Hello from the Bear Market Brief.
This week in the news:
A recent merger between online marketplace Wildberries and advertising company Russ Outdoor created controversy.
French authorities arrested a Russian man accused of attempting to “destabilize” the Paris Olympic Games.
Ukraine banned the transit of Russian crude oil exports from Lukoil despite complaints from Hungary and Slovakia.
Ukraine’s commander-in-chief Oleksandr Syrskyi discussed the situation on the frontlines in an interview with The Guardian.
Ukrainian Foreign Affairs Minister Dmytro Kuleba visited China to discuss Ukrainian-Chinese relations with his Chinese counterpart, Wang Yi.
Bear Market Brief will take a break during the month of August. You can expect to see us back in your inboxes in September!
— Sara Ashbaugh, Editor in Chief
Wild West for Wildberries
Russian business news was dominated this week by an escalating conflict around Wildberries, Russia’s largest online marketplace, which was triggered by an ongoing dispute between its owner, Tatyana Bakalchuk, and her husband, Vladislav Bakalchuk.
On July 23, Vladislav Bakalchuk appeared in a video with Ramzan Kadyrov, the head of Chechnya. He complained to the Chechen leader about his divorce, specifically about a recent deal merging Wildberries with the much smaller Russ Outdoor, an advertiser. In June, this deal—which was reportedly approved by President Putin himself—was justified as an attempt to create a global e-commerce company with its own ruble-based payment system. Vladislav Bakalchuk, however, claimed that it was, in fact, a “raider-style” (hostile) takeover, resulting in Russ stripping Wildberries, noting that “some Caucasians” might have benefited from the deal (he likely meant the Dagestani businessman Suleiman Kerimov who, according to Kommersant and Dozhd, may be the beneficial owner of Russ). Kadyrov agreed and said that he would send Duma deputy Adam Delimkhanov, one of his closest allies, to deal with what he called “a national-scale fraud.”
Following Kadyrov’s video, Tatyana Bakalchuk quickly posted her own take, stressing that “this is not a raider-style takeover, but a divorce” and that she is not pressured by anyone. It appears, however, that her husband is sticking to his story.
Very few details of the case are verified and there is little that can be known about business deliberations inside Wildberries. On the surface, the story indeed seems to be a divorce gone bad. Tatyana Bakalchuk owns 99% of Wildberries, with her husband only owning the remaining 1%. Vladislav Bakalchuk, however, claims that the two of them did not have a prenuptial agreement, alleging that the takeover deal significantly worsens his position in the distribution of assets. At the same time, it is not implausible that the Kremlin put pressure on the Wildberries owner to merge her company with Russ Outdoor.
Two circumstances are notable and indicative of the political and economic situation in today’s Russia. The first and most important is the ongoing degradation of ownership rights, which forces business owners either to give up their assets or to look for patrons in both the business and the political world as close to Putin as possible. In Tatyana Bakalchuk’s case, these could be Kerimov and the Presidential Administration; in her husband’s case, it could be Kadyrov, who may very well be eager to monetize his position as a person able to intimidate domestic political and business players. Second, whether or not the takeover deal was indeed a legal move to strengthen Bakalchuk’s position vis-à-vis her husband, it is worth noting that its supporters used arguments exploiting Russia’s international isolation to acquire the blessing of the Kremlin.
— Andras Toth-Czifra
Moscow’s Europe Square has been renamed “Eurasia Square” as Russian relations with the West continue to deteriorate. The Square, which is located in front of the Kievsky Railway Station, was opened in 2002 as part of a joint project between Russia and Belgium. It used to feature the flags of 48 different European countries, but these flags were removed in March 2023. This week, Moscow Mayor Sergei Sobyanin signed a decree renaming the Square, but he did not provide an explanation for the decision. State-affiliated media reported that the new name “reflects a broader geographical concept of Eurasia.” (photo: Moskva News Agency)
Olympics destabilization plot
On Sunday, French authorities arrested a Russian citizen allegedly planning to “destabilize” the Paris Olympic Games. He was detained after police searched his apartment in central Paris at the request of the French Interior Ministry. There, they found evidence of “pro-Russian operations” and connections to the Russian Federal Security Service (FSB). Although police did not release any details of the plan, a source in the French state prosecution service said the man was “organizing events likely to lead to destabilization during the Olympic Games” as well as “passing intelligence to a foreign power in order to arouse hostilities in France.” Prosecutors clarified that the alleged plot was not a terror attack and is being investigated by counter-espionage specialists rather than an anti-terrorist division.
