1. On the eve of his meeting with Trump, Vladimir Putin prefers praying in a monastery to watching football with Macron

What happened

This week, Vladimir Putin gave us a reason to remember another of his hobbies, the influence of which on Russian politics is yet to be measured — the Russian Orthodox religion. Ahead of the meeting, Putin reminded everyone that he is not just a fan of hockey and of topless photo ops, but he is also an orthodox believer.

Last week, we (and just after us, Reuters), speculated why Vladimir Putin is ignoring Russia’s triumph at the World Cup and since opening day hadn’t attended a single match of the Russian national team. When last Friday, France qualified for the quarterfinals, and Emmanuel Macron said that he would attend the match in St. Petersburg, we didn’t have any doubts that Putin would have to bring himself to attend the football match. On the eve of the meeting with Donald Trump, it would be shortsighted to miss the chance to spend some time with the French president in an atmosphere of goodwill. But we underestimated Putin. A very bored looking Valentina Matvienko, head of Russia’s upper house of parliament, watched the France—Belgium match with Macron and the King of Belgium. The Russian president was at that moment preparing for a very important event for him personally — the next morning, he attended a liturgy in a monastery on the island of Valaam, 1000 kilometers from Moscow.

The fascination of Vladimir Putin and his entourage with Orthodoxy is a favorite topic for gossip among the Russian elite. The president, unofficially, has his own priest — Bishop Tikhon Shevkunov (here are excerpts from our interview with him). But the main subjects of gossip are the Orthodox elders to whom even Putin turns for spiritual advice. Russia’s key hawks, Rosneft head Igor Sechin and former head of the KGB and head of the Security Council, Nikolai Patrushev, are also fans. Some of these elders are semi-mythical personalities, but the names of some of them are well known — for example, Efrem, father superior of the Vatopedi monastery on Mount Athos in Greece (Putin made pilgrimages there in 2005 and 2016) or Pankraty, a priest in the Valaam Monastery in Russia’s Karelia, where Putin will spend three days this week.

Valaam Monastery is one of the oldest and most famous in Russia. Putin first visited Valaam in 2001, and in 2008 an unofficial residence for him was built there (Russian). Since then, the president has visited the island almost every year — both on official visits accompanied by Patriarch Kirill, and on unofficial trips — as state media report (Russian), “to speak with Valaam’s elders… in an informal setting”. Sometimes these visits occur at critical political moments. For example, Putin visited Valaam at the end of April 2014, just before the beginning of military action in eastern Ukraine. This year, the monastery was featured in the election campaign — Putin was filmed in a documentary entitled “Valaam” in which he appeared as the restorer of Russian statehood and spirituality.

Why the world should care

The former oligarch, Sergey Pugachev, who introduced Vladimir Putin at the end of the 1990s to the church hierarchy, said that Putin’s interest in the church at the beginning of his presidency was rational — he believed Orthodoxy to be the best common idea to rally people around and offered a basis for national identity. But as the years went on, Putin’s interest grew. It’s difficult to say what Putin thinks now about religion and to what extent religion impacts his political decisions. But, judging from the photographs and video from Valaam, where an unidentified pilgrim is seen crying on the president’s shoulder (who surely was vetted at length ahead of time by the president’s security services), it is easy to believe that at this time, Putin truly believes himself to be the saviour of Russia, blessed by God.

2. What Russia expects from Putin’s meeting with Trump in Helsinki

What happened

We don’t know if Vladimir Putin prayed in the Valaam Monastery for a successful meeting with Donald Trump, but he might have — Russian government officials, although they have already put together a draft joint announcement for the presidents on the summit’s achievements, admit that they don’t really know what to expect. Actually, Russians won’t be surprised in any case by the results of the summit. According to a survey (Russian), only one third of the population believes that the summit will be useful.

It is difficult to understand which message Donald Trump will bring to his meeting with Putin on the basis of the contradictory statements which Trump made during his European tour. But Russian government officials didn’t make any announcements this week which might have hinted at what to expect from the summit in Helsinki. The last credible information from the Russian side appeared (Russian) on Monday in the newspaper, Kommersant, which is well known for its good relationship with the Russian Ministry of Foreign Affairs. According to the paper, Russian diplomats gave the U.S. a draft version of a joint statement on the summit’s results. The draft included official statements regarding the importance of dialogue between countries, and the main question surrounding its approval should be whether or not the U.S. will be able to insist on including in the document a written promise from Moscow to not interfere in U.S. elections (and thereby indirectly admitting to election interference in 2016). The U.S. will insist on this, anonymous U.S. sources told Kommersant. Other questions which might be discussed between the two presidents may include arrangements for Ukraine and Syria, sources told the paper.

The Russian side is now only sure that Syria will be discussed, a senior Russian government official told The Bell on Thursday. Therefore, all week, Vladimir Putin touched base with other players in the region, he said. Over three days, the Russian president held talks with the presidents of Israel and Palestine and with the foreign affairs advisor to Iran’s Ayatollah Khomeini (of course, not all at once).

Russia is not preparing any specific proposals for other questions, because it does not know what the Americans will come with, two people familiar with the Kremlin agenda told The Bell: Trump is totally unpredictable.

