0654GMT//Putin-Macron chat on the phone; Relations with Azerbaijan worsen; Fee imposed for airport smoking room
PUTIN-MACRON CONVERSATION: Vladimir Putin held a telephone conversation with French Pres. Emmanuel Macron on Tuesday for the first time since September 2022. According to the Kremlin, the telephone conversation lasted two hours and was "substantive". (COMMENT: Macron and Putin reiterated their public positions – Macron said he recognised Ukraine's sovereignty; Putin blamed the West for the war. They both called for a ceasefire in Ukraine. None of this is surprising but it is important that this dialogue channel appears to have reopened. Macron has always been viewed as having a better 'in' with Putin than other senior European leaders. This doesn't mean a peace deal is on the table for the war in Ukraine but it may be a small step in that direction.)
AZERBAIJANI ARRESTS: Azerbaijan police arrested several Russians for drug-running and cybercrime offences, largely seen as a response to the arrest of 50 Azerbaijanis in a police raid last week. Two Azerbaijanis were also killed in the police raid in Yekaterinburg. The Russian men were paraded in an Azerbaijani court with bruises across their faces. Outraged Russian bloggers Telegram said that the arrested men were tech programmers, engineers and a psychologist who fled Russia in 2022 when the Kremlin ordered a partial mobilisation. The Azerbaijani government also ordered the closure of all Russian-language schools. In Russia, police arrested a high-profile Azerbaijani businessman in Yekaterinburg and another in the city of Voronezh. (COMMENT: The collapse in relations between Russia and Azerbaijan is worsening. The arrest of the Azerbaijani businessman in Voronezh means that the row has now spread from Yekaterinburg. It's worth repeating that Azerbaijan has become an important ally to the Kremlin by agreeing to host upgraded infrastructure for its North-South transport corridor. Putin flew to Baku last year for a private dinner with Azerbaijani Pres. Ilham Aliyev and his wife.)
EX-DEPUTY DEFENCE MINISTER JAILED: Timur Ivanov, a deputy minister of defence in Russia until his arrest in 2024, was sentenced to 13 years in prison on Tuesday for taking billions of roubles in bribes. (COMMENT: This is a reminder that corruption is rampant in Russia. Officials can get away with it until their more senior protection fails. In this case, Sergei Shoigu, an associate of Putin, was shifted from Defence Minister to Secretary of Russia's Security Council in May 2024. This exposed Ivanov, an ally of Shoigu.)
BAD LOANS GROW: VTB, a Russian bank, said that the proportion of its retail loans that were now overdue had risen. It said that loans more than 90 days overdue were now 4% of its portfolio, up from 3.5% at the start of the year. VTB also warned that this proportion may hit 6% or 7% by 2026. (COMMENT: Economists have been warning that borrowers were struggling to deal with the high interest rates in Russia.)
HIRING DISABLED PEOPLE: Putin on Tuesday ordered his government to look into how businesses can hire more disabled people to plug massive gaps in Russia's workforce. The number of disabled people in Russia has soared since 2022 with thousands of men returning from the war in Ukraine physically and mentally broken. (COMMENT: Russia's tight labour market is pushing up inflation. At the end of last year, a think tank estimated that Russia was short of around 2.6 million workers, a 17% increase from the year before.)
FOREIGN INVESTMENT: Putin on Tuesday signed a decree that should make it easier, in theory, for foreign companies to invest in Russia. The decree bypasses laws introduced in 2022/23 that blocked most foreign investment in Russia. Now, a foreign company from an "unfriendly country" can invest in Russia through a company based in a "friendly country". (COMMENT: It's unclear if this is window-dressing by the Kremlin or a genuine attempt at preparing the ground for foreign investors to return.)
WAR IN URKAINE: Russia has now captured the whole of the Luhansk region in eastern Ukraine, Russian officials have claimed. (COMMENT: Luhansk is one of two regions in Ukraine's Donbas region. Putin made the capture of Luhansk and Donetsk a priority. Its capture is unlikely to make any difference to Russian offensive plans but it does serve as a reminder that the Russian army is rumbling on in Ukraine.)
DRONE HITS ARMS FACTORY: Ukrainian drones on Tuesday struck a factory in Izhevsk, in Russia's Urals, that produces parts for Russian surface-to-air missiles and radar stations. The drone strike killed three people and injured 45. (COMMENT: The daytime drone strike on Izhevsk is another embarrassment for Russia's air defences. The city lies more than 1,000km from Ukraine. Russian media broadly ignored the strike.)
FIGHTER JET CRASH: An Su-34 fighter jet crashed on Tuesday outside Nizhny Novgorod in central Russia. The pilots managed to eject. (COMMENT: Fighter jet crashes in Russia are not uncommon. This is the third crash this year. Su-34 fight jets are used regularly by the Russian air force in Ukraine. They cost an estimated $15 million each.)
NEW MILITARY LEADERSHIP SCHOOLS: Russia plans to open 15 new military schools across the country to train up officers and NCOs, a defence ministry source told the Izvestia newspaper on Tuesday. The Ministry of Defence source said that the extra officers were needed to plug gaps created by the war in Ukraine. (COMMENT: This move is another indication of the attritional impact of the war in Ukraine on the Russian military. The Russian army is not in any position to take on Nato directly.)
FEE TO SMOKE AT AIRPORT: Pulkovo Airport in St Petersburg has started charging people 500 roubles ($6.36) to use its smoking room. This is the first charged-smoking room in Russia.
KYRGYZ LEADER IN THE KREMLIN: Kyrgyz Pres. Sadyr Japarov is expected to hold talks with Putin in the Kremlin on Wednesday. (COMMENT: Japarov has proved himself to be a valuable Kremlin ally, helping Russia skirt Western sanctions. It also hosts a Kremlin-backed cryptocurrency.)
NEWS MATRIX:
There is no doubt that the telephone conversation between Putin and Macron is important. This was their first for nearly three years. It's unclear if the reopening of communications between Macron and Putin is going to push the Kremlin towards a peace deal in Ukraine or not but it must be a small step in that direction. Worsening Azerbaijan-Russia relations are important. The Kremlin had been relying on Azerbaijan to act as a faithful ally on its southern fringe.