The Middle East crisis is a gift for Russia

Hello! Our top story this week is an analysis of how the crisis in the Middle East is playing into Russia’s hands. We also look at the online game inventor who is setting a new political party, and two of the newest entries into Russia’s rich list. You probably know that Russia is only just returning to work after the New Year holidays, meaning our newsletter is slightly shorter this time. We will be back to normal service next week. 

Flowers and a portrait of Qasem Soleimani left by mourners outside the embassy of Iran in Moscow. Photo: Anton Nobvoderezhkin/TASS

The Middle East crisis is a gift for Russia

Russia has officially refrained from commenting on the major political crisis that was triggered by the assassination of Iranian general Qasem Soleimani. But Russia’s stock market has hit new record highs on the back of increasing tensions in the Middle East, and state-owned media outlets have capitalized on the opportunity to mourn Soleimani, who is described by Iranian media as a friend of President Vladimir Putin.

• Soleimani was not well known inside Russia, but he played an important role in shaping Russian foreign policy. It was Soleimani who flew to Moscow twice in 2015 to meet with Putin, convincing the Russian president to commit troops to Syria and help save Syrian President Bashar al-Assad from defeat in the country’s civil war. Soleimani was able to persuade (Rus) Putin that Assad still stood a chance. Iran’s Fars news agency wrote with pride that, during their meeting, Putin called Soleimani his “friend”. Despite this, Putin didn’t officially respond to the general’s murder — Russia only expressed its condolonces (Rus) through the Ministry of Foreign Affairs. However, on January 7 Putin made a rare visit to Damascus during which he must have discussed Soleimani’s murder with Assad.
• Unofficially, Russia’s propaganda machine tried to exploit the situation. Even though most Russians had not heard the name ‘Qasem Soleimani’ until his killing, mourners immediately started bringing flowers to the Iranian embassy in Moscow. State-owned media outlets emphasized (Rus) that it wasn’t just Moscow-based Iranians who were laying flowers, but also “Russians, expressing their solidarity with the Iranian people.” Both official media and pro-Kremlin bloggers pointed out the illegality of the U.S. drone strike on Soleimani — in some cases comparing it to the recent murder of a former Chechen military commander in Berlin (Germany has expelled two Russian diplomats in connection with the case).
• For Russia’s stock market, the crisis in the Middle East has been fantastic news. So far in in 2020, the Moscow Exchange has risen for five straight days in a row — climbing 2.6% overall and surpassing the 3,100 mark for the first time ever. The rally even continued after oil prices fell back to about $65 on January 8 when U.S.-Iranian tensions appeared to ease. A major war may have been avoided, but Russia will continue to benefit from instability, according to analysts. Increased risks could push oil and gold prices higher in 2020 — and shares in Russian oil companies have already risen as much as 6 percent this year.

Why the world should care

Russia’s equity market was the world’s best performing in 2019. And while the U.S. stock market also hit new highs, this is unlikely to be repeated. Events like the Soleimani muder fuel the bull market in Russia, and experts believe (Rus) growth is set to continue.

Online game inventor to found a Kremlin-approved political party

Russia’s parliamentary elections are scheduled for 2021, and the Kremlin is already making preparations. In an unexpected twist, Vyacheslav Makarov, co-creator of popular online game World of Tanks, has announced he is setting up a new political party called the Direct Democracy Party. The group will be organized through an application built on blockchain technology — and it has already been approved by the Kremlin.

• World of Tanks is one of the top 30 most popular games on gaming platform Steam, and its different versions have over 200 million users worldwide. In 2016, Bloomberg valued Wargaming, which owns World of Tanks, at $1.5 billion. The company is also a sponsor of real-life, military-themed events with a patriotic tinge in both Russia and Belarus.
• Wargaming operates from Cyprus and its founder, Viktor Kisly, and most of its partners are Belarusian citizens. But Vyacheslav Makarov, the product director and the lead developer of World of Tanks, is Russian. In an interview (Rus) with Kommersant newspaper Friday, Makarov said the Direct Democracy Party will be a “technological instrument” to allow people to take part in politics.
• A source in the Presidential Administration told The Bell that the Kremlin has given its blessing to the project. Political consultant Timofey Shevyakov, a veteran of pro-Kremlin political consultancy, has joined the organizing committee of the party-to-be. In 2000, Shevyakov was one of the contractors involved the creation of pro-Kremlin websites, and he has worked with the influential Vladislav Surkov.
• Vedomosti newspaper reported (Rus) in October that Kremlin officials were actively seeking new political projects that could be launched in the run-up to the State Duma elections. A new Kremlin-controlled liberal party is expected to be one of the new parties to emerge.

Why the world should care

Elections to the State Duma may seem like a distant prospect, but how the Kremlin seeks to ‘manage’ the outcome of the vote will reveal a lot about the shape of a possible power transition in 2024 when Putin comes to the end of his current presidential term.

IN BRIEF

Russia’s data protection billionaires

New faces don’t often appear on Russia’s rich list, but when they do they come from the IT industry. Russian Forbes announced two newcomers to its list last week: the founders of start-up Veeam Software, Ratmir Timashev and Andrey Baranov, who the publication estimated (Rus) to be worth $1.2 billion. Veeam was recently bought by U.S. fund Insight Partners for $5 billion. Since it was established, Veeam has been registered in Switzerland, but its founders — and most of its employees — are Russian. Veeam is one of the world’s largest producers of software for restoring files, data defense, security and cloud storage.