By Andrew Korybko, Substack, 3/24/24

Speculation has swirled since Friday night’s terrorist attack at the Crocus City Hall venue in Moscow over whether ISIS-K was really responsible like the group claimed or if Ukraine’s military-intelligence service GUR orchestrated everything under the cover of its agents posing as members of that group. The Mainstream Media is running with the first scenario while doing their utmost to discredit the second, but recalling the GUR’s terrorist history and ties with radical Islamists shows that it’s not above suspicion.

They were responsible for assassinating Darya Dugina in summer 2022, carrying out the Crimean Bridge truck bomb attack that fall, assassinating Vladlen Tatarsky in spring 2023, and the cross–border terrorist raids by the so-called “Russian Volunteer Corps” over the past year. They’re also tied to Crimean Tatar terrorists and ISIS-linked Chechen ones. The CIA is connected with these terrorist acts and groups too after the Washington Post reported last fall that they rebuilt the GUR from the ground-up after 2014.

The modern-day GUR is a product of the CIA, which certainly shared with its protégés everything that it learned while waging the ongoing Hybrid War on Syria, not to mention their terrorist contacts as well. It was through this meticulous cultivation that GUR chief Kirill Budanov obtained his bloodlust that was on full display last spring when he declared that “we’ve been killing Russians and we will keep killing Russians anywhere on the face of this world until the complete victory of Ukraine.”

For as lethal as the GUR has become over the past decade, it’s still a CIA knockoff, which is why it’s expected to make sloppy mistakes from time to time. This is relevant when it comes to the latest attack after ISIS-K claimed responsibility using an outdated news template, thus suggesting that someone else claimed credit in their name at first but then ISIS-K opportunistically ran with it for clout. Considering its terrorist history and ties with radical Islamists, that mysterious actor was arguably the GUR.  

What likely happened is that their agents posed as members of that terrorist group in order to retain plausible deniability in case the planned attack was foiled or the terrorists were caught afterwards. One of the Tajiks who was captured in the car that was racing towards the Ukrainian border claimed that they were recruited by the curators of a radical Telegram channel just a month ago to carry out the attack using already cached arms in exchange for a debit card payment of around $5000 each.

These nationals were probably chosen by the GUR since some of them are predisposed to religious radicalism due to the lingering legacy of Tajikistan’s Islamist-inspired civil war from the 1990s, their country abuts ISIS-K’s Afghan headquarters, and they have visa-free travel privileges to Russia. Accordingly, they were allegedly recruited via a radical Telegram channel, ISIS-K’s involvement doesn’t seem entirely implausible, and they were able to easily enter Russia with minimal scrutiny.

They weren’t radical enough to go out with guns blazing or in a suicide blast like ISIS-K is known for, however, but were still sufficiently sympathetic with that group’s ideology to carry out what they believed was its latest mission in exchange for money. This explains why they fled from the scene of the crime, which is contrary to what any affiliate of that group would ever do, after machine-gunning dozens of people and setting fire to the venue.

Had they reached Ukraine, where the FSB confirmed that they had contacts and President Putin said that “a window was prepared for them…to cross over”, then they’d likely have been killed by the GUR to cover everything up. It shouldn’t be forgotten that this group learned how to conduct terrorism from the CIA, which in turn perfected this practice in Syria over the past 13 years of the Hybrid War that it’s been waging there, but the GUR is still a knockoff and that’s why they made three sloppy mistakes.

In the order that they occurred, their first mistake was recruiting people who weren’t ready to fight to the death at the scene of their forthcoming terrorist attack. This led to the culprits being captured and spilling the beans about how they were recruited in exchange for money, which is one of the signs that ISIS-K wasn’t behind what happened since their members always expect to die as “martyrs”. Accordingly, the fact that this mistake was made suggests that the GUR was desperate to go through with their plans.

The second mistake was that they didn’t tell their proxies to flee to a safe house right after the attack to meet a contact that’ll then help them reach the border later on but who’d actually kill them once they meet in order to cover everything up. This led to them racing towards the Ukrainian border, thus showing everyone that they at the very least felt that they’d find sanctuary there, which made Russia’s claim of Ukrainian involvement much more believable for many skeptical Westerners.

