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Private habits of Putin
Ben Judah
1261 words
8 Aug 2014
The Australian Financial Review
Copyright 2014. Fairfax Media Management Pty Limited.
Ben Judah puts together the daily routine of a Russian President who lives like a modern tsar.

The President wakes late and eats shortly after noon. He begins with the simplest of breakfasts. There is always cottage cheese. His cooked portion is always substantial; omelette or occasionally porridge. He likes quails' eggs. He drinks fruit juice. The food is forever fresh: baskets of his favourites dispatched regularly from the farmland estates of the Patriarch Kirill, Russia's religious leader.

He is then served coffee. His courtiers have been summoned, but these first two hours are taken up with swimming. The President enjoys this solitary time in the water. He wears goggles and throws himself into a vigorous front crawl. This is where the political assistants suggest he gets much of Russia's thinking done.

The courtiers joke and idle and cross their legs in the lacquered wood waiting rooms. He rarely comes to them quickly. They say three, perhaps four hours is the normal wait for a minister. He likes to spend some time in the gym where Russian rolling news is switched on. There he enjoys the weights much more than the exercise bikes.

He sometimes reads after the sweat. This is because he likes to work late into the night. He summons his men at the hours that suit his mental clarity – the cold hours where everything is clearer. The books he finds most interesting are history books. He reads these attentively. Heavy, respectable tomes: about Ivan the Terrible, Catherine II, Peter the Great.

But there sometimes fly rumours: that he has read a novel. In 2006, the President is said to have read a thriller in which working-class men beat up Chechens and cops and seize the governor's office from corrupt thieves with machineguns – Sankya, by Zakhar Prilepin.

He immerses himself into both hot and cold baths. Then the President dresses. He chooses to wear only tailored, bespoke suits in conservative colours. His choice of ties is usually dour.

And now power begins. The early afternoon is about briefing notes. This mostly takes place at his heavy wooden desk. The President uses only the most secure technologies: red folders with paper documents, and fixed-line Soviet-era telephones.Obsessed with information

He is obsessed with information. The thickest, fattest folders at his request are not intelligence reports: they are press clippings. His hands first open the Russian press digest. The most important papers come at the front: the obsequious national tabloids – such as Komsomolskaya Pravda and Moskovsky Komsomolets. These matter most, with their millions of readers. Their headlines, their gossip columns, their reactions to the latest Siberian train wreck affect the workers' mood.

Then he moves on to Russia's quality press: the lightly censored broadsheets,Vedomosti and Kommersant. These matter in the Kremlin court: this is their gossip, their columnists, their analysis. He pays particular attention to the regular columns about Vladimir Putin written by Andrey Kolesnikov in Kommersant.

The President rarely uses the internet. He finds the screens within screens and the bars building up with messages confusing. However, from time to time, his advisers have shown some satirical online videos: he must know how they mock him. His life has become ceremonial: an endless procession of gilded rooms. His routine is parcelled up into thousands of units of 15 minutes and planned for months, if not years ahead.

Following his morning review, the schedule folders embossed with the eagle are presented to him. After glancing at them, he follows the plan: without a smile or a joy.

Mostly, these meetings are meaningless. There are those who come to pay homage to him: receiving the Crown Prince of Bahrain, awarding bronze medals to Udmurt Heroes of Labour, or reviewing promotions in the management of the federal space industry.

He does not live in Moscow. He dislikes the place: the traffic, the pollution, the human congestion. The President has chosen the palace at Novo-Ogaryovo as his residence. Home is out there, to the west of the city, away from the red walls, the mega-estates, the mega-malls – out in his parkland.

It is 24 kilometres from the palace to the castle. The route is closed and cleared of all traffic when the President chooses to commute. He can reach the Kremlin in less than 25 minutes, while Moscow sits in gridlock.

He finds the commute irritating.The treasured invite

The President loves ice hockey. He thinks it is graceful and manly and fun. The President practises ice hockey as much as he can. He loves putting on that thick comfy helmet and picking up his agile hockey stick. This is what the court most feverishly covets: every few weeks, the President organises a game of ice hockey.

A mark of intimacy, the treasured invite, the most bragged-about occasion in oligarchic society, is watching one of the President's hockey matches.

These are his intimates – most, like him, from St Petersburg, the old associates, the ones he trusts. They are mostly businessmen; and on the United States-sanctions list. Men like the brothers Arkady and Boris Rotenberg or Gennady Timchenko.

These men are the inner circle. The ones that rose with him out of the swamps of St Petersburg. He was only then a deputy mayor. They shared electricity wires between their dachas and ate cheap meat together. They feel they deserve this. They used to call him: the "Boss". But over recent years they have come to call him the "Tsar".

There are no stories of extravagance: only of loneliness.The President loves animals. He smiles at the sight of creatures that refuse to obey him and finds solace in the company of a black Labrador, who is not afraid of him.

The court interpreter says his life is monotonous. The President says that he works harder than any leader since Stalin.

