Yevgeny Prigozhin’s mutiny came as a shock to the Russian elite. Moreover, the ease with which the Wagner troops seized Rostov-on-Don and started to head towards Moscow without encountering any major resistance provoked panic. Some representatives of the political and business elite, most likely including Vladimir Putin, left the capital in a hurry. The law enforcement bodies behaved passively, which likely resulted from a lack of clear orders and perhaps also from a reluctance to obey them, as well as from the lack of enough forces and equipment to suppress the mutiny effectively. Prigozhin received no signs of support from the federal and regional elites or the law enforcement bodies, all of which maintained their official, albeit passive, loyalty to the Kremlin. The public also remained passive. Although the events took state propaganda by surprise, state media outlets quickly started to report on the revolt, which proves that the Kremlin realised how sensitive this issue was. The propaganda message was that the law enforcement bodies, the elite and the public were opposed to Prigozhin’s initiative and actively supported the president. External actors monitored the developments in Russia with concern, fearing that the Russian state might have become ungovernable. None of Moscow’s formal allies offered it active support; they limited themselves to expressing verbal support, which was often belated. However, the rapid end of the crisis may also have influenced their stance.
Keywords: Ukraine; Demographic crisis; Russian-Ukrainian War; Refugees; population decline;
The Russian invasion of Ukraine has aggravated the country’s already extremely difficult demographic situation, creating the prospect of a demographic catastrophe. Over the course of its three decades of independence, Ukraine has experienced a deepening population loss due to negative birth rates and high migration dynamics. Although Ukraine had a population of 51.5 million after gaining independence, in 2019 its estimated population size was a mere37 million. The ongoing war has resulted in a large (although undisclosed) number of both military (mostly men in their prime) and civilian casualties, and has triggered a wave of refugees whose prospects of returning to their former places of residence are unclear. The invasion has worsened the physical and mental health of Ukrainian citizens and contributed to further negative trends in the younger generations’ decisions to procreate, out of uncertainty regarding the economic situation in the near to mid-term future.
Ukrainian oligarchs and their businesses: their fading importance
Author(s): Sławomir Matuszak / Language(s): English
Keywords: Ukrainian oligarchs; War and economy; business during the war; financial performance;
The longer Russia’s full-scale aggression against Ukraine continues, the weaker the oligarchs’ influence on the country’s political and economic life becomes. They have failed to regain control over media coverage and have little to no sway over parliament. Their businesses have suffered heavy losses as a result of the hostilities and the economic crisis. Consequently, the estimated wealth of many oligarchs has more than halved. In addition, the state has taken numerous steps aimed at representatives of big business, including the nationalization of some of their assets. This trend will persist as long as the active phase of the war continues. However, it is too early to say that the decline of the oligarchs is permanent.
The popularity of the Alternative for Germany (Alternative für Deutschland, AfD) is growing, as confirmed by its second place in the latest opinion polls, putting it on a par with Chancellor Olaf Scholz’s SDP, and that is raising great concern in Germany. The factors which have contributed to the AfD’s success include the public dissatisfaction with the incumbent government and the overlapping consequences of the Ukraine war and the inflation, climate and migration crises. The SPD-Green-FDP government coalition has presented different, often inconsistent approaches to these challenges. This has been coupled with Scholz’s deliberate passiveness as he shuns disputes inside the coalition in an attempt to improve his popularity ratings. This strategy has been successful up to a certain point, but is currently failing, and as a result the Chancellor is being blamed for the situation in the coalition. The AfD is benefitting from this, while also capitalizing on the fears most Germans share about the pace of the changes being implemented as part of the government’s climate policy. The party is also an advocate for voters who oppose the excessive influx of migrants to Germany and further support for Ukraine. Residents of the eastern federal states are particularly sensitive to these issues, where the AfD leads the polls with over 30%, and is viewed as a ‘catch-all’ or mass party, and not merely a fringe movement. This is particularly important given the upcoming elections to the parliaments of Saxony, Brandenburg and Thuringia scheduled for autumn 2024, which will be the final electoral test before the Bundestag elections in 2025.
