‘Russia in the doldrums?’: new U.S. sanctions to weigh on recovery

By Jack Stubbs and Polina Nikolskaya

MOSCOW (Reuters) – An escalation in U.S. sanctions against Moscow risks derailing a fragile recovery in Russia’s economy, which had just begun to take hold after the Kremlin’s last confrontation with the West in 2014, analysts and investors said on Monday.

The United States imposed major new sanctions against Russia on Friday, striking at senior Russian officials and some of the country’s biggest companies in one of Washington’s most aggressive moves to punish Moscow for its alleged meddling in the 2016 U.S. election and other “malign activity”.

“One gets the impression that since 2014 we have been convinced that sanctions are painless for our economy,” said Kirill Tremasov, head of research at Loko-Invest and former director of the Russian Economy Ministry’s forecasting department.

“This is completely groundless. What happened on Friday opens a new stage in relations with Western countries. We have found ourselves in a new reality. And it is very, very serious.”

Analysts and investors in Moscow said the sanctions could consign Russia to years of low growth, frustrating government efforts to stimulate a rebound from a two-year downturn brought on by low oil prices and Western sanctions over Moscow’s role in the Ukraine crisis.

Putin was re-elected for his fourth presidential term in March with a huge majority, but is under increasing pressure to meet voters’ expectations of better growth and assuage concerns about falling living standards.

SLOW-GROWTH ENVIRONMENT

After two years of contraction, Russian GDP returned to growth of 1.5 percent last year on the back of higher oil prices, still short of a government target of 2 percent.

Chris Weafer, a senior partner at economic and political consultancy Macro Advisory, said he still saw Russia’s economy growing by 1.8 percent this year, with oil prices above $60 a barrel.

“But the big question, of course, is ‘How long does Russia stay in this low-growth environment?’ That’s where the impact of sanctions happens,” he said.

“We all know that the economy needs to grow at a faster pace over the course of the next (presidential) term, it needs to get stronger – and sanctions and the impact on foreign direct investment, that’s where it comes in,” he said. “2018 is the year of Russia in the doldrums.”

The latest round of U.S. sanctions represents the biggest escalation in Western action against Russia since Washington and the European Union first targeted oligarchs close to Putin and their businesses over the Ukraine crisis in 2014.

Investors said the inclusion of people who are not traditionally seen as part of Putin’s inner circle showed that any Russian company or business leader could now be targeted.

Russia’s rouble suffered its biggest daily fall in over three years on Monday and stocks in major Russian companies also slid, as investors reacted to the new sanctions. State-owned Sberbank, often seen as a barometer of the wider economy, fell 17 percent in Moscow and aluminum giant Rusal <0486.HK> lost over half its value in Hong Kong after its main owner Oleg Deripaska was named on the sanctions list.

TIGHTER MONEY

The increased uncertainty and risk will make it harder for Russian companies to borrow abroad and reduce the amount of inward investment, said Tim Ash at BlueBay Asset Management.

“Unless there is a move to de-escalation, you have to assume that financing conditions around Russia will get even tighter,” he said. “Long-term, that’s going to be bad for growth and mean even more stagnation in the Russian economy.”

Natalia Orlova, head economist at Alfa Bank, said the central bank might now take more time over interest rate cuts that could boost growth: “Based on economic logic … it seems to me that it is dangerous to hurry with a rate cut in such uncertain conditions.”

Loko-Invest’s Kirill Tremasov said the biggest danger of the new sanctions might be in scaring foreign investors off Russian OFZ treasury bonds, popular in the West because of their high yields.

The yield on the benchmark 10-year OFZ rose as high as 7.32 percent on Monday as the price of the bond fell. It had stood at around 7.05 percent last week.

Foreigners’ holdings of OFZ bonds stood at nearly $40 billion, or 33.9 percent of all OFZ bonds as of Feb. 1, the last period for which data was available.

“For foreign investors, this is a very, very serious signal … and now there could be some OFZ outflows,” Tremasov said. “This will be reflected in the growth of interest rates in the economy.”

(Additional reporting by Andrey Ostroukh; Writing by Jack Stubbs; Editing by Kevin Liffey)

UK says world’s patience is wearing thin with Russia’s Putin after chemical attack

British Defence Secretary Gavin Williamson visits UK troops of the NATO Enhanced Forward Presence battle group at the military base in Tapa, Estonia March 25, 2018. REUTERS/Janis Laizans

TALLINN (Reuters) – British Defence Secretary Gavin Williamson said on Monday that the world was united behind Britain’s stance over the poisoning of a former Russian spy and that patience was wearing thin with Russian President Vladimir Putin.

Britain has blamed Russia for the attack on Sergei Skripal and his daughter Yulia with a military-grade Soviet-era nerve agent on March 4, winning the support of NATO and European leaders.

The Kremlin has denied any involvement and says Britain is orchestrating an anti-Russia campaign.

During a visit to Estonia, Williamson said the backing for Britain was in “itself a defeat for President Putin”.

“The world’s patience is rather wearing thin with President Putin and his actions, and the fact that right across the NATO alliance, right across the European Union, nations have stood up in support of the United Kingdom … I actually think that is the very best response that we could have,” he told reporters.

