Swap 'til you drop
Russia and Ukraine exchange prisoners of war
Hello from the Bear Market Brief.
This week in the news:
Russia and Ukraine began a series of prisoner swaps involving soldiers under 25 years old and the severely wounded.
President Putin supported the idea of a Russian “national messenger” managed by VK to replace widely used alternatives, such as Telegram and WhatsApp.
After years of labor shortages, the Russian labor market may be reaching an equilibrium.
— Sara Ashbaugh, Editor in Chief
Prisoner swap
Russia and Ukraine began their largest prisoner swap to date on Monday, after a series of delays cast doubt on whether the exchange would happen at all. The prisoner swap was one of the only concrete results of last week’s negotiations in Istanbul, during which the two sides struggled to find common ground on their respective peace proposals. Negotiators did, however, agree to exchange prisoners of war under 25 years old and the severely wounded. In addition to young and wounded soldiers, negotiators also agreed to exchange the bodies of thousands of fallen soldiers.
The prisoner swap and exchange of bodies was expected to begin over the weekend. However, according to Russia’s lead negotiator Vladimir Medinsky, Ukraine did not arrive to collect the bodies. “The Ukrainian side has unexpectedly postponed for an indefinite period both the acceptance of the bodies and the exchange of prisoners of war,” Medinsky posted on Saturday, claiming that refrigerated trucks containing the bodies were already waiting at the border. Ukraine's Coordination Headquarters for the Treatment of Prisoners of War denied this accusation, insisting that the date for the exchange had not been set. “Instead of following the agreed process, the Russian side resorted to unilateral actions that were not coordinated within the joint framework,” the organization posted on Telegram, calling on Russia to “stop playing dirty games.” The dispute came amid a barrage of attacks from Russia, including its largest drone attack on Ukraine to date. According to Ukrainian air defense, Russia launched 479 drones and 20 missiles at Ukraine in the early hours of Monday morning, most of which were shot down.
Despite the delays, the prisoner swap began in earnest on Monday. The first stage included the exchange of POWs under 25 years old. “Our people are home,” Ukrainian President Volodymyr Zelenskyy posted on X, adding, “The process is quite complex, with many sensitive details, and negotiations continue virtually every day.” A second exchange took place on Tuesday and a third on Thursday, both involving captured soldiers who are severely injured or ill. Neither side has announced the exact number of prisoners released, but it is estimated to be more than 1,000 each. Additionally, on Wednesday, the bodies of 1,212 fallen soldiers were returned to Ukraine. According to Medinsky, Russia received 27 bodies in return. The exchange of bodies is expected to continue, with each side committed to returning 6,000 in total.
— Sara Ashbaugh
Serbian President Aleksandar Vucic visited Ukraine on Wednesday for the first time since taking office in 2017. During his visit, Vucic participated in the Ukraine-Southeast Europe Summit in Odesa, which was also attended by senior politicians of at least 9 other European countries—Moldova, Montenegro, Romania, Bulgaria, Croatia, Greece, Albania, North Macedonia, and Slovenia. While Vucic expressed support for Ukraine’s territorial integrity, he refused to sign the summit’s joint declaration, calling it “anti-Russian.” Serbia has maintained an official stance of neutrality throughout the war, declining to join Western sanctions against Russia. However, Russia’s Foreign Intelligence Service (SVR) recently accused Serbia of covertly supplying weapons to Ukraine, in what the SVR called “an attempt to stab Russia in the back.” (photo: Ukrainian Presidential Press Office via AP)
GosMessenger
In a televised meeting with Digital Development Minister Maksut Shadaev last week, President Vladimir Putin supported the creation of a “national messenger” managed by VK. VK is Russia’s largest social media network, and its ownership structure links it to close Putin ally Yury Kovalchuk and Gazprom. The purpose of the messenger would be to replace Telegram and WhatsApp, the latter of which is owned by Meta and, despite Meta’s designation as a “terrorist and extremist organization,” can still be used in Russia.