His planes travel in threes. One carries his motorcade; one, his delegation; the third flies ahead for him. The fleet leaves Vnukovo-2 terminal more than five times a month. His wish is to be everywhere: the industrial fair in Omsk, the inspections of Karelia, the summit in Astana, or the state visit to South Korea.

But in Russian time zones his provincial governors, with their microgarchs and their sallow police chiefs, use little tricks to deceive him. Recently, they were ashamed in Suzdal of their city of rotting wooden hutches so they covered them in tarpaulin façades of freshly painted cottages. In the factories, they hid everything broken.

The visits abroad are conducted differently: the intelligence service plans ahead. The pilot group comes a month before the president to the capital in question. The luxury hotel his administration will occupy is inspected. The FSB and the SVR co-operate in this delicate matter. How secure is that room? How bio-contaminable is this bathroom?

The court has established itself on foreign soil a week before he arrives. The hotel becomes the Kremlin. They have booked and sealed 200 rooms.

Meanwhile, everything he will need arrives by the planeload: Russian cooks, Russian cleaners, Russian waiters. Russian lorries bleep and dock with two tonnes of Russian food.

He will sleep on this soil one night.

Author's note: This piece of journalism is an amalgamation of more than three years of interviews, for my book Fragile Empire: How Russia Fell in and Out of Love with Vladimir Putin (Yale).

This is an edited extract from a story that first appeared in Newsweek. © 2014 Newsweek

Fairfax Media Management Pty Limited

Document AFNR000020140807ea8800032
wow nice story about putin.

All the exercise and good food, sounds like he is a very hardcore and disciplined person!
Less we forget, he was from the Russian "School of Espionage"-KGB or what?
(10-08-2014, 09:20 PM)Temperament Wrote: [ -> ]Less we forget, he was from the Russian "School of Espionage"-KGB or what?
and quite well verse in martial art - judo or what?
Exercise, healthy diet, good sleep, have a pet, and organise your time/work in 15 mins/case..

good enough for me! Big Grin
The bank that backs Putin and rewards his men
PUBLISHED: 04 OCT 2014 03:43:00 | UPDATED: 04 OCT 2014 04:59:44

The bank that backs Putin and rewards his men
Vladimir Putin and President Dmitry Medvedev, right, tour the House of Music in St Petersburg, Russia, with its artistic director, Sergei Roldugin. Photo: NYT
Weeks after President Vladimir Putin annexed Crimea in March, an obscure regulatory board in Moscow known as the Market Council convened inside an office tower not far from the Kremlin to discuss the country’s wholesale electricity market.

It is a colossal business, worth 2 per cent of Russia’s gross domestic product, and a rich source of fees for the bank that had long held the exclusive right to service it.

With no advance notice or public debate, though, the board voted that day in April to shift that business to Bank Rossiya, a smaller institution that lacked the ability to ­immediately absorb the work.

For Bank Rossiya, it was a coup set to yield an estimated $100 million or more in annual commissions, yet it was hardly the only new business coming in. State corporations, local governments and even the Black Sea Fleet in Crimea were suddenly shifting their accounts to the bank, too.

In a matter of days, Bank Rossiya had received an enormous windfall, nearly all from different branches of the Russian state, which was delivering a pointed message. In late March, the United States had made Bank Rossiya a primary target of sanctions, ­effectively ostracising it from the global financial system. Now the Kremlin was pushing back, steering lucrative accounts its way to reduce the pain.

The reason the Kremlin rushed to prop up Bank Rossiya is the same reason that the United States, and later Australia, placed it on the sanctions list: its privileged status as what the Obama administration calls the “personal bank” of the Putin inner circle.

Built and run by some of the presidents closest friends and colleagues from his early days in St Petersburg, Bank Rossiya is emblematic of the way Putin’s brand of crony capitalism has turned loyalists into billionaires whose influence over strategic sectors of the economy has in turn helped him maintain his iron-fisted grip on power.

Now the sanctions are testing the ­resilience of his economic and political ­system. Even as President Barack Obama argues that the measures aimed at Putin’s inner circle are pinching Russia’s economy and squeezing the tycoons who dominate it, many of them have mocked the sanctions as a mere nuisance, the economic equivalent of a shaving cut. (One of the businessmen Vladimir Yakunin recently joked about Australia’s decision to put him on the ­sanctions list saying, “It’s a pity I won’t get to see the kangaroos.”)

Woven deeply into the Putin system is Bank Rossiya. Founded as the tiniest of banks in the twilight of the Soviet era, Bank Rossiya, through staggering, stealthy ­expansion backed by the largesse of the state, now has nearly $11 billion in assets.

It controls a vast financial empire, including a large stake in the country’s most ­powerful private media conglomerate, a key instrument of the Kremlin’s power. How well the bank survives in a time of sanctions may ultimately be a barometer of whether economic pressure is enough to make Putin stand down.

