Russia detains WSJ journalist

[TexasHooch 5122]

Well this isn't good.

https://www.nytimes.com/2023/03/30/world/europe/russia-wsj-reporter-detained-gershkovich.html

 

Quote

The Russian authorities said on Thursday that they had detained an American journalist for The Wall Street Journal and accused him of espionage, marking a new escalation in Moscow’s tensions with the United States and with foreign media organizations since the start of its invasion of Ukraine.

The journalist, Evan Gershkovich, a correspondent based in Moscow, is believed to be the first American reporter to be held as an accused spy in Russia since the collapse of the Soviet Union. His detention comes as relations between Russia and the United States continue to deteriorate, with Washington leading a coalition of nations supporting Ukraine’s military defense and pushing for Moscow’s further diplomatic and economic isolation.

The Russian Federal Security Service, or F.S.B., said in a statement that Mr. Gershkovich “is suspected of spying in the interests of the American government” and had been detained in Yekaterinburg, a city about 900 miles east of Moscow in the Ural Mountains. The F.S.B. is a successor agency to the Soviet-era K.G.B.

“It was established that E. Gershkovich, acting on the instructions of the American side, collected information constituting a state secret about the activities of one of the enterprises of the Russian military-industrial complex,” the F.S.B. said. Hours after the F.S.B.’s announcement, the Kremlin endorsed Mr. Gershkovich’s arrest.

“We’re not talking about suspicions,” Dmitri S. Peskov, spokesman for President Vladimir V. Putin of Russia, said in a daily conference call with journalists, adding, “He was caught red-handed.” Mr. Peskov said he could not provide further details.

In a statement, The Wall Street Journal strongly rejected Russia’s accusations and said that it was concerned for Mr. Gershkovich’s safety.

 

[ryskey 447]

Dude had to have known that was a big risk.  Ignored dozens of warnings to GTFO.

[statsman 5456]

2 minutes ago, ryskey said:

Dude had to have known that was a big risk.  Ignored dozens of warnings to GTFO.

Why do you say that? Did you read the WSJ article? Do you think he is staying in Russia against the will of his employer?

[956 Worldwide 34705]

He published a long-read article on how Russia’s economy is collapsing the day before his arrest. I won’t post it all here even with spoilers.

https://www.wsj.com/articles/russias-economy-is-starting-to-come-undone-431a2878
 

It was management malpractice for the WSJ to leave a U.S. citizen there in this environment. 

[ztejas 43414]

How many journalists are over there still? Can't be a lot.

[statsman 5456]

2 minutes ago, 956 Worldwide said:

He published a long-read article on how Russia’s economy is collapsing the day before his arrest. I won’t post it all here even with spoilers.

https://www.wsj.com/articles/russias-economy-is-starting-to-come-undone-431a2878
 

It was management malpractice for the WSJ to leave a U.S. citizen there in this environment. 

Why do you say that? Is Washington signaling that they’re not prioriyhis release?

[TexasHooch 5122]

3 minutes ago, 956 Worldwide said:

He published a long-read article on how Russia’s economy is collapsing the day before his arrest. I won’t post it all here even with spoilers.

https://www.wsj.com/articles/russias-economy-is-starting-to-come-undone-431a2878
 

It was management malpractice for the WSJ to leave a U.S. citizen there in this environment. 

It's paywalled.  I know my way around NYT walls but not WSJ's.  

[956 Worldwide 34705]

Just now, statsman said:

Why do you say that? Is Washington signaling that they’re not prioriyhis release?

Washington has clearly told every single American citizen to leave Russia and specifically warned of political-related arrests and prison terms:

Quote

Do not travel to Russia due to the unpredictable consequences of the unprovoked full-scale invasion of Ukraine by Russian military forces, the potential for harassment and the singling out of U.S. citizens for detention by Russian government security officials, the arbitrary enforcement of local law, limited flights into and out of Russia, the Embassy’s limited ability to assist U.S. citizens in Russia, and the possibility of terrorism. U.S. citizens residing or travelling in Russia should depart immediately. Exercise increased caution due to the risk of wrongful detentions.

https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/RussianFederation.html
 

Yes, when it’s that black and white, leaving a U.S. citizen to report on sensitive political matters is indeed management malpractice.
 

