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Sep 18 12 tweets 17 min read Read on X
Armenia exits the Collective Security Treaty Organization (CTSO) .

This thread is offers some context, history, Ukraine related relevance and a chronology of recent events leading to Armenia rejecting the Russian led CTSO.

👉 A little bit about Armenia..

Armenia is an ancient country. Its history dates back to well before the Bronze Age and traces the beginnings of civilization. Armenia is the first country to adopt Christianity as its state religion. Today, 97% of the Armenia’s population are Christians, and Armenia has one of the most beautiful churches in the world.

The Armenian capital, Yerevan, is one of the world’s oldest inhabited cities. Founded in 782 BC by King Argishti, it is even older than Rome. There are six UNESCO World Heritage Sites in Armenia: Haghpat Monastery, Sanahin Monastery, Echmiadzin cathedral and churches, Zvartnots archaeological site, Geghard Monastery and Azat Valley.

Mining in Armenia is concentrated around the extraction of metals iron, copper, molybdenum, lead, zinc, gold, silver, antimony, and aluminum.

Armenia is a landlocked country located in the South Caucasus region of Eurasia. Armenia is bordered by Georgia in the north, the Republics of Azerbaijan and Artsakh in the east, Nakhchiva (Azerbaijan's exclave) Iran in the south, and Turkey in the west. Armenia occupies a land area of 11,484 square miles.

The population of the country is estimated at 2.9 million. Until independence, the economy of Armenia heavily depended on industry. The industry relied on outside sources. The main domestic energy source is hydroelectric. The country’s vast majority of energy is produced with imported fuel from countries such as Russia.

Natural resources play an important role in boosting the economy of Armenia. The natural resources are used domestically and are also exported. Geographically, Armenia is mountainous. This geographical peculiarity renders the country rich in mineral resources.

The mineral resources of Armenia include iron, zinc, aluminum, copper, molybdenum, gold, lead, silver and antimony. The country is also rich in other rare and hard to find metals.

Armenia possesses some of the world’s most diverse nonmetallic minerals including tuff, zeolites, nephelite syenites, perlite, scoria, marble, pumice stone, and basalts. The industrial minerals found in the country are cement, diatomite, limestone, and gypsum.

The mining industry is, therefore, one of the principal areas of Armenia’s economy. In Armenia, 24.8% of the population lived below the national poverty line in 2022.

Armenia is the 7th safest country in the world, according to NUMBEO. The analytical platform's Crime Rate and Safety Index by Country report has ranked Armenia 7th out of 146 countries, while the city of Yerevan is 15th out of 329 cities.

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Next 👉 What is the CTSO?Image
👉 What is the CTSO?

The CSTO is a Russia-dominated alliance of former Soviet states that have pledged to protect one another in the event of an attack.

The Collective Security Treaty Organization (CSTO) is an intergovernmental military alliance in Eurasia consisting of six post-Soviet states: Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan, formed in 2002.

The Collective Security Treaty has its origins in the Soviet Armed Forces, which was replaced in 1992 by the United Armed Forces of the Commonwealth of Independent States, and was then itself replaced by the successor armed forces of the respective independent states.

Similar to Article 5 of the North Atlantic Treaty and the Inter-American Treaty of Reciprocal Assistance, Article 4 of the Collective Security Treaty (CST) establishes that an aggression against one signatory would be perceived as an aggression against all.

The 2002 CSTO charter reaffirmed the desire of all participating states to abstain from the use or threat of force. Signatories are prohibited from joining other military alliances.

The CSTO holds yearly military command exercises for the CSTO nations to have an opportunity to improve inter-organizational cooperation. The largest of such exercises was held in Southern Russia and central Asia in 2011, consisting of more than 10,000 troops and 70 combat aircraft.

On 4 February 2009, an agreement to create the Collective Rapid Reaction Force (KSOR) was reached by five of the seven members, with plans finalized on 14 June. The force is intended to be used to repulse military aggression, conduct anti-terrorist operations, fight transnational crime and drug trafficking, and neutralize the effects of natural disasters.

Belarus and Uzbekistan initially refrained from signing on to the agreement. Belarus did so because of a trade dispute with Russia, and Uzbekistan due to general concerns. Belarus signed the agreement the following October, while Uzbekistan has never done so.

The Collective Security Treaty Organization (CSTO) maintains a peacekeeping force that has been deployed to areas of conflict, including Tajikistan and Kyrgyzstan. The force is composed of troops from member states and is designed to provide stability and security in the region.

On 6 October 2007, CSTO members agreed to a major expansion of the organization that would create a CSTO peacekeeping force that could deploy under a United Nations mandate or without one in its member states. The expansion would also allow all members to purchase Russian weapons at the same price as Russia.

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Next 👉 A potted history of Putin squeezing Armenia
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👉 Potted History of Russia and Putin squeezing Armenia.

Back in 2003, Armenia was pressed to settle its accumulating debt to Russia by Putin, Armenia decided on transferring state-owned strategic assets to Russia. A series of equity-for-debt deals, placed virtually the entire Armenian energy sector under Russian control. The swaps would provide Moscow with additional political leverage over its chief ally in the South Caucasus.

Opposition politicians in Yerevan are raising the alarm, accusing President Robert Kocharian's administration of compromising the country's sovereignty. Their concerns are shared by some local analysts who believe that Russia's tightening grip on the struggling Armenian economy will postpone prosperity indefinitely.

Many also complain that Russian officials have been more lenient toward other, less pro-Russian ex-Soviet debtors. Kocharian and his allies, argued that the Russian-Armenian military alliance needs to be reinforced by closer economic ties.

The largest swap deal was signed during Russian Prime Minister Mikhail Kasyanov's visit to Yerevan. Under that deal, Russia wrote off Armenia's $100 million debt in return for obtaining control of five state-run Armenian enterprises. Among them was Armenia's largest thermal power plant located in the town of Hrazdan.

Armenia was already heavily dependent on Russia for its two main energy resources: natural gas and nuclear fuel. That dependence deepened when Moscow and Yerevan agreed to transfer the financial management of Armenia's Metsamor nuclear power station and the ownership of six hydro-electric plants to Russia's state-run Unified Energy Systems (UES) power utility.

For its part, UES agreed to repay $32 million in Metsamor's outstanding debts to Russian nuclear fuel suppliers. UES would also come up with an additional $8 million for fresh deliveries this summer.

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Next 👉 Lukashenko predicts the downfall of the CTSOImage
👉 Lukashenko predicts the downfall of the CTSO in 2022.

On the occasion of the CTSO meeting and in the midst of the 2022 Russian invasion of Ukraine, Belarusian President Alexander Lukashenko stated that many in their countries had started to discuss the possibility that the CSTO may cease to exist if Russia loses its war in Ukraine.

He later expanded on his opinion on the matter, stating that the CSTO will continue on and nobody will fall, if there is unity.

In a tweet from the Belarusian dictator, he said “The Collective Security Treaty Organization will continue to exist and nobody anywhere is going to fall”.

Belarus President Aleksandr Lukashenko made the statement as he presented priorities of Belarus' forthcoming presidency over the CSTO in Yerevan, Armenia on 23 November, BelTA has learned. Aleksandr Lukashenko remarked that mass media have been recently speculating that the life and the fate of the Collective Security Treaty Organization depend on the outcome of Russia's special military operation in Ukraine.