Why the world should care

Russian government officials have called the Putin Trump summit the international event of the year. Even if that is an exaggeration, the summit still could likely be the event of July, but that doesn’t add real content: does anyone remember what Trump and Kim Jong-un agreed to during their June summit?

3. Threatened with U.S. sanctions, big business sees Putin as the lesser of two evils

What happened

U.S. sanctions have divided Russian billionaires into two groups — members of the first group are trying everything possible to avoid being named to blacklists, while those in the second group concluded that this is pointless, and are now trying to strengthen their positions in Russia. This week, Russia’s largest internet holding, Mail.Ru Group, became involved in a scandal regarding a leakage of Facebook user data. But instead of trying to save themselves from possible U.S. sanctions, the company’s shareholders are giving approximately 50% of the company’s shares to new partners who are very close to the Kremlin.

You probably already read about the accusations against Mail.Ru — CNN learned that the Russian company received Facebook user data in 2015 via third-party applications. For now, it looks like there is no cause for serious accusations — Mail.Ru was just one of 61 companies which Facebook allowed to save user data, and the Russian company did not violate social media rules. But in the U.S. Congress, there have already been calls for an investigation.

Mail.ru Group is vulnerable to U.S. sanctions — the company’s shares trade on the London Stock Exchange. The closest partner to the holding’s owner, Alisher Usmanov, Andrei Skoch has already personally come under U.S. sanctions. It would seem that the owners of Mail.Ru Group should prepare a plan to save the company from being named to the sanctions list. But their latest actions are quite the opposite.

At the beginning of May 2018, Mail.Ru announced a deal in which the company would get new co-owners, some of the most toxic companies from the U.S. point of view, including Russia’s third largest bank, Gazprombank, and the state-owned defense holding, Rostec. Both new shareholders are close to the Kremlin. Gazprombank is controlled (Russian) by Vladimir Putin’s friend, Yury Kovalchuk (under sanctions since March 2014), and Rostec is run by Sergey Chemezov (under sanctions since April 2014), who served in the KGB together with Vladimir Putin in Berlin. Together, Gazprombank and Rostec will own 46% of a new company which will own a controlling stake in Mail.Ru. Alisher Usmanov will retain control over the internet holding, and as a result of the deal, he will receive $250 million cash, the credit resources of Gazprombank, and the political support of Rostec. The new company plans to build, on the base of Mail.Ru, Russia’s version of Chinese internet holdings.

A former senior Russian government official called the events at Mail.Ru Group “the wonderful result of American sanctions”. Earlier, Russian business tried to escape government control, move abroad and become international, but now Russian business understands that there is no future in the West for it, simply because it is Russian, the source explained to The Bell. Within Russia, everyone follows the same rules — if you are not too small or invisible, you will be swallowed by larger structures which are close to the government, and if you are large — you must affiliate yourself either with a state company or an oligarch holding which is close to Vladimir Putin, our source concluded.

Why the world should care

U.S. sanctions against Russian businessmen had one clear goal — to stop big business from supporting Vladimir Putin. It was clear that personal friends of Vladimir Putin, who owe their fortunes to their friendship with him, had nothing to lose — sanctions against them only made them closer to those in power. But in the case of Usmanov and Mail.Ru Group, we see the same result with other major businessmen. In the mid-2000s, Usmanov made $2 billion buying 10% of Facebook at an early stage. In the present situation, it seems highly unlikely that we will see any kind of similar investments from Russian business anytime soon.

4. After a long fall, Russia is becoming the most attractive emerging market

What happened

Yet another topic which Donald Trump and Vladimir Putin are likely to discuss is the price of crude oil, which probably made the Russian government a bit nervous this week. After the U.S. announced new tariffs on Chinese goods, the price of crude fell by $5.50 in just four hours and has still not recovered. World markets fell, but the Russian rouble broke with tradition and didn’t react to the drop in the oil price.

The price of Brent has fallen 7% since Wednesday, while the rouble only lost 0.8% against the USD. This is another confirmation that the usual correlation between the Russian rouble exchange rate on the price of oil is at its lowest point in the last decade. During all of 2018, while the price of oil rose, the rouble fell. In fact, it fell disproportionately quickly — due to investors fleeing emerging markets, which was further aggravated by U.S. sanctions against Russia. As a result, the Russian currency is not reacting now to the fall in the oil price, just as it didn’t react when the oil price was rising earlier this year. In addition, the best macroeconomic indicators among developing countries have contributed to the strengthening of the rouble. These include low external debt and capital outflows, and a significant balance of payments surplus.

As a result, even if we take into consideration that investors will likely continue to flee from emerging markets, Russia remains one of the most attractive markets. In a recent Bloomberg survey, managers voted the rouble the most attractive currency of 2H 2018 among the currencies of 11 major emerging economies, and the Russian equities market was ranked 3rd in terms of its attractiveness for investors. Russia was also ranked first in the survey in terms of its potential for economic growth.

Why the world should care

It isn’t clear what will happen in the Russian economy in the medium term, but now it is at the bottom of the chart. As long as the overall equation doesn’t change, this is exactly the right time for investors to start buying Russia.

Peter Mironenko, The Bell editor

This newsletter is made with the support of the Investigative Reporting Program at UC Berkeley.

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