As a reminder, we had to exchange a weapons dealer for a basketball playe last time. 

[statsman 5456]

5 minutes ago, ztejas said:

How many journalists are over there still? Can't be a lot.

Simple googling shows that the WP, the NYT and the Times all have Moscow correspondents. My guess is the Kremlin bureau that covers them gave assurances that they would be protected, and those assurances proved to be worthless. 
 
I suspect the WSJ correspondent drew the short straw. I won’t be surprised if the others are withdrawn. 
 
Russia has gone full rogue nation 

Edited March 30, 2023 by statsman

[956 Worldwide 34705]

6 minutes ago, TexasHooch said:

It's paywalled.  I know my way around NYT walls but not WSJ's.  

Tried to but surly breaks when I try to spoiler, it’s that long. Can’t sit down now and slice it into separate copy/paste. 

[statsman 5456]

Shareable link

A Russian economy that survived 2022 faces a long-term deep freeze. “There will be no money next year.”  
https://www.wsj.com/articles/russias-economy-is-starting-to-come-undone-431a2878?st=q7xi8020ugnipim&reflink=share_mobilewebshare

[kevwun 15770]

5 minutes ago, statsman said:

Simple googling shows that the WP, the NYT and the Times all have Moscow correspondents. My guess is the Kremlin bureau that covers them gave assurances that they would be protected, and those assurances proved to be worthless. 
 
I suspect the WSJ correspondent drew the short straw. I won’t be surprised if the others are withdrawn. 
 
Russia has gone full rogue nation 

There's only one person on earth who can give assurances on what Russia will do and his word isn't worth a bucket of spit.

[ztejas 43414]

This was 8 months ago.

https://www.npr.org/2022/06/09/1103997613/russia-threatens-to-kick-out-u-s-journalists-unless-u-s-treats-russian-media-bet

 

[Kennythetiger 9376]

How is he at playing basketball?  

[TexasHooch 5122]

6 minutes ago, 956 Worldwide said:

Tried to but surly breaks when I try to spoiler, it’s that long. Can’t sit down now and slice it into separate copy/paste. 

TLDR?  Lol, just kidding.  Thanks for the alternate link Statsman.  NYT article above mentions that it's believed to be his military reporting that made him a target.

Quote

Tatiana Stanovaya, a senior fellow at the Carnegie Russia Eurasia Center who is based in France, said that Mr. Gershkovich’s reporting on the Russian military was what had most likely attracted the attention of the Russian security services, adding that they probably saw an opportunity to gain a new negotiating chip.

 

Edited March 30, 2023 by TexasHooch

[Neonmoon 38129]

At least it's not Saudi Arabia

[956 Worldwide 34705]

1 minute ago, kevwun said:

There's only one person on earth who can give assurances on what Russia will do and his word isn't worth a bucket of spit.

Exactly. This is incredibly poor decision making by WSJ staff. The government is explicitly told everyone to leave because of exactly this risk.  And it has consequences for U.S. policy now. It’s hard to see the choice to leave any American in Russia as a good one, but the choice to leave one to report on things that will make Putin mad goes beyond that. As a reminder, he kills Russian journalists. 

[Parliament 14249]

Can we trade him for Brittany Griner?

Can we trade him for Brittany Griner?

[956 Worldwide 34705]

I will also bet that this is closely linked to this story. Russia will ask us to drop an extradition request and pressure Brazil to let this guy go back to Russia. Russia is big on signaling and mirroring and the “unofficial spy” allegations are a method of telling Washington what they want without ever saying a word directly.

https://amp.theguardian.com/world/2023/mar/26/us-indicts-alleged-russian-spy-sergey-cherkasov-who-tried-to-infiltrate-icc-in-the-hague
 

Quote

US authorities have released new details about an alleged Russian spy who attempted to penetrate the international criminal court in The Hague, using a false identity developed over a decade.