Putin came to power vowing to eliminate as a class, the oligarchs who had amassed fortunes – and, to the new presidents mind, a dangerous quotient of political sway – under his predecessor, Boris Yeltsin, in the ­post-Communist chaos of the 1990s. Instead, a new class of tycoons have emerged, men of humble Soviet origins who owe their vast wealth to Putin, and offer unquestioning political fealty to him in return. “These guys emerged from scratch and became billionaires under Putin,” Sergei Aleksashenko, a former deputy finance ­minister and central banker, said in a recent interview.

If the modern Russian state is Kremlin Inc, Putin is its CEO, rewarding his friends with control of state-owned companies and doling out lucrative government contracts in deals that provoke accusations of ­corruption but have the veneer of legality under the Putin system.

“He has given, and he has taken away,” said Mikhail Kasyanov, who served as prime minister during Putin’s first term. “They depend on him,” and he depends on them.

This inner circle coalesced around Putin as he began his unobtrusive rise, from a ­middling career as a KGB intelligence officer to a mid-level functionary in the office of St Petersburg’s mayor.

One of these loyalists is Bank Rossiya’s chairman and largest shareholder, Yuri Kovalchuk, a physicist by training, sometimes called the Rupert Murdoch of Russia for his role as architect of the bank’s media interests. Other Bank Rossiya shareholders include several of the country’s wealthiest men, the son of Putin’s cousin and even an old St Petersburg friend of his, a cellist who was formerly first chair at the fabled ­Mariinsky Theatre.

The Kremlin has long denied giving Putin’s friends preferential treatment. But in acquiring many of its holdings, the privately held Bank Rossiya benefited from Kremlin directives that allowed it to purchase prized state-owned assets at what critics have called cut-rate prices.

Meanwhile the true extent of its holdings is obscured by shadowy corporate shell structures that nest like matryoshka dolls, one inside the next.

Records show that the ownership of one powerful TV advertising company linked to Bank Rossiya, for example, is buried in offshore companies in Panama, in the British Virgin Islands and even at a simple concrete house on Karpathou Street in Nicosia, the capital of Cyprus, whose owner had no idea of the company registered there.

In the early days of the conflict over Ukraine, several European leaders expressed deep ambivalence about alienating a Russia that under Putin’s rule has become immeasurably wealthier than it ever was under the Soviet system. Russia has been a sought-after partner in the globalised economy, a source of cheap natural gas for Europe, where wealthy Russians have also purchased billions of dollars in real estate in places like the Cote d’Azur and the Belgravia district of London.

But that resistance has to some extent eroded, especially since the downing of MH17 over eastern Ukraine in July, that killed 298 people. Last month, despite an edgy truce between pro-Russian separatists and government forces in Ukraine, the West announced a new round of sanctions aimed not just at Putin’s powerful cronies, but at the Russian economy more broadly.

Some argue, however, that this punitive strategy fundamentally misunderstands the way the Putin system works.

Gennady Timchenko, an oil trader and Bank Rossiya investor whose own holding company is also under Australian and Western sanctions, admitted in a recent interview with the Russian governments news agency, Tass, to a measure of annoyance. He was unhappy that his Lear jet had been grounded because of sanctions, and that he could not vacation in France with his family and dog, Romi, which happens to be the offspring of Putins beloved black Labrador, Koni.

And yet, he said, he would never presume to question the Russian president’s policies in Ukraine, whatever the cost to companies like his. “That would be impossible,” he said, going on to refer to Putin formally by his first name and patronymic.

“Vladimir Vladimirovich acts in the ­interest of Russia in any ­situation, period.”

In the Kolomna district of St Petersburg, near the shipyards, is a 19th-century palace that belonged to Grand Duke Aleksei Aleksandrovich, a son of Czar Aleksander II. Lately its elegant halls – this one in Baroque style, this one English, this one Chinese – have been repurposed as the House of Music, a training academy for ­classical musicians.

The academy’s artistic director, Sergei Roldugin, has his own singular back story. He is an accomplished cellist and musical director. He is certainly not a businessman, he explained at the palace the other day.

“I don’t have millions”, he said.

And yet, on paper at least, he has a fortune that could be worth $350 million. That is because, years ago, he said, he acquired shares in a small bank run by men close to his old friend Putin.

He had met Putin in the 1970s, and is ­godfather to his eldest daughter, Maria. He opened the House of Music with Putin’s patronage. Last year, he recalled, the ­president asked him for a favour: Would he organise a private concert?

So Roldugin travelled to the presidents official residence west of Moscow, Novo­Ogaryovo, with three young musicians: a violinist, a pianist and a clarinetist. They played Mozart, Weber and Tchaikovsky – so well, he said, that Putin invited them to play again the next night for the same small group of friends who had gathered there.

“They were of course, very famous ­people,” Roldugin said, without revealing any names.

“Quite all,” he said, “are under sanctions.”

The concerts are a glimpse into the small, remarkably cohesive group of men who came together around Putin as the old order was crumbling and a new, post-Soviet ­Russia was taking form.

