likely doubt the scalability of its business model, according to Marat Ibragimov, a senior analyst at Gazprombank.
  • Russia’s tradition of free, state healthcare provision means private medicine has developed very slowly since the collapse of the Soviet Union. In 2020, PwC valued Russia’s private healthcare market at just 811 billion rubles (about $10 billion), and estimated it would not reach 1 trillion rubles until at least 2025.

Why the world should care

Commercial healthcare in Russia is an untapped and potentially highly lucrative market. However, with the state investment in public healthcare and Russian salaries falling amid economic stagnation, this market looks set to grow at a snail’s pace.

‘Major Grom’ brings Russians and American together

A Russian action film with coded references to Russian politics became Netflix’s most-streamed film this week. The hero of ‘Major Grom: Plague Doctor’ is incorruptible cop Igor Grom who does battle with a mass-murdering IT billionaire bearing an uncanny resemblance to Telegram messaging service founder Pavel Durov.

  • Netflix released ‘Major Grom: Plague Doctor’ — their first film based on a Russian comic — on July 7. Within days it had become their most streamed film worldwide and was still topping the charts Thursday, according to data from streaming rating service Flix Patrol. The film was among the ten most popular Netflix offerings in 65 countries, including the U.S. and Russia. And it took the top spot in Belgium, Brazil, Hungary, the Dominican Republic, Spain, Italy, Qatar, Cyprus, Kuwait, Luxembourg, Slovakia, Oman, Switzerland and the Czech Republic.
  • ‘Major Grom: Plague Doctor’ is an adaptation of comic books with the same name published by Russian firm Bubble Comics. In them, detective Igor Grom (Grom is the Russian word for thunder) keeps order in his native St. Petersburg until things are upended by the so-called Plague Doctor, a masked villain who dispenses arbitrary justice and promises to ‘cleanse’ the city. Eventually, it turns out that the Plague Doctor is an alter-ego for internet entrepreneur Sergei Razumovsky, the creator of social network Vmeste that spreads murderous propaganda. It’s not hard to spot references to Pavel Durov in Razumovsky; Durov founded a social network called Vkontakte — a Russian equivalent of Facebook — before going on to create Telegram.
  • The movie also reflects Durov’s conflict with the Russian security services: when Major Grom demands Razumovsky release the identity of the Plague Doctor — who broadcasts a murder on his social network — Razumovsky refuses, insisting that Vmeste respects anonymity. And when Razumovsky is unmasked, he tries to organize riots on the streets.
  • Many have spotted an attempt at a subtle form of Russian propaganda in both the Major Grom movie and the comics on which it is based. There is even a human link: the founder of Bubble, which publishes Major Grom, is the son of media magnate Aram Gabrelyanov who founded the muck-racking, pro-Kremlin tabloid LifeNews.

Why the world should care

Films like ‘Major Grom: Plague Doctor’ can’t seriously be seen as Kremlin propaganda infiltrating the West. It’s more a case of exploiting newsworthy topics to make money.

IN BRIEF

Record coronavirus death rates

Amid the rapid spread of the Delta variant, Russia reported 799 coronavirus deaths Friday — the fourth single-day mortality record to be set in a week. Russia has also overtaken France to become the country with the fourth highest number of coronavirus cases after the U.S., Brazil and India. Officially, Russia has now recorded 5,882,295 cases and 146,069 deaths, although the real numbers are assumed to be higher.

Despite the rising body count, Moscow Mayor Sergei Sobyanin announced Friday the rollback of controversial coronavirus restrictions imposed just three weeks ago. Muscovites will no longer be required to show a QR-code to enter a restaurant or cafe from Monday (the QR codes were available to those who had recovered from COVID-19 and/or those who had been vaccinated).