“Their (the Kremlin’s) intention, their aim is to divide and what we are seeing is the world uniting behind the British stance and that in itself is a great victory and sends an exceptionally powerful message to the Kremlin and President Putin.”

European Union member states agreed on Friday to take additional punitive measures against Russia over the attack on Skripal, found slumped on a bench with his daughter in the southern English city of Salisbury.

U.S. President Donald Trump is also considering the expulsion of some Russian diplomats, a source familiar with the situation said on Sunday.

Williamson also said he was surprised and disappointed by reports about European Union proposals to freeze Britain out of the Galileo satellite navigation project as part of negotiations over Britain’s exit from the bloc next year.

The Financial Times newspaper reported that the EU was looking to lock Britain’s space industry out of the 10 billion euro program to protect its security after Britain leaves the bloc next year.

“The United Kingdom has been absolutely clear that we do not want to bring the defense and security of Europe into part of the negotiations because we think it is absolutely vital,” Williamson said.

“So I very mush hope that the European Union commission will take the opportunity to see sense, re-calibrate its position and not play politics on something that is so vitally important which is European defense and security.”

(Reporting by David Marditste; writing by Michael Holden; editing by Guy Faulconbridge)

Kremlin supporters pressure Russian election observers before vote

FILE PHOTO: Russian President Vladimir Putin addresses the audience during a rally marking the fourth anniversary of Russia's annexation of Ukraine's Crimea region in the Black Sea port of Sevastopol, Crimea, March 14, 2018. REUTERS/Maxim Shemetov/File Photo

By Andrew Osborn

MOSCOW (Reuters) – Police last month detained David Kankiya, an observer at Russia’s forthcoming presidential election, yards from his home in southern Russia. Police said his car may have been used in a crime, according to Kankiya.

Hours later, Kankiya was charged with disobeying the police, something he denies, and jailed for five days by a court. Weeks later, his car tyres were slashed with a knife, he says, and on Tuesday, pro-Kremlin journalists ambushed him.

“I have information that you have insulted the Russian people,” one of the journalists said, a video of the incident shows.

Days before Sunday’s election, which polls show incumbent Vladimir Putin is on track to win comfortably, Golos, a non-governmental organization that monitors Russian elections, says it is under unprecedented pressure.

Its problems are part of what Kremlin critics say is a wider campaign by authorities to hinder or silence dissenting voices.

Opposition politician Boris Nemtsov was shot dead in 2015, while current opposition leader Alexei Navalny has been barred from running in Sunday’s election over what he says is a trumped-up fraud conviction.

The Kremlin, which denies involvement in Nemtsov’s murder, wants Putin’s re-election to be viewed as legitimate and largely clean in the West so as not to further damage already poor relations. At home, wary of street protests, the Kremlin is keen that voters see it in the same way.

The Kremlin says complaints about a crackdown on dissent are hollow. Individual cases are a matter for the relevant authorities who it says are only trying to uphold the law.

Equally, the Central Election Commission says it will do everything it can to ensure Sunday’s vote is free of fraud and has turned to Golos for advice on how to do that.

However, opposition leader Navalny, accused by Putin of being Washington’s pick for president, has predicted the authorities will resort to widespread fraud to deliver a Putin landslide and has spoken of organizing post-election protests of the kind that roiled Russia after Putin’s last election victory in 2012.

Golos says the authorities unfairly blamed it for those protests — some of the biggest since the Soviet collapse — because of its work publicizing what it said were serious election violations, something it plans to do again on Sunday.

Kankiya, a Golos coordinator in the Krasnodar Region, says that’s why he was targeted.

“I was detained and charged on a false pretext,” Kankiya, 28, told Reuters by phone. “It’s political pressure.”

A court in Krasnodar disagrees. It rejected his appeal against his arrest and jailing on Wednesday. Police say he was detained after he failed to produce identification during a routine check.

‘FOREIGN AGENT’

Election fraud has been a problem in Russia since the 1991 Soviet collapse.

Abuses have often been highlighted by Golos, whose observers spend election day at polling stations and flag suspected cases of fraud to the authorities.

Founded in 2000, the year Putin won his first presidential term, Golos says its problems began when Putin returned to the presidency in 2012.

“After the 2012 election, their task was to destroy Golos,” Grigory Melkonyants, the movement’s co-chairman said in an interview in his Moscow office, referring to the authorities.

A month after the election, the tax inspectors came. And, in July that year, Putin approved a law that forced non-governmental organizations engaging in political activity to register with the justice ministry as “foreign agents.”

Golos lost one of its main donors in 2012 when Moscow accused the United States Agency for International Development (USAID)of trying to influence politics and forced it to leave.

Soon, weighed down by the red tape that came with being designated a “foreign agent” and facing a funding squeeze, Golos was struggling to function. In July 2016, at the behest of the justice ministry, a court ordered Golos to close.

Today, Golos still operates after reconfiguring its structure in such a way that it is not classified as a legal entity.

PRESSURE

A shoe-string operation run out of a pokey Moscow office staffed by about nine volunteers, it says it relies on private donations from inside Russia.

It has coordinators in almost half of Russia’s voting regions, about 6,000 volunteers, and dozens of experts who train people how to observe elections.

Melkonyants says the movement on Sunday plans to field thousands of observers, run a telephone hot line for complaints, and chronicle reports of electoral abuses on a nationwide violations map on its website. It will deliver its verdict on how clean the election was on Monday.

