Weekly 10 October 2021

Nobel arguments

Hello! Our top story this week is about the award of the Nobel Peace Prize to Russian journalist Dmitry Muratov — and why the decision has divided public opinion. We also look at Russia’s decision to send an actor and director to the International Space Station to shoot the first ever movie in space, why Russia isn’t making huge money from Europe’s gas crisis, and the fallout from the Pandora Papers. 

Nobel Peace Prize for Russian journalist sparks controversy

Dmitry Muratov, editor-in-chief of independent Novaya Gazeta newspaper, became the first Russian journalist to receive the Nobel Peace Prize on Friday. Those who wanted to see the prize go to jailed opposition leader Alexei Navalny were deeply unhappy with the decision.

  • Novaya Gazeta started out as one of Russia’s first independent media outlets, and today it is one of the few left. Later this month, Muratov will celebrate his 60th birthday: 24 of those years have been spent at the helm of Novaya Gazeta. The newspaper was established in 1993 by staff who left the Soviet-era title Komsomolskaya Pravda. “The ones who stayed wanted to make KP into a tabloid, but we did not want to produce a tabloid,” Muratov explained later.
  • Initially, all shares in the newspaper were held collectively. Their first computers were purchased with money from the Nobel Peace Prize fund of Mikhail Gorbachev, the last leader of the Soviet Union, who was friends with Muratov. Gorbachev became a shareholder in 2006 at the same time as banker Alexander Lebedev who was then a parliamentary deputy. The two men bought 49 percent of the newspaper (Lebedev had 39 percent, and Gorbachev 10 percent). When Lebedev began having financial problems in 2014, Novaya Gazeta found a new sponsor – Sergei Adonyev, the former co-owner of Russian telecoms operator Yota. Adonyev has close ties to Sergei Chemezov, the influential head of state defense corporation Rostec who is also close to Putin. Today, according to Muratov, 76 percent is owned by staff, Lebedev holds 14 percent and Gorbachev 10 percent. Since 2018, the newspaper has also been financed by crowdfunding.
  • Muratov dedicated his Nobel Prize to the six Novaya Gazeta journalists killed while working for the newspaper. “The Nobel Peace Prize cannot be awarded posthumously, it is awarded to living people. Apparently, they decided to give it to me as I am still alive, while having in mind Yury Shchekochikhin, Igor Domnikov, Anna Politkovskaya, Nastya Baburova and Stas Markelov, Natasha Estemirova,” he said in an interview with independent media outlet Meduza (designated a ‘foreign agent’ by the Russian government). The day before Muratov’s win was announced, the 15-year statute of limitations expired in Politkovskaya’s murder.
  • Muratov’s award was criticized by supporters of Navalny, who had been one of the favorites to win the prize. Muratov later said that if he had been on the Nobel committee, he would have given the prize to Navalny. One of Navalny’s colleagues, Lyubov Sobol, congratulated Muratov but added that she still regarded Navalny as the “leading agent for peace in our country and beyond”. Leonid Volkov, the head of Navalny’s HQ (designated a ‘foreign agent’ and extremist organization by the Russian government) tweeted Muratov’s own quote from a recent dispute between the two men: “As a champion of human freedom, I certainly support your right to puke.” That’s how Muratov signed off a recent open letter to Volkov in which he defended the much-criticised online voting system used in Moscow as part of parliamentary elections last month.
  • Konstantin Sonin, a professor at Chicago University and Moscow’s Higher School of Economics, called the decision “not just stupid, but corrupt.” But he later changed his mind. “My yesterday reaction re: Nobel peace prize was wrong. Whatever my issues with the committee, Dmitry Muratov has been brave and smart,” he wrote on Twitter.
  • Political analyst Fyodor Krasheninnikov wrote on Facebook that the Nobel Committee’s decision suggests “freedom reigns in Russia” and “rumors of the suppression of the independent media and critics of the government are greatly exaggerated”. He added: “Most importantly, nobody from Russia will win any Nobel Prize in the foreseeable future. A big win for the Kremlin, I must say.”
  • There was also criticism of Muratov’s decision to donate part of the prize money (he and Philippine journalist Maria Ressa should each get about $570,000) to charity Circle of Kindness, which helps children with rare illnesses and was set up by President Vladimir Putin in January. Some commentators recalled how Navalny donated his €10,000 ($11,570) prize money when he won the Boris Nemtsov Prize for Courage to the families of four jailed activists.
  • Notably, Muratov was congratulated by top Russian officials (something impossible to imagine if Navalny had been the winner). Putin’s press secretary Dmitry Peskov said Muratov “consistently works according to his ideals, he is committed to his ideals. He is talented, he is bold. Of course, this is a big achievement.” And the press secretary for Russian Prime Minister MIkhail Mishustin said the prize rewarded Muratov’s “talent, great professionalism, loyalty to his beliefs and, most of all, human qualities.”
  • The reaction among Russ’s pro-Kremlin journalists was mixed. The head of state-owned RT Margarita Simonyan congratulated Muratov, saying that she was happy to think the prize money would help sick children. However, television presenter Dmitry Kiselev said that “decisions like this devalue the prize itself”.