"If Russia wins, then the CSTO will live. If, god forbid, it doesn't win, then the CSTO will not survive either. And many hotheads in our countries have also started discussing this problem," he stated.

"I feel that we now share the opinion that if, god forbid, Russia falls, then our place is under these broken pieces," the Belarusian head of state said.

"This is why we should not only defend but understand each other (as we always used to say in normal times): 'Russia this, Russia that, the key role of Russia...' So, such talks have to stop. We are not going to leave the military and political arena.

The Collective Security Treaty Organization will continue to exist and nobody anywhere is going to fall. But we need unity," the Belarus president added.

In February 2024, Armenia joined the International Criminal Court (ICC) which has issued an arrest warrant for Russian President Vladimir Putin over his actions in Ukraine.

Putin has avoided visiting ICC member states since then.

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Next 👉 Armenia exiting the CTSO - it’s complicated!Image
👉 Exiting the CTSO:

Relations between Russia and Kazakhstan have deteriorated since the start of Russia's invasion of Ukraine. The latter has refused to recognise the Donetsk and the Luhansk People's Republics.

After the start of renewed fighting between Armenia and former member Azerbaijan on 13 September 2022, Armenia triggered Article 4 of the treaty, and a CSTO mission including CSTO Secretary General Stanislav Zas and Anatoly Sidorov was sent to monitor the situation along the border.

Russia had acted as guarantor of a peace deal that ended a 44-day war with Azerbaijan over the disputed territory three years ago however Azerbaijan's larger army was able to capture the disputed territory.

After the CSTO mission took a rather uncommitted position in the conflict, criticism towards CSTO membership inside Armenian political circles increased, with the secretary of the Security Council of Armenia, Armen Grigoryan, even stating that he saw no more hope for the CSTO.

"We will leave the CTSO," Pashinyan said. "We will decide when to leave. We won't come back, there is no other way." The Armenian leader denounced the CSTO for failing to provide protection, during an address to lawmakers.

Pashinyan accused members of the alliance of siding with Azerbaijan which launched a military campaign in September to seize control of the Nagorno-Karabakh region, ending decades of ethnic Armenian separatist rule.

👉 Armenia’s practical realities of leaving the CTSO.

In the past, Speaker of the Armenian Parliament Alen Simonyan has branded the alliance a “gun that does not shoot”. Armenia is now following the path Azerbaijan and Georgia were on two decades ago when they left the CSTO in 1999. If Yerevan follows through with this decision, the number of members will be reduced to five—Russia, Belarus, Tajikistan, Kyrgyzstan, and Kazakhstan.

The decision to freeze Armenian participation will leed to the closure and withdrawal of Russian forces from the two military bases in Yerevan and Gyumri. When Armenia officially leaves, the CSTO will lose control over the South Caucasus, and Russia will not have any other military bases in the region outside of the occupied territories of Abkhazia and South Ossetia.

The Pashinyan government also seems to be trying to end Armenia’s geopolitical and economic isolation by normalizing relations with Azerbaijan and Türkiye. From the point of view of the Pashinyan government, this normalization could allow Armenia to further reduce its economic dependence on Russia by creating routes for transit and energy transfer with Türkiye and Azerbaijan, as well as open up opportunities for joint economic projects with both countries.

In these circumstances, gas imported from Azerbaijan and Iran could replace a portion of the gas exported from Russia to Armenia.

Pashinyan still needs to overcome internal political challenges in officially leaving the CSTO. However, if successful, it is unclear which partners Yerevan would go to as alternatives to Russia.

The current options arrange from France and the United States to Iran and India.

France seems to be the most willing to play such a role, which has support in the United States. Recent defense and military agreements between Armenia and France could be a sign of Yerevan reorienting the country’s foreign policy to the West.

In these circumstances, if Armenia withdraws from the CSTO, Iran will try to maintain close relations with its only Christian neighbor. Maintaining the 40 kilometer (25 miles) border with Armenia is a strategic priority for Iran, which clear opposition to the Zangezur corridor is a clear example in recent years.

During the last three decades, the Russian border guards were responsible for the security of this border. If these forces are withdrawn from Armenia, Iran would prefer they not be replaced by another foreign force and that Armenian border guard were stationed this border.

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Next 👉 Exiting the CTSO continued..Image
India and Armenia have expanded military and defense cooperation in recent years. India, however, is unlikely to be a suitable alternative for Russia, as New Delhi maintains close relations with Moscow. India also participates in the International North-South Transport Corridor (INSTC) with Iran, Azerbaijan, and Russia, and New Delhi hopes to take a relatively more balanced approach to the South Caucasus.

Furthermore, the tripartite cooperation between Armenia, Iran, and India focuses efforts on “soft balancing” (economic transit) instead of “hard balancing” (military-security) against the tripartite ties of Azerbaijan, Türkiye, and Pakistan in the region

For now, Yerevan has only frozen participation in the CSTO, with the intention to officially leave the body in the near future. When Armenia does, the organization will lose its influence over the South Caucasus, and Russia will no longer have as strong of a foothold in the region.

Armenia’s strategic shift away from Russia signifies a transformation in its geopolitical stance, seeking greater autonomy, alignment, and cooperation with Western and regional powers.

If Armenia wants to separate completely from Russia, it will have numerous obstacles concerning economic independence. Important sectors of the Armenian economy, such as electricity, gas, telecommunications, and railway transport, were handed over to Russia in 2003 in payment for Yerevan’s accumulated $100 million debt to Moscow.

In the years since, Armenia grew increasingly dependent on Russia for its economic needs, which gave Moscow increased political influence. For example, in September 2013, due to Russian pressure, including threats to cancel security guarantees and an increase in gas prices, then-Armenian President Serzh Sargsyan decided to join the EAEU instead of signing an Association Agreement with the European Union.

Economic cooperation with Russia has been one of the least transparent areas of the Armenian government's work, political observers say. The debt arrangements have been personally negotiated by powerful Defense Minister Serge Sarkisian, Kocharian's closest political associate, with other top government officials, including Prime Minister Andranik Markarian, having little say on the issue.

All of the controversial agreements have been announced after Sarkisian's frequent trips to Moscow, without prior public discussion.

Armenia is not the only ex-Soviet state that has incurred multimillion-dollar debts to Russia over the past decade. But Armenia is the only state to have so far given up such a large share of its economic infrastructure to Russia.

Pro-Western Ukraine and Georgia, which both owe the Russians more than Armenia, have managed to reschedule repayment of their debts.

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Next 👉 Recent events chronologyImage
Recent chronology

👉 September 2023

Pashinyan accuses Russia of not sending the CSTO mission mandate on the Azerbaijani-Armenian border. Even, in an interview with Italian TV, he emphasized that relying on Russia was a strategic mistake. Besides, withdrawal from CSTO has been voiced by Armenian statespersons and public figures.

👉 November 2023

A regular Collective Security Council meeting took place on 23 November 2022 with the leaders of all CSTO members present to discuss matters of international and regional security. After Pashinyan refused to sign the joint declaration because it did not "reach a decision on a CSTO response to Azerbaijan's aggression against Armenia", speculation arose regarding the continuation of the CSTO.

👉 June 12, 2024

Euro news reported “Armenia's prime minister declared his intention on Wednesday to pull out of a Russian-led security alliance of six ex-Soviet states.

Prime Minister Nikol Pashinyan told parliament that his government will decide later when to leave the Collective Security Treaty Organization (CSTO), a grouping that includes Russia, Belarus and the former Soviet Central Asian nations of Kazakhstan, Kyrgyzstan and Tajikistan.