But as election day draws near, pressure on Golos is intensifying.

Its volunteers have complained of being systematically stopped for long periods when leaving or entering the country by border staff who tell them there’s a note by their name that says they are linked to terrorism, Golos says.

REN TV, a Russian TV channel, on Monday broadcast what it billed as a special investigation into Golos and other groups. The program depicted Golos as a shadowy Western-funded group that worked to discredit Russia in the eyes of the world.

Andrei Klimov, a senator who heads up a committee in the upper house of parliament to prevent interference in Russia’s internal affairs, told the program such groups posed a threat.

“They (Golos and other groups) will try to trigger protest,” said Klimov.

And on Thursday, Golos said the landlord of a hall in Moscow it had agreed to rent for a call center on election day had annulled the rental contract after being told by the police to back out of the contract or face problems.

Kankiya, the Golos coordinator in southern Russia, said he would continue his work regardless.

“We’re the only election observation movement in Russia capable of operating on a large scale,” said Kankiya. “Many people don’t like that.”

(Editing by Cassell Bryan-Low)

Russia to expel UK diplomats as crisis over nerve toxin attack deepens

A coat of arms is seen on a gate outside of the Russian embassy in London, Britain, March 16, 2018. REUTERS/Toby Melv

By Olzhas Auyezov and Guy Faulconbridge

ASTANA/LONDON (Reuters) – Russia is set to expel British diplomats in retaliation for Prime Minister Theresa May’s decision to kick out 23 Russians as relations with London crashed to a post-Cold War low over an attack with military-grade nerve agent on English soil.

After the first known offensive use of such a weapon in Europe since World War Two, May blamed Moscow and gave 23 Russians who she said were spies working under diplomatic cover at the London embassy a week to leave.

Russia has denied any involvement, cast Britain as a post-colonial power unsettled by Brexit, and even suggested London fabricated the attack in an attempt to whip up anti-Russian hysteria.

Asked by a Reuters reporter in the Kazakh capital if Russia planned to expel British diplomats from Moscow, Russian Foreign Minister Sergei Lavrov smiled and said: “We will, of course.”

Kremlin spokesman Dmitry Peskov said Russia could announce its response at any minute.

Britain, the United States, Germany and France jointly called on Russia on Thursday to explain the attack. U.S. President Donald Trump said it looked as though the Russians were behind it.

A German government spokesman called the attack “an immense, appalling event”. Chancellor Angela Merkel said an EU summit next week would discuss the issue, in the first instance to seek clarity, and that any boycott of the soccer World Cup, which Russia is hosting in June and July, was not an immediate priority.

INDEPENDENT VERIFICATION

Russia has refused Britain’s demands to explain how Novichok, a nerve agent developed by the Soviet military, was used to strike down Sergei Skripal, 66, and his daughter Yulia, 33, in the southern English city of Salisbury.

Britain has written to the Organisation for the Prohibition of Chemical Weapons in The Hague, which monitors compliance with the global convention outlawing the use of such weapons, to obtain independent verification of the substance used.

Skripal, a former colonel in the GRU who betrayed dozens of Russian agents to British intelligence, and his daughter have been critically ill since March 4, when they were found unconscious on a bench.

A British policeman was also poisoned when he went to help them is, and is in a serious but stable condition.

British investigators are working on the theory that an item of clothing or cosmetics or a gift in the luggage of Skripal’s daughter was impregnated with the toxin, and then opened in Skripal’s house in Salisbury, the Daily Telegraph said.

President Vladimir Putin, a former KGB spy who is poised to win a fourth term in an election on Sunday, has so far only said publicly that Britain should get to the bottom of what has happened.

In a sign of just how tense the relationship has become, British and Russian ministers used openly insulting language while the Russian ambassador said London was trying to divert attention from the difficulties it was having managing Britain’s exit from the European Union.

“SHOCKING AND UNFORGIVABLE”

British Foreign Secretary Boris Johnson said Britain had no quarrel with the Russian people but that it was overwhelmingly likely that Putin himself took the decision to deploy the nerve toxin in England.

“We have nothing against the Russians themselves. There is to be no Russophobia as a result of what is happening,” he said.

“Our quarrel is with Putin’s Kremlin, and with his decision – and we think it overwhelmingly likely that it was his decision – to direct the use of a nerve agent on the streets of the UK.”

The Kremlin’s Peskov called the allegation that Putin was involved “a shocking and unforgivable breach of the diplomatic rules of decent behavior”, TASS news agency reported.

British Defence Secretary Gavin Williamson sparked particular outrage in Moscow with his blunt comment on Thursday that “Russia should go away, it should shut up.”

Russia’s Defence Ministry said he was an “intellectual impotent” and Lavrov said he probably lacked education. Williamson studied social science at the University of Bradford.

“Well he’s a nice man, I’m told, maybe he wants to claim a place in history by making some bold statements,” Lavrov said. “Maybe he lacks education, I don’t know.”

In London, opposition Labour Party leader Jeremy Corbyn struck a starkly different tone to that of the British government by warning against rushing into a new Cold War before full evidence of Moscow’s culpability was proven.

Corbyn said Labour did not support Putin and that Russia should be held to account if it was behind the attack.