And finally, the last mistake was that the GUR used an outdated news template to claim credit for the attack on behalf of ISIS-K, who they correctly predicted would opportunistically run with it for clout. By doing so, however, they signaled that the group itself didn’t play a role in organizing what happened otherwise their more modern template would have been used instead. Taken together, these three sloppy mistakes discredited the Mainstream Media’s narrative and drew attention to the GUR instead.

Coupled with its terrorist history and ties with radical Islamic groups, which respectively prove that it has the capabilities and intent to carry out the Crocus attack as well as the knowledge required to impersonate extremists online for recruiting purposes, all of this makes the GUR the prime suspect. It learned everything about terrorism from the CIA, but since it’s still a knockoff, it made a series of sloppy mistakes that resulted in incriminating Ukraine instead of lending false credence to the ISIS-K narrative.

By Kit Klarenberg, Substack, 2/28/24

In an extraordinary testament to the sheer pace and scale of the US Empire’s collapse, on February 15th Politico published a remarkable investigation, How the US broke Kosovo and what that means for Ukraine. In unprecedentedly forensic, candid detail, it documents how NATO violently “wrenched” the province from Yugoslavia’s grasp, then forged a politically and economically dysfunctional, unsustainable “American protectorate” in Belgrade’s place, while US officials and corporations corruptly profited every step of the way.

The relevance of Kosovo’s fate to what will inevitably befall whatever territory comprises Ukraine once Russia has completed its Special Military Operation couldn’t be starker. Whenever that day comes, Kiev will be wholly reliant on US support to keep its literal lights on, reconstruct whatever isn’t irrecoverable, and pay salaries of state employees and government officials. Washington already pumps tens of billions into the country for the latter purpose alone.

While there is a growing sense among Ukrainians within and without the country they have been abandoned and betrayed by their American “friends”, officials in Kiev continue to talk up their alliance with Washington, while routinely pleading publicly for short- and long-term financial assistance from the Empire. Yet, as Politico observes:

“For Ukraine, the task of fixing its shattered infrastructure will represent a daunting, generational challenge. For corporate America, it will be just another business opportunity. And if Kosovo is any guide, the Ukrainians should be careful what they wish for.”

‘Serious Reservations’

The “liberation” of Kosovo Albanians, and creation of an “independent” state in the province – long-considered “the cradle of Serb civilisation” and “Serbia’s Jerusalem” – began as a deeply personal pet project of Bill and Hillary Clinton, and longtime deep state operatives and notorious warmongers like Madeleine Albright. Their crusade was then adopted by subsequent US administrations. Accordingly, Kosovo today is laden with monuments, avenues and squares dedicated to these individuals, including Wesley Clark, who as US Supreme Allied Commander Europe oversaw NATO’s criminal bombing of Yugoslavia.

Such is the affinity of Kosovo Albanians for the States, star spangled banners and garish posters proclaiming, “Thank You USA!” can be found in profusion throughout Pristina. As Politico notes too, “at one point, local authorities seriously contemplated naming a lake after Donald Trump” – and “the affection is mutual.” Entire generations of US officials “carry Kosovo around with pride,” a Washington diplomatic source boasted to the outlet. “But should they?” Politico bluntly enquires.

The answer, unambiguously, is absolutely not. Once Pristina unilaterally declared independence in 2008 – a highly controversial move unrecognised by much of the international community, and Serbia, its constitution still categorising the province as Belgrade’s sovereign territory – “American fortune hunters” started moving in en masse, employing “prominent former officials from the Clinton administration who’d had a hand in helping Kosovo liberate itself” to “grease the skids.” In other words, secure lucrative contracts via dubious if not outright criminal means, for personal enrichment.

An early entrant in this imperial feeding frenzy was US government-tied construction giant Bechtel, “a major player in the reconstruction of Iraq’s energy sector” following the illegal 2003 Anglo-American invasion. Its mission in Kosovo – building two highways – was much more modest. Nonetheless, US officials first had to convince authorities in Kosovo, “which had a poverty rate of about 60 percent at the time,” the roads were a vital necessity.