The police have not released the name of the suspect, but a joint investigation by The Insider, Der Spiegel, and Le Monde identified the man as 40-year-old chef Kirill Gryaznov. Gryaznov moved to Paris in 2010 and attended culinary school at Le Cordon Bleu Paris. He went on to work in a Michelin-star restaurant in Courchevel (a luxury ski resort in the French Alps) as well as appearing on several Russian reality TV shows. He reportedly caught the attention of the French secret service in May. During a layover in Istanbul on a trip from Moscow to Paris, Gryaznov got drunk and told witnesses that he was on a secret mission from the FSB. He is currently being held in pre-trial detention. If convicted of espionage, Gryaznov faces up to 30 years in prison.
According to French Interior Minister Gerald Darmanin, French authorities screened over 1 million people—including athletes, coaches, journalists, workers, and volunteers—in preparation for the Games. Of those screened, 880 were denied access due to suspected foreign interference. “We have refused a large number of ‘journalists’ [from Russia] who claimed to want to cover the Games. On the other hand, we have allowed the presence of Russians working for the International Olympic Committee. We proceed from a precautionary principle,” Darmanin said.
The opening ceremony of the Paris Olympic Games will take place on Friday evening. Russia was banned from officially competing, but 15 Russian athletes will participate under a neutral banner.
— Sara Ashbaugh
Ukraine Halts Lukoil Transit
The governments of Hungary and Slovakia accused Ukraine of causing disruptions in their oil supply after the Ukrainian government banned Russian crude oil exports by the country’s biggest private oil firm, Lukoil, transiting through Ukraine via the Druzhba pipeline. Lukoil supplies make up a considerable chunk of the two countries’ oil imports—up to 35% in Hungary and 45% in Slovakia. The two countries have so far been able to import from Russia because the EU’s sanctions on Russian oil only cover seaborne crude and oil products. The justification for the carveouts, however, was to allow Hungary and Slovakia time to replace Russian oil in their energy mix, which has not happened—albeit Unipetrol, a leading player on Slovakia’s market, announced that it is moving away from Russian oil at the end of this year.
The governments of Robert Fico and Viktor Orbán claim that the Ukrainian ban violates the country’s Association Agreement with the EU—the trade pact that was at the center of the 2013 protests that evolved into the Revolution of Dignity. Thus, Fico and Orbán asked the European Commission to intervene before they initiated legal proceedings. However, Hungary’s Minister of Foreign Affairs Péter Szíjjártó has also threatened to block the disbursement of 6.5 billion euros of military aid to Ukraine through the European Peace Facility. Both governments also reminded Ukraine that they provide energy shipments to the country, which could be affected by the ban.
The EU’s executive arm is currently studying the developments, but its spokesperson has said that the ban is not going to lead to fuel shortages. The Ukrainian oil company Naftohaz acknowledged that it does not transit Lukoil oil, but claimed that the volumes were nonetheless the same in July as in previous periods because other suppliers stepped in. The Hungarian government does not agree with this assessment; Szíjjártó said that Hungary was only able to stabilize the situation temporarily (although he has held talks with Bulgaria about increasing oil supplies through the country). Ilona Gizinska, a Polish expert, also claimed that Hungary could face sky-high energy prices or even electricity cuts in the near future, which, several years into a cost-of-living crisis, could further worsen the position of Orbán’s government (which was weakened by a series of scandals at the beginning of this year and has only recently started to stabilize its support). Others disagreed; Erste’s Tamás Pletser told the Hungarian news site 444 that Lukoil could simply sell its oil domestically to another Russian oil firm that could then resell it to Hungary (so far the firm has opted to sell the banned oil through ports).
