Research & Insights #13

Financial Transactions. Russia’s national payment system, Mir accounts for about 25% of all card transactions in the country today. Released in 2015 by the Bank of Russia and the National Payment Card System, this cashless solution was introduced in a market historically dominated by US international payment systems, Visa and Mastercard. The creation of a national payment system was prompted by US restrictions imposed on several Russian banks following the Ukrainian crisis. Its use is now mandatory for pensioners, civil servants, public sector employees and anyone receiving state payments such as social welfare. It is estimated that in 2020, the share of cashless payments in total retail sales exceeded 70% in the country. Russia’s disconnection from Western payment systems may be painful, but the country can manage such sanctions at the national level by switching entirely to Mir, said Vicktor Dostov, Chairman of the Association of Electronic Money and Money Transfer Market Participants.

Artificial Intelligence. Vladimir Putin gave a speech at AI Journey 2021 during which he reaffirmed the importance of artificial intelligence. He considers that access to data is essential for Russia to be competitive in this field and that two principles must be respected in this regard. First, it is essential to establish an effective mechanism for anonymization and storage of data that is clear and understandable to the public. Second, the state must guarantee access to databases for all players in the sector, in order to promote competition and avoid the establishment of a data monopoly. If the authorities understand the importance of new technologies, they are also aware of the anxiety they can create among the general public. A recent example is the presentation of Meta by Mark Zuckerberg. It is interesting to note that support of these new technologies is usually accompanied by the promotion of conservative values in Russia. Paradoxical though it may seem, to be leaders in artificial intelligence, what is needed is a humane environment, like in a family where parents pass on important moral values to their children and, of course, at school, Vladimir Putin said.

Militarisation of Space. On November 15, Russia fired a missile at one of its defective satellites called Tselina-D, in orbit since 1982. This exercise was primarily military since obsolete satellites eventually return naturally to the atmosphere where they are destroyed. With this type of demonstration, the Russians showed their ability to destroy a satellite from Earth, which is strategic at a time when the communication systems we use daily depend on satellites. Previously, such tests in space have been conducted by the United States, China and India, said the Russian Ministry of Defence. Russian officials are also seeking to encourage other powers to finally begin negotiations on a space treaty at the Conference on Disarmament. For now, space is essentially framed by political commitments and the few existing rules are difficult to enforce. Not surprisingly, the North Atlantic Council has condemned the recent test as “irresponsible behaviour” that undermines the rules-based international order.

Nord Stream 2. The US imposed new “symbolic sanctions” on a ship (Transadria) involved in the construction of the Nord Stream 2 gas pipeline. The Biden administration is looking to exert more pressure on Russia without antagonizing Germany. These new sanctions against Nord Stream 2 are the latest in a series of US measures that have significantly slowed the construction and operation of the pipeline. On November 16, it was revealed that certification of the pipeline would be postponed for several months after the German regulator asked the Swiss-based Nord Stream 2 consortium to create a subsidiary under German law. According to Russian Foreign Minister Sergei Lavrov, Western countries “led by the Americans” are imposing politically motivated unilateral restrictions on everything, “for any reason or no reason.” 

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