Amid the widening rift with Russia, Armenia earlier froze its participation in the alliance, cancelled its involvement in joint military drills and snubbed CSTO summits”.

Pashinyan said for the first time that Armenia will leave CSTO altogether during a question-and-answer session in parliament, saying that the government will decide later when to make the final move. There was no immediate comment from Russian authorities.

Armenia’s ties with Russia, its long-time sponsor and ally, have grown increasingly strained after Azerbaijan waged a lightning military campaign in September to take the Karabakh region, ending three decades of ethnic Armenian separatist rule there.

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Next 👉 July 2024 - to the reported coup plotters in September 2024.Image
👉 July, 2024

July 12: Armenian Prime Minister Nikol Pashinyan confirmed that Armenia plans to withdraw from the Russian-dominated Collective Security Treaty Organization. This confirmation follows agreements for Russian border guards to leave Armenia, further moving Yerevan away from Russian influence.

July 31st: Russian border guards completed their withdrawal from Yerevan’s Zvartnots International Airport, where they had been stationed since Armenia gained independence in 1991.

Russian border guards have for decades been stationed at Zvartnots as well as along Armenia’s borders with Turkey and Iran in a show of the close military ties between Russia and Armenia.

Prime Minister Nikol Pashinian announced in March that his government had given Moscow until August 1 to remove them from the airport. Armenia has the capacity to carry out border controls there “without the help of the Russian side,” he said.

The Russian Foreign Ministry criticized the move, saying that Yerevan risks inflicting “irreparable damage” to Russian-Armenian relations and jeopardizing Armenia’s security and economic development. Russian President Vladimir Putin and Pashinian agreed on the withdrawal when they met in Moscow in May.

The process was completed with a farewell ceremony held for the few dozen officers of Russia’s Federal Security Service (FSB) at Zvartnots. The newly appointed commander of Armenian border troops, Edgar Hunanian, thanked them for their service in a speech at the ceremony.

He said the Armenian side will use the “experience and skills of Russian border guards passed on during more than 32 years of joint service.”

At his May meeting with Pashinian, Putin also agreed to pull back Russia troops and border guards from Armenia’s border with Azerbaijan. They had been deployed there at Yerevan’s request during and after the 2020 war in Nagorno-Karabakh. The border guards will continue to protect Armenia’s borders with Iran and Turkey.

Russia also has a military base in the South Caucasus country. In March, a senior Russian lawmaker said he "would not recommend that the Armenian authorities even think about" demanding an end to the Russian military presence.

Pashinian has signaled no such plans so far, but he has frozen his country’s membership in the Russian-led Collective Security Treaty Organization and not ruled out a bid to join the European Union.

👉 18 September, 2024

Russia is implicated in an attempted coup in Armenia.

Next reports: “The Investigative Committee of Armenia stated that an "attempt to usurp power through a coup" had been prevented in the country.

The security agency claims that members of the group of conspirators traveled to Rostov-on-Don, where they allegedly underwent training at the base "Arbat". During the training, they allegedly received 200 thousand rubles in allowances.

There are seven defendants in the criminal case. Three of them have been arrested, four are wanted.

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More from @Beefeater_Fella

Sep 12
August 2024, - the EU countries are continuing to prop up revenue for Putin’s regime and the murderous onslaught against Ukraine.

The EU’s State of the Energy Union Report 2024, published on September 11, 2024 - sets out that the EU is trying to quickly replace Russian gas supply and ensure Europe’s energy security in the short-medium term. To do so the EU has reached out to other international suppliers.

Norway and the U.S. have become the EU's largest gas suppliers - for pipeline and LNG gas respectively- providing 34% and 18% of EU gas imports in the
first half of 2024.

The EU claims that a record of twelve new LNG terminals and six expansion projects of existing terminals have been commissioned between 2022 and 2024.

Overall, these are expected to increase the EU’s LNG import capacity by 70 bcm to 284 bcm by 2024.

Remember - In May 2022, the Commission responded to the European Council’s demand to phase out Europe’s dependency on Russian energy imports as soon as possible by adopting the REPowerEU Plan.

The objective was to rapidly reduce the EU’s dependence on Russian fossil fuels not only by saving energy and diversifying our supplies, but especially working towards the long-term objective to fast-forward the clean transition via the acceleration of renewables deployment and energy efficiency measures, joining forces to achieve a more resilient energy system and a true Energy Union.

Immediate actions focused on saving energy and enhancing energy efficiency as the cleanest and cheapest way to address the energy crisis. Actions undertaken under REPowerEU allowed one of the steepest gas demand decline in history.

In parallel to EU sanctions banning seaborne imports of Russian crude oil and refined petroleum products12 as well as Russian coal, imports of Russian gas (pipeline & LNG) dropped from a 45% share of overall EU gas imports in 2021 to only 18% in the first half of 2024.

Yet the enormous volumes of continued revenue reported by Crea for August 2024 volumes, show that the EU still provides significant income for Russia, for its fossil fuels - arguably a different reality to the one the EU suggests in it’s latest energy report.

The ongoing purchase of Russian fossil fuels by EU countries, despite sanctions, highlights the complexities and contradictions within Europe's energy policy and its efforts to reduce dependence on Russian energy amid the Ukraine conflict. Several key points arise:

The EU's decision to exempt certain Russian fossil fuels from sanctions, particularly crude oil imported through the southern branch of the Druzhba pipeline to Hungary, Slovakia, and the Czech Republic, demonstrates the difficulty of fully severing ties with Russian energy.

These exemptions likely stem from the fact that many of these countries, especially landlocked ones like Hungary, Slovakia, and the Czech Republic, have limited alternatives to replace Russian fossil fuel imports.

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Next 👉 Crea report for August 2024Image
Crea’s latest publication sets out the data on Russia’s fossil fuel revenue in August 2024 (please see the references tweet for a link to the full report).

👉 In August, the top five largest Russian fossil fuel importing countries in the EU paid Russia a total of EUR 1.2 bn for their imports. The EU has granted an exemption for Russian crude oil imported through the southern branch of the Druzhba pipeline to Hungary, Slovakia, and the Czech Republic. Russian pipeline gas and liquified natural gas (LNG) also remain unsanctioned.

👉 Hungary was the largest importer of Russian fossil fuels within the EU, importing fossil fuels worth EUR 369 mn. Their August imports included crude oil via pipeline valued at EUR 155 mn and gas valued at EUR 214 mn.

👉 France, the second-largest buyer within the EU, exclusively imported LNG worth EUR 219 mn.

👉 Slovakia was the third-largest importer of Russian fossil fuels within the EU, importing pipeline oil and gas worth EUR 61 mn and EUR 130 mn, respectively.

👉 Austria exclusively imported pipeline gas worth EUR 177 mn.
Italy, the fifth-largest buyer within the EU, imported Russian pipeline gas valued at EUR 174 mn.

👉 LNG: The EU was the largest buyer, purchasing 50% of Russia’s LNG exports, followed by China (21%) and Japan (18%).

👉 Pipeline gas: The EU was the largest buyer, purchasing 40% of Russia’s pipeline gas, followed by China (28%) and Turkey (25%).