The Russian government was quick to agree with the Slovak and Hungarian governments (and their respective media) about the alleged risks to the countries’ energy security and the unfriendly nature of the Ukrainian ban. It is worth noting, however, that Hungary’s government has been blocking aid to Ukraine on various grounds for more than a year. From this perspective, the reactions to the Lukoil ban seem to be simply the latest chapter in the political conflict between two governments that are eager to maintain amicable relations with the Kremlin on the one hand and the Ukrainian government on the other.
— Andras Toth-Czifra
An unknown man decapitated a statue of Joseph Stalin in the city of Zvenigorod in the Moscow region on Saturday. The man can be seen in a video striking the bust with a sledgehammer. He also damaged a statue of Vladimir Lenin before fleeing the scene. By Sunday, authorities reported that a suspect had been detained, but a motive was still being established. The statue of Stalin was erected without permission last year by a group of pro-veteran activists, but local authorities decided not to remove it. This is not the first time the statue has been vandalized; in March 2024, it was marked with spray paint. (photo: Telegram / @ostorozhno_novosti)
Ukraine’s commander-in-chief Syrskyi speaks with The Guardian
On Wednesday, The Guardian published an interview with Colonel-General Oleksandr Syrskyi, Ukraine’s commander-in-chief. He spoke about the situation on the battlefield, acknowledging Russia’s superiority when it comes to resources, including manpower. “When it comes to equipment, there is a ratio of 1:2 or 1:3 in their favor,” Syrskyi said. According to him, Russians have not achieved any significant breakthroughs, such as capturing any major city. Even the tactical gains they were able to achieve came at a substantial human cost. Colonel-General Syrskyi said that Russia’s casualties were three times higher than Ukraine’s, declining to say how many Ukrainian service members have died since the beginning of the full-scale invasion. As a reminder, in February, President Zelenskyy said during a press conference that 31,000 Ukrainian military personnel had died since 2022.
The commander-in-chief also noted some positive developments, including future delivery of F-16 fighter jets, successes in using land robots to deliver ammunition or rescue wounded soldiers, and employing long-range drones to hit Russian critical infrastructure. Syrskyi added that Russia was forced to relocate its naval fleet from the Crimean port of Sevastopol following successful Ukrainian drone strikes. When it comes to the main challenges, he spoke about mobilization. Syrskyi said that without mobilization, he could not create new reserves and brigades, which Ukraine needed as Russia multiplied its own land forces. The Ukrainian government recently adopted a new mobilization law lowering the conscription age from 27 to 25. Last week, this law came into effect, requiring men to register their personal information with military recruitment centers.
Ukraine’s main objective, according to Syrskyi, is to destroy the Kerch road and rail crossing connecting the occupied Crimean peninsula with Russia. Syrskyi said he has a plan to return Crimea to Ukraine, but “of course, it’s a big military secret.”
— Lisa Noskova
Ukraine’s Minister of Foreign Affairs visits China
On Tuesday, Ukrainian Foreign Affairs Minister Dmytro Kuleba arrived in China to discuss Russia’s ongoing war against Ukraine, China’s role in achieving just and sustainable peace, and Ukrainian-Chinese relations with his Chinese counterpart, Wang Yi. This is Kuleba’s first trip to China since the beginning of the Russian invasion and the first bilateral visit since 2012.
On Wednesday, the two diplomats held talks that lasted for over three hours. According to the statement published by China’s Ministry of Foreign Affairs, Kuleba and Wang discussed ways to expand bilateral cooperation in various fields, including trade. China committed to increasing grain imports from Ukraine to ensure international food security. Additionally, China will continue providing humanitarian aid to Ukraine. In return, Ukraine reaffirmed its support for China’s stance on Taiwan and its adherence to the One China policy.