An indictment made public on Saturday accuses Sergey Cherkasov, who US intelligence believes is an elite “illegal” operative of Russia’s GRU military intelligence agency. Cherkasov posed as Brazilian citizen Victor Muller Ferreira over many years.

Cherkasov, in his cover identity, took a masters at Johns Hopkins University in US foreign policy and won an internship at the ICC. He was detained on arrival in the Netherlands last April when he presented his Ferreira passport.

Our guy got arrested a few days after that indictment was made public. 

[Kel Varnsen 8458]

29 minutes ago, Parliament said:

Can we trade him for Brittany Griner?

Can we trade him for Brittany Griner?

[956 Worldwide 34705]

46 minutes ago, statsman said:
 
I suspect the WSJ correspondent drew the short straw. I won’t be surprised if the others are withdrawn. 
 
Russia has gone full rogue nation 

That’s a side benefit, other outlets pulling their people and the ones left will be chilled. As well as now he has a “spy” to bargain with. 
 

You cannot go wrong analyzing Putin if you ask yourself “what would the head of a crime family do, and why.” 

[686 3448]

The WSJ links are all paywalled up now - anybody have a Cliff’s of what he was citing regarding the Russian economy?

[Neonmoon 38129]

2 minutes ago, 686 said:

The WSJ links are all paywalled up now - anybody have a Cliff’s of what he was citing regarding the Russian economy?

There’s a shareable link a few posts up 

[Skipper 6130]

3 hours ago, statsman said:

Simple googling shows that the WP, the NYT and the Times all have Moscow correspondents. My guess is the Kremlin bureau that covers them gave assurances that they would be protected, and those assurances proved to be worthless. 
 

Well that's a big fucking shocker.  Agreed 100% this was absolutely idiotic of this journalist and the WSJ to put us in this position.  We all bitched about Griner's dumbass being over there a year ago but this is clearly worse.   He should have been doing his job from Poland and backchanneling the best he could.  Ridiculous for any American no matter the circumstances to still be on Russian soil.

[686 3448]

There’s a shareable link a few posts up 

It paywalls for me.?.

[atomheartbevo 89630]

3 hours ago, Neonmoon said:

At least it's not Saudi Arabia

[52-80 19147]

4 hours ago, Kennythetiger said:

How is he at playing basketball?  

What if he merely identifies as one?

1 hour ago, 686 said:

The WSJ links are all paywalled up now - anybody have a Cliff’s of what he was citing regarding the Russian economy?

Archive.ph all articles

[MNLonghornFUKM 8817]

Viktor Bout have any buddies we have that he wants to bring home?

[ztejas 43414]

1 hour ago, Skipper said:

Ridiculous for any American no matter the circumstances to still be on Russian soil.

Yeah I mean this is basically where we're at - which is really sad. 

I think I'm out of sympathy for anyone getting arrested over there. I appreciate the balls of these journalists to still try and report from Russia - but they're aware of the risks involved. 

[HamsterHookah 112]

29 minutes ago, ztejas said:

Yeah I mean this is basically where we're at - which is really sad. 

I think I'm out of sympathy for anyone getting arrested over there. I appreciate the balls of these journalists to still try and report from Russia - but they're aware of the risks involved. 

This. 

But what do you do? You gotta overpay to get the guy back, I guess.

[statsman 5456]

Well, Whelan has been in jail in Russia for five years, now. I guess they want more than we’re willing to pay. We kind of set the bar with the Griner deal. Mr. Gershkovich may be in jail for a very long time. 
 
It sounds like the NYT and WP are quietly bringing people out. 
 
I think the post above, that compared Putin to a mob boss, had it right. The alternative to overpaying for an exchange is for the US to find a way to hurt them more, and to step over the line doing it. Maybe give Ukraine some weapons we weren’t going to, draw a linkage, and explain that more can be coming. Or maybe grab some more oligarch assets. 
 