Globally - the revenue streams have seen marginal drops:

In August 2024, Russia’s monthly fossil fuel export revenues dropped 8% to EUR 636 mn per day, marking the fifth consecutive month of decline.
Revenues from seaborne crude oil (EUR 186 mn per day) dropped 14% month-on-month. A significant reason for this drop was an 8% drop in the volume of exports.

👉 Meanwhile, revenues from crude oil via pipeline (EUR 77 mn per day) dropped by 4% in August.

👉 Russian revenues from seaborne oil product exports declined 7% month on month, dropping to EUR 206 mn per day.

👉 LNG export revenues increased by 55% month-on-month to EUR 42 mn per day.

👉 Russia benefitted from a 4% month-on-month rise in revenues from pipeline gas to EUR 73 mn per day.

👉 Russian revenues from coal exports dropped 28% month-on-month to EUR 49 mn per day — the fifth consecutive month they’ve dropped.

👉 Coal: From 5 December 2022 until the end of August 2024, China purchased 45% of all Russia’s coal exports, followed by India (18%). Turkey (10%), South Korea (10%), and Taiwan (5%) round off the top five buyers list.

👉 Crude oil: China has bought 47% of Russia’s crude exports, followed by India (37%), the EU (6%), and Turkey (6%).

👉 Oil products: Turkey, the largest buyer, has purchased 24% of Russia’s oil product exports, followed by China (12%) and Brazil (11%).

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Next 👉 EU countries called outImage
Image
Contrary to Crea’s report showing a decline in fossil fuel revenues, Reuters reports on September 6, 2024 - that “Russia's economy ministry has revised up its 2024 forecasts for export sales of oil and gas, key sources of budget revenues, by $17.4 billion from the previous estimate to $239.7 billion thanks to a more positive price outlook, a document seen by Reuters showed”.

Infrastructure and energy dependency mean that abruptly cutting off Russian oil and gas could severely impact their economies.

Hungary stands out as the largest importer of Russian fossil fuels, with its imports totaling EUR 369 million in August, including significant purchases of crude oil and gas. Hungary’s government, under Prime Minister Viktor Orbán, has maintained a more conciliatory approach toward Russia compared to other EU nations.

Orbán has often criticized the EU’s sanctions regime, arguing that such measures harm European economies more than they deter Russia.

Hungary’s strategic reliance on Russian gas and oil has allowed it to negotiate more favorable terms for its energy imports, ensuring a steady supply while keeping energy prices lower than in many other EU countries.

👉 France:

France, as the second-largest EU importer, focused entirely on liquefied natural gas (LNG) from Russia, purchasing EUR 219 million worth of it in August.

Unlike pipeline gas, LNG can be sourced from various global suppliers, but France's continued reliance on Russian LNG suggests that alternative suppliers may not yet be able to meet all of its energy needs at competitive prices. LNG imports, especially in the context of ongoing energy shortages and price hikes in Europe, reveal the difficulty of transitioning to non-Russian energy sources even for major economies like France.

👉 Austria, Slovakia and Italy:

Meanwhile - Austria and Slovakia continue to rely heavily on pipeline gas, while Slovakia also imports oil. Italy, one of the EU’s largest economies, imported Russian gas worth EUR 174 million in August. Although Italy has been vocal in supporting sanctions and seeking alternative energy sources, this dependence on Russian gas highlights the time lag in fully transitioning away from traditional suppliers.

The difficulty of diversifying energy sources, building new infrastructure, and ensuring affordable energy prices means that many EU countries are still tied to Russian fossil fuels despite their political opposition to Russia’s actions in Ukraine.

👉 The EU’s Position as the Largest Buyer of Russian LNG and Pipeline Gas:

The EU remains the largest purchaser of Russian LNG and pipeline gas, buying 50% of Russia’s LNG exports and 40% of its pipeline gas. This is particularly significant given the ongoing war in Ukraine and the EU's stated intentions to reduce its dependency on Russian energy. The fact that the EU remains the largest buyer underscores the energy insecurity in Europe, where immediate alternatives to Russian energy are either insufficient or too costly.

In contrast, Russia’s other major customers, China and Turkey, are gradually increasing their share of Russian energy imports, but Europe remains the largest market.

Ukraine’s intent to end the transit contracts for Russian fossil fuels to the EU reflects a significant strategic and geopolitical shift in response to Russia’s invasion and the ongoing war.

This decision has both political and economic implications for Ukraine, Russia, and Europe, as it impacts energy flows, regional stability, and the broader EU energy strategy. Since Russia’s full-scale invasion of Ukraine in February 2022, energy has become a central aspect of the conflict, with Ukraine looking to cut all remaining economic ties with Russia.

3/5
Next 👉 Ukraine ending it’s deal to transit Russian gasImage
Read 8 tweets
Sep 10
The Vertical Gas Corridor is the key to the energy security of Ukraine, Moldova and the countries of South East Europe in the long term, confirmed the natural gas transmission system operator of Bulgaria, Bulgartransgaz in March 2024.

“After the probable end of the transport of natural gas from Russia through Ukraine from the start of 2025, the Vertical Gas Corridor will be the only project that can provide both the required transport of liquefied natual gas and the continuation of the operation of the gas transmission network and the underground gas storage facilities in Ukraine,” the CEO of Bulgartransgaz explained.

It is now certain that Ukraine will end transition of Russian gas from the end of 2024.

Bulgaria consumes about 3 billion cubic meters (bcm) of natural gas. The Gas Interconnector Greece-Bulgaria natural gas pipeline became operational in 2022, and Bulgaria receives about 1 bcm a year from Azerbaijan, with a long-term contract at a price linked to the international oil price. In April this year, Azerbaijani gas accounted for 51.1% of Bulgaria’s domestic consumption.

Bulgaria also purchases oil to feed its Burgas refinery, which has a capacity of 190,000 barrels per day (bpd) and is operated by Russia's Lukoil. Bulgaria was the fourth largest buyer of seaborne Russian oil in 2023, purchasing over 100,000 bpd.

Bulgaria is however replacing Russian oil imports with crude from Kazakhstan, Iraq and Tunisia in January, according to traders and LSEG data.

Bulgaria has a waiver from a European Union embargo that allows it to continue seaborne imports of Russian oil in 2024. But the country has restricted exports of all refined products produced from Russian crude from this month, which makes it almost impossible for its sole refinery to run on Russian oil, and has decided to stop all Russian crude imports from March.

When flows from the Yamal and NordStream 1 pipelines halted, the CEE region had to rapidly adapt to the new reality (see Figure 1 for more details). Poland stopped sending gas to Germany, and German flows into the Czech Republic were slashed to one-fifth. Czechia then opted to receive gas from Slovakia, reversing years of flow in the opposite direction.

Similarly, Slovak flows into Austria were reduced by more than two-thirds, which in turn saw their exports to Hungary and Italy almost disappear by the end of 2023.

Further east, the inauguration of the Balkan Stream pipeline in 2021 provided some relief to the region, allowing flows from the TurkStream pipeline to reach Romania, Serbia, and Hungary, and giving the latter the opportunity to export gas to Slovakia since 2023.

However, not every country benefited from the project: Bulgaria and Moldova stopped consuming Russian gas in 2022 following disputes involving long-term contracts with Gazprom. This overhaul of the gas market resulted in a rebalancing of geopolitical power in the region.

1/3
Next 👉 ContextImage
Context:

After the halt of Russian gas flows through the Yamal and NordStream 1 pipelines in 2022, the region now risks losing the Russian supply it receives via Ukraine. Ukraine has expressed its intention not to renew the transit contract with Russia, set to expire by the end of the year.

