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Proposed constitutional changes reveal Kremlin splits over Putin’s ‘2024 problem’

Valery Zorkin (left) has supported all the constitutional amendments inspired by Vladimir Putin

What happened

Only six months after Vladimir Putin’s presidential election victory, the Kremlin is beginning to prepare for the end of his term in 2024. To stay in power beyond this, Putin will have to amend the constitution. This week, an article by the head of Russia’s Constitutional Court showed evidence of disagreement within government about how the constitution should be changed.

  • On Tuesday, an article by Valery Zorkin, the head of Russia’s Constitutional Court, was published in the government’s official newspaper, Rossiskaya Gazeta. In the article, Zorkin says that Russia’s constitution, adopted in 1993, is outdated, and suggests making some “delicate changes”. Specifically, Zorkin wants to expand parliament’s role, reduce the powers of the executive branch and create a two-party system.
  • Putin’s press secretary Dmitry Peskov, said the article was Zorkin’s personal opinion. But journalists and political scientists have no doubt this is the start of public discussions about how Putin can stay in power after 2024 (at the moment the constitution bars him from running for a third consecutive term). 74-year-old Zorkin is a Russian political veteran, he was first appointed head of the Constitutional Court in 1991. Zorkin has supported all the constitutional amendments inspired by Vladimir Putin: from increasing the presidential term length from 4 to 6 years in 2008 to the annexation of Crimea in 2014.
  • Political scientists who spoke with The Bell believe Zorkin’s article is not the Kremlin’s attempt to start a fake discussion about a decision that has already been made, but evidence of disagreement within government about how the constitution should be changed. There is a group advocating for radical reform and there are more conservative figures, like Zorkin, who believe the constitution shouldn’t be drastically altered.
  • A future constitutional reform to allow Putin to preserve his power could take place in several ways: 1) Putin becomes the head of the biggest party in a parliament with significantly expanded authority (a similar tactic is being used now in Kazakhstan); 2) Putin continues to govern through a new, non-governmental body comprised of top officials (like the State Council); 3) Putin maintains his status as a ‘leader of the people’ without an official title but with total control (like Deng Xiaoping in China in the 1990s).

Why the world should care

Discussions about the ‘2024 problem’ are already well underway. With each day that passes, the issue will get more and more attention from Russian authorities and will play a bigger role in Russian politics, including in relations with the West.

Comments from political scientists Grigory Golosov, Dmitry Badovsky, Alexey Makarkin, Nikolay Petrov, Gleb Pavlovsky, and Abbas Gallyamov were used in this analysis.

Russia starts a new campaign against money laundering, small businesses suffer

What happened

While the scandal in Europe surrounding Russian money and Danske Bank is growing, the Russian authorities are starting a new anti-money laundering campaign. The Kremlin wants to change the law to be able to confiscate money sent to the West. But this is difficult legally and the victims will be Russian businessmen.

  • This week, the head of the presidential administration, Anton Vaino, met with representatives of the Central Bank, FSB and other security services. During the meeting, participants discussed strengthening Russia’s anti-money laundering legislation. Last year, just 30 criminal cases were opened under 2014 laws designed to change the system and the government currently has no way of confiscating laundered money, which is usually found abroad.
  • The Kremlin has come up with three ways of making current anti-money laundering legislation more effective. First, there will be harsher punishments for notaries, lawyers and accountants taking part in illegal operations. Second, they want to create an instrument to confiscate assets transferred abroad (it’s not clear how they will ensure the cooperation of foreign law enforcement agencies). Third, the Prosecutor General’s Office wants to make it mandatory to obtain an expert opinion about the possibility of money laundering in any case involving economic crime.
  • Lawyers are skeptical these changes will be effective: the system works badly not because legislation is absent, but because officials and state companies are often involved in money laundering — and are never investigated. A perfect example is the famous $21 billion Russian Laundromat scheme, which was supported by high-ranking law enforcement officers.
  • For now, the only losers will be innocent businessmen. As The Bell discovered, part of this campaign will be increasing tariffs on transfers from the bank accounts of  small businesses to personal accounts: a process that is already underway. From the start of this month, banks popular among Russian small businesses have reduced the amount (from $5,000 to $2,500) that business owners can transfer commission free from their business accounts to their personal accounts. And for large transfers, the commission was raised from 1% to 6%. This increase was recommended by the Central Bank, which believes such companies are widely used for money laundering.