There was a reason that, 2,000 years ago, foreign states were careful with Roman citizens. The US could start thinking like Rome. 

[Deej 76756]

20 hours ago, Skipper said:

We all bitched about Griner's dumbass being over there a year ago but this is clearly worse. 

Was this guy dumb enough to carry a vape pen in his carry on? 

[gsoda3 3252]

Quote

MOSCOW—The opening months of Russia’s invasion of Ukraine last year drove an increase in oil and natural-gas prices that brought a windfall for Moscow. Those days are over.

As the war continues into its second year and Western sanctions bite harder, Russia’s government revenue is being squeezed and its economy has shifted to a lower-growth trajectory, likely for the long term.

The country’s biggest exports, gas and oil, have lost major customers. Government finances are strained. The ruble is down over 20% since November against the dollar. The labor force has shrunk as young people are sent to the front or flee the country over fears of being drafted. Uncertainty has curbed business investment.

“Russia’s economy is entering a long-term regression,” predicted Alexandra Prokopenko, a former Russian Central Bank official who left the country shortly after the invasion.

There is no sign the economic difficulties are bad enough to pose a short-term threat to Russia’s ability to wage war. But state revenue shortfalls suggest an intensifying dilemma over how to reconcile ballooning military expenditures with the subsidies and social spending that have helped President Vladimir Putin shield civilians from hardship.

Russian billionaire Oleg Deripaska warned this month that Russia is running out of cash. “There will be no money next year, we need foreign investors,” the raw-materials magnate said at an economic conference.

Having largely lost its European market next door, and with other Western investors pulling out, Moscow is becoming ever more reliant on China, threatening to realize long-simmering fears in Moscow of becoming an economic colony of its dominant southern neighbor.

“Despite Russia’s resilience in the short term, the long-term picture is bleak: Moscow will be much more inward-looking and overly dependent on China,” said Maria Shagina, a senior fellow at the International Institute for Strategic Studies think tank in London.

A big part of the dimming outlook stems from a bad bet by Mr. Putin last year that he could use Russian energy supplies to limit Western Europe’s support for Ukraine.

European governments, instead of tempering their support for Kyiv, moved rapidly to find new sources of natural gas and oil. Most Russian gas flows to Europe stopped, and after an initial jump, global gas prices fell sharply. Moscow now says it will cut its oil production by 5% until June from its previous level. It is selling its oil at a discount to global prices.

As a result, the government’s energy revenue fell by nearly half in the first two months of this year compared with last year, while the budget deficit deepened. The fiscal gap hit $34 billion in those first two months, the equivalent of more than 1.5% of the country’s total economic output. That is forcing Moscow to dip deeper into its sovereign-wealth fund, one of its main anti-crisis buffers.

The government can still borrow domestically, and the sovereign-wealth fund still has $147 billion, even after shrinking by $28 billion since before the invasion. Russia has found ways to sell its oil to China and India. China has stepped in to provide many parts Russia used to get from the West.

Russian officials have acknowledged the difficulties but say the economy has been quick to adapt. Mr. Putin has said his government has been effective in countering the threats to the economy.

“You know, there is a maxim, guns versus butter,” Mr. Putin said in a state-of-the-nation address last month. “Of course, national defense is the top priority, but in resolving strategic tasks in this area, we should not repeat the mistakes of the past and should not destroy our own economy.”

For much of Mr. Putin’s more than 20 years in charge, high oil and gas revenue underpinned a social contract that saw most Russians largely staying out of opposition politics and protests in exchange for rising living standards.

The International Monetary Fund has estimated that Russia’s potential growth rate—the rate at which it could grow without courting inflation—was around 3.5% before 2014, the year it seized Crimea from Ukraine. That has now fallen to around 1%, some economists say, as productivity declines and the economy becomes technologically backward and more isolated.

“For an economy like Russia, 1% is nothing; it’s not even a maintenance level,” said Ms. Prokopenko, the former central bank official.

