Weekly 24 January 2021

Rallying for Navalny

Hello! This week our top story is the nationwide protest that took place over the arrest of opposition leader Alexei Navalny. We also look at why the son of one of Russia’s richest men has been kicked out of the family business and sent off to do military service, and how a Russian company helped save messaging app Parler.

Apologies for the lateness of our newsletter this week: we decided to delay its publication to allow us to cover the opposition protests that took place Saturday.

Russia rocked by nationwide protests in support of Navalny

Demonstrations Saturday in support of detained opposition leader Alexei Navalny were the biggest protests to go ahead without an official permit for many years. An estimated 20,000 to 40,000 people turned out in Moscow, and overall up to 100,000 were on the streets in about 100 cities. Over 3,000 people were arrested — another record — but there was no evidence of the kind of widespread police brutality that might trigger public outrage.

The build-up

A Moscow court arrested Navalny for 30 days Monday after he returned from Germany (where he recovered following an attempted nerve agent assassination likely orchestrated by the Russian security services). His supporters immediately called for protests, and released a video accusing President Vladimir Putin of corruption and showing details of a Black Sea palace allegeld built on his orders. Within four days, the video accrued over 70 million views.

  • Key members of Navalny’s Anti-Corruption Fund were arrested Thursday on charges of calling for illegal protests.
  • The police visited the homes of hundreds of opposition activists, independent journalists and other people who had publicly revealed plans to attend the rallies. They were all given written warnings about the consequences of breaking the law.
  • Internet watchdog Roskomnadzor demanded internet platforms delete posts calling for people to take part. Russia’s biggest social network, VKontakte, along with TikTok, Facebook, Twitter, Instagram and YouTube all published warnings after they were threatened with fines of up to 10 percent of their Russian earnings. Roskomnadzor reported Friday that VKontakte and YouTube deleted 50 percent of their “illegal posts”, while TikTok removed 38 percent and Instagram 17 percent.
  • Police warned they would treat protests as ‘mass public disorder’ that, under Russian law, could see organizers jailed for up to ten years and participants for up to eight.
  • Moscow Mayor Sergei Sobyanin urged the city’s residents to stay home and highlighted the risk of coronavirus infections.

The TikTok Factor

A big issue for both sides was the expected involvement of large numbers of schoolchildren inspired by TikTok posts. Tags linked to the protests received over 200 million views on the platform. All the while, state-owned media and online propaganda outlets drummed home their message that the opposition was trying to use kids as ‘human shield’ at the rallies.

School teachers handed out brochures to parents detailing the consequences of participating in unsanctioned protests. The leaflets even made it into kindergartens – an acquaintance of one of The Bell’s editors shared a link shared by a teacher at his three-year-old’s Moscow pre-school.

However, neither side was capable of reliably predicting the impact TikTok might have on the protests. “Nobody knows to what extent a viral wave on TikTok will translate into a wave of people on the streets. This will be a first, vital experiment,” Leonid Volkov, a colleague of Navalny’s told independent outlet VTimes on the eve of the demonstrations.

What happened

Reporters for news agency Reuters estimated the number of demonstrators in downtown Moscow on Saturday at 40,000, while crowd counting organization White Counter put turnout up to 20,000.

  • Protestors gathered in the central Pushkin Square, and police straightaway began making arrests. Even official figures, which typically underestimate the true numbers by a factor of four or five, say that 4,000 people gathered on Pushkin Square.
  • About an hour after the start of the rally, protestors attempted to march to the Kremlin walls, but police blocked their path and protestors dispersed across the downtown area. In several places there were violent clashes at police roadblocks.
  • The country’s second biggest demonstration took place in St. Petersburg, but the most notable development was the spread of the protests into dozens of regional cities where the opposition is traditionally weak. At least 111 rallies took place – and these are just the ones where human rights activists collected information about arrests. About 110,000 people across Russia took part, according to anti-Kremlin outlet MBKh Media. Making this a genuinely nationwide protest was the biggest success of Navalny’s team.
  • A total of 3,068 people were arrested, according to information Saturday evening. That number is likely to increase, but it is already a modern record. There were dozens of reports of police using truncheons or kicking people to the floor, and protestors responded by throwing snowballs and, on occasion, plastic bottles. The authorities said 42 security officials were injured. Despite the scuffles, the police response cannot be described as brutal — at least according to Russian standards.
  • Criminal proceedings have already begun against some participants. At least 12 cases had been launched by Saturday evening, three of them in Moscow. After similar such street demonstrations  (in 2012 and 2019), several dozen people were jailed for multi-year terms.
  • Photos from Saturday’s protests can be seen here and here. Some of the most interesting video footage is collected here by independent outlet Meduza.

Key takeaways

  • A widely-predicted increase in the number of high school students among protestors failed to materialize – reporters at the scene unanimously reported that there were no more young demonstrators than usual.
  • Only about 25 percent of those protesting across Russia were in Moscow — this is highly unusual (Muscovites usually dominate in nationwide demonstrations).
  • Judging by the behavior of the security forces, the Kremlin is trying to avoid triggering a process of radicalization: of course, some protestors were assaulted, but the crackdown generally took place without conspicuous brutality (particularly when compared with events in Belarus in fall last year).
  • Opposition sentiment seems to be spreading. Business people are, as a rule, publicly apolitical, but at least a dozen well-known businessmen — usually loyal to the authorities — publicly announced their participation in Saturday’s events. Admittedly, this is a tiny number, but it could be very damaging for the authorities if it were to grow.