“That does not mean we should resign ourselves to a ‘new cold war’ of escalating arms spending, proxy conflicts across the globe and a McCarthyite intolerance of dissent,” he said.

(Additional reporting by William James, David Milliken and Kate Holton in London, and Maria Tsvetkova, Jack Stubbs and Andrew Osborn in Moscow; Writing by Guy Faulconbridge; Editing by Kevin Liffey)

Britain warns Russia over double agent’s mysterious illness

Sergei Skripal, a former colonel of Russia's GRU military intelligence service, looks on inside the defendants' cage as he attends a hearing at the Moscow military district court, Russia August 9, 2006. Picture taken August 9, 2006. Kommersant/Yuri Senatorov via REUTERS

By Toby Melville and Emily G Roe

SALISBURY, England (Reuters) – Britain warned Russia on Tuesday of a robust response if the Kremlin was behind a mysterious illness that has struck down a former double agent convicted of betraying dozens of spies to British intelligence.

Foreign Secretary Boris Johnson named Sergei Skripal, once a colonel in Russia’s GRU military intelligence service, and his daughter Yulia as the two people who were found unconscious on Sunday on a bench outside a shopping center in southern England.

Skripal, 66, and his 33-year-old daughter were exposed to what police said was an unknown substance in the English city of Salisbury. Both are still critically ill in intensive care, police said.

“We don’t know exactly what has taken place in Salisbury, but if it’s as bad as it looks, it is another crime in the litany of crimes that we can lay at Russia’s door,” Johnson told the British parliament.

“It is clear that Russia, I’m afraid, is now in many respects a malign and disruptive force, and the UK is in the lead across the world in trying to counteract that activity.”

If Moscow was shown to be behind Skripal’s illness, Johnson said, it would be difficult to see how UK representation could go to the World Cup in Russia in a normal way. A government source said that meant attendance of ministers or dignitaries.

Russian Foreign Ministry spokeswoman Maria Zakharova said Johnson’s comments were “wild”.

A previous British inquiry said President Vladimir Putin probably approved the 2006 murder of ex-KGB agent Alexander Litvinenko with radioactive polonium-210 in London. The Kremlin has repeatedly denied any involvement in Litvinenko’s killing.

Litvinenko, 43, an outspoken critic of Putin who fled Russia for Britain six years before he was poisoned, died after drinking green tea laced with the rare and very potent radioactive isotope at London’s Millennium Hotel.

It took weeks for British doctors to discern the cause of Litvinenko’s illness.

His murder sent Britain’s ties with Russia to what was then a post-Cold War low. Relations suffered further from Russia’s annexation of Crimea and its military backing for Syrian President Bashar al-Assad against rebels trying to topple him.

A police car is parked next to crime scene tape, as a tent covers a park bench on which former Russian inteligence officer Sergei Skripal, and a woman were found unconscious after they had been exposed to an unknown substance, in Salisbury, Britain, March 6, 2018. REUTERS/Toby Melville

A police car is parked next to crime scene tape, as a tent covers a park bench on which former Russian inteligence officer Sergei Skripal, and a woman were found unconscious after they had been exposed to an unknown substance, in Salisbury, Britain, March 6, 2018. REUTERS/Toby Melville

RUSSIAN DOUBLE AGENT

British authorities said there was no known risk to the public from the unidentified substance, but they sealed off the area where Skripal was found, which included a pizza restaurant and a pub, in the center of Salisbury.

Counter-terrorism police are now leading the investigation though they said they believe there no risk to the public. Samples from the scene are being tested at Porton Down, Britain’s military research laboratory, the BBC said.

Skripal, who passed the identity of dozens of spies to the MI6 foreign intelligence agency, was given refuge in Britain after being exchanged in 2010 for Russian spies caught in the West as part of a Cold War-style spy swap at Vienna airport.

The Kremlin said it was ready to cooperate if Britain asked it for help investigating the incident with Skripal.

Calling it a “tragic situation,” Putin’s spokesman Dmitry Peskov said the Kremlin had no information about the incident.

Asked to respond to British media speculation that Russia had poisoned Skripal, Peskov said: “It didn’t take them long.”

Russia’s embassy in London said the incident was being used to demonize Russia and that it was seriously concerned by British media reporting of the Skripal incident.

Russia’s foreign spy service, the SVR, said it had no comment to make. Russia’s foreign ministry and its counter-intelligence service, the Federal Security Service (FSB), did not immediately respond to questions submitted by Reuters about the case.

FROM MOSCOW TO SALISBURY

Skripal was arrested by the FSB in 2004 on suspicion of betraying dozens of Russian agents to British intelligence. He was sentenced to 13 years in prison in 2006 after a secret trial.

Skripal, who was shown wearing a track suit in a cage in court during the sentencing, had admitted betraying agents to MI6 in return for money, some of it paid into a Spanish bank account, Russian media said at the time.

But he was pardoned in 2010 by then-president Dmitry Medvedev as part of a swap to bring 10 Russian agents held in the United States back to Moscow.

The swap, one of the biggest since the Cold War ended in 1991, took place on the tarmac of Vienna airport where a Russian and a U.S. jet parked side by side before the agents were exchanged.

One of the Russian spies exchanged for Skripal was Anna Chapman. She was one of 10 who tried to blend into American society in an apparent bid to get close to power brokers and learn secrets. They were arrested by the FBI in 2010.