With the expected end of Russian gas transit through Ukraine at the end of this year, the Balkan Stream gas pipeline through Bulgaria will become the main supply route for the EU and Ukraine, as discussed during the visit of the EU’s top energy official, Ditte Juul Jorgensen, to the dispatch centre of state-owned gas company Bulgartransgaz (BTG).

In the long term, Bulgaria will become an important transit country to ensure supplies to Romania, Moldova and the countries of south-eastern Europe.

“After the probable termination of the transmission of natural gas from Russia through Ukraine from the beginning of 2025, the vertical gas corridor through Bulgaria will be the only project that can ensure both the necessary transmission of liquefied gas and the continued operation of the gas transmission network and underground gas storage facilities in Ukraine,” said Vladimir Malinov, head of Bulgartransgaz.

Data from the EU Commission show that since the start of Russia’s invasion of Ukraine, the EU has drastically reduced its imports of Russian gas from more than 50% to 15% last year. In total, 9% of Russian gas supplies to the EU come via pipelines, with the remainder being liquefied gas. Following the suspension of the Ukrainian gas corridor, supplies to the EU and Ukraine will have to pass mainly through Bulgaria.

The Balkan country operates the Balkan Stream gas pipeline, which is a continuation of Turk Stream, a gas pipeline that was inaugurated exactly one year before the Russian invasion of Ukraine. Russian President Vladimir Putin’s project to bypass Ukraine was supported by the former leaders of Bulgaria, Turkey, and Serbia – Recep Tayyip Erdoğan, Boyko Borissov and Aleksandar Vučić.

After the outbreak of the war, Russia cut off gas supplies to Bulgaria, but the authorities in Sofia did not interfere with the transit of Russian gas to Serbia, Hungary and from there to Austria. Separately, Bulgaria and Greece built a gas interconnector linking the Bulgarian gas network to the Trans-Adriatic Gas Pipeline, which carries gas from Azerbaijan.

This connection also allows the transfer of LNG from the Greek terminals and the import of LNG from the Russian terminals via the Balkan Stream.

Currently, Bulgaria and Romania are not using the potential of the Trans-Balkan gas pipeline, which was the old route for the transit of Russian gas from Ukraine through Romania to Bulgaria before the launch of the Turkish Stream. The idea of the authorities in Sofia is to reverse the direction of this gas pipeline and make Bulgaria a gas export route to Romania and Ukraine.

This project is called the Vertical Gas Corridor and is a joint project of the gas companies of Greece, Bulgaria, Romania, Hungary, Slovakia, Moldova and Ukraine to extend the existing gas connections between them.

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Next 👉 Kpler analysis of russian gas interruptionImage
Kpler provided an interesting analysis of the looming impacts to countries with the disruption of Russian gas flows, in August 2024:

“What countries are most impacted by Russian gas flow disruption?

In the case of Poland, flows via Ukraine are consumed domestically and represent roughly 4% of total Polish gas consumption, according to our estimates.

Flows entering Slovakia are more impactful. The Slovak economy relies heavily on these flows; Kpler Insight estimates the implied use of Ukrainian flows to be nearly 80% in 2023. This dependency could increase if inflows from Hungary decrease and a cold winter occurs, as no Russian gas would be available for refilling storage levels.

Gas flows entering Austria are consumed domestically and sent via the TAG pipeline to Italy and, to a lesser extent, Slovenia. Austria’s exposure to Ukrainian gas increased in 2024, presumably due to the rising German gas storage levy, which has been gradually increasing since 2022. The levy currently stands at 2.5 euros/MWh, making Austrian gas imports via Germany almost three times more expensive than those via Slovakia.

Our calculations show that Austria currently relies almost exclusively on flows from Slovakia, presenting the highest risk in the event of a disruption. We also anticipate a reduction in flows to Italy. However, the end of the German gas storage levy in January 2025 will likely mitigate some of these risks.

Further north, Czech Republic has consistently imported Russian gas via Ukraine since October 2023, most likely due to the German gas storage levy. However, risks remain for Czechia even after the levy ends.

Firm capacity at the Brandov IP on the Czech-German border might not be enough to compensate for the potential loss of Russian pipeline gas to the CEE region after 2025, increasing congestion risks and price differentials between countries.

The situation is more optimistic in the southern part of the region. Hungary and Serbia continue to source gas through the Balkan Stream, while Bulgaria has managed to diversify away from Russian supply.

Flows into Bulgaria and Serbia use around 75% and 80% of the total firm capacity available at the interconnection points, providing some breathing room to the region if needed. As for Hungary, although inflows from Serbia run at maximum capacity, domestic production and lower gas demand in the power mix give the country higher flexibility to manage its domestic gas market.”

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Read 6 tweets
Sep 8
The International Monetary Fund (IMF), a potted history, it’s makeup, it’s role in Ukraine and current relationship with Russia, and news of the move by the IMF in September 2024 - to appoint a US sanctioned russian to the board of the IMF, a close connection to the indicted war criminal Vladimir Putin.

This thread is not a comprehensive view and history of the IMF, it brings together key reported information and facts that will provide you with a better understanding.

The thread is long - have you considered bookmarking and listening to the podcast version (see the reply to the last tweet in the thread for a link), or keep an eye out for the YouTube version which should be released in the coming days.

Please remember to like and share this post, it will help with the reach of information to a wider audience.

👉 IMF History

The IMF is an United Nations (UN) specialised agency, founded at the Bretton Woods Conference in 1944 to secure international monetary cooperation, to stabilize currency exchange rates, and to expand international liquidity (access to hard currencies).

The first half of the 20th century was marked by two world wars that caused enormous physical and economic destruction in Europe and a Great Depression that wrought economic devastation in both Europe and the United States.

These events kindled a desire to create a new international monetary system that would :

💰stabilize currency exchange rates without backing currencies entirely with gold;
💰 to reduce the frequency and severity of balance-of-payments deficits (which occur when more foreign currency leaves a country than enters it);
💰 to eliminate destructive mercantilist trade policies, such as competitive devaluations and foreign exchange restrictions

…all while substantially preserving each country’s ability to pursue independent economic policies.

Multilateral discussions led to the UN Monetary and Financial Conference in Bretton Woods, New Hampshire, U.S., in July 1944. Delegates representing 44 countries drafted the Articles of Agreement for a proposed International Monetary Fund that would supervise the new international monetary system.

The framers of the new Bretton Woods monetary regime hoped to promote world trade, investment, and economic growth by maintaining convertible currencies at stable exchange rates.

Countries with temporary, moderate balance-of-payments deficits were expected to finance their deficits by borrowing foreign currencies from the IMF rather than by imposing exchange controls, devaluations, or deflationary economic policies that could spread their economic problems to other countries.

After ratification by 29 countries, the Articles of Agreement entered into force on December 27, 1945. The fund’s board of governors convened the following year in Savannah, Georgia, U.S., to adopt bylaws and to elect the IMF’s first executive directors.

The governors decided to locate the organization’s permanent headquarters in Washington, D.C., where its 12 original executive directors first met in May 1946. The IMF’s financial operations began the following year.

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👉 Structure of the IMF

The IMF is headed by a board of governors, each of whom represents one of the organization’s approximately 180 member states. The governors, who are usually their countries’ finance ministers or central bank directors, attend annual meetings on IMF issues.

