Hello Delegates,

My name is Ali Mohaidly and it is my honour to serve as the Director of the Government of the Russian Federation committee (Kremlin) along with my chair Catherine Shin. The Kremlin is one of the most innovative committees at this year’s CAIMUN and I wish that all of you will enjoy participating in political schemes beside Saint Basil’s Cathedral as much as I do. I promise that I will, to the best of my abilities, make this committee as enjoyable as possible, and whether you are a beginner or a seasoned MUNer, I trust that you will find something interesting to you within the Kremlin.

Having joined Model UN in 2015, I have continuously participated within this activity, as there are many valuable things to learn. I have found a deep passion in discussing political conflicts around the globe with my peers and I feel that it should be everyone's duty to have at least some basic knowledge of the events happening in the world. After all, we live in an interconnected world. In my free time I can be found following the news or having a casual chat with friends and family.

I am very excited to meet you all at CAIMUN 2017 and I hope to hear fruitful discussions, respectful debates, and perhaps some mischievous plotting within our Government of the Russian Federation.

Best of luck,

Ali Mohaidly Director | The Government of the Russian Federation

The Kremlin is located in the Heart of Moscow, Russia and dates back to 1147 when the grand duke of Kiev Yuri Dolgoruky built a wooden fortress where the Neglina and Moskva Rivers converge. Despite its distant origin, the Kremlin remains a cultural and historical monument of Russia.. After the collapse of the Soviet Union in 1991, the Kremlin has served as both the official office of the Government of the Russian Federation and the official residence of its president. Furthermore, this building also harbours the legislative body of Russia, which drafts and passes all the laws and bills regarding issues such as national security, domestic affairs, the economy, and public security. It is also home to the Russian Security council, an agency that deals with high priority issues such as socioeconomic security, spheres of defence, state & public security, the military, and international relations. But above all else, the Kremlin serves as the advisory body that assists the President in guaranteeing coordinated interactions between various branches of government.

"Money Plays the Largest part in determining the course of history"

- KARL MARX

Russia is a world leader in a diverse set of energy resources. Not only do they are ranked number one in proven oil reserves, but is also ranked first in the more renewable resource of natural gas, holding approximately 32% of the world’s reserves and almost 30% of global share. ( Advantour, Natural Resources Russia). The exports of Russia’s natural resources primarily go to European and Asian markets, reaching $449 billion in 2014 alone. Europe in particular is crucial to Russian trade, as its biggest market, and a key focus of Russian policy is to maintain its immense economic clout in Europe. To illustrate this, Russia’s top exporting nations along with the value of exports are:

Netherlands $39 Billion

Germany $29.9 billion,

Italy $22.9 billion,

Turkey $14.7 billion.

On its own, the European market generates $252 billion in revenue for Russia while the Asian market generates $158 billion. Maintaining this presence is crucial for Russian lawmakers. This is challenging due to frosty relations with the United States, which seeks to challenge Russia’s economic role in Europe and extend its own influence.. Since 2015, the US has been working on establishing its market in Europe for liquefied natural gas (LNG), the demand of which has risen lately. There are many possible solutions for delegates to combat this difficult reality.

Gazprom, a Russian state owned company it was founded in 1993 which was pursuant to the Russian government's order. Gazprom is reorganized into an open joint stock company in 1998 Only in 1994 it’s privatization started. It is one of the largest natural gas company in the world, at the same time, it is also the only LNG producer in Russia. This corporation exports to over 30 countries and has a de facto monopoly for natural gas and oil in Eastern Europe. Being such a potent organization, Gazprom enjoys privileges such as being the price setter rather than a price taker and having little to no competition, both of which make this company extremely profitable. It runs and operates major gas pipelines across Russia and Europe.

Pipelines serve as the main conduit of oil and gas flowing outwards from Russia, as it significantly increases the reliability and flexibility of the transfer. Among these major pipelines are “Yamal”, which runs through Belarus, Poland and Germany, and “Nord stream”, which links Russia’s Baltic coast with Germany’s Baltic coast. However, pipelines can lead to detriments such environmental hazards if not maintained and built correctly.