The returning spies were greeted as heroes in Moscow. Putin, himself a former KGB officer, sang patriotic songs with them.

Skripal, though, was cast as a traitor by Moscow. He is thought to have done serious damage to Russian spy networks in Britain and Europe.

The GRU spy service, created in 1918 under revolutionary leader Leon Trotsky, is controlled by the military general staff and reports directly to the president. It has spies spread across the world.

Since emerging from the John le Carre world of high espionage and betrayal, Skripal lived modestly in Salisbury and kept out of the spotlight until he was found unconscious on Sunday at 1615 GMT.

Wiltshire police said a small number of emergency services personnel were examined immediately after the incident and all but one had been released from hospital.

Skripal’s wife died shortly after her arrival in Britain from cancer, the Guardian newspaper reported. His son died on a recent visit to Russia.

A white and yellow police forensics tent covered the bench where Skripal was taken ill.

(Reporting by Toby Melville; Writing by Guy Faulconbridge; Additional reporting by Alistair Smout, William Schomberg, Andy Bruce and Michael Holden in LONDON, Andrew Osborn, Polina Nikolskaya and Margarita Popova in MOSCOW and Mark Hosenball in WASHINGTON; Editing by Matthew Mpoke Bigg and Gareth Jones)

Russia offers rebels safe passage out of eastern Ghouta

A man pushes a cart past damaged buildings at the besieged town of Douma, Eastern Ghouta, Damascus, Syria March 5, 2018. REUTERS/Bassam Khabieh

By Katya Golubkova and Dahlia Nehme

MOSCOW/BEIRUT (Reuters) – The Russian military has offered Syrian rebels safe passage out of eastern Ghouta, setting out a proposal to let the opposition surrender its last major stronghold near Damascus to President Bashar al-Assad.

The Russian defense ministry said rebels could leave with their families and personal weapons through a secure corridor out of eastern Ghouta, where Moscow-backed government forces have made rapid gains in a fierce assault.

The Russian proposal did not specify where the rebels would go, but the terms echo previous deals under which insurgents have ceded ground to Assad and been given safe passage to other opposition-held territory near the Turkish border.

“The Russian Reconciliation Centre guarantees the immunity of all rebel fighters who take the decision to leave eastern Ghouta with personal weapons and together with their families,” said the defense ministry statement.

Vehicles would “be provided, and the entire route will be guarded”, it added.

Hundreds of civilians have been killed in the besieged enclave of satellite towns and rural areas on the outskirts of Damascus in one of the fiercest bombing campaigns of the seven-year-old civil war.

The United Nations believes 400,000 people are trapped inside the enclave where food and medical supplies were already running out before the assault began with intense air strikes two weeks ago.

Damascus and Moscow have pressed on with the campaign despite a U.N. Security Council call for a ceasefire, arguing that the rebel fighters they are targeting are members of banned terrorist groups who are not protected by the truce.

The offensive appears to have followed the tactics Assad and his allies have used at other key points in the war: laying siege to rebel-held areas, bombing them fiercely, launching a ground assault and offering passage out to civilians who flee and fighters who withdraw.

Wael Alwan, the spokesman for one of the main rebel groups in eastern Ghouta, Failaq al-Rahman, said Russia was “insisting on military escalation and imposing forced displacement” on the people of eastern Ghouta, which he called “a crime”.

Alwan, who is based in Istanbul, also told Reuters there had been no contact with Russia about the proposal.

The Syrian army has captured more than a third of the enclave in recent days, threatening to slice it in two.

The Syrian Observatory for Human Rights war monitor says government bombardment of the area has killed 790 people since Feb. 18, including 80 people killed on Monday alone.

Assad said on Sunday the Syrian army would continue the push into eastern Ghouta, which government forces have encircled since 2013. Many civilian residents have fled from the frontlines into the town of Douma.

CLAIMS OF CHLORINE USE

For the rebels fighting to oust Assad, the loss of eastern Ghouta would mark their worst defeat since the battle of Aleppo in late 2016. Rebel shelling on Damascus has killed dozens of people during the last two weeks, state-run media has said.

Russia has organized daily, five-hour long “humanitarian ceasefires” with the stated aim of allowing civilians to leave and to permit aid deliveries. It has accused rebels of preventing people from leaving the area, which rebels deny.

The health directorate in rebel-held Ghouta said on Tuesday it had received reports of people suffering suffocation as a result of chlorine gas in the eastern Ghouta village of Hammourieh on Monday.

A media official with the directorate said it was “following up on the details of this incident and would release a detailed report after following up on the cases”.

Western countries and rescue workers say Syria has repeatedly used chlorine gas as a weapon in eastern Ghouta in recent weeks, which the government has strongly denied.

The civil defense rescue service in eastern Ghouta said the latest bombardment with chlorine gas had caused 30 people to suffer from suffocation in the shelling in Hammourieh.

The Syrian government swiftly denied using poison gas, and said rebels had received instructions from their foreign “sponsors” to use chemical weapons in eastern Ghouta in order to accuse the Syrian army of doing so.

The Kremlin said on Tuesday only an impartial investigation in Syria by an international commission can determine if allegations about the use of chemical weapons are true.

