0805GMT//Putin skips funeral of minister who shot himself; Lavrov and Rubio meet; Kremlin bank sets up in Abkhazia
PUTING SKIPS MINISTER'S FUNERAL: Vladimir Putin ducked out of attending the funeral on Thursday of Roman Starovoyt, his former transport minister who killed himself on Sunday evening after being accused of corruption. The Kremlin said that Putin was busy with work. (COMMENT: Starovoyt's suicide is a problem for Putin. Corruption is endemic in Russia. It's part of the system of reward and control. If an official steps out of line or gets too powerful he/she will be slapped down with a corruption investigation. Corrupt officials are meant to take their punishment, in return for getting rich. What they are not meant to do, is shoot themselves. And so, by killing himself, Starovoyt has challenged the Putin regime and dented the elite's confidence in the Kremlin.)
RUSSIA-US MEETING: Sergei Lavrov, Russia's foreign minister, met with Marco Rubio, the US Secretary of State, for talks in Kuala Lumpur on the sidelines of a regional economic conference. The talks, focused on Ukraine and Iran, lasted 50 minutes and were described as "honest and important" by Washington and "constructive and mutually respectful" by the Kremlin. (COMMENT: These talks are important because a detente between the US and Russia has drifted and slipped over the past couple of months. These bilateral meetings are useful for the Kremlin as, through its propaganda outlets, it can portray the US as desperate to talk to the Kremlin.)
THE KREMLIN'S ABKHAZIA GRAB: Russia's state-owned PSB Bank opened its first branch in Sukhomi, the capital of Abkhazia, on Thursday. Abkhazia is a breakaway region of Georgia lying on the Black Sea. In attendance was Sergei Kiriyenko, a top Kremlin official who advises Putin and is his personal envoy to "new regions of Russia". (COMMENT: Abkhazia is increasingly the focus of a power grab by the Kremlin. This year the Kremlin set up direct tourist flights to Sukhomi from Russia for the first time since the early 1990s. In 2023, it announced plans to build a new naval base in Abkhazia. PSB Bank is seen as an extension of the Kremlin and is used to pay pensions. The presence of Kiriyenko at the opening of the branch is also an indicator of just how important the Kremlin sees the bank branch opening and more control in Abkhazia. Abkhazia broke away from Georgia in the 1990s after a war. The Kremlin recognised it as independent after Russia fought a brief war with Abkhazia in 2008. The Kremlin, essentially, already bankrolls Abkhazia.)
CHILDLESS COUPLE TAX FLOATED: A Russian MP has floated the idea of taxing couples who don't have children. (COMMENT: Boosting Russia's birth rate is one of the Kremlin's pet projects. It already hands out extra benefits to couples who have several children, now it may also tax couples who don't have any.)
AIRCRAFT CARRIER SCRAPPED: The Kremlin has decided to scrap the modernisation of Russia's only aircraft carrier because of major cost overruns, Russia's Izvestia newspaper reported. The Admiral Kuznetsov has been undergoing repairs in the port of Murmansk since 2018. (COMMENT: This is a blow to the Kremlin's naval authority but this moment had been coming.)
ELECTRONIC PAYMENT OUTAGE: Russia's Fast Payment System (FPS) suffered a major outage on Thursday, delaying payments and transactions between accounts. Media reported that 4,500 incidents linked to Russia's FPS were reported within an hour of the 4pm outage. Kremlin officials confirmed the outage but denied it was linked to a cyberattack. (COMMENT: This is the third or fourth serious FPS outage in Russia this year and raises questions about the system's robustness.)
GRAIN EXPORTS COLLAPSE: Agriculture officials confirmed earlier estimates this week that Russia would only export 2m tonnes of grain in July – a drop of 50% from July 2024 and the lowest monthly sale since 2008. (COMMENT: This is a blow to the Kremlin's income and more bad economic news for Russia. Farmers have blamed a poor 2024 harvest and increased competition from foreign grain producers.)
DRONE THREAT: St Petersburg city has become the latest local government in Russia to warn citizens that it may have to reduce mobile internet coverage to limit the threat from drone attacks. (COMMENT: Ukraine's drone attacks on Russia are undermining civilian infrastructure – governments from Rostov in south Russia to Kamchatka in the Far East have slowed mobile internet or warned that they may have to. Passenger flights across Russia are regularly disrupted.)
NEWS MATRIX:
Putin skipping the funeral of a minister who shot himself is not a surprise at all. The suicide has embarrassed Putin and it would have been more surprising if he'd actually gone to the funeral. It is 'quite important', though, because the suicide has eroded the Russian elite's confidence in Putin. Dead ministers are bad for morale, even if they have been accused of corruption.
Russia's PSB Bank setting up in Abkhazia is not a surprise as it had been flagged up but it is important as it shows the Kremlin's interest in asserting control over the Georgian breakaway region.
The Lavrov-Rubio meeting is not a surprise but it is important as Russia-US talks need momentum.
The Admiral Kuznetsov aircraft carrier has been rusting in Murmansk for nearly a decade. To resurrect it was probably impossible without huge cost. And to pursue its war in Ukraine, the Kremlin doesn't need it.