Russia in details: events and trends in Russia over the last week (01.08-05.08)

Events and trends in Russia over the week of August 1^st – 5^th

Conclusions:

1. The Taiwan crisis between the People’s Republic of China and the United States plays more in favor of the Russian Federation than Ukraine because it gives Moscow a reason to drag Beijing to its side and, therefore, gain significant support in the fight against Western sanctions.

2. The armed clashes around Nagorno-Karabakh reflect the situational joint game of Azerbaijan and the Russian Federation over Armenia, the essence of which boils down to the countries gaining control over regional logistics and transport corridors to satisfy their own geopolitical and geoeconomic interests.

3. Putin began to imprison his regional officials. Corruption cases against regional elites may become one of the Kremlin’s critical political tools in the near future. On the one hand, this strengthens the influence on the regions. On the other hand, the image of an “internal enemy” is created in the person of a corrupt official for the population.

4. A serious ideological crisis has emerged among Russians. In early August, the Russian Presidential Administration published the manuals for conducting historical propaganda. According to these documents, the current invasion of Ukraine equates to the baptism of Russia, the Battle of Neva, and the First World War. Their appearance indicates a crisis in the deep layers of Russian society. Since Kyiv was not “taken in three days”, and the end of the war is not in sight, the legitimacy of Russia’s invasion began to require additional “supporting details”.

5. China is increasing its electronics supply to the Russian Federation, but exclusively of the civilian type. At the same time, the PRC is trying to bring its processor lines to the market (with orders for the necessary Russian state corporations and data centers). The goal is to make Moscow dependent (in the field of electronics) on Beijing.

6. The Accounting Chamber of the Russian Federation recommended that the Ministry of Finance exclude from the National Welfare Fund (NWF) portfolio in euros, pounds sterling, and yen as the currencies of countries that have imposed sanctions against Russia. However, e -experts believe that a complete rejection of the dollar and euro in Russia is impossible because these are the most popular freely convertible currencies that are used as the main reserve currencies of many countries around the world. There will be no critical consequences for Russia from the devaluation, just as there will be no tangible effect. This is another PR attempt to show “a good mine in a bad game”.

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Russia’s severe ideological crisis

On August 1st, the Administration of the President of Russia issued two new methodological reports for the conduct of historical propaganda. According to these documents, the current invasion of Ukraine equates in significance to the baptism of Russia, and Vladimir Putin is compared to Alexander Nevsky. On August 4^th, it was made public that the third method was dedicated to the First World War.

The most critical parallels that the Russian media should draw between the Nevsky Battle of 1240 and the so-called “special military operation” are the following:

1. In both cases, it is the confrontation between the aggressive West and historical Russia;
2. The West once again seeks to dismember Russia and seize its resources;
3. The West always uses peripheral nations and states against Russia; this time, it is Ukraine;
4. Russia is constantly gathered around a national leader (Nevsky/Putin);
5. Russian troops will launch a well-prepared pre-emptive strike on the enemy and eventually win.

The use of the figure of Nevsky in anti-Western propaganda has a long tradition: in the Russian Empire in 1914 against the “Teutons”; then in the Stalin era (the film “Alexander Nevsky” 1938); and the naming of the military medal in 1942 against the “German-fascist invaders”. In the Russian Federation, the cult of Nevsky began to develop actively in 2008. If, during the Soviet era, only two of his monuments were erected, in modern Russia and the occupied Crimea – 24, one of them was personally opened by Putin.

The mass media should look for parallels between the “special operation” and the First World War. “Inhabitants of several regions, who remained Russian-speaking and were persecuted for this by Ukrainian radicals and the official Kyiv authorities, disagreed with the coup and the prospect of living in a Ukrainian state hostile to Russians. Crimea announced its desire to join Russia; meanwhile, the Donetsk and Luhansk regions declared independence.” Just as in 1914, Russia “couldn’t leave” Serbia, so in 2014 and 2022, it was “forced” to defend the oppressed residents of Ukraine from Russophobes financed by the West.

Modern Russian “national traitors” are equated to the Bolsheviks in 1917, because of whose activities Russia lost that war. Finally, it is about the decline of the US-oriented world order and the emergence of a new one – “just and safer”: by launching an invasion of Ukraine, “Russia defends not only its national interests, its uniqueness as a civilization, but also the right of other countries to their uniqueness and respect to the multipolar world”.

