Meduza’s latest daily newsletter: Monday, August 5, 2024 What the Wildberries merger scandal says about Kremlin politics today, a ruined memorial service for NKVD victims, Volkswagen effectively returns to Russian market

The war in Ukraine

• 👋 Fired from her job while her husband is under fire in Ukraine: The founder of “The Way Home,” a movement by mobilized soldiers’ wives advocating for the return of their husbands from Ukraine, says she’s lost her job due to her designation by the government as a “foreign agent.” Maria Andreeva told Mediazona that she’s been placed on a 136-day leave before she is formally dismissed from her position at the Moscow Health Department’s Scientific and Practical Center for Children’s Psychoneurology. Andreeva also revealed that the Justice Ministry is fining her for violating her obligations as a designated “foreign agent.”

🪖 Russia’s ongoing advance has plunged five key areas of Ukraine’s defense into simultaneous crisis: The Pokrovsk sector, Toretsk, Chasiv Yar, Krasnohorivka, and Vuhledar (6-min read)

The defense crisis for Ukraine’s Armed Forces (AFU) along the 100-kilometer (62-mile) arc around Avdiivka is worsening. At the end of July, after capturing the village of Prohres between Avdiivka and Pokrovsk, Russian troops outflanked and reached the rear of Ukrainian units defending nearby front lines, forcing them to abandon their positions. Even tank-supported counterattacks by the AFU failed to halt the advance. As a result, the Russian army pushed several kilometers closer to Pokrovsk, a critical logistics hub for Ukrainian forces in Donbas. It’s still unclear how the Ukrainian command can stabilize the situation.

Additionally, despite moving in reserves, the Ukrainian army continues to lose positions in the villages of Niu-York and Zalizne in the Toretsk urban area. The troops between these villages are already at risk of being encircled. Furthermore, the Russian army has managed to cross the Siverskyi Donets–Donbas Canal in Chasiv Yar and establish a small bridgehead on its western bank. Reinforcing positions around Pokrovsk, Toretsk, and Chasiv Yar is difficult for Ukraine as defense crises are also brewing in other areas, particularly in southern Donbas.

🧑‍✈️ Volodymyr Zelensky unveils newly arrived F-16 fighter jets on Ukraine’s Air Forces Day (2-min read)

Ukraine has received its first batch of U.S.-made F-16 fighter jets. President Volodymyr Zelensky officially commissioned the aircraft at an unveiling ceremony on August 4, Ukraine’s Air Forces Day. The president and Ukrainian media outlets shared footage from the event, which was held at an undisclosed location in Ukraine. Zelensky described the occasion as a new milestone in the development of Ukraine’s Air Force. “We have turned our ambitions and defensive needs into reality, a reality in our skies,” he said. 

Russian domestic affairs

• 🚨 It’s a small, corrupt world, after all: The sprawling crackdown on corruption at Russia’s Defense Ministry has led to two new arrests: Patriot Park director Vyacheslav Akhmedov and Major General Vladimir Shesterov, the deputy head of the military’s Main Directorate for Innovative Development. The two officials are suspected of embezzling more than 40 million rubles ($520,000) allocated to state institutions affiliated with Patriot Park, a theme park outside Moscow featuring interactive exhibits with military equipment and the Main Cathedral of the Russian Armed Forces. 

🕯️ A ruined memorial service for NKVD victims

A group of Cossacks and men in camouflage disrupted a memorial ceremony on Monday at the Republic of Karelia’s Sandarmokh cemetery, where the Soviet NKVD executed and buried several thousand prisoners in 1937 and 1938. In attendance were embassy officials from France, Sweden, Germany, Poland, and Norway. The protesters came with signs mocking the Finns and a local lawmaker who supports the memorial ceremony. Some chanted, “The Jews sponsored Hitler!” The intruders also erected two large speakers to drown out the memorial service with Soviet-era patriotic music. Earlier in the day on Monday, August 5, police in Karelia raided the homes of two local activists, Alexey Trunov and Andrey Litvin.

In recent years, some pro-Kremlin scholars have argued that the Sandarmokh is also the resting place of Soviet soldiers killed in Finnish captivity during the Finnish occupation of Karelia from 1941 to 1944, though independent historians question these claims.

🎧 What the Wildberries merger scandal says about Kremlin politics and property rights (35 minutes, in Russian)

In the latest episode of Meduza’s View of the Kremlin podcast, Alexandra Prokopenko and Andrey Pertsev discuss the scandal surrounding Tatyana and Vladislav Bakalchuk’s divorce and the merger between Tatyana’s Wildberries online marketplace and the advertising conglomerate Russ Group. Prokopenko and Pertsev point out that the deal itself is strange, given how much bigger Wildberries is as a business, and the backroom dealing to win Putin’s reported approval also raises many questions.