Russia’s nuclear project in Hungary: France’s growing role
Author(s): Andrzej Sadecki,Ilona Gizińska / Language(s): English
Keywords: Russia; Nuclear project; Hungary; France; Russian nuclear energy sector;
Despite the Russian invasion of Ukraine, the Hungarian government has declared it is fully determined to build the Paks II Nuclear Power Plant, the main contractor of which is Russia’s Rosatom. Several important decisions have been taken over recent weeks to remove the barriers to implementing the project. For example, Hungary and Russia have renegotiated the contracts that were signed nearly a decade ago and were initially accepted by the European Commission. When the German government refused to approve Siemens’ participation in the consortium supplying components to the power plant, France’s Framatome began playing a greater role in the project. According to the current plan, the construction of Paks II is set to start this year, and the first of the two units are to be completed in 2032. However, the project is still facing a great deal of technical, financial and political challenges that may hinder or even prevent it from being completed. To this end, Budapest is seeking the support of France; it hopes above all that Paris will keep resisting the proposals to impose EU sanctions on the Russian nuclear sector.
Author(s): Iwona Wiśniewska / Language(s): English
Keywords: Russia; Black Sea Grain Initiative; Russian exports of agricultural products and mineral fertilisers;
The Kremlin has made further attempts in recent months to use the food market to intensify pressure on the West, primarily in order to ease the sanctions imposed on the Russian Federation. For example, Moscow is again threatening to pull out of the Black Sea Grain Initiative which enables Ukrainian food to be exported through Odesa’s ports. The escalation of the Kremlin’s demands is based on false accusations that the Western coalition is blocking Russian exports of agricultural products and mineral fertilizers. Over the past few months, Russian exports of these goods have grown dynamically and the export volume has returned to the pre-invasion level; in the case of grain it is now definitely higher. Last year, despite the decline in the volume of supplies, their value increased significantly and accounted for 10% of Russia’s export revenues. This not only ensured the inflow of currency to Russia but, given that selected members of the Putin elite are among the direct beneficiaries of these exports, it enabled them to further build their fortunes. The Kremlin’s threats should therefore be seen on the one hand as a test of the West’s unity and determination to continue its sanctions policy towards Russia, and on the other as an attempt to maximize public revenues from the export of agricultural products and mineral fertilizers.
NATO Summit in Vilnius: breakthroughs and unfulfilled hopes
Author(s): Jakub Graca,Justyna Gotkowska,Marek Menkiszak,Krzysztof Nieczypor,Tadeusz Iwański / Language(s): English
Keywords: NATO Summit in Vilnius; Regional Defence Policy; Ukraine; Russia; China;
The main topics of the NATO Vilnius Summit held on 11–12 July were deterrence and defense, Ukraine’s future membership of NATO, and deepening relations with partners in the Indo-Pacific. The Alliance is partly returning to the defense planning processes and structures that were in place during the Cold War, but which NATO abandoned in the 1990s. The adoption of three regional defense plans constitutes a structural change in NATO’s approach to collective defense, but will require implementation and funding in the years to come.
Russia: funding the war eases the consequences of sanctions
Author(s): Iwona Wiśniewska / Language(s): English
Keywords: Funding the war; Russia; GDP; Economic statistics; Rosstat; Vladimir Putin; federal budget; unemployment rate;
Preliminary estimates by Rosstat indicate that in Q1 2023 Russia’s GDP decreased by 1.9% y/y, although earlier in its report the Central Bank of the Russian Federation (CBR) estimated the decrease at 2.3%. In this context, it is worth noting that statistics published in Russia should always be taken with a grain of salt (for more see ‘The credibility of Russian economic statistics is a growing problem’). The CBR estimates that as a whole Russia’s economic growth rate in 2023 will be 0.5–2%of GDP. The CBR analysts expect to see particularly positive macroeconomic indicators in Q2 2023 figures, due to the low comparative base. Russia’s economic growth in 2023 has also been announced by some international institutions; for example, the International Monetary Fund says that this rate will be 0.7% of GDP. However, some international forecasts expect recession to continue in Russia: the OECD predicts that Russia’s GDP will decline by 2.5%, and the European Commission spells a decrease of 0.9%.
