Page 8 - RusRPTMay21

not taken seriously.
As bne IntelliNews has been extensively reporting the geopolitical situation is very fluid at the moment as both the US and Russia attempt to set the tone of relations for the next four years under the Biden administration. The US imposed fresh sanctions on April 15 that were largely symbolic but targeted Russian domestic debt for the first time, which is to threaten an outright ban on the foreign ownership of the widely held ruble-denominated OFZ treasury bills – the so-called “nuclear option.”
However, in remarks following the sanctions Biden went out of his way to point out that the US “could have done more, but didn't” and that he was interested in a “stable” relationship with Russia and wants a summit to start talking about arms controls and other global issues like the Climate Crisis.
Russian President Vladimir Putin set a similar tone in his state of the nation speech on April 21, which mixed threats of retaliation if red lines were crossed but also held out an offer of talks on the same issues.
As bne IntelliNews has been arguing, all these moves are posturing but there is real common ground between Moscow and Washington and both presidents need to focus on fixing their own economies. The tensions are an expensive distraction. The same is true for the EU with knobs on, which is clearly very tired of “the Russia problem” and is looking for a new pragmatic, if not friendly, relation. It is notable that at the end of the same day the Kremlin withdrew its troops from Ukraine’s border Putin was sitting in a video conference, face-to-face with Biden, and committing Russia to doing more in the Climate Crisis campaign.
The Kremlin seems to have accepted the April 15 sanctions as measured
– given Trump’s legacy of being “soft” on Russia and the US domestic political set up, it was inconceivable that no sanctions at all were imposed – as they did no “economic damage” at all and the proposed summit between Biden and Putin is still on, tentatively slated for June 15-16. If progress is made, then tensions will ease further, the ruble will rally to some RUB69, according to Renaissance Capital, and as the cost of borrowing comes down investment will rise fuelling the economic bounce back that is already underway.
The Kremlin is also preparing the ground for the key September Duma elections and since jailed anti-corruption activist and opposition politician Alexei Navalny returned to Russia the Kremlin has decided that it has suffered so much PR damage already there is nothing to be lost from crushing Navalny and his organisations completely. As April comes to an end the Moscow courts are poised to brand Navalny’s Anti-Corruption Foundation (FBK) an “extremist” organisation on a par with terrorist groups and Team Navalny decided to close down all operations to protect workers who would otherwise face lengthy jail sentences.
8 RUSSIA Country Report May 2021 www.intellinews.com