According to the methodology, the baptism of Russia should justify the Kremlin’s right to an armed “collection of lands”. “Baptism became the basis of the strengthening and unity of the Russian state hundreds of years in advance. The Orthodox faith teaches compassion, love for one’s neighbor, and tolerance for others. These values became the basis of Russian civilization and allowed Russia to unite hundreds of people. Russia again became capable of fulfilling its mission of protecting the oppressed.”

The appearance of three methods clearly shows the crisis in the deep layers of Russian society. Since Kyiv was not “taken in three days”, and the end of the war is not in sight, the legitimacy of the Russian invasion began to require additional guarantees. The “Nevsky” methodology blames the aggressive West, represents Ukraine as its puppet, and justifies the attack by the need for a pre-emptive strike. The “Christian baptism” methodology legalizes the attempts to capture Kyiv both as part of the “Russian lands” and as the spiritual center of Russia and explains the atrocities of Russian soldiers as a struggle with Ukrainian “nazi-satanists”.

Since Russia has not achieved significant military successes, we should expect an increase in the degree of propagandist hysteria in its media and additional censorship restrictions as compensation.

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Chinese electronics go to Russia. But there are nuances.

Trade statistics of the People’s Republic of China and the Russian Federation record positive dynamics. We can observe an increase in export and import volumes. In the first case, the growth is provided at the expense of raw materials (gas, oil, wood, fertilizers, ores). On the other hand, the People’s Republic of China is trying to occupy the niches vacated in the Russian market due to EU and US sanctions. Of course, these are products of the automotive industry, textiles, and household goods.

Separately, the mass media note an increase (in some positions by two or more times) in the supply of electronics and semiconductor products. Suppose the supply of smartphones, televisions, and other equipment is easily explained by the presence of demand among the population. In that case, the issue of the supply of microcircuits, processors, and other electronic components is perceived by a number of politicians as an attempt to support the Russian military industry in light of the war in Ukraine.

“Electronics, but not the one needed”

Indeed, from January to June, the supply growth of the component base exceeded 200% compared to the same period in 2021. However, we are talking about relatively small volumes (the total amount of deliveries is less than 60 million dollars). At the moment, it does not cover the range of the “military” class products (microcircuits with an increased level of protection against radiation and aggressive environments). Indirect evidence provides information about the supply of a complete set of electronic systems of “high-precision” guided missiles 9М544. The photos published by Russian resources show that the electronic circuits are produced using “civilian” microcircuits, which, of course, affects the ammunition’s accuracy (and other characteristics).

The problem of producing processors for the Russian military industry, data centers, and computer networks of state bodies (and corporations) also remains unresolved. Chinese companies have not (yet) entered into agreements on the Elbrus, Baikal, and KomDiv production families at their facilities. Instead, China is trying to enter the Russian market with its products. So, for example, deliveries of Loongson and Zhaoxin processors to the Russian market have begun, and those are still trial and come as “one-time” supplies.

At the same time, manufacturers position their products as a replacement for Russian processors. However, as of today, none of the key Russian departments has made a political decision to switch to a Chinese elemental base. For the Russian Federation, this position is logical — even the rejection of European and American microcircuits was presented as protection against possible hardware vulnerabilities (and their use by the enemy in the event of a conflict). However, the transition to a Chinese elemental base dramatically increases the mentioned risks, only in case of disputes with the PRC.

At the same time, China’s policy regarding the expansion of trade with Russia shows its desire to “tie” the Russian Federation to itself economically (sales market) and technologically. Therefore, attempts to offer their component base will continue. But first of all – in the sector of civil electronics. At this stage, it makes no sense for Beijing to strengthen the Russian military-industrial complex — the risks are too significant, and the Kremlin is unwilling (so far) to provide (sell) its technologies in exchange for tactical assistance.

Therefore, the most likely development of the situation is an attempt by the PRC to come out with its processors for PCs, data centers, and networks of crucial Russian corporations. Such as Oschadbank, data centers of state bodies, and key IT companies.

