Laying the groundwork
Russian authorities appear to be preparing for the end of the war
Hello from the Bear Market Brief.
This week in the news:
A management workshop for Russian deputy governors seems to be encouraging authorities to lay the domestic groundwork for the end of the war.
The Slovak government detained (and then released) two suspects accused of planning a terrorist attack on the Druzhba pipeline.
Political unrest in Georgia continues with mass protests against the pro-Russia ruling party, Georgian Dream.
— Sara Ashbaugh, Editor in Chief
Domestic preparations for the end of the war?
While the Kremlin is pinning its hopes of reaching a temporary settlement and sanctions relief in 2025 on the new U.S. administration, news reports from last week indicate that the authorities have started to lay the domestic groundwork for an eventual ceasefire.
At a seminar of a management workshop for deputy governors organized by the “Senezh” educational center, linked to the Presidential Administration, participants were reportedly encouraged to work on building an “image of victory” in the war against Ukraine. A report published by Kommersant Daily suggests that the Kremlin is afraid that in the case of an eventual ceasefire in Ukraine, a large number of Russians will either be confused about what has been achieved or harbor resentment against the president. Instead, regional officials are tasked with cultivating a “silent majority” that will simply accept whatever interpretation of “victory” the Kremlin offers them.
There are more subtle signs suggesting that the Kremlin is preparing for the task of supporting and integrating a larger number of returnees from the war in Ukraine. At the Senezh seminar, participants were also encouraged to expand the “Time of Heroes” program in Russia’s regions in order to increase the number of war participants in local public administrations. “Time of Heroes” was created this year to retrain handpicked war participants to serve as officials. The regional programs will be created and curated by deputy governors, who are already responsible for handling the relationship between the regional government and municipalities.
Earlier, Samara Governor Vyacheslav Fedorishchev, an ally of State Council Secretary Alexei Dyumin, floated the idea of having war participants “supervise” municipal heads and possibly even members of the regional parliament (which has traditionally been a place for regional elites to represent their interests). Fedorishchev also started a regional vocational training program for former war participants, which may serve as a blueprint for other regions. Either way, reintegrating former war participants will likely come with a significant price tag for the authorities, given the risk that the traumatized men, many of whom were lured to the army by anomalously high salaries, may join criminal enterprises.
— Andras Toth-Czifra
Russian Foreign Minister Sergei Lavrov attended the annual Organization for Security and Cooperation in Europe (OSCE) ministerial summit in Malta this week—his first visit to an EU country since the beginning of the war. He can be seen here at the plenary session next to San Marino’s Secretary of State for Foreign Affairs Luca Beccari. Lavrov delivered a speech at the event in which he accused the West of provoking conflict with Russia. “The result is the reincarnation of the Cold War, but now with the far greater risk of its escalation into the hot phase,” he said. Ukrainian Foreign Minister Andrii Sybiha and Polish Foreign Minister Radoslaw Sikorski left the room ahead of Lavrov’s speech. (photo: Alberto Pizzoli / Pool Photo via AP)
Alleged planned terrorist attack against Druzhba pipeline
On November 30, Slovakia’s Interior Minister Matus Sutaj Estok warned that an unidentified group was planning a terrorist attack against the Druzhba pipeline, which transfers crude oil from Russia to Slovakia and Hungary. Slovakia arrested and then promptly released and expelled from the country two (reportedly Ukrainian) suspects, and Prime Minister Robert Fico convened the country’s National Security Council. According to the Slovak government, the threat of the terrorist attack remains considerable. As of December 5, Hungary has not launched a probe.
It is unclear why the two suspects were released and not charged. However, according to the Slovak government, the suspects surveyed the area near the pipeline in both Slovakia and Hungary using drones. They in turn appear to have been under the surveillance of the Slovak security authorities, but the Interior Ministry did not share extensive evidence of their plans.
The Druzhba pipeline is of key importance for both Slovakia and Hungary, with a significant portion of their oil needs transferred through it. The two countries even negotiated a carveout from the sanctions that otherwise ban the purchase of Russian pipeline oil in the EU. In August 2024, Mikhailo Podolyak, a Ukrainian presidential aide, suggested that the country may halt oil transit in 2025. However, he later insisted that Ukraine would honor its contractual obligations for oil transit and the dispute was promptly settled. In 2023, the Russian oil transit company Transneft claimed that a filling point of the pipeline in Russia’s Bryansk Region was attacked.
While there is increased evidence of Russian agents conducting sabotage operations across Europe in an apparent attempt to cause anxiety and uncertainty, a report in the Wall Street Journal in August alleged that the 2022 attack on the defunct Nord Stream pipeline may have been a Ukrainian operation. The governments of both Slovakia and Hungary have shown increasingly overt opposition to EU and NATO member states supporting Ukraine’s fight against Russian aggression. They have also emphasized the alleged price of continuing this support, in terms of money as well as security risks, to their domestic audiences. Juraj Krupa, a Slovak opposition politician, has meanwhile expressed skepticism about the Slovak government’s claims regarding the planned attack.
