Magog pursues military modernization despite economic woes - Vladimir Isachenkov -
http://news.yahoo.com/kremlin-pursues-military-modernization-despite-economic-woes-130314823--finance.html Hundreds of new Russian aircraft, tanks and missiles are rolling off assembly lines. Russian jets roar through European skies under NATO's wary eye. Tens of thousands of troops take part in war games showing off the military's readiness for all-out war.
The muscle flexing suggests that Russia's economic woes so far are having no impact on the Kremlin's ambitious military modernization program.
Most Russian economic sectors face a 10 percent cut this year as Russia heads into recession. The military budget, meanwhile, rose by 33 percent to about 3.3 trillion rubles (some $50 billion). The buildup reflects President Vladimir Putin's apparent readiness to raise the ante in a showdown with the West over Ukraine - but it is unclear whether Russia can afford the modernization drive amid slumping oil prices and Western sanctions.
The new Russian military doctrine, endorsed by Putin in December, names NATO as a top threat to Russia and lays out a response to what the Kremlin sees as the alliance's expansion into Russia's sphere of interests. In the Ukraine crisis, Moscow for the first time demonstrated its new capacity for what experts call "hybrid" warfare, a combination of military force with a degree of deniability, sleek propaganda and political and economic pressure.
It is not only in Crimea - the strategic peninsula that Russia annexed from Ukraine - that the nation's 1-million strong military is beefing up its presence. Russia is also reviving Soviet-era airfields and opening new military bases in the Arctic. Last fall the military rattled sabers by briefly deploying state-of-the art missiles to Russia's westernmost Baltic exclave - Kaliningrad - and it is planning to send strategic bombers on regular patrols as far as the Caribbean and the Gulf of Mexico.
The West first got a sense of Russia's revived military might during last February's Crimea invasion. The U.S. and its NATO allies were caught off guard when waves of Russian heavy-lift military transport planes landed on the Black Sea peninsula days after the ouster of Ukraine's former Moscow-friendly president, unloading special forces which swiftly took over key facilities in the region and blocked Ukrainian troops at their bases. Dressed in unmarked uniforms and equipped with state-of-the art weapons, the Russian troops were a far cry from a ragtag demoralized force the military was just a few years ago. The Kremlin first claimed they were local volunteers, but Putin recognized after the annexation that they were Russian soldiers.
Another surprise for the West came a few weeks later, when well-organized groups of gunmen took over local government offices and police stations in several cities across Ukraine's mostly Russian-speaking eastern industrial heartland, triggering a rebellion that evolved into a full-scale war that killed more than 5,300 since April.
As fighting escalated in the east, the Russian military showed its agility by quickly deploying tens of thousands troops near the border with Ukraine. Ukraine and the West said that thousands of them crossed into Ukraine, helping turn the tide in rebels' favor. The Kremlin denies that, although it has acknowledged that Russian volunteers have joined the insurgency.
Unlike the past, when the Russian military was filled through unpopular conscription, the force has grown more professional and motivated. Relatively high salaries have attracted an increasing number of contract soldiers, whose number is set to exceed 350,000 this year from 295,000 in 2014. Russian Defense Minister Sergei Shoigu said that by the end of this year all battalion tactical groups - the core units in the Army, the Airborne Forces and the Marines - will be manned entirely by professional soldiers.
And in sharp contrast to the early post-Soviet years, when combat jets were grounded and navy vessels rusted dockside for lack of fuel, the military has dramatically increased both the scope and frequency of its drills. Ground forces conducted massive maneuvers near the Ukrainian border involving tens of thousands of troops, while navy ships sailed on regular missions and combat jets flew regular patrols near European borders to probe NATO's defenses. The alliance said it intercepted Russian aircraft more than 400 times last year and complained they posed a danger to civilian flights.
In Crimea, Russia had leased a major naval base even before the annexation. Now it has deployed dozens of combat jets, including nuclear-capable long-range bombers, along with air defense missiles, modern drones and other weapons. It is also preparing to dispatch more troops there.
Another key priority for the military is the Arctic, where global rivalry for major untapped oil and gas reserves is intensifying as polar ice melts. The military has restored long-abandoned Soviet-era airfields and other bases in the region after two decades of neglect. It formed a separate Arctic command to oversee its troops in the region.
Russia's weapons modernization plan envisages spending 20 trillion rubles on new weapons in 2011-2020. It produced some highly visible results last year, with the military receiving the highest numbers of new planes, missiles and armor since the 1991 Soviet collapse:
-Last year, the Russian armed forces obtained a record number of 38 nuclear-tipped intercontinental ballistic missiles. This year they are to get another 50, allowing the military to fulfill its ambitious goal of replacing Soviet-built nuclear missiles, which are approaching the end of their lifespan. Officials say the new ICBMs have the capacity to penetrate any prospective missile defenses.
-In a major breakthrough, the Russian navy finally conducted a series of successful test launches of the Bulava, a new submarine-based intercontinental ballistic missile, proving its reliability after a long and troublesome development. The navy already has two submarines equipped with the Bulava, and is to commission a third one next year. Five more are to follow.