Lately Russia's gas market has been shrinking, as many European nations have been shrinking their gas and oil imports from Russia in-order to lower down the price. The Russian position has been challenged by Algerian, Libyan, and Norwegian gas exports, as well as American sale of LNG. On top of that, the European Union sanctions placed on Russia as a result the Crimea crisis have crippled the Russian economy; it is estimated that Russia has lost between $100-150 billion in revenue from Europe as a result of the recent boycotts.1

“Observatory of Economic Complexity’ Russia exports

Recently, Russia’s economy has been declining compared to previous years; its Gross Domestic Product growth rate has dropped to an average of 0.6%. While many factors come into play, Russia’s weak domestic market and heavy reliance on exports maybe be the main reasons for this recent recession. There has been a decrease in "Real Incomes", which is the take-home pay by workers, leading to a decline in savings and investments. This economic downturn is evident when one considers that the ruble has depreciated 4.8% against the dollar in the second quarter of 2015 alone. To worsen the situation, sanctions from the EU and USA have also contributed to this recession, and falling oil and gas prices across the world

1 http://www.bbc.com/news/world-europe-28400218 : European sanctions on Russia and

the decline in exports and imports.

makes it difficult for Russia to maximize its profits in gas and oil sales. Although the price of a barrel of oil has dropped from a record high $50 to $20 a barrel, Russia has been trying increase its oil and gas output in order to combat the flooding/over supplying of the oil market by the Saudis, which is the main cause of the falling prices.

Delegates should note that Saudi Arabia did this intentionally to its competitors like Russia, Iran, and other (Organization of petroleum export countries) OPEC members in attempt to ravage their economies. Many nations suffered from this and experienced rising unemployment, economic downturn, and diminishing trade. However, the particular conflict between Russia and the Middle East bears, besides economic aspects, a shade of geopolitical rivalry. For instance, Russian intervention in the Syrian Crisis is necessary in protecting its control over the oil and gas market in Europe, for if Syria falls to the Saudi and Qatari backed rebels, this will constitute potential long term detriments on Russian export to Europe as well as undermine its influence in the area. Thus, it is advised that delegates take internal and external factors that superficially seem uncorrelated with the oil trade into account in order to reach a comprehensive and informed solution.

Lately, Russia has followed the same tactic that the Saudis implemented by flooding the gas market in Europe. Although this action has caused prices to decrease, Russia prioritizes the protection of its market share against other competitors. Not only has this shielded Russia from America's LNG market, but also from anyone else that plans to undermine Russia market control over Europe. However, as low price trade is detrimental to the Russian economy in the long run, the federation needs to develop a monopoly for its gas and oil across all of Europe in order to effectively eliminate competition and sustain moderate prices.

Currently, state owned Gazprom has a monopoly in Eastern European nations, however, with increasing interactions between Russia and Western Europe, the mega corporation is seeking ways to dominate the gas and oil market there. When compared with other exporters of oil, Russia boasts an advantage when trading with Western European nations, for the shorter distance of transportation (pipelines) between Russia and countries like Germany means that there are less costs involved. However, distance is not the only factor that dictates commerce. In order to compete with companies like American LNG in Europe, for instance, Gazprom could afford to sell at a cheaper price, considering that Russia has a lower cost of production for its resources than the US.

It is crucial to note that Russia should not rely solely on fossil fuels for export. Many other sectors or industries, like the agriculture sector, have proven themselves to be very successful and competitive in the global market. For instance, in 2016, Russia experienced a 3% growth in its Agriculture sector according to the US department of agriculture (USDA), and wheat exports from Russia are set to rise to 23.5 million metric tons. This a signal and potential opportunity for the Russian

government to possibly expand its revenue and to decrease its reliance on oil and natural gas.2 Also, the armament industry in Russia is quite dominant in the world, being able to compete directly with the US. Before EU sanctions, in 2013 alone, the armament industry in Russia accounted for $30 billion of growth, with most of its exports going to China, Iran, and Syria.3 It is thus quite evident that selling arms is can be a secure facet to obtain revenue. The unfortunate truth is that one day, the vast amount of resources that Russia possesses will be depleted, thus it is wise to invest in new industries before it is too late.

The United Nations has not been directly involved in Russia's natural gas and oil market in Europe; its jurisdiction and mandate simply do not cover issues regarding foreign commerce. However, as the gas and oil industry can be influenced tremendously by environmental policies, the Kremlin must take UN conventions such as "the Law of the Sea" and “Kyoto protocol” into account when dealing with proper oil production and transportation. Russia must tread a thin line as to not violate any of these treaties, as negligence can lead to global outrage, which would prove detrimental to the Russian economy.

2 http://thediplomat.com/2016/05/russias-economy-in-2016/ 3http://www.businessinsider.com/the-top-25-weapons-companies-in-the-world-

excluding-china-2014-12

Currently, Russia has a few solutions to its economic downturn. None of them, however, is perfect, and delegates must keep in mind that while this section provides potential ideas for the final resolution, the following paragraphs should act only as a guide for individuals to expand upon.

The first perspective that many agree with is that Russia needs to deal with its internal problems like the recession before investing in foreign affairs. When a nation is facing economic decline, the government usually implements Fiscal policies that tackle unemployment, inflation, welfare, and housing price bubbles directly in order to fuel economic growth. This is done by first increasing spending on private companies, then lowering tax rates and interest rates, incentivizing investments and eventually leading to increased market demand and a recovered economy.

