"How The World Sees Russia"

Issue #44: 02/16/2019

From the Publisher:

This week we begin this issue by discussing the latest from the Black Sea. NATO announced that it would be carrying out naval exercises as  a show of support for the Ukraine. Moscow is obviously upset with this decision. However, can we honestly expect anything to change because of these naval exercises? The status quo is likely to remain, and we discuss why.  

Russia and China appear to have found a way to counter the mighty U.S Navy. The latter is widely considered to be the U.S’s most powerful military branch, and a key asset to their global  security reach. Russia and China do not have naval capabilities that this impressive organization has. However, they are strengthening their ability to take such a force on, and coming up with ingenious ways of challenging U.S dominance in this military sphere.

Russia appears to be gearing up for cyber-attacks with its latest bill. This piece of internet legislation is said to showcase Russia’s ability to better handle foreign hacking attacks. Critics also point that is it is likely another way for the Kremlin to control digital dissent.

Finally, Russia is looking like a better investment for Wall Street. New York-based  agency Moody’s upgraded their ratings for Russia based on better economic performance and a stronger price of oil. This is a positive piece of news for Russia although it still needs more time to properly recover.  

-Rossiya Scan

NATO Further Vexes Moscow With Black Sea Trip…

With the ongoing proxy/asymmetric war between Moscow and Kiev further boiling, NATO is making a symbolic show of force in support of the Ukraine, with the announcement of a set of naval exercises in the Black Sea.

“We are looking at the possibility of further increasing our presence in the Black Sea,” said Jens Stollenburg,  NATO Secretary General during a recent press-conference in Brussels.  “In the coming days, our ships will take part in the exercises in the Black Sea.”

Recently, all NATO defense ministers met with Stepan Poltorak, Ukraine’s Minister of Defense, for an informal meeting. After this gathering, NATO further demanded that all Ukrainian naval personnel and vessels captured during the Kerch crisis be released. Russia is reported to still hold 24 Ukrainian navy members, and three ships.

NATO has been increasing its patrols in the Black Sea for a while. Last January, the U.S sent the USS Donald Cook  to the Black Sea for maritime security operations.

“The U.S. Navy routinely operates in the Black Sea consistent with the Montreux Convention and international law,” said the U.S Navy in a statement

Such moves do irritate Russia though, who usually responds in kind to similar prior NATO announcements.

"These visits have nothing to do with U.S. security," said Aleksei Pushkov, chairman of the Information Policy Committee of the Russian Federation Council, via Twitter. “They should keep away from our coastline."

What is NATO actually looking to do by doing this? In short, maintain the status quo.

The Ukraine is not part of NATO, and therefore cannot count on their military might to protect them from Moscow. NATO is carrying this visit out to keep Russia from migrating further into the Ukraine, and to essentially keep the country as a buffer. By doing this NATO benefits because it keeps Russian attention to this area. However, Russia also benefits because it further consolidates its influence in this disputed area, while keeping the Ukraine from further joining the West via NATO or the EU. Of course, the Ukraine does not necessarily benefit from the status quo, as it further loses the likeliness of ever retrieving its lost territory.  

Read more: 

"NATO Confronts Putin - Alliance Sends Warships to Black Sea and plans aid to Ukraine," by James Bickerton by the Express. 

"U.S. Warship Donald Cook Heads To Black Sea For 'Security Operations'" by RFE/RL staff. 

"U.S Destroyer Arrives in Black Sea Region For NATO Drills," by Allen Cone for UPI. 

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Can Russia & China Counter the U.S Navy?

“Whoever rules the waves, rules the world” – Alfred Thayer Mahan, U.S Naval Strategist, Officer and Historian. 

It seems like almost every other week we manage to discuss new weapons developed by Russia, exhibiting their headway in developing offensive/defensive armament, and upgrading its outdated military equipment with the scarce budget they have; incessantly remaining a force to be reckoned with.

Before we delve into the latest weapon created by the Russians, we will give you a snapshot of how global armies are composed, where their strengths lie, and how countries like Russia and China are working to challenge Western forces by sea and air.