The fund’s day-to-day operations are administered by an executive board, which consists of 24 executive directors who meet at least three times a week.

Eight directors represent individual countries (China, France, Germany, Japan, Russia, Saudi Arabia, the United Kingdom, and the United States), and the other 16 represent the fund’s remaining members, grouped by world regions. Because it makes most decisions by consensus, the executive board rarely conducts formal voting.

The board is chaired by a managing director, who is appointed by the board for a renewable five-year term and supervises the fund’s staff of about 2,700 employees from more than 140 countries. The managing director is usually a European and—by tradition—not an American. The first female managing director, Christine Lagarde of France, was appointed in June 2011.

Each member contributes a sum of money called a quota subscription. Quotas are reviewed every five years and are based on each country’s wealth and economic performance—the richer the country, the larger its quota.

The quotas form a pool of loanable funds and determine how much money each member can borrow and how much voting power it will have.

For example, the United States’ approximately $83 billion contribution is the most of any IMF member, accounting for approximately 17 percent of total quotas. Accordingly, the United States receives about 17 percent of the total votes on both the board of governors and the executive board.

The Group of Eight industrialized nations (Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States) controls nearly 50 percent of the fund’s total votes.

👉 The IMF’s Primary Objectives;

(a). To Promote exchange stability throughout the world

(b). To Promote international monetary cooperation;

(c). To Facilitate the expansion and balanced growth of international trade;

(d). To Assist in the establishment of a multilateral system of payments; and

(e). Make resources available to members experiencing Balance of Payments difficulties.

Publications:

IMF provides periodic assessments of global prospects in its "World Economic Outlook", of financial markets in its "Global Financial Stability Report", of public finance developments in its "Fiscal Monitor", and of external positions of the largest economies in its "External Sector Report", in addition to a series of Regional Economic Outlooks.

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Next 👉 IMF’s operationImage
👉 The IMF’s Operation

Since its creation, the IMF’s principal activities have included stabilizing currency exchange rates, financing the short-term balance-of-payments deficits of member countries, and providing advice and technical assistance to borrowing countries.

Under the original Articles of Agreement, the IMF supervised a modified gold standard system of pegged, or stable, currency exchange rates. Each member declared a value for its currency relative to the U.S. dollar, and in turn the U.S. Treasury tied the dollar to gold by agreeing to buy and sell gold to other governments at $35 per ounce.

A country’s exchange rate could vary only 1 percent above or below its declared value. Seeking to eliminate competitive devaluations, the IMF permitted exchange rate movements greater than 1 percent only for countries in “fundamental balance-of-payments disequilibrium” and only after consultation with, and approval by, the fund.

In August 1971 U.S. President Richard Nixon ended this system of pegged exchange rates by refusing to sell gold to other governments at the stipulated price.

Since then each member has been permitted to choose the method it uses to determine its exchange rate:

💰 a free float, in which the exchange rate for a country’s currency is determined by the supply and demand of that currency on the international currency markets;

💰 a managed float, in which a country’s monetary officials will occasionally intervene in international currency markets to buy or sell its currency to influence short-term exchange rates;

💰 a pegged exchange arrangement, in which a country’s monetary officials pledge to tie their currency’s exchange rate to another currency or group of currencies;

💰 or a fixed exchange arrangement, in which a country’s currency exchange rate is tied to another currency and is unchanging.

After losing its authority to regulate currency exchange rates, the IMF shifted its focus to loaning money to developing countries.

The IMF’s Largest borrowers are: Greece, Ukraine, Pakistan and Egypt

👉 Financing balance-of-payments deficits

Members with balance-of-payments deficits may borrow money in foreign currencies, which they must repay with interest, by purchasing with their own currencies the foreign currencies held by the IMF. Each member may immediately borrow up to 25 percent of its quota in this way.

The amounts available for purchase are denominated in Special Drawing Rights (SDRs), whose value is calculated daily as a weighted average of four currencies: the U.S. dollar, the euro, the Japanese yen, and the British pound sterling.

SDRs are an international reserve asset created by the IMF in 1969 to supplement members’ existing reserve assets of foreign currencies and gold.

Countries use the SDRs that have been allocated to them by the IMF to settle international debts. More than 20 billion SDRs were allocated to members in successive allocations from 1969 through 1981. SDRs are not part of the quota subscriptions supplied by members, and thus they are not part of the general asset pool available for loans to members.

The IMF uses the SDR as its unit of account for all transactions. Drawing on the IMF by a country raises the fund’s holdings of that country’s currency but lowers its holdings of another country’s currency by an equal amount.

Thus the composition of the fund’s resources changes, but the total resources as measured in SDRs remains the same. The country repays the loan over a specified period (usually three to five years) by using member currencies acceptable to the IMF to repurchase its own national currency.

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Next 👉 Operation continued..Image
Read 17 tweets
Sep 4
04 September, 2024 - The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) designated 10 individuals and two entities as part of a coordinated U.S. government response to Moscow’s malign influence efforts targeting the 2024 U.S. presidential election.

Russian state-sponsored actors have long used a variety of tools, such as generative artificial intelligence (AI) deep fakes and disinformation, in an attempt to undermine confidence in the United States’ election processes and institutions.

Beginning in early 2024, executives at RT—Russia’s state-funded news media outlet—began an even more nefarious effort to covertly recruit unwitting American influencers in support of their malign influence campaign.

RT used a front company to disguise its own involvement or the involvement of the Russian government in content meant to influence U.S. audiences.

“Today’s action underscores the U.S. government’s ongoing efforts to hold state-sponsored actors accountable for activities that aim to deteriorate public trust in our institutions,” said Secretary of the Treasury Janet L. Yellen. “Treasury will not waver in our commitment to safeguarding our democratic principles and the integrity of our election systems.”

Today’s designations complement law enforcement actions taken by the Department of Justice and the Department of State’s designation of the Rossiya Segodnya media group and five of its subsidiaries, RIA Novosti, RT, TV-Novosti, Ruptly, and Sputnik, as Foreign Missions, steps to impose visa restrictions, and release of a Rewards for Justice (RFJ) reward offer of up to $10 million relating to information pertaining to foreign interference in a U.S. election.

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Sanctions targeting russian propagandists and RT:

RT, formerly Russia Today, is a Russian state-funded news outlet that began broadcasting internationally in 2005. In 2017, RT registered as an agent of a foreign government in the United States.

Beginning in early 2024, RT executives began an effort to covertly recruit unwitting American influencers. RT used a front company to disguise its own involvement or the involvement of the Russian government.

Margarita Simonovna Simonyan (Simonyan) is the Editor-in-Chief of RT and a central figure in Russian government malign influence efforts. She allowed the operations of a front company to occur under the cover of RT.

Elizaveta Yuryevna Brodskaia (Brodskaia) is the Deputy Editor-in-Chief of RT, who has reported to Russian President Putin and other government officials. Anton Sergeyvich Anisimov (Anisimov) is an RT Deputy Editor-in-Chief, who conducts activities on behalf of the Russian Federal Security Service (FSB).

Andrey Vladimirovich Kiyashko (Kiyashko) is the Deputy Director of the RT English-Language Information Broadcasting and is responsible for updating Russian government officials and providing an overview of RT’s operations.

Konstantin Kalashnikov (Kalashnikov) is RT’s Digital Media Projects Manager, who, in early 2022, worked with Kiyashko. In mid‑2023, Brodskaia and Kiyashko implemented a large-scale influence operation for RT on U.S. social media with the intent of obscuring RT’s connection to the content meant to influence online audiences.