Asked about the possibility that the United States could strike Syria over allegations that forces loyal to Assad had used chemical weapons, spokesman Dmitry Peskov said the Kremlin hoped nothing would be done to breach international law.

Rebel-held areas of the Ghouta region were hit in a major attack with nerve gas that killed hundreds of people in 2013. Syria agreed to give up its chemical weapons arsenal to avert U.S. retaliation for that attack, but was found by the United Nations to have used sarin nerve gas again last year in an incident that prompted U.S. retaliatory air strikes.

Unlike sarin, chlorine is not banned for civilian uses, but its use as a weapon is forbidden.

Aid trucks reached eastern Ghouta on Monday for the first time since the start of the latest offensive. But the government stripped some medical supplies from the convoy and pressed on with its air and ground assault.

The convoy of more than 40 trucks pulled out of Douma in darkness after shelling on the town, without fully unloading supplies during a nine-hour stay. All staff were safe and heading back to the capital Damascus, aid officials said.

(Reporting by Katya Golubkova in Moscow, Tom Perry and Dahlia Nehme in Beirut; Writing by Tom Perry; editing by John Stonestreet)

Syria’s Ghouta residents ‘wait to die’ as more bombs fall

A person inspects damaged building in the besieged town of Douma, Eastern Ghouta, Damascus, Syria February 20, 2018. REUTERS/Bassam Khabieh

BEIRUT (Reuters) – Residents of Syria’s eastern Ghouta district said they were waiting their “turn to die” on Wednesday, amid one of the most intense bombardments of the war by pro-government forces on the besieged, rebel-held enclave near Damascus.

At least 27 people died and more than 200 were injured on Wednesday. At least 299 people have been killed in the district in the last three days, the British-based Syrian Observatory for Human Rights war monitor said.

Another 13 bodies, including five children, were recovered from the rubble of houses destroyed on Tuesday in the villages of Arbin and Saqba, the Observatory reported.

The eastern Ghouta, a densely populated agricultural district on the Damascus outskirts, is the last major area near the capital still under rebel control. Home to 400,000 people, it has been besieged by government forces for years.

A massive escalation in bombardment, including rocket fire, shelling, air strikes and helicopter-dropped barrel bombs, since Sunday has become one of the deadliest of the Syrian civil war, now entering its eighth year.

Reuters photographs taken in eastern Ghouta on Wednesday showed men searching through the rubble of smashed buildings, carrying blood-smeared people to hospital and cowering in debris-strewn streets.

The United Nations has denounced the bombardment, which has struck hospitals and other civilian infrastructure, saying such attacks could be war crimes.

The pace of the strikes appeared to slacken overnight, but its intensity resumed later on Wednesday morning, the Observatory said. Pro-government forces fired hundreds of rockets and dropped barrel bombs from helicopters on the district’s towns and villages.

“We are waiting our turn to die. This is the only thing I can say,” said Bilal Abu Salah, 22, whose wife is five months pregnant with their first child in the biggest eastern Ghouta town Douma. They fear the terror of the bombardment will bring her into labor early, he said.

“Nearly all people living here live in shelters now. There are five or six families in one home. There is no food, no markets,” he said.

The International Committee of the Red Cross (ICRC) called on Wednesday for humanitarian access to Ghouta, especially to reach wounded people in critical need of treatment.

“The fighting appears likely to cause much more suffering in the days and weeks ahead,” said Marianne Gasser, ICRC’s head of delegation in Syria. “This is madness and it has to stop.”

The Union of Medical Care and Relief Organisations, a group of foreign agencies that fund hospitals in opposition-held parts of Syria, said eight medical facilities in eastern Ghouta had been attacked on Tuesday.

WARNINGS

The Syrian government and its ally Russia, which has backed Assad with air power since 2015, say they do not target civilians. They also deny using the inaccurate explosive barrel bombs dropped from helicopters whose use has been condemned by the United Nations.

The Observatory said many of the planes over Ghouta appear to be Russian. Syrians say they can distinguish between Russian and Syrian planes because the Russian aircraft fly higher.

Kremlin spokesman Dmitry Peskov on Wednesday described as “groundless” accusations that Russia bears some of the blame for civilian deaths in eastern Ghouta.

A commander in the coalition fighting on behalf of Assad’s government told Reuters overnight the bombing aims to prevent the rebels from targeting the eastern neighborhoods of Damascus with mortars. It may be followed by a ground campaign.

“The offensive has not started yet. This is preliminary bombing,” the commander said.

Rebels have also been firing mortars on the districts of Damascus near eastern Ghouta, wounding four people on Wednesday, state media reported. Rebel mortars killed at least six people on Tuesday.

“Today, residential areas, Damascus hotels, as well as Russia’s Centre for Syrian Reconciliation, received massive bombardment by illegal armed groups from eastern Ghouta,” Russia’s Defence Ministry said late on Tuesday.

Eastern Ghouta is one of a group of “de-escalation zones” under a diplomatic ceasefire initiative agreed by Assad’s allies Russia and Iran with Turkey which has backed the rebels. But a rebel group formerly affiliated with al Qaeda is not included in the truces and it has a small presence there.

Conditions in eastern Ghouta, besieged since 2013, had increasingly alarmed aid agencies even before the latest assault, as shortages of food, medicine and other basic necessities caused suffering and illness.

