The Telephone Game
Russians were encouraged to call in with their questions during Putin's end-of-year press conference
Hello from the Bear Market Brief!
This week in the news:
Putin held his “Direct Line” press conference, in which he answered carefully curated questions from journalists and the public.
Zelensky visited Washington D.C. to appeal directly to U.S. lawmakers for additional aid for Ukraine.
Jailed opposition activist Alexei Navalny has not been seen by his lawyers or family members in ten days, and the Russian Federal Penitentiary Service refuses to release his whereabouts.
Four hours to say nothing new
Vladimir Putin held his “Direct Line” press conference—a marathon televised interview in which he answered carefully curated questions submitted by Russian citizens—on December 14. The event was combined with his usual end-of-the-year press conference with journalists. Putin chose not to hold his “Direct Line” last year for the first time since 2001, likely due to the still-fresh memory of military mobilization and Ukraine’s successful counter-offensive. This year, however, with the Kremlin eager to project an aura of normalcy to its domestic audience, it seemingly decided that it was safe to let Putin appear in his preferred role of chief problem-solver, to showcase his ostensible domestic and international supporters, to talk up Russia’s economic performance, and to elaborate on his arguments in support of continued warfare.
Indeed, the remarkably stultifying show ran for more than four hours, and mostly saw Putin repeating communications panels from the past few months. He confirmed, among other things, that the Kremlin’s objective in Ukraine remains the subjugation of the neighboring country, and that the President regards the war as a civilizational conflict. These stances support Putin’s strategy of staring down the Western coalition behind Ukraine by keeping up appearances that Russia is ready for a long war. At the same time, the President did not really address issues contributing to growing domestic unease about protracted warfare, including demands by the relatives of mobilized men to rotate their loved ones out of Ukraine. The editors seem to have pulled the trick of displaying these “uncomfortable” questions on big screens inside the studio as text messages coming in, but let them go unanswered. However, Putin did address growing fears of a second wave of mobilization, repeating that no such thing is planned (at least for now, the issue will likely be reassessed after the March 2024 presidential election). He also talked about food inflation—specifically the price of eggs, which has gone up by more than 40% this year—essentially placing the blame on the Minister of Agriculture, who happens to be the son of Security Council secretary Nikolay Patrushev. Through well-choreographed video calls, Putin also outsourced responsibility to the Defense Ministry for missing payments to war participants and their families—another delicate issue that the authorities seem to be tracking.
Putin also touched upon various issues affecting regional politics and economies. Among other things, he talked about plans to expand domestic gas networks in remote regions. These plans have not really moved ahead since Gazprom has been focused on export markets, but they are expected to be one of the collateral benefits of new pipelines towards China (if these pipelines are ever built). Putin also issued a warning to Novosibirsk Governor Andrey Travnikov about rising utility prices in his region, which triggered several protests over the past year. However, the real purpose of the exchange was likely to remind viewers of a recently-adopted law that scrapped bank commissions on utility payments for pensioners. There were also some moments that descended into little more than word salad: for example, Putin nodded along to a message from an entrepreneur in the Shebekino district of the Belgorod region (which has seen shelling from Ukraine) who suggested the creation of a “special economic zone.”
The event also included several check-ins from the occupied territories of Ukraine. Beyond the optics of these exchanges, Putin also mentioned some numbers that highlighted the Kremlin’s continued focus on these territories in the framework of the federal budget. He claimed that Russia allocates more than a trillion rubles ($11.5 billion) every year for the development of these regions. Putin also added that Russia’s regions have so far sent 150 billion rubles ($1.7 billion) for the reconstruction of the occupied territories, and at least 100 billion in addition ($1.1 billion) is still to be spent.