In order to bolster its sales pitch, Bechtel recruited Mark Tavlarides, a member of Bill Clinton’s National Security Council during the Kosovo War, and then-US Ambassador to Priistina Christopher Dell, to assist. Despite “serious reservations about the project’s economic viability on the part of both the World Bank and the International Monetary Fund (IMF),” authorities greenlit the proposal in 2010, while refusing to publish the full contract, “despite pressure from civil society groups.” It was nonetheless revealed the effort’s final cost wasn’t capped.

Initially, the highways were to span just over 100 kilometres, and cost €400 million. By the time of their completion two years later, they had been shrunk to just 77 kilometres, at a cost of €1 billion. Undeterred, in 2014 Pristina handed Bechtel another major highway contract. Completed five years later at a cost of €600 million, multiple Kosovo officials involved in the deal were recently jailed for secretly overpaying the company to the tune of €53 million.

‘Kosovo’s Saviors’

Politico’s investigation highlights a spectacularly egregious aspect of US “nation building” in Kosovo, largely unacknowledged or outright ignored in the mainstream over the past two-and-a-half decades. Namely, the very same officials intimately involved in Yugoslavia’s destruction profited – or, at least, sought to profit – from their actions subsequently. The same is true of every other target of imperial intervention since.

Politico dubs Madeleine Albright “one of the icons of Kosovo’s fight for freedom.” As US Secretary of State 1997 – 2001, she aggressively  tubthumped for NATO “intervention” in Yugoslavia, and resultant privatisation of the country’s industry and resources, which at the time of the bombing was overwhelmingly worker-owned. The 78-day-long aerial onslaught destroyed just 14 Yugoslav tanks, while decimating 372 industrial facilities, leaving hundreds of thousands jobless. The military alliance took direction from US corporations on what sites to target.

Subsequently, Albright – via her personal investment firm Albright Capital Management – sought to make a mint from the wreckage. She gradually began buying up Kosovo’s newly-privatised telecommunications sector, and in 2013 was on the verge of seizing a 75% stake in the formerly state-owned PTK, the province’s postal and telecommunications authority. Major controversy over the deal at home and abroad eventually forced her to back out. Local celebrity not dimmed, six years later a statue of Albright was unveiled in a Pristina square named after her.

Politico records how Albright’s “family and colleagues remain active” in Kosovo, including her daughter Alice, who as chief executive of US government aid agency Millennium Challenge Corporation, “issues development grants” to Pristina, which then get handed back to US corporations via government contracts. Meanwhile, Wesley Clark has been attempting to profiteer in the would-be country for over a decade. He is reportedly “unapologetic about his efforts to reap financial benefit from his reputation as one of Kosovo’s saviors.”

Despite that “reputation”, Clark has been unsuccessful. In 2012, as chair of Canada-based Envidity Energy, he began vying for rights to Kosovo’s copious lignite coal reserves, the fifth largest in the world, promising an investment of $8 billion. The next year, Pristina conveniently tore up laws “designed to prevent foreign investors from exploiting the country’s mineral wealth in a way that didn’t serve Kosovo’s interests,” granting Envidity a licence to dig for coal throughout the province, without public tender.

A scathing 2016 UN Development Program report put an end to Clark’s “Kosovo dream”. It expressed concern Envidity’s project would’ve been completely illegal were it not for the scrapped legislation, there was a high risk of bribery and corruption if it went ahead, and Kosovo “would be stripped of its resources with the profits going into the pockets of foreign investors.” Negative comparisons were also drawn with Bechtel’s grossly exorbitant highway construction. Subsequently, Kosovo’s parliament withdrew Envidity’s licence. However, Clark was undiscouraged:

“The former general is now concentrating on renewable energy projects. He has met with Prime Minister Kurti and other top Kosovo officials to discuss his plan to reimagine the country’s energy infrastructure.”

‘Forgotten Battalion’

Politico observes that the “failure of US nation-building” in Kosovo is particularly conspicuous, given the province is “tiny, roughly one-third the size of Belgium, with a population of 1.8 million,” with a GDP of just $10 billion – “less than one-quarter the size of Vermont’s, the smallest US state in terms of economic activity.” As such, “making a difference there would not require the US to invest the trillions poured into Afghanistan and Iraq.” Furthermore, “the population loves the US.”