(Reporting By Dahlia Nehme, Angus McDowall and Lisa Barrington in Beirut; Additional reporting by Stephanie Nebehay in Geneva and Polina Ivanova in Moscow; Editing by Raissa Kasolowsky and Peter Graff)

Russian toll in Syria battle was 300 killed and wounded: sources

Russian President Vladimir Putin (C), Defence Minister Sergei Shoigu (R) and Syrian President Bashar al-Assad visit the Hmeymim air base in Latakia Province, Syria December 11, 2017. Sputnik/Mikhail Klimentyev/Sputnik via REUTERS

By Maria Tsvetkova

MOSCOW (Reuters) – About 300 men working for a Kremlin-linked Russian private military firm were either killed or injured in Syria last week, according to three sources familiar with the matter.

A Russian military doctor said around 100 had been killed, and a source who knows several of the fighters said the death toll was in excess of 80 men.

The timing of the casualties coincided with a battle on Feb. 7 near the Syrian city of Deir al-Zor where, according to U.S. officials and associates of the fighters involved, U.S.-led coalition forces attacked forces aligned with Moscow’s ally, Syrian President Bashar al-Assad.

Russian officials said five citizens may have been killed but they had no relation to Russia’s armed forces.

The clashes show Moscow is more deeply involved in Syria militarily than it has said, and risks being drawn into direct confrontation with the United States in Syria.

The casualties are the highest that Russia has suffered in a single battle since fierce clashes in Ukraine in 2014 claimed more than 100 fighters’ lives. Moscow denies sending soldiers and volunteers to Ukraine and has never confirmed that figure.

The wounded, who have been medically evacuated from Syria in the past few days, have been sent to four Russian military hospitals, according to five sources familiar with the matter.

The military doctor, who works in a Moscow military hospital and was directly involved in the treatment of wounded men evacuated from Syria, said that as of Saturday evening there were more than 50 such patients in his hospital, of which around 30 percent were seriously wounded.

The doctor, who spoke on condition of anonymity because he is not allowed to disclose information about casualties, said at least three planeloads of injured fighters were flown to Moscow between last Friday and Monday morning.

He said they were flown back on specially equipped military cargo planes which can each accommodate two or three intensive care cases and several dozen less severely wounded patients.

Maria Zakharova, a spokeswoman for the Russian foreign ministry, said initial information was that five Russian citizens in the area of the battle may have been killed, but they were not Russian troops. She said reports of tens or hundreds of Russian casualties were disinformation inspired by Russia’s opponents.

The Russian defense ministry did not respond to Reuters questions about casualties in Syria. A Kremlin spokesman, asked about Russian casualties on Thursday, said he had nothing to add to previous statements. The Kremlin said earlier this week it had no information on any casualties.

Reuters was unable to make direct contact with the contractors’ employers, the Wagner group, whose fallen fighters have in the past received medals from the Kremlin.

The military doctor said that a fellow doctor who flew to Syria on one of the recent medevac flights told him that around 100 people in the Russian force had been killed as of the end of last week, and 200 injured.

The doctor who spoke to Reuters said most of the casualties were Russian private military contractors.

Yevgeny Shabayev, leader of a local chapter of a paramilitary Cossack organization who has ties to Russian military contractors, said he had visited acquaintances injured in Syria at the defense ministry’s Central Hospital in Khimki, on the outskirts of Moscow, on Wednesday.

He said the wounded men had told him that the two units of Russian contractors involved in the battle near Deir al-Zor numbered 550 men. Of those, there are now about 200 who are not either dead or wounded, the wounded men had told him.

Shabayev said the ward he visited contained eight patients, all evacuated from Syria in the past few days, and there were more in other wards in the hospital.

“If you understand anything about military action and combat injuries then you can imagine what’s going on there. That’s to say, constant screams, shouts,” Shabayev told Reuters. “It’s a tough scene.”

A source with ties to the Wagner organization, and who has spoken to people who took part in the Feb. 7 clashes, told Reuters his contacts told him more than 80 Russian contractors were killed.

The source, who spoke on condition of anonymity, said the total of about 300 killed or injured was broadly correct.

He said many of the injured had shrapnel in their bodies that was not showing up on X-rays, making treatment difficult. “The prognosis for most of the wounded is dismal,” he said.

PROXY WAR

Other military hospitals treating the contractors are the Third Vishnevskiy hospital in Krasnogorsk, near Moscow, the Burdenko hospital near Moscow city center, and the Military Medical Academy in St. Petersburg, according to the doctor, Shabayev, and three other people who know dead or wounded fighters.

When Reuters contacted those hospitals by phone on Thursday, staff either declined to comment or denied having any patients evacuated from Syria.

A Reuters reporter visited the Burdenko hospital on Wednesday and spoke briefly to patients who said they knew nothing about anyone evacuated from Syria. Reporters also visited the hospital in Krasnogorsk, and a fifth military hospital, at Balashikha near Moscow, but were denied entry.

Russia launched a military operation in Syria in September 2015 which has turned the tide of the conflict in favor of Assad.

Russian officials deny they deploy private military contractors in Syria, saying Moscow’s only military presence is a campaign of air strikes, a naval base, military instructors training Syrian forces, and limited numbers of special forces troops.