Unfulfilled ambitions: Russia’s LNG sector in the grip of sanctions
Author(s): Filip Rudnik / Language(s): English
Keywords: Russia’s LNG sector; Global LNG market; global LNG exports; sanctions;
The technological sanctions which the West has imposed on Russia’s LNG sector have drastically reduced the opportunities for the industry’s expansion, and made it less likely that Russia can increase its share on the global LNG market. Moreover, the Russian Federation’s ambitious targets for LNG production capacity have not been formally revised, which means that it is now virtually impossible to achieve them. The slim chances of Russia’s LNG production capacity increasing over the coming years have a negative impact on the country’s overall gas exports. In view of Moscow’s political decision to slash pipeline supplies to Europe, liquefied gas could help Russia to mitigate the consequences of this reduction as long as there are no formal restrictions on its imports to the EU; it could also ensure that European consumers remain partly dependent on Russian gas. However, the tough restrictions on technology exports to Russia have significantly reduced the likelihood of this scenario becoming a reality.
The Czech nuclear showdown enters the final straight
Author(s): Krzysztof Dębiec / Language(s): English
Keywords: Czech Republic; Nuclear power plants; Temelín; Russia; China; Dukovany; Czech energy sector;
The repeatedly delayed expansion of the Czech Republic’s nuclear power plants has recently started to take concrete shape. The next two years should see the signature of a binding contract for the construction of the fifth unit at the Dukovany nuclear power plant (NPP), which is expected to cover around 10% of the country’s electricity demand. There are long-term plans to build another unit at this plant, as well as two additional units at the other Czech nuclear power plant at Temelín. The US-Canadian company Westinghouse, France’s Framatome (EDF Group) and South Korea’s KHNP are bidding for the Dukovany contract. This line-up of potential contractors results from a decision by the previous government to exclude Russian and Chinese bidders from the tender. The Czech Republic has also taken other steps to wean itself off its dependence on Russia in the nuclear power sector: it has decided to replace the Russian supplier of nuclear fuel for the NPP Temelín and regained control of the key Czech nuclear company Škoda JS from a Kremlin-linked company.
Israel and the Arab states: between conflict and interdependence
Author(s): Karolina Zielińska / Language(s): English
Keywords: Israel; Arab states; conflict; diplomacy; UAE; US; Foreign policy;
In late 2020 and early 2021, Israel established official diplomatic relations with the United Arab Emirates and Bahrain (the Abraham Accords), renewed its relations with Morocco, and took steps towards establishing relations with Sudan, in a series of developments that occurred with extensive US involvement. These were Israel’s first normalisation deals since the agreements with Egypt (1979), the Palestine Liberation Organisation (PLO, 1993) and Jordan (1994). The following factors paved the way for this process: changes in the region related to the aftermath of the Arab Spring (the desire of Arab regimes to consolidate power, also by countering radical Islam that feeds on the struggle against Israel), the growing Iranian threat, US policy, as well as economic and energy transitions.
Author(s): Krzysztof Strachota,Miłosz Szymański / Language(s): English
Keywords: post-Soviet system; Russia; Economic partnership; Central Asia; socio-political system;
In 2022, post-Soviet Central Asia experienced a number of fundamental challenges that undermine and redefine the systemic foundations of order and stability that have been in place in the region over the past decades. Some of these challenges are typical for the region and have been particularly evident in the protests held in Kazakhstan, Tajikistan and Uzbekistan, but also in other cases. They are manifestations of a violent (in Kazakhstan) or evolutionary (in Uzbekistan) transition of these states’ political systems and, to no lesser degree, of a social transformation and increased popular aspirations, especially in the region’s two largest countries.
The ongoing war in Ukraine has had a disastrous impact on the country’s economy. Its GDP has fallen by approximately a third, and material losses due to the destruction of infrastructure have exceeded US$100 billion and are rising every day. The high inflation rate, the weakened currency and the very high unemployment rate are taking an increasing toll on Ukrainian society. The functioning of the country, including the disbursement of social benefits, salaries and pensions, depends almost entirely on foreign financial assistance. Even though international support for Ukraine has been growing, it remains insufficient, which has forced the government to radically increase public debt. Despite the observed positive trends, such as increased exports (in particular agricultural goods) and the stabilised fuels market, no substantial improvement in the economic situation should be expected before the end of the war. In fact, it seems more likely that it will deteriorate further, given that Russia will most likely continue its attacks on Ukrainian infrastructure, and the future of maritime food exports is open to question.