-The ground forces are receiving large batches of Iskander missiles, which are capable of hitting enemy targets up to 500 kilometers (310 miles away) with high precision. Russian officials said the missiles, which can be equipped with a nuclear or conventional warhead, could be used to target NATO's U.S.-led missile defense sites. In a show of force, Iskanders were briefly deployed in December to the Kaliningrad exclave bordering NATO members Poland and Lithuania.
-The Russian air force received more than 250 new planes and helicopters last year and is set to receive more than 200 this year - numbers unseen since Soviet times. They include new models such as Su-34 bombers, Su-35 fighter jets and Mi-28 helicopter gunships equipped with sophisticated electronics and high-precision missiles.
-The Russian army this year is set to receive a new tank, which also will be used as the basis for a lineup of other armored vehicles. The model called Armata will be shown to the public during a Red Square parade in May. It surpasses all Western versions in having a remotely controlled cannon and a superior level of crew protection.
Its security enhanced by a new-look military, the Kremlin can be expected to pursue a defiant course in Ukraine and may raise the stakes further if the peace process fails.
The threat for Putin - who has insisted that Russia will not be drawn into a costly arms race with the West - is whether the massive military buildup will stretch the nation's economic potential beyond the limit.
Despite such challenges, the Kremlin made it clear that it will not cut corners on defense.
"The task set by the president not to allow anyone to get a military advantage over Russia will be fulfilled no matter what," Defense Minister Sergei Shoigu said at a meeting with the top brass last week.
Magog and the Kings of the East growing Energy Relationship - Nick Cunningham - http://time.com/3692820/russia-china-energy-relationship/
Russia has succeeded in capturing a larger share of the massive - and growing - Chinese oil import market
Russia's economic free fall and isolation from the West has made it increasingly eager to build its relationship with China, even at the cost of lost leverage with Beijing.
But new economic data from China shows that Russia has succeeded in capturing a larger share of the massive - and growing - Chinese oil import market. China's imports of Russian oil skyrocketed by 36 percent in 2014. The rapid rise in Russian oil exports to China is displacing other sources, such as Saudi Arabia and other OPEC members. The Wall Street Journal reports that China's oil imports from Saudi Arabia fell 8 percent in 2014, and imports from Venezuela fell 11 percent.
The data suggests that Russia and China are finally forging closer trade ties based on energy. They share a massive border, but have been unable to capitalize on what has long appeared to be a well-matched economic opportunity - Russia is a huge energy producer and China is the world's largest importer of petroleum products. Historic animosity and mutual suspicion had long left a major deal off the table.
The sticking point had been price. Years of negotiations over major natural gas trade stalled as each side held out for more favorable terms.
However, the conflict in Ukraine and the near-severing of relations between Russia and Europe led to a breakthrough in the Sino-Russian energy relationship - in Beijing's favor. They agreed to a major natural gas deal in May 2014 that could see Russia export 38 billion cubic meters per year to China beginning in 2018, with the option of ramping those figures up to 60 bcm per year at a later point. Crucially, the two sides appeared to agree on a price in the range of $9-$10 per million Btu (MMBtu), much closer to China's preferred price point. The exact terms were not disclosed, but China may have even secured a lower price than Europe pays for Russian gas.
On the other hand, the collapse of oil prices have also forced down the price of liquefied natural gas (LNG), another vital source of imports for China. LNG spot prices have dipped below $10/MMBtu. While LNG prices are highly volatile and may not stay low for long, for now the Russia-China gas deal (if it goes through) looks a bit better for Russia than it did last year, having potentially locked in a price higher than it might have otherwise received after LNG prices collapsed.
Nevertheless, Russia is increasingly at China's mercy, as it offers a crucial lifeline. Rosneft has received advanced payments from China in exchange for future oil exports, and other Russian firms have obtained loans from Chinese companies, as they are unable to access international financial markets because of western sanctions.
Moreover, not only was price a sticking point in the natural gas deal, but so was the issue over China taking equity stakes in Russian energy projects. Russia feared a geopolitical disadvantage if China acquired ownership in oil and gas fields within Russian borders.
But that too appears to be changing in China's favor. In 2013, China's CNPC took a 20 percent stake in the Yamal LNG project, and agreed to jointly develop oil and gas fields in eastern Siberia with Russia's state-owned oil company Rosneft. And in November 2014, a subsidiary of CNPC gained access to a major oil field in Russia. CNPC will take a 10 percent stake in ZAO Vankorneft (a subsidiary of Rosneft), which is seeking to develop an oil field that could produce 1 million barrels per day by 2020. Such upstream equity stakes were something that Russia had opposed until recently. More upstream acquisitions by Chinese firms in Russia could be in the offing as Russia's economic and geopolitical position has weakened.
As a result, Russia and China are forming a much stronger symbiotic relationship. Although for very different reasons, that suits both countries just fine.
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