When the last Soviet leader, Mikhail ­Gorbachev, began to allow the first experiments in private enterprise in the 1980s, St Petersburg was still Leningrad, an ­impoverished shadow of the czarist ­capitalist had been.

An early adapter was Kovalchuk, a ­physicist at the Ioffe Physical Technical Institute, who founded an enterprise to turn its scientific work into commercially viable products. Another was Timchenko, a former Soviet trade official, who formed a cooperative to export products from an oil refinery on the Baltic Sea.

What brought Putin into their orbit was the fall of the Berlin Wall in 1989.

After five years as a KGB officer in East Germany, Putin was part of a wave of ­embittered ­military and intelligence officers who ­withdrew from the Soviet satellites and returned with few prospects to a changing homeland.

Still with the KGB, Putin came into ­contact with one of his former law ­professors: Anatoly Sobchak, a reformer who had just become chairman of the ­Leningrad legislature (and would later become mayor of the renamed St Petersburg). He asked Putin to become an adviser, to smooth relations with the still-powerful security services. And when the Soviet Union collapsed, Putin joined Sobchak full time, overseeing a new committee on ­foreign economic relations.

The committee worked closely with ­Russia’s emerging entrepreneurs, regulating imports and exports and distributing city contracts. Some of the deals became ­controversial, notably one during the ­hungry winter of 1991-92; a deal to barter oil, metal and other products for food.

Virtually none of the food ever materialised, and a City Council committee ­unsuccessfully sought to have Putin fired for incompetence.

Putin’s fluency in German was useful with many Germans seeking a foothold in the city. Among them was Matthias Warnig, formerly of the East German secret police, the Stasi, who opened one of the city’s first foreign banks, Dresdner.

Putin was, in short, collecting new friends and laying the foundation for what would evolve into the system of personalised, state-sponsored capitalism now at the heart of his power. It was a favourable environment for such a bouquet of friends to appear, explained Mikhail Amosov, who served on the City Council at the time.

“Everything was decided through ­personal connections,” Amosov said. “We didn’t like it.”

One enterprise that received an infusion of municipal aid was Bank Rossiya. The bank had been founded in 1990 at the initiative of the city’s branch of the Communist Party, with party funds as capital. It was also believed to handle the banking needs of the KGB. But with the collapse of the Soviet Union, it was all but bust.

Kovalchuk stepped in. In December 1991, he and a group of friends secured a small loan from a local shoe manufacturer and bought the foundering bank. The investors included three other alumni of the Ioffe Technical Institute – the physicists Victor Myachin and Andrei Fursenko, and Yakunin, the institute’s former head of international relations. (Kovalchuk, Fursenko and Yakunin are now on Australia’s ­sanctions list.)

The reconstituted Bank Rossiya quickly became a favoured city institution. At the mayors instruction, according to news reports, the city opened several large accounts there.

Business connections became deeply ­personal connections.

In 1996, Putin joined seven businessmen, most of them Bank Rossiya shareholders, in forming a cooperative of summer homes, or dachas, called Ozero, or lake, in the northeast of St Petersburg. The group has come to have an outsize influence on Russia’s ­political and economic life. The cooperative included the homes of Putin, Yakunin, Kovalchuk, Fursenko and his brother Sergei, Myachin, and Nikolai Shamalov, who headed the St Petersburg office of the ­German manufacturer Siemens and would also acquire a major stake in Bank Rossiya. Vladimir Smirnov, a St Petersburg ­businessman with an exclusive contract to supply the city’s gasoline retailers, served as Ozeros director.

Timchenko, the oil trader, entered the Bank Rossiya circle as an investor; according to the bank, his stake is owned by a company he controls. Warnig, the German banker, would later join Bank Rossiya’s board. (When Putin’s wife was badly injured in a car accident, Warnigs bank arranged to pay for her medical care in Germany). And there was Rodulgin the cellist.

Putin’s stint in St Petersburg ended in 1996, when his boss lost his bid for ­re-election. Soon Putin had a new boss, Yeltsin. And after Yeltsin unexpectedly ­elevated him to prime minister and then ­acting president on New Years Eve in 1999, the fortunes of many of his friends – and their little bank – began to be transformed.

He had arrived in Moscow as a mid-level apparatchik in ill-fitting suits, had ascended to power as a thoroughly unexpected ­president and won his first presidential ­election in 2000 on the crest of war to suppress separatists in Chechnya. By 2004, Putin had become the paramount figure in Russia, winning a second term with 72 percent of the vote, in a race tainted by ­allegations of strong-arm tactics and vote rigging. Yet Putin probably would have won a fair election easily, too.

The Russian economy, buoyed by high oil prices, was booming.

Not many people yet understood that in the middle of Russia’s prosperity, the men in the tight circle close to Putin were becoming fabulously wealthy.

Bank Rossiya, which reported less than $1 million in profits the year before Putin became president, had grown steadily, but figures like Kovalchuk and Timchenko remained in the shadows.

“I didn’t even know such names – ­Timchenko, Kovalchuk,” said Kasyanov, whom Putin dismissed as prime minister shortly before the elections.