— Andras Toth-Czifra
President Putin conducted his annual end-of-year press conference on Thursday to answer questions from reporters and the public. He can be seen here during the conference, which took place over four hours in the Gostiny Dvor shopping center in Moscow. While he tackled some controversial questions about inflation and military mobilization, he successfully avoided more contentious hot button issues concerning the war. (photo: Alexander Kazakov / Russian Presidential Press and Information Office / TASS)
Zelensky in Washington
Ukrainian President Volodymyr Zelensky arrived in Washington, D.C. on Monday to advocate for more aid for Ukraine. This is Zelensky’s third visit to Washington since Russia launched its full-scale invasion in February 2022. The Ukrainian leader kicked off his visit to the U.S. capital by giving remarks at the National Defense University to plead for more funding for Ukraine. Zelensky also met with International Monetary Fund Managing Director Kristalina Georgieva and thanked the organization’s executive board for recently approving a $900 million disbursement for Ukraine as part of an ongoing long-term loan. Later on Monday, Zelensky discussed ways of strengthening the country’s financial system, a strategy for restoring mortgage lending, and mechanisms for using frozen Russian assets for Ukraine’s benefit with World Bank President Ajay Banga.
On Tuesday morning, Zelensky met with members of Congress on Capitol Hill in an effort to convince them to approve a supplemental funding package that was blocked last week. It seems, however, that even following their meetings with Zelensky, some U.S. lawmakers remain unconvinced. They argue that more significant border policy changes need to be agreed upon before the aid package to Ukraine can be considered. Zelensky also met with House Speaker Mike Johnson, who later said that his meeting with the Ukrainian President went well. However, Johnson also said that he still wants greater clarity from the White House on its strategy in Ukraine and believes that the border issue should be the primary focus. “I have asked the White House since the day that I was handed the gavel…we need a clear articulation of the strategy to allow Ukraine to win,” Johnson said, “and thus far their responses have been insufficient.”
Later that day, Zelensky arrived at the White House to meet with President Biden. During the meeting, Biden announced an additional $200 million in drawdown funds for Kyiv. President Biden reiterated U.S. support for Ukraine and called on Congress to pass the aid package before the holiday recess.
— Lisa Noskova
Ukrainian President Zelensky visited Washington, D.C. this week in an effort to convince U.S. lawmakers to continue providing aid to Ukraine. Zelensky can be seen here on Capitol Hill with Senate Majority Leader Chuck Schumer and Minority Leader Mitch McConnell. After meeting with members of the Senate, Zelensky also met with Speaker of the House of Representatives Mike Johnson and held a joint press conference with President Biden. (photo: Andrew Caballero-Reynolds / AFP)
Where is Navalny?
Concerns have been raised about jailed opposition activist Alexei Navalny, who has not been seen by friends or family in ten days. According to Navalny’s lawyer, Vyacheslav Gimadi, the Russian Federal Penitentiary Service confirmed that Navalny is no longer at the penal colony in the Vladimir region where he was imprisoned, but they did not provide his current whereabouts. “The Federal Penitentiary Service did not say where he was taken and where he is now,” Gimadi posted on X. Navalny’s spokesperson, Kira Yarmysh, said that his lawyers have been denied access to him since December 6 for unspecified reasons.
In August, the Moscow City Court sentenced Navalny to a further 19 years in prison for founding an extremist organization, on top of his existing prison sentences for parole violation, fraud, and contempt of court. Recently, allies raised concerns about his health, claiming that Navalny did not have access to adequate medical care in penal colony IK-6 where he was serving his sentence. His recent absence from court hearings has only exacerbated these concerns. He may have been transferred away from IK-6 as part of his most recent sentencing, which stipulates that he serve his time in a “special regime colony.” Independent news outlet Sotavision quoted a court hearing on Thursday stating that Navalny was taken to “a correctional facility located outside the Vladimir Region in accordance with the verdict of the Moscow City Court,” although no further details were shared. His next scheduled court hearing has been postponed until December 18.