 

The fall in exports, tight labor market and increased government spending are worsening inflation risks, the central bank said this month. Russia’s inflation was running at around 11% in February compared with that month last year. That rate will temporarily fall below 4% in the coming months, the central bank said, though that is because of the high comparison base of the post-invasion surge in prices last year. A number of other economic indicators will also temporarily improve in the coming months due to such base effects, economists say.

The country’s industry is in its worst labor crunch since records began in 1993, the Moscow-based Gaidar Institute for Economic Policy has said. The post-invasion brain drain and last fall’s 300,000-man military mobilization have resulted in around half of businesses facing worker shortages, according to the central bank. Locksmiths, welders and machine operators are in high demand.

On a recent visit to an aircraft factory, Mr. Putin said the labor shortage is hampering military production. He said the government has prepared a list of priority professions for deferment from service.

Before the war, Oleg Mansurov dreamed of competing with Elon Musk’s SpaceX. After the invasion, investors in Mr. Mansurov’s Moscow-based SR Space pulled their funds.

 

By April 2022, the private company, which he launched in 2020 with venture-capital funding, was facing bankruptcy. To save it, he turned it into an IT business, providing services from web design to analyzing satellite imagery.

Western satellite-imaging-service companies had left the Russian market over the war, and Mr. Mansurov secured interest from large state-controlled enterprises that previously rejected his approaches, such as Gazprom PJSC and the nuclear-engineering company Rosatom.

“We became more focused not on the development of a long-term product that would make some kind of qualitative leap but on simply becoming a classic business and generating revenue,” Mr. Mansurov said. “We understood we just had to survive.”

Companies are adapting to the West’s import bans. While Moscow has boosted imports of technologies critical to its war in Ukraine from other countries, including semiconductors and microchips from China, in many civilian sectors, parts are difficult to replace.

The central bank has said risks are rising in the airline sector, where a deficit of new aircraft and parts could lead to problems with maintenance. IT and finance firms are struggling without access to Western technologies such as software, database-management systems and analytics tools and equipment, the bank said.

 

Russia tried import substitution—replacing foreign goods with homemade ones—for years before the current sanctions, with limited success. A large chunk of its telecommunications equipment and advanced oil drilling software is imported.

“This is a little bit like going back to Soviet times, doing everything ourselves,” said Vasily Astrov, an economist at the Vienna Institute for International Economic Studies. “It will be nearly impossible to properly replace what’s missing.” Analysts at the central bank have called the postwar reality “reverse industrialization,” suggesting a reliance on less-sophisticated technology.

Ilya Korovenkov, director of Chili. Lab, a boutique IT company in Nizhny Novgorod developing web services and e-marketplaces, said that before the war, clients would often order new capabilities and functions. Now, the work is focused on fixing and improving existing systems.

“It’s logical,” he said. “We don’t know what will happen in a month. We need to wait it out.”

With all these changes, the Russian economy is becoming more dependent on the state.

Much industrial-production growth now comes from factories turning out missiles, artillery shells and military clothing, replacing the vast quantities used in the war. Some factories are working multiple shifts to cope with demand, Mr. Putin has said.

While official statistics don’t break out military production, the output of “finished metal goods”—a line that analysts say includes weapons and ammunition—rose by 7% last year. Production of computers, electronic and optical products, another line said to include military output, rose by 2% for the year and 41% in December compared with November. By contrast, auto output fell about 45% year-over-year.

Military production masks the problems. “This isn’t real, productive growth. This doesn’t develop the economy,” Ms. Prokopenko said.

Russia managed to avoid the worst last year, aided initially by high global energy prices. Gross domestic product fell 2.1%, according to official data, far less than some early forecasts of a 10% to 15% drop.

Gas exports to Europe didn’t start tailing off until last summer. The EU’s ban on Russian seaborne oil and a Group of Seven price cap began to take effect only in December. Sanctions on oil products such as diesel took effect last month. These delays kept energy revenue up and helped the government unleash a huge fiscal stimulus of around 4% of GDP in 2022, according to the IMF.