During the 2004 campaign, one of Putin’s quixotic challengers, Ivan Rybkin, did raise the issue of corruption, accusing Kovalchuk and Timchenko of acting as the president’s cashiers. But few people were listening. (Rybkin disappeared soon after making his accusation, re-emerging several days later, saying he had been kidnapped and drugged in Ukraine’s capital, Kiev.)

Bank Rossiya’s holdings would increase tenfold during Putin’s second term. Critical to this remarkable growth was the bank’s ability to snap up assets, at knockdown prices, that had previously belonged to the state-owned energy company Gazprom.

Those deals were documented in a series of reports published at the end of Putin’s ­second term by Boris Nemtsov, a former deputy prime minister, Vladimir Milov, a former deputy energy minister, and others.

The total value of the assets exfiltrated from Gazprom, they estimated, was ­$60 billion. An early deal involved one of the country’s biggest insurers, Sogaz. Bank ­Rossiya bought a controlling stake in Sogaz by acquiring shares that had been held by Gazprom. The bank paid around $100 million, according to Nemtsov and Milov, who later valued Sogaz at $2 billion.

Putin said, ‘Bank Rossiya, that’s it,’ Milov later told the Russian edition of Forbes.

Sogaz became the insurer of choice for major state companies like Russian Railways, headed by Yakunin, and the growing oil giant, Rosneft, by then led by Igor Sechin, who had been Putin’s deputy in the St Petersburg mayors office. Sogaz also bought 75 per cent of a company called Leader that ­managed Gazprom’s $6 billion pension fund, Gazfond. The purchase price was $30 million, less than Leader’s profits that year alone, according to Nemtsov and Milov.

It seemed to be a quintessential insider deal: The year before, Yuri Shamalov, son of the Bank Rossiya shareholder and Ozero member, had been appointed chairman of Gazfond.

Shamalov jnr, as head of Gazfond, sold shares in the company managing Russia’s largest private pension fund at a fantastically low price to the bank owned by his father, Nemtsov asserted.

At the same time, Kovalchuk, the bank’s chairman, began assembling a media empire that now controls some of Russia’s largest television and radio stations, and newspapers.

Bank Rossiya had already assumed ­management of the assets of Gazprombank, one of Russia’s largest. Now, Gazprombank purchased Gazprom Media Group, which owns five TV and several radio stations. The price: $166 million.

Two years later, Dmitri Medvedev, a Putin protege and first deputy prime ­minister, put Gazprom Media’s value at $7.5 billion, or 45 times the purchase price.

Not content merely to manage media assets, Bank Rossiya began buying up media companies of its own.

In 2005, a subsidiary of Bank Rossiya bought a stake in Channel 5, a local ­television network owned by the St Petersburg government. The price was $25 million. There was no competition. Channel 5s value swelled in 2006, when ­regulators let it acquire frequencies in 30 regions across Russia.

Soon after, Putin designated it a national broadcaster, able to reach 91 cities and 53 million people. Today, it is the country’s fifth-largest broadcaster.

A year later, a Bank Rossiya subsidiary bought a controlling stake in Ren TV, today the country’s eighth-largest broadcaster.

Once known for investigating government corruption and airing opposition views that were never allowed on state ­television, Ren TV over time became noticeably less critical.

By 2008, Putins second term was ending and the Bank Rossiya media empire ­provided a supportive voice when, rather than recede from politics, he decided to serve as prime minister. Medvedev was elected president, while Putin largely retained control over the levers ­of government.

Two years later, Kovalchuk scored his biggest prize – a 25 percent stake in ­Channel 1, a state-controlled network with the largest audience in Russia. The stake cost only $150 million, an amazingly low price, according to the newspaper Novaya Gazeta. The next year, Channel 1 reported profits of nearly $100 million.

Then, in 2012, Putin announced he would seek a third term as president. Democracy activists were deeply alarmed but ­powerless. No one doubted he would win, though the economy had slowed and Putin’s men were targets of rising criticism, no longer hidden.

To grasp how Bank Rossiya’s holdings extend around the globe – and how island tax havens and other tools of global finance may serve to obscure their true breadth – one place to visit is 13A Karpathou Street in Nicosia. This is the registered address of Med Media Network Limited, a company listed in a corporate flow chart connecting Bank ­Rossiya to a company called Video International.

In a peculiarity of the Russian marketplace, broadcasters do not sell advertising time directly. They act through middlemen like Video International, which buy airtime wholesale, then sell to those who wish to advertise.

Med Media is a major shareholder, holding a 20 percent stake. Except that Med Media’s address in Cyprus is hardly a ­corporate headquarters at all. It is a simple concrete home with a large ficus shading a small garden. The owner, Agathi Zinonos, has never heard of Med Media or any of the other companies registered there.

She regularly receives legal documents in the mail from Russia, Bulgaria, Romania and other countries.