Regarding Russia’s invasion of Ukraine, Wang emphasized China's belief that Russia and Ukraine should return to the negotiation table. According to Ukraine's MoFA website, Kuleba updated Wang on the outcomes of the Peace Summit in Switzerland and outlined the next steps in implementing the peace formula to achieve a just end to Russian aggression. Ukraine's top diplomat reiterated Ukraine's established position—that it is ready to engage in the negotiation process with Russia when Russia is willing to negotiate in good faith. However, he stressed that no such willingness is currently observed on the Russian side.
Although China claims neutrality in the war between Russia and Ukraine, it has deepened economic ties with Moscow and supported Russia against Western sanctions. Additionally, China has become Russia’s primary source of dual-use goods that bolster the Russian defense industry. Despite Kyiv’s repeated appeals for China to use its influence over Moscow to help end the war, these efforts have been largely unsuccessful. Notably, China also did not attend the June global Peace Summit.
— Lisa Noskova
On the podcast
Why has the Global South, historically on the receiving end of colonialism and imperialism, maintained what might be called a neutral stance towards Russia's war against Ukraine? Ivan Grek, Director of the Russia Program at George Washington University’s Institute for European, Russian, and Eurasian Studies, joins Aaron Schwartzbaum to discuss.
Quickfire: Regions
On July 23, it emerged that a court in Kazan sentenced Alsu Kurmasheva, a Russian-American journalist for Radio Free Europe / Radio Liberty (RFE/RL) to 6.5 years in prison. The sentence, which was passed on the same day as the sentence of WSJ correspondent Evan Gershkovich, was for “spreading false information” about the Russian military—the Russian authorities’ codephrase for saying or writing anything about the war in Ukraine that does not correspond to the Kremlin’s narrative. Kurmasheva has been in Russian custody since October 2023. It is possible, as King’s College professor Sam Greene suggested, that by passing both sentences on the same day, Russia is preparing to offer to exchange the two American journalists for Russian citizens held in the West—or possibly, for sanctions relief.
According to stories published by local Telegram channels and social media posts, the regional government of the Altai Territory threatened local deputies in one of the region’s administrative districts with hostile labor inspections and “business problems” after the deputies came out in favor of direct elections for the head of the district. The threats are likely not unique to the Altai Territory; authorities have been trying to push through similar administrative reforms across the country over the past years. These reforms highlight the tensions between local stakeholders—many of whom are part-time officials with local business interests or jobs—and regional governments representing the Kremlin and the methods used by the authorities to put pressure on locals.
Alexey Dyumin, the recently-appointed secretary of the State Council (an important institution that serves as a key deliberative channel between regional governments and the Kremlin in the preparatory phase of lawmaking), set out to strengthen his influence in the institution. As part of the changes approved by President Putin to the structure of the State Council this week, the acting governors of the Tula Region and the Samara Region, Dmitry Milyaev and Vyacheslav Fedorishchev (who both worked under Dyumin when the latter was head of the Tula Region), were appointed committee heads (for sports and industry, respectively), in spite of their de jure interim position. Moscow Mayor Sergey Sobyanin and Chelyabinsk Governor Alexey Teksler preserved their positions at the helm of the committees for municipal and state governance and economics and finances. Murmansk Governor Andrey Chibis was appointed to head a new committee on Arctic development, while his Arkhangelsk colleague, Alexander Tsybulsky, will oversee “international cooperation and exports.”
Russia will reinstate a gasoline export ban from August 1, according to deputy prime minister Alexander Novak, in order to stabilize domestic market prices. According to Kommersant Daily, a diesel ban export was also considered—such a ban was briefly introduced last year. Recent weeks have seen a significant rise in the price of fuel at Russian gas stations, partly due to Ukrainian drone strikes at refineries, which have caused shortages.
— Andras Toth-Czifra