— Andras Toth-Czifra
A small asteroid collided with Earth’s atmosphere over the Republic of Sakha early Wednesday morning. Residents stayed up to watch the spectacular event, which created a blazing fireball for a few seconds at 1:15 am. Astronomers detected the 28-inch asteroid about 12 hours earlier and predicted its harmless collision. “Thanks to observations from astronomers around the world, our alert system was able to predict this impact to within +/-10 seconds,” the European Space Agency posted to X. The Sakha Emergencies Ministry reported that there was no damage following the asteroid’s descent. (photo: Sakha Republic Ministry Of Internal Affairs)
Unrest in Georgia
Mass protests broke out in Georgia last week after Prime Minister Irakli Kobakhidze announced that the government will not pursue EU accession until at least 2028. This came just a few weeks after Georgia’s October 26 parliamentary elections, during which the pro-Russia Georgian Dream party won the majority of seats. Opponents of the Georgian Dream party, including Georgian President Salome Zurabishvili, called the elections fraudulent and sought to annul the results in court. On Tuesday, however, Georgia’s Constitutional Court rejected the lawsuit, thereby upholding the election results.
The court’s Tuesday ruling did not curb the widespread unrest across Georgia, which has continued into its second week. Thousands have taken to the streets and have been met with a heavy-handed response from authorities, including the use of tear gas, water cannons, and beatings to disperse crowds. The Georgian Public Defender’s Office likened the police’s treatment to “torture,” and several other countries have condemned the excessive use of force. Almost 300 people have been detained and dozens have been injured since the start of the mass demonstrations.
Protesters involved in the demonstrations accuse Georgian Dream of becoming increasingly authoritarian and intentionally steering Georgia away from EU membership, despite the fact that roughly 80% of Georgians support EU accession. Additionally, many believe that Georgian Dream is influenced by Russian interests, although both the party and the Kremlin deny these claims. “We did not intervene and have no intention of intervening in these processes,” Kremlin spokesperson Dmitry Peskov told reporters, before comparing the situation to Ukraine’s 2004 Orange Revolution. On Tuesday, Kobakhidze vowed retribution against his political opponents and, in a statement echoing language often used by the Kremlin, insisted that the protest movement is “funded from abroad.”
As the political unrest continues, several Georgians interviewed by The Moscow Times expressed concern about potential Russian interference. “For me, the most terrifying scenario seems to be if Russia attempts to send military or security forces to intervene in the current situation,” one protester said. “I fear a potential military intervention from Russia if civil unrest intensifies. That would be the scariest thing,” said another.
— Sara Ashbaugh
On the podcast
Between a Russian offensive and the reelection of Donald Trump, the war in Ukraine hangs in the balance. Janis Kluge joins host Aaron Schwartzbaum to explore how we got here and what might happen next.
Quickfire: Regions
In an unprecedented move, on December 5, President Putin appointed a new governor to the Kursk Region to replace Alexei Smirnov, who had been in power for only 205 days. Smirnov was officially elected to the position only two months ago and has been relying heavily on the support of his predecessor, Roman Starovoit, who is currently the federal Minister of Transportation. Smirnov faced growing criticism due to the regional government’s handling of refugees; the region has been partially occupied by Ukrainian troops since August. Refugees protested against the governor and local officials last month, complaining about the slow pace of issuing housing certificates and appealing to Putin to “stop this goddamn war.” Smirnov blamed two district heads for the disruptions, and the issuance of certificates picked up pace, but it appears that the Kremlin still considered the situation to be too politically risky. Smirnov’s replacement is Alexander Khinshtein, a Duma deputy representing the Samara Region who was previously an adviser for the director of the National Guard. Khinshtein is also considered one of the most active ultraconservative voices in United Russia. The Kremlin likely expects Khinshtein to serve as a more efficient crisis manager than Smirnov. Altogether, the appointment of an official with a reputation of heavy-handedness and ample backing in the security elite to what is considered a highly problematic region is in line with the Kremlin’s personnel policy.
The regional parliament of Tatarstan rejected the latest version of a sweeping municipal reform currently undergoing discussion in the State Duma. The head of the regional legislature’s committee on local self-government claimed that the reform would “finish off villages.” The reform, which was drafted in 2021 but has been on hold since early 2022, will likely be adopted in December. One of its key provisions is scrapping free-standing municipalities by folding existing rural localities into municipal and urban districts—a process that several regions have already started in spite of the pause of the reform. In an October interview, Pavel Krasheninnikov, one of the authors of the law, conceded that the final version may let regions choose whether or not they want to do this, suggesting that there was substantial pushback against this measure from regional elites (and citizens). Although the regional legislature did not reject the reform as a whole, such pushbacks are not common.
According to Finance Minister Anton Siluanov, regions are experiencing a significant drop in corporate income tax receipts. These receipts, which usually make up about a third of regional incomes, are 7% lower than in 2023 in nominal terms. The problem is more significant in coal-producing regions and regions that rely on export-oriented industries that have not been able to successfully reorient trade (the corporate income tax receipts in the Kemerovo Region, Russia’s main coal-producing region, are lagging 59% behind last year’s figures), but the situation in general reflects thinning profit margins in the private sector. Together with high interest rates—which VTB Bank now expects to be 23% in 2025—this will likely lead to restricted investment in sectors that cannot rely on subsidized loans.
— Andras Toth-Czifra