But according to people familiar with the deployment, Russia is using large numbers of the contractors in Syria because that allows Moscow to put more boots on the ground without risking regular soldiers whose deaths have to be accounted for.

The contractors, mostly ex-military, carry out missions assigned to them by the Russian military, the people familiar with the deployment said. Most are Russian citizens, though some have Ukrainian and Serbian passports.

The United States and Russia, while backing opposite sides in the Syria conflict, have taken pains to make sure that their forces do not accidentally collide. But the presence of the Russian contractors adds an element of unpredictability.

PROBING MISSION

A U.S. official, speaking on condition of anonymity, said last week that a force aligned with Assad, backed with artillery, tanks, rockets and mortars, had on Feb. 7 attacked fighters with the U.S.-backed Syrian Democratic Forces near Deir al-Zor.

U.S. special forces were accompanying the SDF forces that came under attack, officials in Washington said.

The U.S.-led coalition in Syria retaliated, killing about 100 of the pro-Assad forces, according to the official.

Since the battle, associates of Russian military contractors have said Russians were part of the pro-Assad force involved in the battle, and among the casualties.

Shabayev, the Cossack leader, said casualties were so high because the force had no air cover, and because they were attacked not by poorly equipped rebels, their usual adversaries, but by a well-armed force that could launch air strikes.

“First of all the bombers attacked, and then they cleaned up using Apaches (U.S.-made attack helicopters),” Shabayev said, citing the wounded men he visited in hospital.

The source with ties to Wagner said they told him the force struck by the U.S.-led coalition was made up mainly of Russian contractors, with a few Syrians and Iranians in support roles.

He said that on Feb. 7 the force had advanced toward the settlement of Khusham, in Deir al-Zor province, into a zone designated as neutral under a deal between the Russian military and the U.S.-led coalition.

The aim was to test if the U.S.-led coalition would react. The force advanced to within less than 5 km (3 miles) of the SDF and American positions, he said.

He said that the U.S.-led forces, in line with procedure agreed with the Russians, warned Russian regular forces that they were preparing to strike. He does not know if the warning was passed on to the contractors.

“The warning was 20 minutes beforehand, in that time it was not feasible to turn the column around,” said the source.

He said once the strikes began, the contractors did not return fire because they believed that would provoke even more strikes from the U.S.-led coalition.

(Additional reporting by Anton Zverev in MOSCOW; Writing by Christian Lowe; Editing by Giles Elgood)

U.S. blames Russia for crippling 2017 ‘NotPetya’ cyber attack

A man poses inside a server room at an IT company in this June 19, 2017 illustration photo. REUTERS/Athit Perawongmetha/Illustration

By Dustin Volz

WASHINGTON (Reuters) – The United States on Thursday publicly blamed Russia for carrying out the so-called NotPetya cyber attack last year that crippled government and business computers in Ukraine before spreading around the world.

The statement by the White House came hours after the British government attributed the attack to Russia, a conclusion already reached and made public by many private sector cyber security experts.

The attack in June of 2017 “spread worldwide, causing billions of dollars in damage across Europe, Asia and the Americas,” White House Press Secretary Sarah Sanders said in a statement.

“It was part of the Kremlin’s ongoing effort to destabilize Ukraine and demonstrates ever more clearly Russia’s involvement in the ongoing conflict,” Sanders added. “This was also a reckless and indiscriminate cyber attack that will be met with international consequences.”

Earlier on Thursday Russia denied an accusation by the British government that it was behind the attack, saying it was part of a “Russophobic” campaign that it said was being waged by some Western countries.

(Reporting by Dustin Volz; Editing by Susan Heavey and Bill Rigby)

Turkey, Russia and Iran leaders to discuss Syria in Istanbul: Turkish source

Iran's President Hassan Rouhani together with his counterparts, Russia's Vladimir Putin and Turkey's Tayyip Erdogan, attend a joint news conference following their meeting in Sochi, Russia November 22, 2017.

ANKARA (Reuters) – The leaders of Turkey, Russia and Iran agreed on Wednesday to meet in Istanbul to discuss the conflict in Syria, a Turkish presidential source said.

Turkish President Tayyip Erdogan discussed the meeting in two phone calls on Wednesday with the Russian and Iranian presidents, the source said. The date of the summit would be set in coming weeks.

The three countries have worked together in recent months to try to reduce violence in Syria, even though they have backed rival sides in the nearly seven-year civil war and remain deeply involved in the conflict.

Iran-backed militias and Russian air power have supported a Syrian army offensive in Syria’s northwestern province of Idlib since November, and Turkish forces last month launched an offensive in northern Syria’s Kurdish region of Afrin.

On Monday, Iran urged Turkey to halt the Afrin operation, saying it breached Syrian sovereignty and would increase tension. It was not immediately clear whether Erdogan and Rouhani discussed Afrin in their telephone call on Thursday.

Erdogan and Putin also agreed to speed up the establishment of military observation posts in Syria’s Idlib region under an accord reached by Ankara, Tehran and Moscow last year to reduce fighting between President Bashar al-Assad’s forces and rebels.

After the phone call, the Kremlin said in a statement that Putin and Erdogan agreed to strengthen coordination between the two countries’ military and security services in Syria in the fight against terrorism.

(Reporting by Tulay Karadeniz; Writing by Ece Toksabay; Editing by Dominic Evans)