The outlet acknowledges the Empire “threw plenty of money” at Pristina post-1999, but “Washington’s priorities were informed more by short-term American business interests than providing the country what it really needed to develop.” Kosovo may have “been a good bet”  for “the American businesses active” in the province, but not the local population. This more widely reflects how “political will in Washington to remain engaged in foreign countries typically fades once big business has squeezed what it can out of America’s presence.” 

While these revelations are apparently surprising to Politico, and may well be news to many of its Western readers, it is a major, long-apparent structural flaw in the Empire’s foundations, which will be Washington’s ultimate undoing in many parts of the world. This is particularly the case throughout the former Yugoslavia. Today, the entire Balkans cries out for new infrastructure, and much else besides. 

Yet, Western investment to rebuild what was destroyed – in several cases by NATO bombing – and renew roads and other logistics structures and facilities has been almost entirely unforthcoming in the decades since. A chronic lack of employment opportunities and derisory incomes has moreover precipitated a grave, region-wide population collapse. In “American protectorate” Kosovo, these issues are particularly pronounced, with the highest unemployment and poverty rate in Europe by some margin.

The wars also created, or exacerbated, a host of social and political problems with no simple resolution, which Western powers still struggle to comprehend, let alone settle. In closing, Politico notes that on top of a failure to invest in Kosovo for the benefit of its population, “Washington and Brussels have utterly failed” to end the conflict between Belgrade and Pristina on the future of Kosovo’s remaining Serb population. The outlet expresses disbelief that: 

“Despite a quarter century of trying, the US, the most powerful country in the world, has been incapable of resolving what amounts to a border dispute involving a population the size of a small American town.”

Of course, the US is no longer the world’s most powerful country. The military, diplomatic, and economic clout it exerted during Yugoslavia’s destruction has been lost, and will not be returning. This decline is writ large in Kosovo, which is home to Camp Bondsteel, the largest and most expensive foreign military base built by the US in Europe since the Vietnam War. Covering almost 1,000 acres, it was meant to house 7,000 troops, although typically just 1,000 are stationed there.

Bondsteel, Politico reports, has been nicknamed the “Forgotten Battalion” in Washington as a result. Despite its manpower shortages, “the troops there are nearly the only thing standing between Kosovo and Serbia.” The long-term viability of the base, and the corrupt, collapsing protectorate posing as a state it supports, is an open question.

Kit Klarenberg is an investigative reporter. Go here to subscribe to his reporting.

By Glenn Diesen, RT, 3/20/24

Western media coverage of every Russian election is bad. But this time it was even worse than usual.

Instead of lashing out at the incompetence on display, it’s more constructive to explore why rational discussions about the country continue to appear impossible.

Not to mention the dire consequences of the ongoing self-delusion.

Reason versus conformity to the group

One of the first things we learn in sociology is that humans are in a constant battle between instincts and reason. Over tens of thousands of years, we have developed the instinct to organise in groups as a source of security. This is the result of evolutionary biology as survival demands that we organise into “us” versus “them”. In-group loyalty is augmented by assigning contrasting identities of the virtuous “us” versus the evil “other”, which helps stop an individual from straying too far from the pack.

Yet, human beings are also equipped with reason and thus the ability to assess objective reality independent of their immediate circle. In international relations, it’s imperative to place yourself in the shoes of the opponent. The rationality required to see the world through the perspective of the “other” is vital for reaching mutual understanding, reducing tensions, and pursuing a workable peace.

Every successful peace process and reconciliation in history – from Northern Ireland to negotiations to end apartheid in South Africa – has been based on this.

We expect journalists to be objective in their reporting of reality, which is especially important during war. But this seems to be almost impossible, especially during conflicts. When human beings experience external threats, their herd instincts are triggered as society demands group loyalty and we punish those who deviate. The political obedience demanded during war time usually results in the weakening of freedom of speech, the role of journalism, and democracy.

Why did Russians vote for Putin?