At a glance, just so you can grasp the overwhelming superiority that the U.S’s  armed forces has in sea and air, relative to other nations, we are going to drop some facts. The U.S has 13.444 military aircraft, the second nation with most aircrafts globally is Russia which has 3.547. In other words, the U.S has 3.8 times more than the runner up. However, if air superiority is combined with naval pre-eminence, to be more precise with aircraft carriers (and their escorts), the combo is lethal. The U.S has individually more aircraft carriers than the rest of the world put together.

Approximately 80% of the world's population is located within a hundred miles of the sea, thus having a fleet of floating air bases which can destroy hundreds of targets daily for months, without requiring access to land facilities is a great advantage to strike your enemy. What’s more, having 20 like the U.S, allows it to impose its power globally at any given moment.

Albeit, one Achilles heel can be found within the U.S's greatest strength. Russia and China have developed weapons, which can suppress this military superiority. One that the U. S and its allies have enjoyed for so long.

Russia is upgrading some of its Tu-22M Backfire bombers with new engines and weapons, enhancing their ability to strike American carrier groups with hyper sonic missiles (which cannot be deterred). China is showing off its Dongfeng-26 ballistic missile, which is strategically aimed at sinking aircraft carriers, and has been baptized the “carrier killer”.

Last week, we highlighted the world’s 2.0 arms race, which has begun between all global powers. Technological progress has allowed countries like Russia and China to challenge the U.S head to head in the seas.

We have noted in prior issues the poor state of the Russian navy, and Russia’s ability to create defensive weapons. However, with this new military upgrade to its bombers, Russia will be able to strike the U.S Navy where it hurts most, if ever confronted directly at sea. Giving strength to its overall naval capabilities.

Once again, Russia and its “friends” develop solutions which will deter the U.S, if ever confronted directly. Time appears to be going against the U.S,  as everyone around them is getting stronger as the days go by. These two developments  will only add to an already existing feeling of paranoia in the U.S. One that is being addressed under the current administration, at the urging of senior military leaders.  That being said, we don’t know what’s being discussed in the infamous backchannel, and who will suffer the consequences of this new reality should it ever get out of hand.

Read more:

“The 25 Most Powerful Militaries in the World,” by Skye Gould and Paul Szoldra for Business Insider

“This 'New' Russian Bomber Could Sink a U.S. Navy Aircraft Carrier,” by David Axe for the National Interest.

“Russia Upgraded a Nuclear Bomber — and its Missiles Are a Nightmare For US Navy Aircraft Carriers,” by Alex Lockie for Business Insider.

“China Shows Off Its 'Carrier Killer' Missiles To Send 'A Clear Message to the U.S,” by Lee Jeong-Ho for the South China Morning Post

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Russia is Preparing for Cyber-Warfare….And Dissent?

“IoT without security = Internet of threats “ – Stephane Nappo, French Expert in IT Security. 

Russia’s parliament approved a major bill, attempting to isolate the countries internet.

The Russian state has claimed that this initiative is founded over fear of Russian networks being hacked by foreign forces. To be more specific the U.S, which last year unveiled its new cybersecurity strategy, which includes defensive/offensive responses to future hostile intrusions. Russia is obviously concerned; as major cyber breaches have originated from the Slavic nation, which has a unique ability to this craft.

However, we believe that the Russian state is attempting to kill two birds with one stone. On one hand they are securing their network for future eventualities, on the other they are sheltering the nation from foreign media influence further consolidating their grip and control over Russian citizens.

Imagine for a moment an enemy hacking into the computers which control critical infrastructure like power stations to cause destruction? This can seem like something out of a novel—but is scarily real.

Envisage the supposed hack by the Russians into Democratic National Committee and subsequent leakage of e-mails during the 2016 presidential campaign. It determined the fate of the most powerful nation globally, and subsequently the world without a shot fired.

Therefore, given the aforementioned assumptions we know that Russia wants to armor its network defenses against foreign aggressions.  Russia is still not being targeted, but sooner then later they might be. Hence, Moscow wants to be well prepared when this occurs.