Why the world should care

In the context of scandals about Russian money laundering in the West, it’s important to understand how it works in Russia. A few years ago, everyone was involved: businesses evaded tax, bankers transferred money abroad and officials took bribes. Now, the big players are still winning, new technology used by the tax authorities has cut out ordinary businessmen from these lucrative crimes.

Uptick in Russian special forces in Libya is a reminder of the Kremlin’s Africa ambitions

What happened

The Kremlin continues to expand its military presence in Africa, with Libya the latest country to see an increase in Russian troop numbers. Officially, Russia and the West recognize the government in Tripoli. But, over the last few months, Moscow has sent special forces to help Tripoli’s main adversary, Marshall Khalifa Haftar, who controls the east of the country that is rich in oil. Russia has an agreement with the Libyan government to develop oil fields in the east, but the government does not control these territories.

  • Russian troops in Libya include several dozen special forces and military intelligence officers (GRU), British tabloid The Sun reported Monday. The newspaper is often unreliable, but this news has been confirmed by the the RBC news website and sources who spoke with The Bell. “It’s true, we have been training guys for several weeks and moving them in in groups,” one source in the Russian Defense Ministry told The Bell. He said Russian forces have been in Libya for some time, both as civil and military advisors. Officially, Moscow refutes its participation in the Libyan conflict.
  • Sources close to the Russian Ministry of Defense and the Libyan government told RBC that “elite divisions” have been sent to Libya in recent months. Only Russian military personnel are in Libya, a source who took part in the wars in Ukraine and Syria explained to The Bell. Salaries in Libya, he said, were several times higher than what he was paid in these other conflicts.
  • In Libya, Russia’s ally is the army of Marshall Khalifa Haftar. In February, he asked Russia for military support and participated in a video conference with Russian Defense Minister Sergei Shoigu. Since Muammar Gaddafi was overthrown in 2011, Libya has been split between rival powers: the east and part of the south are controlled by Haftar’s army, while the west and the center, including Tripoli, are controlled by the government officially recognized by the West and Russia.
  • Many suggest that Moscow’s interest in Libya is linked to the country’s energy reserves. In February 2017, Russia’s state-owned oil giant Rosneft and Libya’s National Oil Corporation (NOC) signed a cooperation agreement. The NOC is based out of the government’s stronghold in the west, but most of the country’s oil fields are in the east.

Why the world should care

Since mid-2017, Africa has been an important new focus for Kremlin foreign policy. In just a year, Russia has signed military cooperation agreements with a dozen African countries and private Russian military companies, led by Wagner (famous for its role in Syria) have made their presence felt in Sudan, the Central African Republic and the Congo. For the Kremlin, Africa is a means of keeping its mercenaries busy, helping to strengthen its international influence and a way of gaining access to valuable natural resources.

Soyuz malfunction casts a shadow on Russia’s whole space program

What happened

On Thursday, the Russian space industry suffered one of its largest setbacks in recent years when a Soyuz rocket with two crew members bound for the International Space Station fell out of the sky. The crew survived, but the first Soyuz accident since 1975 will have serious consequences. For now, Russia still has a monopoly on space transport, but new projects from SpaceX and Boeing will be ready soon, and Soyuz’s reliability — its competitive advantage — is now being questioned.

  • The accident occurred 199 seconds after takeoff. It might have been caused by a malfunction of the Soyuz-FG launch vehicle units, which have been used since 2001. The rocket and the spacecraft were lost and the crew only survived by ejecting their capsule and completing an emergency descent. All Soyuz rockets have now been grounded. The investigation into what happened may take several months, former head of rocket production company RKK Energiya Vitaly Lopota told The Bell.
  • Experts who spoke with The Bell didn’t believe that Russia’s rocket program will be halted for long. In fact, they don’t think the accident will impact the future of the program, which has been sending manned spacecraft into space since 1966.
  • After the U.S. Space Shuttle program was shut down in 2011, Soyuz has been the world’s only manned spacecraft capable of carrying astronauts to the International Space Station. But this will not always be the case. Soyuz’s competitors, Elon Musk’s SpaceX Dragon and Boeing’s CST-100 Starliner, are planning their first manned flights next year. NASA doesn’t plan to walk away from Soyuz, but it won’t be easy for Soyuz to compete with these new, privately funded players.