Every day, there is a whole packet coming, she said, noting that the documents are addressed to her son, who recently moved out. Whatever comes, I take to him, because it is a lot of companies.

Attempting to unwind Video International’s convoluted corporate structure requires going back to 2011. That is when Bank Rossiya and a couple of partners ­purchased the company, according to an interview given by Video International’s chief executive in 2013.

Video International had controlled 70 per cent of the advertising-placement market.

But in the months before the sale, the ­government hastily enacted a new ­anti-monopoly law, prohibiting national TV networks from using advertising shops that controlled more than 35 per cent of the ­market. Video International would have to abandon many of its contracts.

But what looked like a debacle for Video International turned out to be a boon for Bank Rossiya. The new law depressed the company’s value – and thus its purchase price. And while Video International gave up many contracts, many of the networks simply brought the placement business in house – while continuing to pay Video ­International consulting and software­licensing fees.

Reflecting on the way the governments anti-monopoly office has looked the other way, Aleksashenko, the former deputy finance minister, invoked the saying “my friends get everything, while my enemies get the law”.

Among those taking part in the new arrangement was CTC Media, a company with several TV channels that was partially owned by a subsidiary of Bank Rossiya. CTC continues to pay Video International around $80 million a year – but as a consultant.

Yet while the arrangement allowed Video International to manoeuvre around Russian law, it may actually have placed CTC at risk of violating US sanctions. For though CTC is a Russian broadcaster, its headquarters are in Delaware, and it is traded on the Nasdaq. The sanctions prohibit American head­quartered companies like CTC from doing business with entities that are majority-owned by sanctioned companies like Bank Rossiya.

But whether Bank Rossiya retains a majority stake in Video International is impossible to ascertain. Records show that, on paper at least, its shares, held by a ­subsidiary, are down to 15 percent. Nearly all the rest of the shareholders are buried behind fronts like Med Media of ­Karpathou Street.

The day after Obama blacklisted Bank Rossiya, Putin met with his national security council. Told that a total of 20 people had also been ­sanctioned – including three security council members, Putin compatriots from St Petersburg – the president turned sarcastic.

“We should distance ourselves from them,” he said, deadpan. “They ­compromise us”.

As for Bank Rossiya, he went on: “As far as I recall, this is a medium-sized bank. Personally, I did not have an account there, but I will definitely open one on Monday.”

He later directed the presidential administration to begin depositing his official salary – roughly $7500 a month – into a Bank Rossiya account.

Kovalchuk later gave a rare TV interview with Dmitri Kiselyov, a prominent news anchor and ardent defender of Putins Russia. The president’s public gesture, Kovalchuk said, had prompted a flood of new customers, including an old, impoverished woman who wanted to deposit her life savings. “For a bank with billions in assets, this old woman means nothing financially, but the fact is that is worth more than any financial investments,” he said. “There is a Putin factor, and it is unconditional. The fact is that people intuitively feel which side of the barricades business stands on.”

Putin’s efforts to protect the bank were not just symbolic. He ordered the Central Bank to provide assistance if needed. State-owned energy companies transferred accounts to Bank ­Rossiya. Additionally, in the lower house of parliament, the main party loyal to Putin provided the margin needed to rescind the law effectively limiting Video International to just 35 per cent of the advertising place­­ment market.

And on April 10, the Market Council stepped in. The council, which ­regulates Russia’s $35 billion wholesale electricity market, is a non-profit organization with 22 members representing government ministries as well as major producers and suppliers of electricity. Its chief executive is Kovalchuk’s son, Boris, its board chairman is Sechin, the president of the state-owned oil giant Rosneft, and one of Putin’s ­closest advisers. The council met at its office in ­Moscow’s World Trade Centre. A spokeswoman declined to discuss the vote, except to say that a quorum attended, explaining that she did not want to contribute to an anti-Russian article. In remarks published on the council’s website in May, the Market Council’s director, Maksim Bystrov, said Bank Rossiya had brought us a ­proposal with lower commissions.

As the United States and Europe ­continue to ratchet up the economic pressure, it is an open question how long the government can continue to prop up the growing number of ­institutions faced with sanctions.

Russia’s economy had been struggling even before the annexation of ­Crimea. The European Bank for Reconstruction and Development recently predicted that, with the added impact of Western sanctions and Putin’s retaliatory embargo on Western goods, the economy could contract next year.

For his part, Putin has denounced the sanctions as unfairly targeting ­people with no influence over Russia’s policies on Crimea or Ukraine. “Yes, these people are my friends and I’m proud to have such friends,” he said at an economic forum in St Petersburg in May.

“They are true patriots and their business is oriented towards Russia. Have these sanctions done damage to them? Yes, they have. If I’m being ­honest, they have. But they are ­seasoned entrepreneurs and brought all their money back to Russia, so don’t worry about them too much.”

The Australian Financial Review
China's Li in Russia for Putin talks
AFP OCTOBER 13, 2014 2:00AM

Chinese Prime Minister Li Keqiang has arrived in Moscow for talks with President Vladimir Putin as Russia is struggling with its most pronounced isolation since the end of the Cold War.