Why the world should care

Pro-Kremlin activist Alexander Ionov recently called for Novaya Gazeta to be designated a ‘foreign agent’, a Soviet-era label akin to ‘spy’ that entails significant financial and bureaucratic burdens. Some believe Muratov’s Nobel Prize may protect Novaya Gazeta from this fate, however, history suggests the opposite: Soviet physicist and human rights activist Andrei Sakharov was persecuted despite his Nobel laureate status.

 

Russia sends actor, director to make first movie in space

A Russian actor and director blasted off Tuesday for a trip to the International Space Station (ISS) to make the first ever movie to be shot in space. But this joint project between state space corporation Roscosmos and state-owned TV station Channel One provoked controversy. While some applauded a ground-breaking moment in Russian movie-making, others were angered by the disruption to the work of the space program.

  • The Soyuz MC-19 spacecraft carrying actor Yulia Peresild and director Klim Shipenko launched from the Baikonur cosmodrome. A third member of the crew, cosmonaut Anton Shkaplerov, has already made several visits to the ISS. The flight went as scheduled, apart from a 10-minute delay during docking. Roscosmos head Dmitry Rogozin joked the delay merely “added to the drama”. As Shkaplerov switched to manual control for the final approach, he was assisted by Peresild, Channel One head Konstantin Ernst later told reporters.
  • Shipenko and Peresild are on the ISS to shoot sci-fi drama Challenge. In the movie, Peresild’s character, a heart surgeon, must perform an operation in space. The role of the patient will be taken by a real cosmonaut. Actor and director will spend 12 days in orbit and are due to return to Earth with about 35 minutes of footage.
  • Challenge is billed as a joint project involving Roscosmos and Channel One with both Rogozin and Ernst listed as producers. Channel One’s PR team has been working hard: live coverage of the Soyuz MC-19’s launch attracted 13 million viewers.
  • Roscosmos first announced plans to shoot a feature film on the ISS last year shortly after U.S. media reported Doug Liman’s plans to fly to the ISS with Tom Cruise. Liman reportedly had a contract with Axiom Space to fly on Space X’s Crew Dragon craft. Rumors that Cruise might film on the ISS first circulated back in May 2020.
  • Roscosmos said funds for the filming would come from Channel One, Russia’s space program and its commercial arm, Glavkosmos. But that only accounts for part of the money: the creators of the film also requested 400 million rubles ($5.6 million) from the state-owned Cinema Fund (it’s not known how much they received) and total production costs are estimated at more than 850 million rubles.
  • But that’s only half the story. The cost of a commercial flight on a Soyuz rocket is far more: it’s about $35 million (and that does not include the costs of a manned spacecraft). NASA typically pays an average of $55 million for a seat on one of Russia’s manned Soyuz flights, with the most expensive trips costing up to $90 million. So, the whole trip would have cost a private client at least $100 million.
  • Some Russians are unhappy that a big chunk of state money has been spent without any obvious social benefit. Others criticized the project because it cost professional cosmonauts the chance to get to the ISS – a chance that might come just once in a career. At the same time, two of the current crew on the ISS, Russia’s Pyotr Dubrov and American Mark Vande Hei will have to remain in orbit for another six months to enable the film crew to return to Earth in the planned time frame. Inside Roscosmos there were also questions: Sergei Krikalev, the only cosmonaut among the directors of the state corporation, was given an ‘honorable demotion’ after criticism of the movie.
  • A Facebook post by journalist Evgenia Albats highlighted the level of public interest. Albats’ post questioning whether Peresild’s flight was really the top news story of the day attracted more than 700 comments. Another Facebook post, this time by journalist Yekaterian Gordeyeva attracted 400 comments. Gordeyeva backed Peresild, but many of the comments questioned how her space flight would benefit ordinary Russians.

Why the world should care

This squabble over a world first in space involving a Russian actor and director reflects contemporary Russian society: those hit by a stagnating economy curse wasteful state spending while Kremlin propagandists struggle to silence dissent with tales of the country’s ‘latest triumph’. Ultimately, it’s ordinary people who suffer.

 

Russia wins from Europe’s energy crisis — but only modestly

Europe’s energy crisis has offered President Vladimir Putin a rare opportunity to flex his half-forgotten gas diplomacy muscles. Russia will benefit from rising gas prices, although state-owned gas giant Gazprom will not post the kind of super-profits some expect.

