0635GMT//Longterm Putin ally quits the Kremlin; UK arrests Russian spies; lower interest rats expected
PUTIN ALLY QUITS KREMLIN: Dmitry Kozak, one of Vladimir Putin's closest Kremlin allies and the only one to speak out publicly against the invasion of Ukraine, has quit the Russian government. Kozak was deputy head of the Presidential Administration and is perhaps the only high-ranking Russian government official to voluntarily leave the Kremlin under Putin. (COMMENT: It had only been a matter of time before Kozak quit the Russian government since his responsibilities for the Kremlin's relationships with captured regions of Ukraine and former Soviet states were handed last month to his rival Sergei Kiriyenko, also a deputy head of the Presidential Administration. Kozak was offered the job of the President's representative to the Northwestern Federal District instead, but Kremlin sources said that he has turned this down. On Feb. 21 2022, the day before Russia's invasion of Ukraine, Kozak spoke for 40 minutes at an extended Security Council meeting against invading Ukraine. He was the only one. This speech was edited out of the official transcript of the meeting. Since then, Kozak has played an increasingly marginalised role in the Kremlin. Kozak has worked with Putin since the 1990s, when Putin was the deputy mayor of St Petersburg. In practical terms, Kozak's leaving the Kremlin changes very little. Symbolically, though, this is an important shift. Putin has relied on Kozak throughout his career as his envoy and enforcer. As we know, the war and attitudes to the war are central for career progression in Russia now. Kozak spoke out against the war, a move that ended his career. To a degree, Putin showed Kozak loyalty by allowing him to stay on in the Kremlin after he opposed the war in Ukraine. That leniency has now ended.)
PUTIN SUGGESTS TAX RISES: At a meeting with parliamentary leaders on Thursday, Putin suggested that taxes could be raised on wealthy people to plug a gap in the government's finances. He said that a "luxury tax" or a tax on stock market dividends could be introduced. Kremlin sources also said that a rise in VAT in Russia is being considered. (COMMENT: Putin didn't give any more details on tax rises but this is still an important indicator that the Kremlin understands that it needs to raise more cash from its underperforming economy to fund the war in Ukraine. Any rises will be unlikely, but the Kremlin also knows that they are needed. Last year, the Kremlin raised income tax for higher earners.)
PROMOTE WAR HEROES, SAYS PUTIN: At the same meeting, Putin urged businesses and politicians to keep promoting "heroes" of the war in Ukraine. He told the political leaders to "seek people who fear nothing in serving the Motherland, who are willing to risk their health and their lives". (COMMENT: Promoting veterans of his war in Ukraine is a key policy of Putin. It's part of his "Time of Heroes" programme and is designed to show the Russian public that they can expect to be rewarded if they go to war for him in Russia.)
KIRIYENKO AT PUTIN'S SIDE: One other takeaway from Putin's meeting with senior Duma deputies is that Sergei Kiriyenko, deputy head of the Presidential Administration, was sitting next to him. (COMMENT: Kiriyenko has had his responsibilities expanded recently and is generally given the thorniest problems by Putin. In other words, Putin trusts him and considers him an effective operator. He is the coming man.)
UK ARRESTS RUSSIAN SPIES: Police in Britain on Wednesday arrested three people for spying for Russia. Two men and a woman, aged between 35 and 46, were arrested in Essex near London. (COMMENT: The arrests came shortly after Lithuania accused Russia of being behind a series of parcel bombs across Europe last year. Russia has been stepping up its recruitment of low-level spies throughout Europe.)
FINANCE MINISTRY EXPECTS LOWER INTEREST RATES: Russia's finance ministry has drawn up a budget for 2026 with an expected interest rate of 12-13%, finance minister Anton Siluanov said on Thursday. (COMMENT: This is a strong indicator of further interest rate cuts. Interest rates in Russia are currently at 17%.)
NAVLANY WAS POISONED, SAYS HIS WIDOW: Alexey Navalny was poisoned in his prison cell in the Russian Arctic and didn't die of a heart attack, his widow has said. She posted photos of what she said was his prison cell with red vomit down one wall, and covering the floor. Navalny died on Feb. 16 2024, a few weeks before a presidential election in Russia. (COMMENT: This is not conclusive proof that Navalny was killed by the Kremlin, but it does pile up more evidence. The timing of Navalny's death was very convenient for the Kremlin.)