"It is a major event in the bilateral relations," Chinese Vice Minister Cheng Guoping said ahead of Mr Li's visit.

He said both sides would sign a joint communique and about 50 agreements. "We are confident it will be a success," he said.

Mr Li's first visit to Russia as premier comes at a sensitive time as the Kremlin is grappling with the consequences of its support for separatists in Ukraine during a six-month conflict in the east of the ex-Soviet country.

Besides meeting Mr Putin on Tuesday, Mr Li during his three-day visit will also meet with his Russian counterpart Dmitry Medvedev and attend an economic forum.

Once bitter foes during the Cold War, Moscow and Beijing have over the past years ramped up co-operation as both are driven by a desire to counterbalance US global dominance.

China and Russia often work in lockstep at the UN Security Council, using their veto power as permanent council members to counter the West on issues such as the Syria crisis.

Russia's showdown with the West over Ukraine has given Kremlin a new impetus to court Beijing.

China for its part has spoken out against the sanctions slapped on Russia by the European Union and the United States to make the Kremlin change tack over Ukraine.

"China always opposes the wilful use of sanctions or the threat of sanctions," said Mr Cheng.

"We welcome the moves by various parties to encourage the momentum of a political settlement of the Ukrainian issue."

Crashing oil prices could crush Vladimir Putin
By Jesse Solomon @JesseSolomonCNN October 15, 2014: 7:23 AM ET
russia oil putin
Russian President Vladimir Putin probably isn't too happy about plunging oil prices.
Falling oil prices are good for American drivers, but not for Russia.
In early March when Russia first sent troops into Ukraine, oil was trading comfortably above $100 per barrel. Now, it's around $81, a level not seen in three years.
That's a tough pill for Russia to swallow since the country relies heavily on oil revenues to bankroll its budget -- over half of the government's revenues come from oil and gas.
"We're probably getting closer to the point of pain," said Phil Flynn, an energy analyst at the Price Futures Group. "It's definitely putting the squeeze on their balance sheet."
Russia's economy is hurting: However you look at it, Russia is hurting. Its stock market (the Micex Index) has plunged 6% in the last three months, and the Russian Ruble is down 20% against the dollar this year.
The World Bank forecasts anemic Russian economic growth of just 0.5% in 2014 and 0.3% in 2015. A more pessimistic scenario foresees the Russian economy slipping into recession this year and contracting further in 2015 and 2016.
Related: Ruble's headlong plunge shows Russia hurting
So far, no one is cutting back on oil production. American and European energy companies, not to mention the oil rich members of OPEC, are flooding the global market for cheap oil.
To be sure, Russia has over $450 billion in international currency reserves, so it's not anywhere near crisis mode yet. And while its biggest corporations, including government controlled oil company Rosneft and banking giant Gazprombank, are banned from tapping the long term American and European debt markets due to sanctions, they are still cash rich and shouldn't have trouble finding alternative financing.
This week Russia also signed a slew of agreements with China, including a deal to supply the country with natural gas for 30 years starting in 2018.
Russia eyes China after Europe snub
Russia eyes China after Europe snub
Ballooning budget: But there's a chance that depressed oil prices could take a bite out of Russian President Valdimir Putin's ambitious military agenda.
Last month, Russian news agency Itar-Tass reported that military spending by the country will rise by 21% next year. A few weeks later, Russian Finance Minister Anton Siluanov was quoted by Reuters saying the country "cannot afford" the defense program.
Regardless, Michael Fitzpatrick, a former energy analyst with the Kilduff Report who still actively trades oil futures, doesn't think oil prices have been pushed down enough to substantially eat into Russia's GDP and trickle down to the general population.
Related: Russian hackers exploit Windows to spy on West
"I don't think you're looking at any political or social unrest unless prices go considerably lower," he said.
Making up for lost oil revenue: The government also has a history of seizing assets to bolster the government's control over the energy industry.
Last month, Russian state prosecutors seized an oil company belonging to one of the country's leading oligarchs, Vladimir Evtushenkov. He was placed under house and charged with money laundering when his holding company -- Sistema -- bought the Bashneft oil firm in 2009.
The case has echoes of the Yukos affair a decade ago, when Mikhail Khodorkovsky was thrown in jail and forced to sell most of his oil company Rosneft.
--CNNMoney's Mark Thompson contributed to this report
First Published: October 15, 2014: 7:23 AM ET
"I am deeply convinced, absolutely convinced, that this project is beneficial for European consumers because it significantly reduces transit risks," he said.

Gas pipeline to Europe a mutual contract, like love: Putin18 Oct5:50 AM

RUSSIA'S President Vladimir Putin on Thursday compared the construction of a controversial natural gas pipeline to love, saying that Europe needs to show its affection for the Russian project.

Speaking on a visit to European Union aspirant Serbia about Brussels' reluctance to back the Russia-led South Stream gas pipeline, Mr Putin said that Moscow could not go it alone.