Mordashov’s son is conscripted, booted out of family business

Nikita Mordashov is one of the most privileged children on the planet: his father, Alexei Mordashov controls steelmaker Severstal and is ranked the fourth richest person in Russia by Forbes magazine with an estimated fortune of $16.8 billion. But this week Nikita was sent off to do military service and stripped of his stake in the family business. This is a unique way of treating your children in Russia. Why is Mordashov behaving so differently?

  • The 20-year-old Nikita was kicked out of Moscow’s prestigious Higher School of Economics where he was enrolled on a joint program with the London School of Economics, Forbes reported last week. Nikita was among the worst students on the course last year with an average grade of 2.6 out of 10.
  • In Russia, military service is compulsory for men under the age of 27, unless they are in higher education or are in bad health. In practice, though, corruption means exemption documents are widely available if you can pay. There’s even a widespread Russian expression — otkosit ot armii — that means buying one’s way out of conscription.
  • Elsewhere in the world, Mordashov Jnr’s story might be unremarkable, but in Russia it’s a sensation — wealthy Russian parents traditionally use their money and influence to smooth the path for their children.
  • It also emerged that Nikita has been deprived of his stake in KN Holding, which owns about 65 percent of Mordashov’s gold-mining company Nordgold. His share was worth about $500 million. Now, KN Holding is solely owned by his elder brother, the 21-year old Kirill Mordashov. When he transferred the shares in 2019, Alexei Mordashov said he was doing it to get his sons involved in the family business.
  • Mordashov is very different from his fellow billionaires, as journalist Paul Khlebnikov, founder of Forbes Russia, noticed back in 2004 (Khlebnikov was murdered a few months later, but that was not linked with his opinions on Mordashov). The businessman was born in Cherepovets, a polluted industrial town to the north of Moscow where his parents, like everyone else, worked in the local steel plant. After graduating in 1988, he returned to the same steelworks as an economist. The plant later became Severstal.
  • Mordashov was a protégé of Yury Lipukhin, the then director of the factory. Appointed finance director in 1992, he suggested setting-up a subsidiary company to buy up Severstal shares owned by its unpaid workers. In time, this subsidiary company became Severstal’s sole owner. In 1996, Lipukhin turned 60 and handed control of the company to Mordashov (although he retained a 49-percent stake).
  • A few years later, Mordashov bought shares for himself without warning Lipukhin, and forced his one-time mentor to sell up his entire stake at a fraction of its market value.
  • It sounds like an ugly business, but Mordashov insists he broke no ‘gentleman’s agreement’ because nothing of the sort existed. And in the context of the ‘wild 1990s’, when abduction and murder were common in business disputes, this was a rather sedate disagreement. Even so, Mordashov is no angel: in Navalny’s recent investigation into Putin’s palace, Mordashov is named as one of the donors.
  • The legacy of Russia’s post-Soviet oligarchs is a fascinating question. Right now, this generation is about to find out whether Putin will guarantee their assets if they pass them to their children. Several billionaires, including Vladimir Yevtushenkov (who owns conglomerate AFK Sistema) and Leonid Fedun (who has a stake in oil giant Lukoil) have already transferred part of their fortunes to offspring. Chicago professor Konstantin Sonin told The Bell that Russia’s finances might benefit more from a hefty inheritance tax than progressive taxation (about which there is ongoing discussion).

Why the world should care

Amid speculation about how Russia’s ageing post-Soviet oligarchs will transfer their wealth, the Mordashov story has attracted significant attention. It highlights an interest in how Russia’s super-wealthy lead their lives, and some of the long-term issues facing big business.

Russian IT company saves U.S. far right app Parler

Messaging service Parler, popular among the far right and ex-U.S. President Donald Trump’s more radical supporters, was removed by the Apple store and blocked by Amazon earlier this month. But it bounced back this week with a Russian accent. Parler’s return is at least partially due to the work of Russian IT firm DDoS-Guard, whose other clients include state organizations.

  • Parler’s traffic was partly routed via IP-addresses directly owned by DDoS-Guard, according to a Tuesday report by Bloomberg. And data protection experts pointed out Parler’s traffic went through Russia, albeit with an intermediate stop in Belize.
  • DDoS-Guard said in response that it does not provide Parler with hosting. However, this would not prevent the companies from having a different arrangement, for example, on the protection and routing of traffic.
  • DDoS-Guard is among Russia’s top 15 communications providers, focusing on information security. It was founded in 2011 by Yevgeny Marchenko and Dmitry Sabitov from the southern city of Rostov-on-Don, but its finances have never been publicly disclosed. Its negotiations with Parler were carried out via representatives in Edinburgh.
  • On its website, DDoS-Guard boasts of its own traffic-filtering network. And it has a license for data protection in Russia, which suggests it cooperates closely with the security services. Industry media describe the company as a Ministry of Defense contractor.

Why the world should care

As President Joe Biden makes his first steps in foreign policy, any revelation about Russian links to far right U.S. groups is fodder for those in Washington arguing for tough action against Moscow.