Third time's the charm?
Russia and Ukraine meet for their third round of peace talks in Istanbul
This week in the news:
Russian and Ukrainian delegations met for a third round of ceasefire talks in Istanbul, but no major breakthroughs were reached.
Corruption investigations continued in the Russian regions, leading to the arrests of several government officials.
A passenger plane crashed in the Amur region in Russia’s Far East, killing all 48 people on board.
After this week’s newsletter, the Bear Market Brief will take a planned hiatus for the month of August. See you in September!
— Sara Ashbaugh, Editor in Chief
New round of Ukraine-Russia talks
Delegations from Ukraine and Russia held a third round of talks in Istanbul on July 23. The brief talks lasted for only 40 minutes and focused on a prisoner exchange, which would involve at least 1,200 prisoners of war from each side (in addition to the roughly 250 prisoners exchanged as the talks took place), and there was some discussion of humanitarian affairs. Apart from the prisoner exchange and a Russian proposal that the two sides should create three “working groups” to discuss political, military, and humanitarian issues respectively, which is apparently being looked at by Ukraine, the talks did not yield any other results.
The Ukrainian delegation proposed a meeting between Volodymyr Zelenskyy and Vladimir Putin before the end of August—when U.S. President Donald Trump’s “ultimatum” runs out—but the Russian government would not agree to this without a draft peace treaty reflecting Russia’s demands, which are essentially unchanged and very far from the Ukrainian or U.S. versions of a tentative peace plan. For one, Ukraine would expect an immediate and sustainable ceasefire before any peace treaty is drafted, but Russia continued its attacks on Ukraine’s population centers following the talks. Putin has also already ruled out meeting with Zelenskyy in person, as he does not recognize the Ukrainian President as a legitimate leader.
As we have highlighted before, the Kremlin is unlikely to interpret Trump’s apparent U-turn as a serious change of policy and is playing for time, expecting the U.S. President to change his mind again. This allows Russia to press ahead both with the war on the ground and with its efforts to negotiate the easing of sanctions. The fact that the Russian delegation agreed to this week’s meeting in the first place is likely part of this tactic: a way to communicate that the Russian side approaches the desired talks with goodwill.
— Andras Toth-Czifra
The ceasefire talks between Russia and Ukraine took place at the Ciragan Palace in Istanbul on Wednesday. The Ukrainian delegation, led by Rustem Umerov, pushed for direct talks between President Putin and President Zelenskyy, but the Russian side remained reluctant. “The positions are quite distant,” the head of the Russian delegation, Vladimir Medinsky, told reporters after the meeting. Russian negotiators appear unhurried despite U.S. President Trump’s 50-day deadline, which will expire on September 2. “We did not expect a breakthrough. A breakthrough is hardly possible,” Kremlin spokesperson Dmitry Peskov said. (photo: Alexander Ryumin / TASS)
Arrests across the country
Nikolay Simonenko, the Deputy Governor of the Bryansk Region, was arrested on Tuesday on corruption charges. Simonenko is accused of embezzlement in relation to the construction of defensive fortifications in the region, causing damage amounting to 818 million rubles. A court had previously blocked the bank account of a local construction firm.
Bryansk is the third region in which investigations into corruption surrounding defensive structures have led to high-profile arrests. In the Kursk Region, where the probes started after the Ukrainian army’s incursion a year ago, the case led to the fall of two governors (among others) and likely the suicide of one of them, Roman Starovoit. In the Belgorod Region, the arrest of a former deputy governor earlier this month represents the biggest risk yet to the political career of Governor Vyacheslav Gladkov. It is unclear yet whether the investigation will reach the governor in the Bryansk Region. The case has so far been handled by the local interior ministry and local courts, and Simonenko, an official with local roots, has already faced corruption accusations in the past (in 2009).
The Kursk-Bryansk-Belgorod cases highlight once again that, after the recent corruption cases having to do with Defense Ministry officials, security and law enforcement have likely received the green light to aggressively pursue cases of corruption related to the war. Following the arrests in Kursk, the governors of the two other border regions also likely understand that they need to show progress on these cases, otherwise they themselves risk being named responsible.
Security services have also continued to arrest regional officials and media workers over the past week in other regions. In the Novgorod Region, the Deputy Premier of the regional government, Stanislav Shultsev, as well as the regional Minister of Transport, Konstantin Kuranov, were detained on corruption charges. In the Chelyabinsk Region, an incumbent and former Minister for Property and the regional government’s property manager were arrested, among others, for abuse of office related to the construction of a hospital. These followed a wave of similar arrests in June and July, comparable to last year. Also this week, Igor Sergeev, an editor of the regional news site URA.ru—a pro-Kremlin site that often prints regional political gossip—was arrested. This comes just weeks after the arrest of URA’s chief editor, who is accused of bribing his uncle, a local investigator. Sergeev was initially named as a witness in that investigation. In Moscow, meanwhile, police raided the offices of Baza, a media outlet with ties to the security services, and detained its Editor in Chief Gleb Trifonov and one of the outlet’s producers, also accusing them of offering a bribe to the police in exchange for information. This charge, similar to the one used in the URA case, suggests that publishing “unauthorized” leaked information is becoming riskier.
While the arrests of regional and local officials on corruption charges are a regular occurrence (albeit the frequency and the intensity of such arrests vary), the arrests of pro-Kremlin media workers whose outlets maintain ties with the authorities are not. The pattern of recent arrests suggests that the rules of behavior for regional and federal elites and their allies in the media and government institutions are changing—not necessarily in predictable ways—and security officials have more freedom to take action against them.
