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On the rocks -- and on the rise
On the rocks -- and on the rise
Oleg Trutnev

MOSCOW - Legal vodka production in Russia was down nearly 40% in June from the same month last year. Could this mean that Russians are suddenly less devoted to this nationally beloved libation? Do they have fewer sorrows to drown? Unlikely. Instead, tax hikes on alcohol have made it more difficult for legal producers to compete with bootleggers, who already control an estimated 30% of the vodka market.

This is hardly unexpected. Since last year, experts have been warning that legal vodka production would slow down, following a 57% tax increase on hard liquor effective at the beginning of 2013. The tax on one liter of vodka used to be 254 rubles ($7.84), but with the new rate, taxes on the same bottle are now 400 rubles ($12.34).

The results of the new levy are dramatic. In just six months, vodka production fell 28%. Experts say if you compare June 2012 to June 2013, the drop is even sharper because the industry was ramping up production last June in preparation for the tax increase at the beginning of the new year. Comparing June 2013 to the same month in 2011 makes the industry slowdown seem less serious — just an 11% decrease.

But those numbers only tell part of the story. “Over the first half of this year, the sales of bootleg vodka in this country have taken on massive proportions,” says Vadim Drobiz, director of the Federal and Regional Alcohol Market Research Center. “Illegal vodka is being sold everywhere.”

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FOCUS: Russia-Ukraine War

The "Corrosion" Strategy: How Ukraine Targets Russian Networks And Morale

Russia continues to shrink its ambitions in Donbas, as Ukraine doubles down on its strategy of guerilla attacks, interrupting supply and communication contacts and ultimately undermines the morale of the enemy.

Ukrainian soldiers sitting atop a tank in Donbas on May 22

Clemens Wergin

For years to come, military experts will be studying how Ukraine managed to push back a far stronger enemy and grind Russia’s major offensive in the east of the country to a halt.

Some military strategists are already trying to find a term to sum up the Ukrainians’ success. Australian military expert and retired army major general Mick Ryan credited Kyiv's stunning showing to "the adoption of a simple military strategy: corrosion. The Ukrainian approach has embraced the corrosion of the Russian physical, moral, and intellectual capacity to fight and win in Ukraine.”

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Ryan argues that while the Ukrainians have used the firepower they possess to halt the Russian advance, while aggressively targeting their enemy’s greatest shortcoming. “They have attacked the weakest physical support systems of an army in the field – communications networks, logistic supply routes, rear areas, artillery and senior commanders in their command posts,” Ryan wrote.

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