Elena Mikhaylovna Afanasyeva (Afanasyeva) is an employee of RT’s Digital Media Projects Department and reports to Kalashnikov. Starting in early 2024, Afanasyeva covertly interacted with prominent U.S. social media influencers under the cover of a fake persona, purporting to be an employee at a U.S. company to obscure RT’s and the Russian government's involvement.

The pro-Kremlin hacktivist group RaHDit is composed of active and former Russian intelligence officers. Aleksey Alekseyevich Garashchenko (Garashchenko) is the head of RaHDit and was an FSB officer at the time he started leading the group.

Garashchenko directly interacts with members of the Russian intelligence and security services, members of the Russian Presidential Administration, and employees from RT.

Anastasia Igorevna Yermoshkina (Yermoshkina) is an affiliate of Garashchenko. Aleksandr Vitalyevich Nezhentsev (Nezhentsev) works with Garashchenko and is an administrator and developer of cyber tools used by the FSB. Nezhentsev also leads a team focusing on developing new tools that can be used in the surveillance of information data files.

Today, OFAC designated Simonyan, Brodskaia, Anisimov, Kiyashko, Kalashnikov, Afanasyeva, Garashchenko, Yermoshkina, and Nezhentsev pursuant to E.O. 14024 for being owned or controlled, or having acted or purported to act for or on behalf of, directly or indirectly, the Government of the Russian Federation.

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SANCTIONS IMPLICATIONS

As a result of today’s action, all property and interests in property of the designated persons described above that are in the United States or in the possession or control of U.S. persons are blocked and must be reported to OFAC.

In addition, any entities that are owned, directly or indirectly, individually or in the aggregate, 50 percent or more by one or more blocked persons are also blocked.

Unless authorized by a general or specific license issued by OFAC, or exempt, OFAC’s regulations generally prohibit all transactions by U.S. persons or within (or transiting) the United States that involve any property or interests in property of designated or otherwise blocked persons.

In addition, financial institutions and other persons that engage in certain transactions or activities with the sanctioned persons may expose themselves to sanctions or be subject to an enforcement action.

The prohibitions include the making of any contribution or provision of funds, goods, or services by, to, or for the benefit of any designated person, or the receipt of any contribution or provision of funds, goods, or services from any such person.

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Next 👉 The history of RT - important read!Image
Read 8 tweets
Sep 2
Mongolia threatens Putins pipeline deal. Putin rushes to Mongolia to save the deal, risking arrest under the ICC warrant of arrest.

Mongolia is a key transit route for new Russia-China pipeline. The landlocked country is a key transit route for Russian gas supplies to China and will host almost 1000 kilometres of the planned Sila Sibiri 2 pipeline.

With capacity of 50 billion cubic metres of gas per annum, the project aims to help replace volumes lost after Russia almost halted its pipeline gas exports to Europe in 2022 following its invasion of Ukraine.

Russian state-controlled gas giant Gazprom and the Russian government have repeatedly assured that talks are progressing with China and Mongolia over the Sila Sibiri 2 route and gas supply terms.

On June 2, the Financial Times (FT) reported that China and Russia did not conclude a deal on the pipeline because China demanded to receive it at Russia’s subsidized domestic prices and that it would only purchase a small fraction of the pipeline’s planned annual capacity.

But reported on August 22nd, 2024 - The planned pipeline intended to transport gas from Russia to northeastern China known as Power of Siberia-2 has likely fallen through. Former Mongolian Security Council member Munkhnaar Bayarlkhaag said Moscow has failed to reach an agreement with Beijing.

Bayarlkhaag added that Beijing might’ve been displeased with Russian state-owned energy conglomerate Gazprom’s potentially obtaining unilateral control over the Mongolian section of the pipeline. “This would have meant a sudden and long-term increase in Moscow’s influence in Mongolia, to the detriment of Beijing,” he said. “Though never explicitly verbalized, it would have been ‘fair’ to include the Chinese into the Mongolian section’s development from the beginning.”

The South China Morning Post (SCMP) reported on Monday, Aug 19, Mongolia, whose territory the pipeline would transit through, did not include the project in its national development plans through 2028.

Although Russia has seen an increase in gas exports to China through the Power of Siberia 1 pipeline, this has not been sufficient to compensate for the decline in European exports.

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Next 👉 Mongolia’s decoupling from Russian gas and their obligation to arrest Putin.Image
Mongolia has rolled out a plan to end its energy shortfall by the end of 2028, long before it expects cheap Russian gas to finally start flowing into the country.

The Mongolian parliament’s final approval this week of a government-proposed, five-year development plan that excludes any gas input from Sila Sibiri 2, means the nation will need to rely on coal, hydropower and renewable energy sources to eliminate energy shortfall, according to a copy of the plan available on the parliament’s website.

According to the development plan, two hydropower stations with a total capacity of 400 megawatts, and one 450-MW coal-fired power plant are to be built before the end of 2028 to answer the increasing energy demands of the country and its capital Ulaanbaatar, where energy use exceeds available supply by about one third during winter.

As well as the proposed new power plants, Mongolia’s energy policy will also focus on wind and solar energy sources, the plan said. The country is estimated to have an ultimate capacity to produce 2600 gigawatts of renewable power, which could potentially cover its energy needs and provide capacity to export electricity to neighbouring countries, according to the approved document.

Putin risks being arrested in Mongolia - he arrived on Monday 02 September, 2024 - for a state visit in Mongolia, which lies on the route of a planned new gas pipeline connecting Russia and China. He is clearly desperate to prevent the collapse of the pipeline deal with Mongolia. He is due to hold talks with Mongolian President Ukhnaagiin Khurelsukh on Tuesday.

Ukraine urged Mongolia last week to arrest Putin on a warrant issued by the International Criminal Court warrant last year, when it accused him of the war crime of illegally deporting hundreds of children from Ukraine. The Kremlin has dismissed the accusation, saying it is politically motivated, and has said it has no worries about Putin making the trip.

The warrant obliges the court's 124 member states, including Mongolia, to arrest Putin and transfer him to The Hague for trial if he sets foot on their territory.

What will the consequences be if Mongolia fails to arrest Putin - have they given Putin cast iron assurances that they will not meet their obligations as an ICC signatory? What will the @IntlCrimCourt do if Mongolia fails in its obligation to arrest Putin?

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Read 6 tweets
Aug 26
Debunking the malinformation - Ukrainian drone strikes are just a temporary inconvenience.

Foreign Policy has published many insightful think-tank opinions on Russia and the illegal war conducted by Russia in Ukraine, (see references tweet).

However - I take substantial issue with a recent publication that purports Ukrainian drone strikes have minimal effect.

The article was published by a so-called “energy expert” Sergey Vakulenko, from Carnegie Russia Eurasia Center. The article suggests that while the drone strikes are a boost to Ukrainian morale - they have little effect on Russia’s oil revenues.

In April 2023, the Carnegie Russia Eurasia Center opened in Berlin, Germany. who wrote for the Carnegie Russia Eurasia Centre. @CarnegieRu / @CarnegieEndow. The center focuses on major policy challenges across the wider region in the wake of the Russian invasion of Ukraine. It is home to the digital publication Carnegie Politika. The current director of the center is Alexander Gabuev.

Key points in the publication:

So far this year, Ukraine says that it has successfully attacked more than 30 Russian oil installations, some deep inside Russia.