— Andras Toth-Czifra
The famous Pryvoz market in Odesa was hit by a Russian drone strike overnight on July 24, just hours after ceasefire talks concluded in Istanbul. The market has been in operation for almost 200 years, with regional Governor Oleh Kiper calling it “the living heart of Odesa.” The attack set fire to the market’s iconic “Fruit Passage,” pictured here, destroying many of its retail pavilions. In addition to the Pryvoz market, several buildings were also damaged in Odesa’s historic city center, a UNESCO World Heritage site. According to Kiper, four people were injured and one was killed in the attack. Meanwhile, a Ukrainian drone killed two people and injured 11 others in Sochi, a Russian resort city near the Black Sea. (photo: Iryna Nazarchuk / Reuters / Scanpix / LETA)
Plane crash in the Amur region
A passenger plane crashed in Russia’s Far East on Thursday, killing everyone on board. The flight initially departed from the city of Khabarovsk in Khabarovsk Krai before making its way to the Amur oblast. It stopped in Blagoveshchensk, near the Chinese border, and then headed toward its final destination in Tynda. The plane was making its second attempt at landing in Tynda when it disappeared from radar, according to the Far Eastern Transport Prosecutor’s Office. Rescue operations were dispatched, and, about an hour later, a search helicopter spotted burning wreckage from the crash. The plane was discovered nine miles south of Tynda on a heavily forested mountainside, making it difficult for rescue teams to access. It was eventually confirmed that all 48 people on board, including 42 passengers and 6 crew, died in the crash. There were also five children on board. Amur region Governor Vasily Orlov declared three days of mourning to commemorate the victims, and President Putin held a minute of silence before a government meeting to express his condolences.
The exact cause of the crash is still unknown. Local officials said that the plane gave no distress signal or warning before it disappeared from radar. The plane’s black box was discovered at the crash site and sent to Moscow for further analysis. According to Interfax, there were adverse weather conditions at the time, and TASS reported poor visibility, which may have contributed to the crash. However, the accident has also raised questions about the continued use of Soviet-era planes in Russia. In this case, the plane was an Antonov An-24, manufactured in 1976 and operated by the privately-owned Siberian company Angara Airlines. It had been involved in four aviation incidents since 2018, although it passed its airworthiness inspection in 2021. According to The New York Times, there have also been recent safety events involving other An-24 planes—at least three in the past three years. The war in Ukraine, as well as Western sanctions, have restricted access to parts and delayed Russian government plans to service aging aircrafts such as An-24s. Research by Reuters suggests that there are currently 75 An-24s in operation in Russia.
The Investigative Committee opened a criminal case into the possible violation of aircraft safety rules, a standard procedure for Russian aviation accidents. Amur region Transportation Minister Andrei Nikitin said that the relatives of those killed in the crash will be compensated 5 million rubles each.
— Sara Ashbaugh
From Russia with Risk
On this episode of the Bear Market Brief podcast, geoeconomic and country risk expert Rachel Ziemba joins Aaron Schwartzbaum to delve in the discipline of Political Risk: how does one "do" the field?
Quickfire: Regions
According to a report in the Siberian Express news outlet, village council deputies in two Siberian regions have launched lawsuits against the liquidation of lower-tier municipalities in the framework of municipal reforms in their regions. In the Krasnoyarsk Territory, the council of the Sukhobuzimsky District—controlled by United Russia deputies—sued, as did a local activist and former official in the Republic of Altai. The hearings will take place next week. Activists often seek justice at local courts and other institutions after an initial round of public protests—a pattern that has been seen in other local protest movements in Russia. For example, environmental protesters have followed this course, only to return to protesting and local activism when their proposals were rejected by the courts. However, the fact that local deputies of the governing party have also joined the effort highlights that the Kremlin’s grip on lower-level political institutions remains tenuous.
According to a prognosis by the Institute for Agricultural Market Studies, this year’s grain harvest in the main agricultural regions of Southern Russia will be the worst in five years due to severe drought. In several districts of the Rostov Region, the Krasnodar Territory, and the Stavropol Territory, regional authorities have introduced states of emergency due to the condition of winter crops. While the study implies that losses in Southern Russia will be partially compensated with better harvests elsewhere in the country, the production growth initially expected for 2025 after last year’s relatively poor harvest will likely not be realized, as preliminary harvest figures are behind expectations. This will allow agricultural producers to seek compensation and may put further pressure on domestic prices.
Severe disruptions in air travel have continued across Russia over the past week due to Ukrainian drone attacks. On the night and the morning of July 20-21, Moscow’s airports were closed, leading to long delays and many flight cancellations. The disruptions continued into the next few days; on July 23, airport officials in Sheremetyevo reportedly distributed mattresses to passengers who were stuck waiting in the terminal. Airports in Nizhny Novgorod and in Sochi also suspended flights (and, in the Rostov Region, the attacks led to the suspension of trains). Due to the centralized nature of Russia’s air travel network, the closures in Moscow have had knock-on effects across the country. Similar disruptions have become increasingly commonplace in Russia over the past two months and are probably an intended side-effect of drone warfare. Ukraine likely hopes to increase the war-related discomfort of the general population after Russia’s regular strikes against Ukrainian civilian infrastructure.
— Andras Toth-Czifra