Over the past months, VK has been developing “Max,” an alternative to both WhatsApp and Telegram that would come with money transfer functions integrated with major Russian banks. This suggests that the developers ultimately have something resembling China’s Swiss-army-knife apps in mind. A draft law hastily adopted by the State Duma this week about the creation of a new “information exchange platform,” which would also allow users to access digitized government services, also suggests this.
It is difficult to imagine that, even with significant support from the government, a homegrown messenger will easily outcompete existing and widely used alternatives, suggesting that the authorities could throttle or, if possible, outright ban the use of Telegram and WhatsApp. Earlier, the Kremlin started throttling YouTube in order to force users to switch to VK Video, a domestic alternative also owned by VK. The news outlet Vyorstka noted that, in April and May, the Russian authorities started fining Telegram, WhatsApp, Viber, and Discord for the lack of user identification and cooperation with the security services. Note that users can likely still find workarounds using VPN or proxy services.
News about the “national messenger” app coincides with two other developments showing how the Kremlin and the Federal Security Service (FSB) are extending control over independent data exchange platforms. According to a fresh investigation by iStories, Telegram’s networking equipment is owned by Global Network Management (GNM), a company linked to a person whose other companies have cooperated with the FSB. While there is no evidence that GNM has shared information with the FSB on Telegram users, and Telegram itself denied that this has happened, the news could further undermine Telegram’s already tattered image as a safe messaging platform and a champion of free expression. The authorities also recently nationalized “Lesta Igry,” the developer of popular online multiplayer game World of Tanks, citing the designation of owner Malik Khatazhayev as a participant in “an extremist organization,” and will likely hand over the assets to Kremlin-linked entrepreneurs.
— Andras Toth-Czifra
Kremlin-backed reforms to local self-governance triggered protests in the Altai Republic this week. Demonstrators blocked the Chuya Highway, a major thoroughfare, with signs calling on Putin to “stop the lawlessness” of regional head Andrei Turchak and government chairman Alexander Prokopyev. Turchak, who was appointed to head the region in October 2024, proposed amendments to the Republic’s laws that will dismantle the two-tier system of self-governance. This falls in line with Kremlin plans to eliminate lower-tier municipal governments, as per a recently adopted municipal self-governance reform. Local residents are also concerned that Turchak may be preparing for a possible merger of the Altai Republic with the neighboring Altai Territory, which has been a constant fear of local residents and elites for several years. Eight people were detained as a result of the protest, with sentences ranging from fines to two weeks of administrative arrest. Previously, similar municipal reforms triggered protests in several regions, most prominently in the Krasnoyarsk Territory in May. (photo: Sib_EXpress / Telegram)
Labor issues
There are early signs that, after several years of a worsening (though uneven) labor market crunch triggered by the war and demographic changes, the Russian labor market may be on the cusp of finding a new equilibrium. According to a survey by hh.ru, an employment portal, from January to May 2025 Russian companies posted 15% fewer vacancies than in the same period last year. SuperJob, another portal, puts the number at 11%. The drop in the number of vacancies has affected several industries, including construction—which, due to the government ending subsidized mortgage lending programs, was expected—but also transportation and logistics, sectors that earlier faced severe labor shortages. In many industries, the lower number of vacancies could be related to falling profit margins, which in 2024 were 7% lower than a year before.
At the same time, recruitment for the Armed Forces may also have declined, albeit in this case the data is more difficult to interpret. According to Janis Kluge, a researcher who looks at Russia’s fiscal policies, regional budget data suggests that recruitment declined in May (although it is unclear if at a higher rate than in 2024). At the same time, sign-up bonuses have also decreased in several regions. This could be a sign that these regions have met their recruitment quotas, but also that quotas have dropped—albeit the news outlet Vyorstka recently reported that several state-owned enterprises now act as contracted intermediaries between the Ministry of Defense and recruiters (instead of regional governments).