A dangerous resemblance. Moves to revise Germany’s China policy
Author(s): Lidia Gibadło / Language(s): English
Keywords: Russia’s invasion of Ukraine; Germany; China; Economic policy and dependence;
Russia’s invasion of Ukraine has revived the ongoing discussion in Germany regarding the need to revise its policy towards China. Until recently, the course Berlin adopted towards Beijing and Moscow was not only convergent in many aspects, but also enjoyed a consensus among the Christian Democrats and the Social Democrats, who co-formed three government coalitions from 2005–2021. This resulted in the emergence of a dependence that was unfavourable for Germany. With Russia this involved the import of fuels and with China it involved supplies of components and also major investments carried out by German companies in China. Both states were viewed as priority partners, frequently at the cost of relations with other countries in Central and Eastern Europe and the Indo-Pacific, respectively. Berlin’s approach to Beijing and Moscow sparked disputes with its closest allies as well as dilemmas regarding Germany’s economic and security interests. In addition, cooperation with authoritarian regimes that violate human rights was a blot on Germany’s image in the context of its foreign policy.
After 16 years of independence, there are no significant political forces in Montenegro that could openly challenge this status and seek to re-establish a federation with Serbia. However, the relationship with Serbia continues to be among the key issues shaping the young state’s politics. Its relations with Belgrade are the source of a protracted dispute between the Democratic Party of Socialists of Montenegro (DPS), which had spent over three decades in power until 2020,and a Church-backed alliance of more than a dozen parties, mostly with a centre-right profile, united in their intention to remove DPS from power. The legacy of DPS, who view themselves as the founding fathers of Montenegrin independence, is associated with certain successes (the launch of accession talks with the EU, Montenegro joining NATO, the country’s economic development), but also has major drawbacks, such as the reduction of democratic standards, the concentration of economic and financial resources in the hands of the ruling elite, increased financial dependence on China and a rise in corruption and organised crime. Although a centre-right coalition has been in power in Montenegro since 2020, it is affected by instability resulting in high social polarization and by a conflict over the status of the Serbian Orthodox Church operating in the country, which is viewed as an instrument of leverage used by Serbia and as a regional centre of cultural influence associated with the “Serbian world”.
China after the 20th CCP Congress: a new stage in Xi Jinping’s revolution
Author(s): Michał Bogusz / Language(s): English
Keywords: China; Xi Jinping; The 20th Congress of the Chinese Communist Party (CCP); China's GDP; PRC’s socio-political system;
The 20th Congress of the Chinese Communist Party (CCP) ended with the complete triumph of Xi Jinping and marks the culmination of a process of radical overhaul of the political system created in the 1980s and 1990s. It marks not only the end of collective leadership in the party, but also a redefinition of the relationship between the party and the state and the relationship between the CCP and society. The transformation of the CCP carried out by Xi Jinping over the past decade provides him with the tools to overcome institutional inertia and the resistance of middle and lower-level party-state cadres – factors that are among the elements holding back the changes in the socio-economic development model of the People’s Republic of China(PRC) that were first announced 15 years ago. Therefore, radical and rapid decisions in this sphere are to be expected in the coming years. They will bring further the Marxist-nationalist ideologisation of the PRC, the introduction of a mechanism of mass redistribution and an increase in the role of the party and the state in all aspects of the social and private life of the population. This, in turn, heralds an increase in totalitarian tendencies.