“The latest estimates are that about 17 percent of Russia’s (admittedly ample) oil-refining capacity has been damaged to some extent by the strikes. But more broadly, Russia continues to export huge volumes of oil and even a fair bit of natural gas, ensuring that oil revenues continue to fuel its war machine

In some ways, the energy fight is an adjunct to the fight on the battlefield. Ukraine’s ability to damage (even for short periods of time) Russian refineries and fuel depots is meant, in part, to undermine logistics for the Russian army, which continues to occupy large swaths of southern and eastern Ukraine.

Blowing up expensive installations deep inside Russia is also a psychological boon for Ukraine, which has been largely on the back foot since early 2022. Russia’s systematic destruction of the Ukrainian electric power grid, meanwhile, is meant to undermine civilian morale and resilience ahead of winter.”

The White House had initially warned Kyiv not to strike Russian oil installations, fearing Russian reprisals as well as an inconvenient spike in oil and gasoline prices ahead of the U.S. election, but Ukraine has plowed ahead regardless (just as it did with the Kursk incursion).

The big question is: Do all the eye-grabbing explosions at refineries and fuel depots make much of a difference to Russia’s surprisingly resilient oil-based economy?

But the damage done is brief and relatively easy to repair,” said Sergey Vakulenko, an energy expert at the Carnegie Russia Eurasia Center. “Will it make drastic impacts on Russian oil revenues? Probably not. The drones cannot do what the sanctions were unable to achieve.”

In some cases, Vakulenko said, the oil installations that Ukraine is targeting, chosen because they are within easy range of drones, may not be the critical marks that Kyiv imagines.

Many of the older refineries in western Russia were built to take advantage of export customs loopholes that made it more beneficial to export barely refined oil products, even very low-quality ones, than to export regular crude.

These aren’t the crown jewels, but the cracked zircons. “The benefits of hitting those refineries may not be what the Ukrainians thought,” said Vakulenko, who was previously an oil executive at Russian and international companies.”

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Next 👉 Debunking the mal-informationImage
Debunking this view:

This report smacks of a biase from the start, showing a reluctance to recognise the facts or credit the real and wider impact drone strikes have on Russia.

This biased opinion is highlighted from the outset where the author says 17 percent of Russia’s oil-refinery has been damaged “to some extent” and “admittedly ample”. To admit something reluctantly has strong overtones that the opposite is about to be argued, and true to form - the article then sets out to minimise the perceived impact of drone strikes on Russia oil infrastructure.

The author of this article, a “senior fellow” and “energy expert” Sergey Vakulenko, from Carnegie Russia Eurasia Center.

In April 2023, the Carnegie Russia Eurasia Center opened in Berlin, Germany. The center focuses on major policy challenges across the wider region in the wake of the Russian invasion of Ukraine. It is home to the digital publication Carnegie Politika. The current director of the center is Alexander Gabuev.

Challenging the analysis:

👉 The assertion is that oil installations being targeted are within easy range of drones, is misleading.

In fact a growing number of attacks are penetrating deep into Russia. For example, Reuters reported on May 9, 2024 - “A Ukrainian drone struck a major oil processing plant in Russia's Bashkiria region on Thursday from some 1,500 km (932 miles) away, its longest-range such attack since the start of the war.”

The Kyiv source said the drone flew 1,500 km, calling it a record, and hit a catalytic cracking unit in an attack that showed "Russian refineries and oil depots serving the military complex cannot feel safe even in the deep rear".

While the article published on foreignpolicy. Com suggests hitting a catalytic cracking is of little consequence and easily repaired, tries to diminish the effects of ordinary Russians and oil refinery employees having their businesses attacked in the plain sight of day - 1500km from the nearest Ukraine border.

👉In terms of the impacts of the drone strikes.

The suggestion the impact is minimal sounds like a Kremlin playbook response. Ukraine has stepped up its drone attacks on oil processing facilities in Russia since the start of the year, disrupting 15% of Russia's oil refining capacity according to an estimate by a NATO official at the beginning of April.

15% of Russia’s refining capacity of 5.2 million barrels per day (According to Bloomberg, Russia refined 5.2 million barrels of oil per day on average in April 2024, compared to 5.5 million in January. ). This the equivalent of 780,000 barrels per day of refined oil income.

Hydracarbonprocessing .com reported that Russia's primary offline oil refining capacity has been raised by 114% from the previous plan to 4.1 million metric tons for June mainly to due to last-month stoppages at the Tuapse and Komsomoslk plants, Reuters calculations show. Llll reported “In May, idle capacity stood at 3.8 MMt.

The Russian oil refining industry has been targeted by Ukrainian drone attacks. Technical outages have also contributed to idle capacity. Russia and Ukraine have both used drones to strike critical infrastructure, military installations and troop concentrations in their more than 2-yr conflict, with Kyiv hitting Russian refineries and energy facilities in recent months.

According to the current plan, which is likely be revised upward, the offline refining capacity in July is seen declining to 1.8 MMt, according to Reuters calculations based on data from industry sources.

To suggest the impact of the drone strikes on Russia’s oil refining capacity is just a “psychological boon”, with minimal, temporary or of no consequence - is misleading and factually incorrect.

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Next 👉 Catalyst Crackers..Image
👉 Targeting catalytic cracking units - a description that tries to characterise the drone strikes result in minimal effect:

Ukrainian drones also struck two oil depots near the town of Anapa in Russia's southern Krasnodar region causing large-scale fires, Russian authorities said a Ukrainian drone attack caused a fire and damaged several oil tanks at a refinery in Krasnodar region.

About six drones were destroyed, but debris fell on a facility near the village of Yurovka, sparking a fire, they wrote on the Telegram messaging app. Russian propaganda really admits to targets and damage but again - the suggestion the drone strikes targeting catalytic cracking equipment being at most a temporary inconvenience is a Kremlin disinformation line.

Here they have admitted to damaging “several tanks” and debris falling on a nearby village - which would have been distressing to Russian’s who thought they would not end up on the front end of the war - especially since Putin promised Russians he would protect them and has failed to do so.

The impact of the Ukrainian drone attack on August 18, targeting an oil depot in Russia's Rostov region - set fire to some 20 diesel fuel tanks with an estimated volume of 5,000 cubic meters of fuel each.

A second attack 5 days later when the original fires had still not been extinguished, targeted the kerosene tanks. A day earlier, Eto Rostov Novosti warned about the potential explosion of kerosene tanks at the Proletarsk oil depot, describing it as “much more dangerous” than diesel fires that have been raging at the facility for almost a week.

The fire was reportedly approaching the kerosene tanks, raising concerns about a possible explosion that could surpass previous ones in power.

This one attack alone, demonstrates the flawed assumptions and analysis suggesting the drone strikes do not impact the russian oil infrastructure in any meaningful way. To emphasise this - reports have been published in the Rostov Gazeta, which wrote that oil depot owners in Rostov Oblast are rushing to sell their assets due to threats of new attacks from Ukraine.

“The number of advertisements for such facilities increased after the drone strikes on the fuel storage in Proletarsk. Several oil depots and refineries in the region, including those in Volgodonsk, Azov, and Matveyev Kurgan, are now up for sale, according to the publication.”

Does this sound like the minor inconvenience the ForeignPolicy publication suggests Ukrainian drone strikes are?

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Next 👉 The latest drone strikes and conclusionImage
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