So, how can we understand the reasons for President Vladimir Putin’s immense popularity in Russia and his landslide victory?

If we use our reason and resist our tribal instincts, it should not be difficult to understand the popularity of Putin. While the 1990s was a golden period for the West, it was a nightmare for Russians. The economy collapsed and society disintegrated with truly horrific consequences.

The country’s security also collapsed, as NATO expansion meant there was no chance to agree an inclusive European security architecture. This had been outlined in the Charter of Paris for a New Europe in 1990 and the OSCE founding documents.

A weakened Russia meant that its interests could be ignored, and NATO was able to invade Moscow’s ally Yugoslavia, in violation of international law.

When Putin took over the presidency on 31 December 1999, it was commonplace in the West to predict that Russia would share the fate of the Soviet Union. That is eventual collapse.

However, Russia has instead become the largest economy in Europe (by PPP), its society has healed from the disastrous 1990s, its military might has been restored, and new international partners have been found in the East and Global South, as evidenced by the growing role of BRICS.

Furthermore, most Russians believe it’s not a good idea to have major disruptions to leadership in the middle of a NATO-Russia proxy war in Ukraine that is deemed an existential threat. Don’t change horses in midstream as the American proverb, often attributed to Abraham Lincoln, advises.

Speaking of the US, the late Mikhail Gorbachev – who was immensely popular there – did not shy away from criticising Putin, when he was still with us. However, he nevertheless argued that Putin “saved Russia from the beginning of a collapse”.

Today, any Western journalist repeating this would be immediately branded as a “Putinist” – implying a betrayal of the “us”. Western journalists cannot acknowledge the immense achievements of Russia since 1999 as it could be interpreted as lending legitimacy and signalling support for the “bad” side.

The price of self-delusion

Arguments are not judged by the extent they reflect an objective reality, rather they are assessed by how they are seen to express support or condemnation of Russia. Conformity to a narrative signals in-group loyalty, and the desire to deprive opponents of legitimacy limits what is allowed to be discussed.

Acknowledging Putin’s achievements over the past 25 years is treated as expressing support for him, which is tantamount to treason.

Meanwhile, journalists hardly ever discuss Moscow’s security concerns and the extent to which our competing interests can be harmonised. Instead, Russian policies are conveyed by referring to derogatory descriptions of Putin’s character.

As in our other wars, conflicts are explained by the presence of a bad man and if we could just make him go away, then the natural order of peace would be restored. Putin, the narrative contends, is our most recent reincarnation of Hitler and we constantly live in the 1940s where an adversary must be defeated and not appeased.

How can journalists then explain to their audience Putin’s popularity and the reasons for his huge personal vote when it is not allowed to say anything positive about the Russian president? Unable to live in reality and unable to place ourselves in the shoes of the opponent – how are we supposed to have sensible analysis and policies? As I always warned my students of international relations: Do not hate your rivals, it produces poor and dangerous analysis!

Making self-delusion virtuous comes at a high price. How can the West pursue diplomacy and work with Putin when he is presented as the embodiment of evil and an illegitimate leader? Even explaining Russian policies is condemned as legitimising Russian policies, which is deemed to be propaganda that must not be given a platform. People conform to the good versus evil mantra as it feels virtuous and patriotic to signal that they support the in-group and loathe the out-group. But how can we pursue our interests when we have committed ourselves to self-delusion and have banned reality from our analysis?

I have attempted to explain for two years why the anti-Russian sanctions were doomed to fail and why Russia will win the war, only to be told that it is Russian propaganda to undermine support for sanctions and to challenge the narrative of a pending Ukrainian victory. Reality be damned! Ignoring reality results in a distorted picture of Russia which predictably leads to miscalculations. How could Russia as a “gas station masquerading as a country” defeat the most draconian Western sanctions and see its economy not only survive, but by some measures even thrive? Why would Russians unite under an existential threat when we cannot acknowledge the role played by NATO in that regard?