In January and February of this year, however, oil and gas tax revenue, which accounts for nearly half of total budget revenue, fell by 46% year-over-year, while state spending jumped more than 50%.

Analysts estimate that Russia’s fiscal break-even oil price—what it would need to balance its books—has swelled to over $100 a barrel as war spending weighs on the budget.

The country’s flagship Urals crude fetched an average of $49.56 a barrel in February, according to the Ministry of Finance, a deep discount to the benchmark Brent, which traded around $80 a barrel that month, although some analysts argue the difference is smaller. The government last month changed its oil-taxation formula in an effort to squeeze more from producers.

“Russia now has a lower bargaining power in the world oil market because they have much less choice where to ship the oil,” said Mr. Astrov, the Vienna Institute economist.

Consumers are ailing, too. Retail sales fell 6.7% in 2022, the worst showing since 2015, according to official data. New-car sales fell by 62% in February year-on-year, according to the Moscow-based Association of European Businesses.

 

Nearly a decade ago, Artem Temirov and his brother launched a coffee shop in central Moscow they called Kooperativ Chernyy, or the Black Cooperative. Just before the war, they opened a roaster and planned to begin selling their coffee beans in supermarkets.

The invasion halted those plans. Russia’s postwar exodus has included many who could afford to spend at a high-end shop like Kooperativ Chernyy, and sales fell. Despite a pick-up in the summer—which Mr. Temirov attributed to Russians wanting to ignore their new reality—sales cratered again after Mr. Putin’s September troop mobilization.

For this year, most analysts expect another fall in GDP, although some, including the IMF, forecast modest growth.

But the fund said that by 2027, economic output is projected to be around 7% lower than pre-war forecasts had indicated. “The loss in human capital, isolation from global financial markets, and impaired access to advanced technology will hamper the Russian economy,” the IMF said.

Rystad Energy, a consulting firm, expects investment in Russian oil and gas exploration and production to fall to $33 billion this year from a predicted $57 billion before the invasion. That would mean less output down the line. Analysts at BP PLC estimate that Russia’s total oil production, which was around 12 million barrels a day in 2019, will be down to between 7 million and 9 million a day by 2035.

“We’re not talking about a one-year or a two-year crisis,” said Mr. Astrov. “The Russian economy will be on a different trajectory.”

 

 

 

Write to Georgi Kantchev at georgi.kantchev@wsj.com and Evan Gershkovich at evan.gershkovich@wsj.com

Feeling the Pinch

As sanctions have cut into Russia’s oil and gas revenues, the government is running budget deficits, and consumers have pulled back on spending.

Oil and gas revenue

2.0

 trillion rubles

1.5

1.0

0.5

0

2022

’23

Federal budget balance

1

 trillion rubles

0

–1

–2

–3

–4

’23

2022

Retail trade turnover index

105

100

95

90

85

2022

’23

Note: 1 trillion rubles = $13.1 billion

Sources: Russia’s finance ministry and statistics office via CEIC Data
Josh Ulick/The Wall Street Journal

[Proust Bag 20]

18 hours ago, HamsterHookah said:

This. 

But what do you do? You gotta overpay to get the guy back, I guess.

Yep. We suck at prisoner exchanges. 

[Handcruser 2805]

Yep. We suck at prisoner exchanges. 

WSJ needs to overpay to get their guy. They put him there. They should be liable for the cost to retrieve him.

And I don’t care if we get him back. Going to Russia during a war or North Korea or whatever should come with the disclaimer of “you may not make it out. If not, sorry”.

[Schulz2.0 28951]

52 minutes ago, Proust Bag said:

Yep. We suck at prisoner exchanges. 

We care about our people. Our people generally give a shit about getting our citizens back. Russia doesn't give two fucks about their people. They do care about optics for propaganda wins though.

Edited March 31, 2023 by Schulz2.0

[TexasEd 8066]

I read that article last week or earlier this week and when I read it I would have thought the author was writing from Poland or Czech Republic, not inside Russia.  I would have paid more attention if I had known that.