Why the world should care

In terms of funding, manned space programs have a relatively small footprint. According to data from the U.S. Civil Aviation Authority, the global space services market in 2017 was valued at $345 billion but about 2% of that is spent manned flights. Instead, most of the market is comprised of satellite launches (for television, navigation or communication). Russia lost its leading position in this area some years ago. Data from NGO Union of Concerned Scientists shows that in April there were 1,886 satellites in orbit and most of these were launched by the U.S. (859), with China in second place (250) and Russia in third place (146).

Soccer players with a taste for violence and the perils of Russian selective justice

What happened

Russian law works selectively: if a criminal has money and connections, he or she can almost always escape punishment. But there are exceptions — when bad luck gets in the way. This is what happened to two stars of Russian soccer: Alexander Kokorin and Pavel Mamaev. On Monday morning, when they left a nightclub, they beat up three different people. All three turned out to have government connections, or connections to Putin.

  • The classic example illustrating how it’s dangerous to attack strangers in Moscow happened in 2010. Banker Matvei Urin was held up by a BMW driver who refused to give way to him and his entourage, so his bodyguards forced the driver to stop and beat him up with baseball bats. However, this was a bad mistake: the driver of the BMW was the Dutch boyfriend of Putin’s eldest daughter and the incident was the end of Urin’s career. He was sentenced to 7 years in prison and his banks lost their licenses.
  • Kokorin and Mamaev were not that unlucky, but they have been arrested for at least 2 months and are awaiting trial. On Sunday evening, the soccer players were celebrating 10 years of friendship in Moscow and their revelry continued well into Monday morning. First, they got into a fight in a parking lot with the driver of a Mercedes. It later emerged that the car was owned by a TV host who had moderated Putin’s annual call-in show for five years in a row and is rumoured to have been in a relationship with a senior FSB officer. After beating up the driver, Kokorin and Mamaev went to have breakfast in an expensive cafe in downtown Moscow. There, they hit a customer with a chair. Again, they were unlucky: the person they attacked was a top official in the Ministry of Trade and Industry and his partner (who was also assaulted) is the CEO of the company producing Putin’s new presidential limousine.
  • If the soccer stars had chosen victims from a bit lower down the social hierarchy, the story would have almost certainly turned out differently. Both Kokorin and Mamaev are among Russia’s top 20 most highly paid soccer players: Kokorin earns an annual salary of $3.8 million and Mamaev gets $2.8 million. Kokorin is one of Zenit’s best players and Zenit is Russia’s richest club, sponsored by state-owned gas monopoly Gazprom. But their wealth has, so far, been of no help whatsoever.

News in brief:

  • The Kremlin continues to make changes to regional government after four government-backed candidates unexpectedly lost election battles. On Thursday, Putin fired Rustam Khamitov, the head of Bashkiria and one of the country’s most influential regional politicians, as well as the governors of the Kursk and Baikal regions. A total of 11 Russian governors have lost their jobs in the past month.
  • Moscow has another international problem, this time a religious one. On Thursday, the Ecumenical Patriarch in Istanbul approved the establishment of an independent Ukrainian Orthodox Church. The leadership of the Russian Orthodox Church is very upset and the conflict threatens to cause a real split.
  • Billionaire Ziyavudin Magomedov, who was once close to Prime Minister Dmitry Medvedev and was arrested at the end of March on corruption charges, has sold his main asset to the state. Magomedov was paid $750 million for his 25% stake in Novorossiysk, Russia’s largest port. This is almost twice the current market value — but a third less than Magomedov wanted when talks about a sale began.

Anastasia Stognei

Anton Baev and Egor Sonin contributed to this newsletter

This newsletter is supported by the Investigative Reporting Program at UC Berkeley.