Sigmund Freud explored the extent to which instinctive group psychology could diminish the rationality of the individual. Freud’s ideas were further developed by his nephew, Edward Bernays, who became the father of modern political propaganda. Over a century ago, Walter Lippman cautioned group psychology, managed with propaganda, as it came with a heavy price. Yielding to the instinct of viewing conflict as a struggle between the virtuous “us” versus the evil “other” implies that peace requires defeating the adversary, while a workable solution becomes tantamount to appeasement.

What better explains the current failure of rational analysis and the resulting collapse of diplomacy?

YouTube link here.

“James Galbraith challenges common perceptions about western sanctions and their impact on Russia, revealing unexpected outcomes for its economy and development. Contrary to the goals of defunding the war and degrading Russia’s military capacity, sanctions have led to economic adjustments that have fostered Russia’s independent development. Galbraith points out that despite initial disruptions, Russia adapted by focusing on domestic production and diversifying its economic partnerships. This analysis provides a nuanced view of economic sanctions’ real-world impacts, suggesting that their effectiveness and consequences are more complex than commonly understood.“

Read Putin’s address to the citizens of Russia on the terrorist attack here.

The Bell, 3/23/24

The biggest terrorist attack in Moscow for 20 years

A group of armed people killed at least 115 people Friday in an attack on a shopping and entertainment center in Moscow – the most deadly terrorist incident in the Russian capital in two decades. Amid the war in Ukraine, Russia’s response is very difficult to predict. [Note: Both Euronews and RT a the time of this posting are reporting 133 dead. – Natylie]

• The attack began about 8 p.m. in Crocus City Hall, which includes one of Moscow’s biggest concert halls (seating about 6,200 people). Five well-armed people in camouflage entered the hall just before the start of a sold-out performance, shooting the security guards, and then those present in the room. According to officials, at least 150 people were killed and hundreds more injured. A large fire began at about this time, as a result of which part of the roof of the hall collapsed.
• Initially, there were reports that the attackers had remained in the building, but, at about midnight, the police announced they had begun a search for the culprits. On Saturday, the Federal Security Service (FSB) said that the four terrorists were detained in th western Bryansk region, which borders Ukraine. Russian state media posted videos of their interrogations; one of the attackers said that he was offered to carry out the shooting by a “preacher’s assistant” on messaging app Telegram, and was promised 1 million rubles ($11,000) as a reward.
• All the recent developments (especially the fact that the shooters were offered a money reward) and the tone of the propaganda, suggests that the Russian official version will inevitably focus on blaming Ukraine.
• The political backdrop is extremely concerning. President Vladimir Putin’s spokesman Dmitry Peskov said Thursday for the first time that Russia is waging a “war” in Ukraine – not a “special military operation,” which has been the preferred official term for more than two years, And the day before, Defense Minister Sergei Shoigu announced plans to establish three new armies – sparking speculation about another round of mobilization to raise the soldiers to man them.

Why the world should care

Such a brazen attack in the heart of Moscow could potentially be used by the Kremlin to justify another escalation in Ukraine, or another wave of mobilization. However, Russian officials stopped short of blaming Ukraine on Friday evening. We will look at the attack and its fallout in more detail in our following newsletters.

Wartime economics puts money in pockets of Russia’s poor 

Predictably, Western nations were dismissive of the “election” that saw Vladimir Putin voted in for a fifth presidential term. Of course, the election was neither free, nor fair. However, that does not mean it was meaningless. The words once credited to U.S. political strategist James Carville also apply here: “It’s the economy, stupid.”

Even if the votes had been counted accurately, it’s more than possible that the economy would have powered Putin to victory. After all, most Russians have never lived as well as they do now. Nor do people believe that things are about to get worse. This is particularly notable in Russia’s regions, far from the hipsters of Moscow and St. Petersburg. 

An economy that is growing because of the needs of the military and rising government spending has ensured wages outstripping inflation.

After the start of the war, inflation rocketed – but wages more than kept pace. Central Bank head Elvira Nabiullina said Friday that the economy’s “production capacity and labor reserves are almost totally committed.” In other words, there is no way of boosting production and the labor shortage is ongoing. That means salaries will continue to rise. Same the inflation.

The fact that Russians are living better is evident from their outgoings. Spending at cafes and restaurants, for example, is increasing.

