Hello! This week our top story is about state-owned Russian media ignoring the successful Ukrainian advance near Kharkiv and some top politicians raising the issue of mobilization. We also look at how Russia’s domestic payments system is threatened by sanctions and why the new iPhone will be both cheap and freely available in Russia.
Russia’s Kharkiv defeat ignored by propaganda outlets
The Russian authorities and supporters of the Ukraine invasion spent much of last week trying to make sense of the Armed Forces’ heaviest defeat since the spring. State-owned media studiously ignored the fact that Russia was almost entirely driven out of Kharkiv region, focusing instead on military successes announced by the Defense Ministry. At the same time, there was a public discussion of the possibility of a partial mobilization, something the authorities are obviously reluctant to attempt.
- Amid the Ukrainian offensive, Channel 1’s news weekly round-up show, Vremya, focused on the “stabilization” of Russia’s economy. It also discussed the successes of pro-Kremlin candidates in recent local elections. Missile attacks on Ukrainian infrastructure were talked up — apparently these “eclipsed Ukraine’s upbeat reports of a successful counter-offensive” — and the show screened a Defense Ministry briefing that boasted of the destruction of an ammunition dump and the death of “300 Ukrainian servicemen.”
- In a similar show on state-owned Rossiya 1, presenter Dmitry Kiselyov, also said nothing about the Russian army’s retreat. However, he acknowledged that “under the onslaught of superior enemy forces,” Russian soldiers left Balakliya and Izyum. He described the past week as “the most difficult” of the war so far.
- The military defeat was also overlooked by popular political talk show 60 Minutes, hosted by another face of Russia’s wartime propaganda, Olga Skabeeva. In its Sept. 12 afternoon edition, it focused on Ukraine’s losses (4,000 soldiers killed, according to Russian Defense Ministry figures) and insisted Russia was doing the right thing with missile attacks on Ukrainian infrastructure. Skabeeva and her guests argued that NATO forces had done the same thing in Iraq, Libya and Yugoslavia.
- In contrast, pro-Russian bloggers on messaging app Telegram were full of criticism for those who decided to stay silent about the heavy defeat suffered by Russian forces in Ukraine. They also blasted the Defense Ministry. One wrote that “officials thirsting for power and wealth are drowning Russia,” another predicted the imminent collapse of the country. In one group there were calls for the creation of “public militias” in regions bordering Ukraine, and a blogger wrote that soon “people will be foaming at the mouth, demanding [President Vladimir] Putin’s resignation.”
At the same time as it was being ignored in state-owned media, Russian politicians were reacting to the Russian army’s retreat by demanding mobilization, albeit not a full one.
- Sergei Mironov, leader of the Just Russia political party said he was unhappy that Moscow celebrated its city anniversary while “our guys are dying out there.” He believes mobilization is needed: “not military, but a mobilization in our minds.” Gennady Zyuganov, leader of the Communist Party, made a similar suggestion. In his words, Moscow’s “special operation” has already become a full-scale war against the West so “maximum” mobilization is required (again, though, his party clarified later that he apparently did not mean military mobilization).
- The Kremlin said Tuesday that it is not considering the possibility of full mobilization. In addition, it warned critics to “be careful”: while other points of view remain acceptable, the border between pluralism and breaking the law is “very, very thin.”
- Amid all this, a group of parliamentary deputies proposed legislation that would allow fathers of large families, if they wished, to join Russia’s military reserves.
- Russian governors also began actively discussing mobilization after Chechen leader Ramzan Kadyrov’s proposal that the leaders of Russia’s regions launch “self-mobilization” for the Ukraine war. This idea gained support from the head of Crimea, which was annexed by Russia in 2014; the interim governor of the Mariy El republic; the head of Kursk region on the Ukrainian border; as well as the governors of Magadan, Voronezh and Kemerovo. It appears that the covert mobilization that we have seen so far in Russia is coming to an end.
- In addition, prisoners are being encouraged to fight in Ukraine. For several months we have known that the Wagner Group, a mercenary force run by Evgeny Prigozhin, was recruiting for the Ukraine war in Russian jails. But a video appeared last week showing a man resembling Prizhogin telling prisoners about the terms of ‘service’ in Ukraine. It’s unclear who released the footage. Prigozhin responded by saying: “It’s either prisoners and the Wagner Group, or your children – choose for yourselves.”
- Wagner Group commercials were broadcast last week on the TV channel run by well-known Russian propagandist Vladimir Solovyov. To a drum-and-bass soundtrack men were urged to quit their boring factory jobs and join the fight against Ukraine.
Why the world should care
Defeat in Kharkiv region has put Russia on the back foot and the Kremlin appears to have few good options. Putin even appeared to come in for rare public criticism from the Indian and Chinese leaders at a summit in Uzbekistan last week.
Sanctions threaten domestic payments system Mir
The exit of Visa and Mastercard from Russia in the wake of the Ukraine invasion means Russians with cards issued by them can no longer use them overseas. Now, it looks like Russia’s Mir alternative is also being targeted by the West.
- Mir cards can still be used in some countries where Russians frequently travel, including Turkey and Egypt. However, this week it emerged that several hotels in Turkey have stopped accepting payments via Mir. It is possible that this is due to pressure from the U.S. and the EU. Western governments have been ramping up pressure on Turkish banks to force them to refuse curtail operations of the Russian payment system, the Financial Times reported.
- At present, Mir’s operator, the National Payment Card System, is not under any restrictions. However, last week, its head, Vladimir Komlev, was targeted by sanctions. The U.S. authorities also cautioned financial organizations in third-party countries against expanding their cooperation with Mir.
- After the war began, many Russians opened accounts in Turkey and former Soviet countries as a way of obtaining Mastercard and Visa bank cards that they could use abroad. It’s likely that this will now get more difficult. Uzbekistan, for example, has tightened the rules by which non-residents can open bank accounts.
Why the world should care
If Russian tourists can no longer use Mir abroad, many will have no other option apart from to use cash in destinations like Egypt and Turkey.
Russians await arrival of iPhone 14
Apple’s new iPhone — the iPhone 14 — went on sale in U.S. stores Friday. Even though the company’s flagship product is not officially available in Russia, it will still reach the country via the so-called parallel imports scheme. Moreover, a strong ruble means there has reportedly been a significant uptick in pre-orders of the iPhone 14.
- Officially, Apple has ceased its operations in Russia and does not supply products to the country. Despite this, Russian retailers will still be stocking the new iPhones because the parallel import scheme allows Russian companies to import goods without the agreement of the copyright holder. These imports take place via third countries, usually neighboring post-Soviet nations.
- The Russian authorities have high hopes for parallel imports, which they believe can protect against shortages of Western brands. But gaining large-scale supplies through this system is problematic.
- There are even more potential buyers for iPhones than for Apple’s new iPhone a year ago. For example, mobile operator MTS said it had received 2.5 times the number of pre-orders for iPhones compared with last year, Kommersant reported.
- The likely reason for the interest is the strong ruble, which means that the local price for an iPhone 14 is not much more than the cost of previous versions. For example, a new iPhone 14 costs 84,990 rubles. The iPhone 13 with the same memory cost 79,990 rubles in 2021. Apple’s official price of $799 is unchanged.
Why the world should care
The strong ruble and the success of the government’s parallel imports scheme means that Russian consumers still have access to popular Western goods.