Another point of view held by official in the Kremlin is that the government needs to invest and expand in new industries within Russia. The necessity of investing in industry and production based markets increases every year as resources such as fossil fuel become more and more depleted, and many would argue that moving towards a technologically based economy would fuel innovation and advancement in Russia. This solution, however, sacrifices short term economic gain, and can even lead to a complete halt or plummet in the Russian economy. Investing in new industries drains the national treasury of money that it can spend on revitalizing the oil industry, which can lead to vast unemployment and inflation.

Many among the higher ranks of the Russian political system also believe that once Russia is strong enough at home, it should look at its external problems. It is clear the Saudis and Qataris are competing for the European market of oil and gas, and even more alarmingly, they plan to build a pipelines which go directly into Europe. Thus Russian support of the Syrian Government is necessary in order to protect Russian interests in the Middle East as well as in Europe.

An example of an economy facing a recession (recessionary gap) where the economy operates below the full employment level

In Russia, the President is elected for 6-year terms by the citizens through secret ballot and universal direct suffrage. He/she not only determines the basic direction of Russia's domestic and foreign policies, but can also hire governmental staff and approve cabinet appointees. The resource industry, especially, is under strict scrutiny from Putin’s administration, and the power that the President wields over domestic and fiscal policies, as well as minister candidates, can greatly impact the future of Russia’s economy.

The Prime Minister is considered the second highest position in the Kremlin, lower only to the President. He/She serves as the leader of the executive branch and manages the cabinet ministers whom he/she nominates. Additionally, the Prime Minister also handles multiple governmental agencies and federal bureaucracies, and overlooks the fiscal, social, labour, immigration, and domestic policies of Russia.

The Ministry of Natural Resources of Russia formulates and adopts state policies, regulates the study of renewal and conservation of natural resources, and plays by far the most major role in tackling this topic. His/her power is of vital importance to the federation, as Russia is not only a leader in natural resources trade globally, but it also relies on its mineral deposits for 97.5% of its wealth.

The Ministry of Industry and Trade is the executive body responsible for drafting and implementing government policy, as well as the legal regulation of industrial practices. It is also the agency that is commonly affiliated with defence sectors, energy conservation, and energy efficiency. On top of that, the minister of this administration supports and regulates industrial exports, which ensures the market availability of goods and services.

This is the body that is responsible for implementing government policies in the oil and fuel, electric power, natural gas, and peat and shale sectors. It is also in charge of enforcing regulations for major oil and gas pipelines, renewable energy resource companies, and energy supply corporations. The development for hydrocarbon fields is also within the Ministry of Energy’s jurisdiction.

The Minister of Foreign Affairs deals primarily with foreign relations of the Russian Federation, and because of the importance of this agency’s decisions, the President oversees its actions.

1. How can Russia maintain its economic relation with Europe despite all of its competitors trying to seize the market?

2. How can Russia overcome European and American economic-political sanctions?

3. What is the significance of Russian gas and oil in Europe?

4. How does current and future geopolitical conflicts affect Russia commerce?

5. Seeing that there is a noticeable decline in prices of oil and gas in recent years, how can Russia recover and sell at a profitable price once more?

6. How should the Kremlin respond to uneasy minorities living around oil producing regions of Russia should they perform unwanted behaviour

http://atlas.media.mit.edu/en/profile/country/rus/3

http://www.advantour.com/russia/economy/natural-resources.htm

http://peopleof.oureverydaylife.com/list-russias-natural-resources-11448.html

http://www.indexmundi.com/energy/?product=gas&graph=reserves&display=rank

http://oilprice.com/Energy/Energy-General/US-To-Undermine-Russias-Gas-Monopoly-

In-Europe.html

http://www.russia-direct.org/analysis/russia-eu-economic-relations-assessing-two-years-

sanctions

https://www.ceicdata.com/en/blog/economic-implications-ukraine-russia-trade-relations

http://www.consilium.europa.eu/en/press/press-releases/2016/07/01-russia-

sanctions/?utm_source=dsms-

auto&utm_medium=email&utm_campaign=Russia%3A%20EU%20prolongs%20econo

mic%20sanctions%20by%20six%20months

http://www.gazprom.com/about/

http://www.globalresearch.ca/the-secret-stupid-saudi-us-deal-on-syria/5410130

http://www.bbc.com/news/world-europe-28400218

http://thediplomat.com/2016/05/russias-economy-in-2016/

http://www.worldoil.com/news/2016/4/21/russia-and-norway-use-saudi-oil-strategy-in-

europes-gas-market

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