Demand for non-food goods (i.e. items where purchases can be postponed or even canceled) has recovered from its slump in the months after the full-scale invasion of Ukraine in 2022. Its rate of growth now exceeds both inflation, and wage increases.

This does not look like the sort of panic buying that happens in a crisis, when many rush out to buy whatever consumer durables they can afford. Instead, Russians appear to have sufficient confidence in their finances to take out personal loans. Consumer confidence is approaching record levels, Nabiullina told reporters on Friday.

Of course, increased prosperity is not universal. But those who have lost out are the more wealthy Russians. The average income of the richest 10% in Russian society has increased by 27% since the start of the war. While this may seem a lot, it’s the lowest rise of all 10 income groups, and barely matches the combined inflation rate for the past two years. Incomes for the poorest in society have grown much faster.

“A large-scale redistribution of resources in favor of the less well-off has prompted a widespread shift in perceptions of justice for the first time since 1990,” Denis Volkov, director of independent pollster Levada Center, wrote in an article last month. According to Levada, the proportion of Russians who feel that the distribution of material wealth in Russia is getting more unfair fell from 45% in 2021 to 25% in November 2023.

Why the world should care

The war has caused disproportionate economic suffering for a small minority of privileged Russians living in big cities, working for international companies (or companies integrated into global networks) and regarding themselves as “citizens of the world.” The Kremlin has apparently given up on this group. Now, Russian citizens who once regarded themselves as forgotten and overlooked are ready to take their place. Both the war, and the Kremlin’s economic policies, resonate in the hearts and wallets of these people.

Putin Prepares For China Visit as Russia’s Dependence Grows

Putin’s first foreign visit after his upcoming inauguration could be to China. The Russian president could head eastward as soon as May, Reuters reported Tuesday. The increasing regularity of meetings between Putin and his Chinese counterpart, Xi Jinping, is testament to the rapidly deepening ties between the two countries.

• Putin and Xi met twice last year. In March, the Chinese leader came to Moscow. Then, in October, Putin made a visit to Beijing for the Belt and Road Forum. The Russian leader’s next trip would likely be a mirror of Xi Jinping’s Moscow visit. 
• Since the full-scale invasion of Ukraine, Russia’s relationship with China has begun to look a lot like dependence. Western sanctions are pushing Moscow into Beijing’s embrace, with Sino-Russian trade last year topping $240 billion (China delivered 38% of Russia’s imports, and received 31% of Russian exports). Beijing now holds a monopoly in a range of goods (and, as a result, can charge Russia more than other countries).There was a 594% increase in imports of Chinese cars to Russia in 2023, and an almost 600% increase in imports of Chinese tractors.
• China is not just Russia’s leading trade partner. It also plays a key role in helping settle accounts with third countries. In just two years, the yuan has become the most important currency for Russian business. In December, 35.8% of Russian exports and 37% of imports were paid for in yuan. That’s more than the ruble (35.7% and 31.5% respectively). The amount of yuan held in Russian business and personal accounts last year even outstripped the U.S. dollar ($68.7 billion vs $64.7 billion). And lending to companies in yuan was up 3.6 times to $36.1 billion in 2023, primarily due to the conversion of debts once held in U.S. dollars and euros.
• Some media outlets speculated that one of Putin’s reasons for visiting China was to solve the problems some Russian financial institutions had with Chinese banks last year. The issues seemed to arise after U.S. President Joe Biden passed a decree tightening the penalties on third parties helping Russia evade Western sanctions. However, this speculation is probably little more than speculation. It’s true that correspondent banks in China began curtailing relationships with their Russian counterparts after the U.S. decree, and businesses complained of problems. But this did not halt financial transactions. “In general, payments were made and continue to be made,” a source from a Russian export company told The Bell. “It’s just that first-tier banks are being replaced by second and third-tier organizations.”
• The average time to verify funds received from Russia in China is now 18 days, according to the “Business Practice in China” Telegram channel. In other words, payment chains are adapting to new realities. “Before, the relationship was: client – Russian bank – foreign bank – client. Now, there are three or five more banks in the chain. But everything still works,” added The Bell’s source.