Navalny’s supporters believe that his disappearance is related to the upcoming Russian presidential election, for which Putin’s candidacy was just announced. “It's not a secret for Putin who his main opponent is in these ‘elections,’” Navalny’s aide, Leonid Volkov, said, “And he wants to make it so that Navalny's voice is not heard.” Kremlin spokesperson Dmitry Peskov commented on Navalny’s disappearance, saying that the Kremlin “has neither the opportunity, nor the right, nor the desire” to monitor Navalny. However, Navalny’s political organization is still a threat to the Kremlin; just last week, authorities in Moscow banned QR codes on billboards after advertisements went up for Navalny’s anti-Putin campaign. Navalny’s team released a statement urging voters to show their dissent by “voting for any other candidate” besides Putin.
— Sara Ashbaugh
On the Podcast
Almost two years after Russia’s full-scale invasion, the Bear Market Brief investigates how we got here in the first place. What does theory say about Vladimir Putin’s decision making? Seva Gunitsky joins to discuss.
Quickfire: Regions
Inhabitants of several Siberian regions have been experiencing electricity outages in freezing weather over the past week. Problems have been reported from the Irkutsk, Buryatia, Khakassia, and Tyumen regions. They seem to be the consequence of the overuse of the local power network by heating appliances and a lack of alternatives. The expansion of domestic gas networks has not been a priority for the Kremlin over the past few years, as exports to Europe (and now to Asia) have been prioritized. Heating with coal is discouraged by the authorities due to grave air pollution. Over the past year, stress on electric networks in the Siberian and Far Eastern regions has also grown due to Russia’s forced trade pivot to the East.
Two weeks after the Finance Ministry announced that the governors of heavily subsidized regions would need to sign an agreement with the federal government in which they take personal responsibility for reducing the gap between their region’s incomes and its spending, the Head of the Council of Ministers of Chechnya (one of these regions) complained that even with the current amount of federal transfers, it was impossible to cover the development of Chechnya’s social infrastructure and pay public salaries. Federal transfers currently make up more than 80% of Chechnya’s budget. Muslim Khuchiev blamed the Chechen wars and the region’s demographic boom for the situation—the region is one of the few whose population is steadily rising. While one of the reasons for the Finance Ministry’s demand was likely the fact that Ramzan Kadyrov, the head of Chechnya, likes to treat federal transfers as a kitty for himself and his relatives, it is hard not to read Khuchiev’s remark about Chechnya’s demographics as a warning to the federal government that the pressure it is exerting to cut back on expenses that benefit the region’s young men could lead to problems.
Rosstat published fresh data on the amount of tax collected by regions in 2023. Most of the regions that registered the highest increase in personal income tax receipts, such as Kurgan, Smolensk, Chuvashia, Tatarstan, Krasnodar, Tula, and the Transbaikal and Maritime Territories (all of which registered around or more than 20% higher receipts than last year, well above inflation), rely on industries in or adjacent to the military industrial complex. This suggests that salaries in these industries have grown faster than average due to the state’s focus on military production, all while sapping other industries of labor and investments. Industrial production figures also show a clear difference between sectors connected to the military industrial complex, which have experienced significant growth this year (a total of 35% relative to pre-war levels according to a recent analysis by BOFIT’s Heli Simola), and other sectors, which have largely stagnated.
— Andras Toth-Czifra
Quickfire: Ukraine
According to a U.S. intelligence report released on Tuesday, 315,000 Russian troops have been killed or injured in Ukraine since February 2022. The document estimates that over 13,000 Russian military personnel have been killed or wounded since Moscow launched its October offensive along the Avdiivka-Novopavlivka axis in eastern Ukraine alone. Additionally, according to the assessment, Russia has lost about 2,200 of its 3,500 battle tanks and one-third of its total armored vehicles.
On Tuesday, Ukraine’s largest cell phone company, Kyivstar, reported a massive cyber attack. The company has more than 24 million mobile customers and over 1 million home internet customers as of September 2023. Because of this attack, air raid alert systems in some parts of Ukraine, including the Kyiv region, Sumy, and Dnipro, faced technical issues. Kyivstar representatives said that they are working on resolving the issue. One of Ukraine’s largest banks, Monobank, also reported that hackers attempted a massive denial of service (DDoS) attack on December 12. According to the bank, the situation remains under control.
— Lisa Noskova