Hackers can cripple nations getting access to strategic infrastructure, seize sensitive information for ransom or even steal hypersensitive corporate secrets for personal benefits. Therefore, in a more aggressive world where nations attack each other to gain an edge over adversaries, insulating one’s network makes sense strategically.

Nonetheless, filtering what information is to be available to the public in this closed network, is also a great source of power for the Kremlin. What we are picturing now seems like George Orwell’s dystopia coming to reality, but its not fiction. Especially given the current unease of Russian people and military personnel with the Kremlin.

In a related matter of government's using technology to better control their citizens, China is an example of dangerous pioneer. For example, it has implemented a system in which it scores its citizens, depending on how they behave. A score is assigned to every individual citizen; if the score is lower they have less perks and freedom. If the score is higher the citizen gets access to more perks, and still has the same freedoms.

For states with low budgets, hacking is a great option to harm your enemies. It is cheap, easy and deniable. Nations seeking global influence can more easily leverage this brand new weapon, which will also most likely never be countered with a traditional armed assault.                   

Read more:

“Russian Parliament Approves Bill to Isolate Country's Internet,” by Aljazeera staff.

“Russian MPs Back Bill To Isolate Country's Internet,” by France 24 staff.

“China Has Started Ranking Citizens With a Creepy 'Social Credit' System — Here's What You Can Do Wrong, And The Embarrassing, Demeaning Ways They Can Punish You,” by Alexandra Ma for Business Insider. 

“Can Russian Hackers be Stopped? Here's Why it Might Take 20 years” by Steve Ranger for the Republic

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Moody’s: Russia is Now Investment Grade…

Russia appears to be back from the brink. The country has been able to weather the storm of sanctions and oil prices well enough that the New York-based global rating agency Moody’s has increased its grade to Baa3 from Ba1.

The agency also changed its outlook from positive to stable, adding that external pressures, such as sanctions and the price of oil are still a real threat to the Russian economy.

What caused this change?  

“Very low public debt, substantial public assets and steadily shrinking national external debt vis-a-vis the country’s foreign currency assets provide a significant degree of resilience amidst ongoing structural challenges the country faces,” wrote Moody’s.

Moscow’s domestic economic policy adjustments in response to sanctions and the drop in oil prices were also highlighted  as reasons for the improvement.

“The upgrade of Russia's ratings reflects the positive impact of policies enacted in recent years to strengthen Russia's already robust public finance and external metrics and reduce the country's vulnerability to external shocks including fresh sanctions," Moody’s further stated. "The stable outlook reflects evenly balanced upside and downside credit risks."

Russia was downgraded to junk status by Moody’s in 2015.

The drop in crude and foreign sanctions led the country to a recession. However, with oil prices recovering, the nation has managed to showcase modest growth. Sanctions are still in effect though, and more are expected to be implemented. A reality, that is likely to still cause much chagrin to the Russian economy. Their impact is considered to be more minimal than that of the oil slump.

“The fact that three agencies have assigned investment grade to Russia will be an additional positive argument for investors that consider the possibility of capital investments in our country,” said Russian Finance Minister Anton Siluanov in statement.  Rating agencies Fitch and S&P also recently adjusted their Russia ratings. “The Russian government, on its part, will create new conditions for a further improvement of the rating.”

It is too early to tell if such a change signifies a turning point for Russia's economy . However, it is fair to refer to this as a bright spot for Russia, with several Wall Street analysts predicting more investment inflows to Russia.

“Moody’s decision could lead to big inflows,” said Ilya Feygin, a senior strategist with New York-based WallachBeth Capital LLC in an interview with Bloomberg. “Moody’s recognized that Russia has cleaned up a lot of stuff internally. Russia’s not in a situation where a downturn in oil prices will completely crash Russia and make it unable to pay its bills.”

Read more: 

"Russia Earns Investment-Grade Rating From Moody's," by Natasha Doff, Ben Bartenstein and Elena Popina for Bloomberg.  

"Russia, Back From The Brink," by Kenneth Rapoza for Forbes.

"Moody's Raises Russia's Rating to Investment Grade," by BNE Intellinews staff.  

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