  • The turbulence on the gas market last week was unprecedented. Benchmark European gas prices at the Dutch TTF hub surged close to $2,000 Wednesday before dropping below $1,000. As prices approached their peak, Putin gave a signal designed to calm the market. At an energy meeting, Putin announced Russia was supplying Europe with 8 percent more gas than scheduled and was closing in on an all-time annual record. He promised gas pipeline Nord Stream 2 “would cool the situation a little” and chided the European Union for trying to move away from long-term contracts. At the same time, he couldn’t resist stomping on Ukraine, whose gas transit system, he said, “hasn’t been repaired in decades.” Putin’s underlying message was that Russia is ready to help Europe — but on its own terms. He warned that: “gas is not like watches, underpants, ties, or even oil, which can be stored anywhere”.
  • As the world’s biggest producer and exporter of gas, Russia will inevitably benefit from rising prices. But it’s not as simple as it might seem. Gazprom, which holds a monopoly on pipeline exports, does not use spot prices for most of its contracts: only 15 percent of Russian exports are sold at spot prices, according to analysts at investment bank Renaissance Capital. Instead, most gas supplies are based on forward contracts that can have very different terms, explained Vasily Tanurkov, head of corporate ratings at Russian ratings agency ACRA. “Typically, in October, Gazprom’s sales price is the average price of October 2021 futures over the past 12 months,” he said. This means the current price surge will gradually be reflected in rising prices over the next 12 months.
  • Nor will Gazprom’s financial windfall from the current situation be eye-watering. It will, for example, be significantly less than Norway’s state-owned energy giant Equinor, which does most of its trading at spot prices, explained Dmitry Marinchenko, a senior director at ratings agency Fitch.
  • According to current rules, all revenue from oil and gas exports above a $44.2 per barrel threshold must be diverted to Russia’s National Welfare Fund. Moreover, the government is, traditionally, far more focused on oil prices than what gas is worth. “Gas exports in themselves are [worth] three times less than exports of oil and related oil-products,” said Renaissance Capital chief economist Sofia Donets.

Why the world should care

According to the International Energy Agency, Russia could supply significantly more gas to Europe – up to about 100 million cubic meters per day. But many experts question whether this is actually true. Russia’s gas supply system is technically complex, and such an increase would require far more than merely opening a tap.

 

Top Russian officials named in Pandora Papers

Offshore assets belonging to Russian officials and top executives at state-owned companies featured prominently in material published last week by the International Consortium of Investigative Journalists (ICIJ). The main revelations concerning Russia included:

  • Konstantin Ernst, the head of state-owned Channel One who is often described as President Vladimir Putin’s image-maker-in-chief, was revealed as a beneficiary of an offshore company registered in the British Virgin Islands. The company is part of a project to demolish Soviet-era movie theaters in Moscow and replace them with shopping malls. State-owned bank VTB has put up billions of rubles to finance the development project, according to the investigation.
  • Svetlana Krivonogikh, who owns shares in Kremlin-connected Bank Rossiya and is described euphemistically as a ‘close acquaintance’ of Putin, reportedly owns a €3.6 million ($4.2 million) apartment in Monaco registered as an offshore asset in 2003.
  • Anastasis Ignatova, the step-daughter of Sergei Chemezov (the influential head of state defense corporation Rostec) owns offshore assets worth at least 22 billion rubles ($415 million), including a villa close to Marbella, Spain, that she shares with other members of the family, and a 85-meter superyacht valued at 10 billion rubles.
  • Andrei Bolotov, son-in-law of Nikolai Tokarev (the head of state-owned oil pipeline company Transneft) owned an offshore company that won contracts from Transneft worth billions of rubles. In the same year that Transneft was sanctioned by the EU, Bolotov acquired citizenship in an EU country.
  • German Gref, the head of state-owned banking giant Sberbank, set-up a $55 million trust fund in Singapore to manage his family’s assets in 2011. The fund was under the control of Gref’s 24-year-old nephew, Oskar, but later liquidated. Its assets were transferred to the Grand Investment Trust, which is owned by Gref’s long-time acquaintance Kirill Androsov, former deputy minister of economic development.

The official Russian reaction to the disclosures was predictable, with many quick to point out — with a knowing smile — that no U.S. individuals were named in the leak. Nor did the Kremlin see any reason for an investigation. “We did not see any ‘hidden wealth of Putin’s circle’,” said presidential press secretary Dmitry Peskov on Monday. He added that the publications represented “an assortment of rather unfounded statements”.

At the same time, pro-Kremlin activist Alexander Ionov, announced Monday that he was preparing an appeal to the Prosecutor General to recognize ICIJ as an ‘undesirable organization’ — which would effectively ban it from operating in Russia. Ionov claimed the Pandora Papers were just a “leak from the American secret services”, and highlighted the role of two journalists from independent media outlet iStories, Roman Anin and Roman Shleinov. He also noted the involvement of New Times editor-in-chief Yevgeniya Albats.

Why the world should care

The Pandora Papers are just the latest evidence of the hypocrisy of the Russian elite, which attacks media organizations, NGOs and individuals over allegations of international funding, while taking full advantage of offshore finance. It’s unlikely to be a coincidence that last week also saw three more organizations, including investigative outlet Bellingcat and nine individual journalists, added to Russia’s list of so-called ‘foreign agents’.

 

Image: Natalya Kolesnikova/AFT/EastNews