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Putin begins the imprisonment of regional officials

At the end of July and the beginning of August, the number of arrests of officials and politicians in corruption cases increased sharply in Russia. The dynamics of the process and the specifics in selecting these “subjects” allow us to make assumptions about the beginning of a campaign that only formally has signs of “fighting corruption.”

Events

Over the past few days, the following have been detained in the Russian Federation on suspicion of corruption, abuse of authority, and embezzlement of budget funds:

• former head of the Ministry of Health of the Altai Republic, Pavel Reshetov;
• deputy head of the Bashkortostan’s branch of the Ministry of Internal Affairs (department of operational work), Andrey Moskvitin;
• ex-deputy head of the Trans-Baikal’s branch of the Ministry of Internal Affairs, Mikhail Polivin;
• first deputy head of the Tomsk district, Denis Prazukin;
• former head of the regional administration of Roszdravnadzor, Olena Khrustalova;
• top managers of companies who received contracts for the construction of boiler houses in the Tomsk region;
• the management (head and deputy) of the capital construction department of the Nadym district of the Tyumen region;
• the ex-head of the Bogorod district of the Nizhny Novgorod region;
• employees of Rostechnadzor and the Kazan Helicopter Plant.

The above list is far from complete. This is only the information reflected in the Russian Federation’s federal press. If we analyze the regional press, at least 16-17 high-profile (for the region) arrests took place at the level of the capital of the subjects of the federation and above over the past week.

Analysis

If we compare the rates of arrests and detentions of regional officials, a sharp increase in their number becomes noticeable. In February-June, the federal mass media reported an average of 1-2 cases (key regional media reported 4-5 more). And over the past seven days, nine high-profile arrests were reported at the federal level alone. Mass media in the key subjects of the federation added 16 more notices.

At the same time, the level of officials is also increasing. At the beginning of the year, it was mainly about employees of city/district administrations and police officers of the same level. In recent weeks, at least half of the cases involved officials (or former officials) at the level of the subject of the federation (region, krai, republic). The third feature is that all cases (in particular, the detention of business representatives) relate to the distribution of budget funds, primarily according to programs financed by the center (public services, infrastructure creation, etc.).

The first scenario – the obedience of the regional elites

Such a policy entirely fits into the logic of the Kremlin’s actions to strengthen its influence on the federation’s subjects. The federal center is trying to demonstrate to the regional elites the perniciousness of attempts to enhance and form their own system of influence on the federal center. Demonstration detentions (and, in the future, arrests) during the governor elections (the logic of the Kremlin’s actions is described in the previous review) guarantees an acceptable result for Moscow and the absence of a regional front during the period of reduction in the flow of investments to the regions and subsidies’ cuts from the center.

The second scenario – a new enemy is needed

On the other hand, a sharp increase in the number of arrests on corruption charges can be used by the Kremlin for propaganda purposes. Russian mass media have long created the image of Russia as an island surrounded by enemies. However, in conditions where the quality of life of an ordinary Russian is likely to deteriorate, it is necessary to search for the “internal enemy”. The latter allows:

• Blame the ineffectiveness of the regional authorities, the freezing of some of the infrastructure facilities’ construction, and the quality of life in the regions;
• Give the population an illusion of justice. The demonstrative arrests of corrupt officials reduce the degree of social tension and create the appearance of the inevitability of punishment even for the representatives of local elites;
• Mobilize society to support the policy of the federal government. On the one hand, there is an “enemy” who “prevents a good life”; on the other – an average citizen is afraid to criticize the government because they also may end up on the “enemies” list.

It is still too early to analyze the use of corruption topic and the image of an “official who is a thief” as an internal enemy. But in light of repressions against dissidents (which have already taken place), it is difficult to blame the issues on “foreign agents”. Therefore, an attempt to generalize several categories at once in the image of the enemy is possible: the political opposition, local officials, and NGO activists. The unifying rod can be the influence of “Western values” on the opponents of the state. Signs of the creation of such a structure can be traced in the Russian mass media over the last 2-3 months.

Conclusions and prognosis

Corruption cases against regional elites may become one of the Kremlin’s key political tools shortly. On the one hand, this is the strengthening of the influence on the regions, and on the other hand, the creation of the image of an “internal enemy” in the person of a corrupt official for the population.