"That is just like love. It can only be happy if there are two participants of this wonderful process and both want to develop a relationship," he said, smiling. "Same here. We cannot unilaterally build a pipeline system worth billions of dollars if our partners are still thinking whether or not they should implement this project."

He spoke hours before his planned arrival in Milan for high-profile talks with EU leaders and after he issued a Cold War-style tirade, accusing US President Barack Obama of a "hostile" approach.

The crisis in Ukraine has made the pipeline, which is already under construction to bring Siberian gas to the EU - bypassing Ukraine - a new focus of tensions between Moscow, Brussels and Washington.

The South Stream pipeline is a major project to reduce Moscow's reliance on Ukraine as a transit country following disputes with Kiev in 2006 and 2009 that led to interruptions of gas shipments to Europe.

The European Union has called on all 28 member states to stand united in resisting pressure from the Kremlin over the project, saying that the pipeline breaches the bloc's competition rules.

Mr Putin said on Thursday that politics was hurting business. "I am deeply convinced, absolutely convinced, that this project is beneficial for European consumers because it significantly reduces transit risks," he said.

A number of south-eastern European countries are heavily dependent for gas on Russian pipelines that pass through Ukraine.

"Politics stands in the way of economy, causes damage," Mr Putin said.

Serbia, an EU candidate with strong relations with Russia, has remained committed to the South Stream pipeline. AFP
Troubled waters as Russians send warships

Brendan Nicholson

Defence Editor
Sarah Martin

Political Reporter

Russian warships sail near Australian waters

Tony Abbott and Vladimir Putin at the APEC summit on Tuesday.Tony Abbott and Vladimir Putin at the APEC summit on Tuesday. Source: AFP
Russian warships sail near Australian wa...Tony Abbott and Vladimir Putin at the AP...

TWO frigates and a patrol aircraft have been sent to monitor a fleet of Russian warships that has ­arrived in waters to Australia’s north, in an apparent show of force by Vladimir Putin ahead of his arrival in Brisbane for the G20 summit this weekend.

Senior sources said the Russian fleet’s arrival followed moves in recent weeks to send bombers ­towards NATO airspace in ­Europe, towards the US and over Japanese territorial waters.

The ADF has been monitoring the Russians’ progress for a week.

Guided missile cruiser Var­yag — named after the country’s ­Viking ancestors, the Varangian people — is leading the contingent south in international waters. It is accompanied by destroyer Marshal Shaposhnikov and one of the world’s most powerful tugs, the Fotiy Krylov. Supply tanker Boris Butoma is also heading south towards Australia’s east coast as part of the dispatch.

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The arrival of the ships comes after weeks of tension between Mr Putin and Tony Abbott, including the Prime Minister’s vow to “shirt-front” the Russian leader over the shooting down of flight MH17, which killed 38 Australians.

INTERACTIVE: G20 explained

At a 15-minute bilateral meeting in Beijing on Tuesday, Mr ­Abbott told Mr Putin that Australia believed MH17 was destroyed by a missile from a launcher that had come from Russia. He said that, if this was true, it would be “a very serious matter’’ and urged him to apologise and make ­appropriate restitution.

On Tuesday the Russian warships were near Bougainville when they turned south. Royal Australian Navy frigates HMAS Parramatta and HMAS Stuart were sent to shadow them along with a RAAF P3 Orion maritime patrol plane. “He (Mr Putin) is making the point that Russia has global reach and he’s making that point to the whole world,” a senior defence source said.

“It would be over the top to call it a naval shirt-front.”

Another senior defence source described the presence of the warships as Russia showing an “aura of power” around its leader at the G20 summit.

GRAPHIC: Russians in the neighbourhood

Defence was not aware of other nations sending naval vessels to accompany their leaders.

Australian Defence Force chief Mark Binskin said last night the Russians had publicised the mission to the South Pacific in ­advance. When asked whether it was an act of aggression, Air Chief Marshal Binskin said: “You’d have to ask the Russians.”

The Russian ships are expected to stay in international waters as part of what is known as a “high seas transit” for the leader, which is permitted under international law. The Russian embassy said the warships had no intention of entering Australian waters, unless by invitation. It said they were performing “routine activities and do not hold the course in the direction of Australia”.

The Russian warships are believed to have departed from Vladivostok on October 23. Another Russian warship, the guided missile cruiser Moskva, was reportedly involved in live-fire drills in the South China Sea and its appearance in Southeast Asia was described by the US Naval Institute as “a rare show of surface presence in the region”.

Defence said Russian naval vessels had previously been ­deployed in conjunction with major international summits.

A warship from Russia’s ­Pacific Fleet accompanied former president Dmitry Medvedev’s visit to San Francisco in 2010, and a Russian vessel was also sent to the APEC meeting in Singapore in 2009.

Defence watchers reported that family members of some of the Russian sailors made comments on social media sites last week that the ships were bound for Australia before making a return trip to Vladivostok.

Additional reporting: Sharri Markson

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