Bromance. Turkey’s activity in the Western Balkans
Author(s): Marta Szpala,Adam Michalski / Language(s): English
Keywords: Turkey; Western Balkans; diplomatic activity; Economic impact of Turkish business; Trade partners;
At the beginning of September 2022, Turkey’s President Recep Tayyip Erdoğan paid a visit to Bosnia and Herzegovina (BiH), Serbia and Croatia. The trip was the culmination of Turkish diplomatic activity towards the region in recent months. Earlier, in June 2022, Turkish Foreign Minister Mevlüt Çavuşoğlu visited Serbia, Croatia, BiH and Kosovo, in August 2022 he attempted to act as a mediator during the escalation of the Serbian-Kosovan conflict, and on 2 September2022 he attended the summit of the Serbian-led Open Balkan initiative held in Belgrade. These activities are consistent with Ankara’s policy that involves fostering its image as both an influential actor, and at the same time a neutral mediator in the Western Balkans – one that is able to contribute to a resolution of bilateral disputes and to the region’s stabilization. Turkey has pursued this policy for more than a decade. In addition, it has been consistently expanding economic influence in the Balkans, accompanied by the development of its retinue of soft power instruments based on shared religious and historical background. However, Turkey’s cooperation with the region’s states is also riddled with challenges. These include Ankara’s close collaboration with Moscow, which raises concern in some Balkan capitals; increasing tension in its relations with the EU and the US; as well as multi-faceted intra-regional disputes.
A tactical pause in relations with the West: China plays on hopes for peace
Author(s): Michał Bogusz / Language(s): English
Keywords: China’s political system; Peace; XI Jinping; EU policy towards China; Kremlin;
In November 2022, China’s leader Xi Jinping embarked on a wide-ranging diplomatic campaign to prevent an uncontrolled breakdown of relations with the West, which should be considered a short-term success, at least in terms of reopening channels of communication with Western countries. This move has succeeded owing to Beijing’s instrumental use of the West’s hopes that it can secure China’s opposition to Russia’s possible use of weapons of mass destruction, and belief that China might be willing to mediate peace in Ukraine. The PRC’s actions have also met the expectations of its Western partners as they look for ways to stabilise relations with Beijing in the face of a looming global economic crisis. At present, we can say that the escalation has been halted, although the negative trend in China’s relations with the West –in particular with the United States – has not been reversed. Faced with economic and social challenges at home, the PRC will make further efforts to avoid economic confrontation with the West in the immediate future, by using more or less veiled suggestions of possible mediation in the Russian-Ukrainian conflict.
The calm before the storm: the state and prospects of Russia’s oil sector
Author(s): Szymon Kardaś / Language(s): English
Keywords: Russia’s oil sector; Russia’s invasion of Ukraine; financial and economic health; Oil and gas condensate production; oil exports from Russia;
Russia’s invasion of Ukraine will have serious consequences for the health of the Russian oil sector, which is one of the most important branches of the country’s economy. Although its production and export performance, and consequently its budget revenues, remained high in2022, the situation began to worsen in December, and the negative trend is likely to continue in the coming months. The main reason for this state of affairs is the sanctions introduced by Western countries, in particular the European Union’s embargo on imports of Russian oil and petroleum products. Russia’s government and companies have taken adaptive measures, such as reconfiguring the directions of oil exports; however, economic, infrastructural and political constraints may make it much more difficult to follow through with the plan for sustainable market diversification. Thus, the EU embargo may lead to a significant reduction in oil production in Russia over the coming years, which will worsen the country’s financial and economic health. The ultimate effect of the restrictions will depend on the determination of Western countries and the pace at which they implement sanctions, as well as the attitudes of Moscow’s other trading partners.
Germany: how the gas sector changed in the crisis year of 2022
Author(s): Michał Kędzierski / Language(s): English
Keywords: Germany; Gas sector; gas crisis; LNG supplies; Gazprom Germania; Russia; Primary energy consumption; gas consumption; electricity generation sector;
Due to Russia’s aggression against Ukraine and the mounting energy and gas crisis in Europe,2022 saw a spell of permanent crisis management in the German energy sector, in particular gas. The structure of Germany’s imports has changed significantly: shipments from Russia, its former principal supplier, have ceased; and Germany has had to launch extremely costly emergency measures to find alternative suppliers on the global market. The war has pushed Berlin to take numerous steps to diversify its supplies, in particular to develop its LNG import infrastructure at a rapid and unprecedented pace. A significant reduction in gas consumption, mild weather and LNG supplies have all enabled Germany to fill its gas storage facilities and avoid the risk of gas shortages this winter. Major changes have also occurred in the management and ownership structure of the German gas sector: Berlin has nationalised the SEFE (Gazprom Germania) and Uniper companies, which has enabled the German state to seize control of the country’s key gas infrastructure and its strategically important gas importers. All these factors have contributed to a major weakening of Germany’s energy ties with Russia.
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