Prokopenko notes that Russian laws should force the Bakalchuks to divide their ownership of the multibillion-dollar company Wildberries in half, though Tatyana Bakalchuk has claimed a 99-percent stake that she clearly doesn’t intend to share. The fact that this dispute has erupted into a public circus instead of moving quietly through lawyers and the courts signals the “trivialization” of Russia’s legal system, says Prokopenko. She also argues that Mrs. Bakalchuk and those lobbying for the merger likely managed to win President Putin’s approval by “checking the boxes” of his interests, appealing to him with big claims about “contributing to economic development,” “circumventing SWIFT,” “promoting traditional values,” and so on. (She later says that the paperwork about the “uneven marriage” between Wildberries and Russ Group only reached Putin thanks to someone with special access to the president.)

Chechnya Governor Ramzan Kadyrov’s surprise intervention last month into the merger process indicates that the Bakalchuks have turned to different protection rackets in the fight over Wildberries. Whereas Mrs. Bakalchuk is believed to have allied with Federation Council Senator Suleiman Kerimov, her husband has apparently thrown in with the head of Chechnya, whose special place in the Russian state and own knack for “stress-testing” the Kremlin’s power vertical led to the recent video on social media in which Kadyrov denounced the merger’s architects as “devils.” Kadyrov and Kerimov have battled over others’ assets before, but the twists and turns in the Wildberries story suggest a return to the chaos of the 1990s when business owners were desperate for protection against hostile takeovers and willing to make shareholders of their protectors. 

According to Prokopenko, Putin has contributed to an “extraordinary institutional vacuum” in Russia by placing himself above the courts and redistributing huge amounts of wealth and corporate assets through informal resolutions where he delegates his decisions to various advisers. This, she argues, has undermined private property rights in Russia and erased a guarantee at the foundation of Putin’s social contract with the oligarchs that he won’t revise the results of Russia’s post-Soviet privatizations.

Andrey Pertsev argues that the fight over Wildberries is most likely due to shrinking profits. With less money to disperse and the Kremlin revisiting so many property rights, there’s more reason to risk a claim on such a valuable company and greater urgency to win the president’s support.

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As the world turns

• 🕵️ Buenas noches, kids! The New York Times reports that the children of the Russian sleeper agents traded last week by Slovenia in the prisoner swap with Moscow didn’t know they were Russian until they “had any ties to Russia” until they were “flown to Moscow on Thursday.” According to the NYT, their parents, posing as an Argentine couple, first moved to Slovenia in 2017 but likely weren’t activated until 2022, after more than 400 Russian spies were expelled from Europe, following the full-scale invasion of Ukraine. Moscow “lost a lot of its regular information sources and probably activated sleeper agents,” the former head of Slovenia’s military intelligence told the newspaper.
• 🏦 The slow process of divesting from Russia: Citing a directive from the European Central Bank, Raiffeisen Bank International announced on Monday that its Russian subsidiary, Raiffeisenbank, has stopped opening new brokerage accounts for retail investors. For existing accounts, it is business as usual, for now, says the bank. The European Central Bank has given RBI another two years to reduce its loan portfolio in Russia by more than 4 billion rubles (roughly $4.5 billion).
• 🚗 Punch-bug me, I must be dreaming: The German newspaper Die Zeit reports that Volkswagen has effectively returned to the Russian market through the sale of cars under the Jetta brand. Jetta vehicles are manufactured by the Chinese FAW group using German components, primarily for the Chinese market. These cars have been sold in Russia for some time already under Moscow’s “parallel import” program, but Jetta Motors announced a few weeks ago that it has officially launched its brand in Russia. According to Die Zeit, it’s “rather implausible” that Volkswagen is unaware of its Chinese partner’s actions, though the German car company has claimed exactly this. (Volkswagen formally withdrew from Russia in the aftermath of the full-scale invasion of Ukraine and later sold off its factory in Kaluga for 160 million euros, or $171.2 million.)

👁️ Russian state media releases first footage of Evan Gershkovich’s and Paul Whelan’s arrests (4-min read)

On August 5, two Russian state-funded media outlets published the first publicly released footage of the arrests of Wall Street Journal reporter Evan Gershkovich and former U.S. Marine Paul Whelan. One of the videos includes audio from a purported meeting between Gershkovich and the source he was meeting with when he was arrested. The clip indicates that the journalist asked his source not to bring any documents but the person brought them anyway, which suggests the meeting was a sting operation set up by the FSB. Meduza shares the new footage and summarizes what Russia’s propaganda media wrote about it.

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