Meanwhile, the authorities continue to prepare for the eventual return of tens of thousands of war participants to the Russian job market, who have so far received significantly higher-than-average salaries. Only a handful of hand-picked candidates will have the chance to graduate to well-paid jobs in public administration via the “Time of Heroes” program, which announced its second selection of (85) candidates last week. More than 46,000 people applied for places in the program’s regional analogues (which also offer paths to public and public-adjacent jobs, albeit less prestigious and well-paid), but these programs are not designed or funded to accommodate most of these candidates; in some regions, applicants outnumber available places by more than 20 times. The authorities likely hope that, as long as the labor market remains tight, private companies will be incentivized to hire—and likely also retrain—former war participants once they return.
— Andras Toth-Czifra
Report in Short: The War’s Impact on Russia’s Regional Power Dynamics
This week on Report in Short, Aaron Schwartzbaum speaks with András Tóth-Czifra about his recent report, “The Kremlin’s Balancing Act: The War’s Impact On Regional Power Dynamics.” In the report, Tóth-Czifra explains the shift of government control, highlights instances of pushback, and identifies limitations on the Kremlin's strategy going forward.
Quickfire: Regions
The authorities raided the apartment of Lev Shlosberg, a prominent opposition politician in the Pskov Region and deputy chairman of the liberal Yabloko party. Shlosberg himself was taken into temporary detention under suspicion of “discrediting the Russian armed forces,” a vague criminal article that has been used liberally to crack down on political dissidents and carries—in Shlosberg’s case—a potential prison sentence of seven years. A day later, the politician was sent to house arrest for two months. Shlosberg has been in the crosshairs of the authorities for years due to his vocal opposition to the war in Ukraine. He was declared a “foreign agent” and fined several times under the same article of the criminal code. Such fines and instances of house arrest are often seen as warnings by the authorities, pushing the person in question to leave the country, which Shlosberg refused to do (and in January the authorities officially banned him from leaving the country). This time, the authorities arrested him shortly after his debate with historian Yury Pivovarov on the “Zhivoy Gvozd’” (“Living Nail”) channel, connected to the Ekho Moskvy media outlet, about the war in Ukraine.
Roughly 30 metric tons of diesel oil spilled into the Yenisei River in the Krasnoyarsk Territory after a ship, owned by the Ob-Irtysh River Shipping Company and towing two barges, ran aground and disintegrated. The company is in the ownership of Akhtyam Mukhutdinov, a Tyumen Region businessman. The river, running between Mongolia and the Arctic Ocean, is an important shipping route inside Russia. The Investigative Committee opened an inquiry into the spill. According to the local authorities, the oil spill resulted in up to 40 times the standard amount of pollutants in the river water, poses a serious risk to the local ecosystem, and may also threaten villages on the river. In Lesosibirsk, an important port with 64,000 inhabitants, a regime of “elevated readiness” was introduced. Oil and fuel spills into rivers and other natural waterways are not uncommon in Russia and have led to a rise in local environmental activism. The Yenisei spill, while problematic, is far from the largest disaster of the past years. For example, during the 2020 Norilsk disaster, more than 17,000 tons of diesel fuel flowed into a river, and the recent Kerch Strait spill saw 5,000 tons of oil leak into the Black Sea and the Sea of Azov.
A series of arrests of regional officials continued this week with the arrest of Vladislav Loginov, mayor of Krasnoyarsk, on suspicion of receiving an “especially large bribe.” The mayor has been in office since 2022, after a long stint in the region’s logistics and transportation sectors. His case will be adjudicated in Moscow, likely to prevent meddling. The arrest itself was not a surprise given that one of the mayor’s advisers was detained in February. Recent weeks have seen several high-profile arrests in several regions, including Buryatia, Kemerovo, Irkutsk, Krasnodar, Novosibirsk, and others. Similarly to last year, these may have been timed to follow spring personnel rotations and precede summer vacations. What makes Loginov’s arrest interesting is that, according to the recently adopted (and heavily contested) regional reform of municipal administration, Governor Mikhail Kotyukov will control mayoral appointments in the region even more tightly, personally selecting mayoral candidates instead of a “competition committee” (which, even so far, has been controlled by the authorities).
— Andras Toth-Czifra