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Why Putin will win re-election: Russians like the status quo

While Russia needs more economic reforms, most citizens are afraid of things getting worse before they get better

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(bne IntelliNews) – Russia has fallen into the middle income trap and it is going to struggle to climb out again. One of the things that keep countries in this trap is that while life could be better, it’s actually not that bad. The Kremlin is banking on the population’s preference for the status quo over radical change to ensure that President Vladimir Putin is a shoo-in at the March 2018 presidential elections. But another six years of Putin’s rule will only make it harder to escape from Russia’s mediocrity.

Russian do want change, and polls show they want it more than ever before. But they just don’t want very much change. The population is haunted by the very recent memory of the nightmarish 1990s when incomes were counted in the $10s and inflation hit a peak of 2400% (that’s 6% a day). Any change must come with guarantees of preserving what they already have.

And life has improved out of all recognition in the last two decades. From a basket case in 1992, today Russia has become a more or less a normal country. It is the only emerging market that has been reclassified “high income” by the United Nations Development Programme (UNDP) in the last decade and has incomes on a par with the poorest EU member states.

Although a lot of money has been invested into things such as new equipment and technology, profits and productivity are rising more slowly than costs. The trap is despite the fast catch up of the early phase, the economy becomes increasingly uncompetitive as time passes.

The Russian economy demonstrated astonishing growth between the two financial crises of 1998 and 2009 in its catch-up phase. The gross domestic product expanded 83% in these 11 years, productivity was up by 70%, and fixed capital investment doubled in real terms.

Whereas in 1999, per capita GDP (in purchasing power parity – PPP – terms) was $9,300 (only 25% above the global average), by 2008, this indicator had increased to $21,600 (78% above the global average). At the same time Russia’s share in the world economy (calculated at prevailing exchange rates) grew fourfold over the same period, from 0.6% to 2.7%. And most importantly the welfare of the population increased considerably: real wages increased by 3.4 times, and real pensions increased by 2.8 times.

Russia raced ahead until  2014, when it suddenly hit the brick wall of the “silent crisis.” It has been losing ground to its competitors ever since – especially now that Central Europe is booming.

The rule of thumb is the middle income trap kicks in when salaries are 40% of the US average, according to the European Bank for Reconstruction and Development’s chief economist Sergei Guriev. Currently the US per capita income is $58,030;  as of the end of 2016 against Russia’s is $22,540, or 38.8%.

To catch up with countries with a similar level of economic development, Russia needs to increase capital investment by an additional 1% of GDP per year, said Guriev at a conference of the New Economic School in Moscow this week, as well as make a lot of really obvious investments into infrastructure, social services, education and health, among other things.

One of the most insidious parts of this trap is that life at this level is actually not too bad – especially when set in the context of a country emerging from the poverty of the early stages of transition. In order to boost productivity both company owners and the workers have to make a big effort and take risks. The forces of “creative destruction” need to be unleashed where successful companies flourish, but the inefficient ones go bust. Transition country leaders are more focused on keeping people employed because of the hardships that went before, and so support the inefficient companies for the sake of the jobs they provide. Likewise, the workers would rather keep a secure but low paying job than take risks on a much better one that comes with the possibility of it blowing up.

All this conspires to make it hard for a country in the middle income trap to climb out of its potential and move on to the next stage.

Much has been written on the rising poverty in Russia, but again put it into the European context and life in Russia is not so bad. Russian poverty is on a par, or better, than the EU average and most of the developed world. The current Russian poverty level is 13.1% of the population, but that compares favourably with the US poverty level of 12.9% and is better than both Portugal and Spain – two countries the Kremlin said it wants to catch up with – that have poverty levels of 18% and 21.1% respectively. Likewise, Russia per capita income is 114% and 85% of per capita income in Portugal and Spain respectively in PPP terms.

Thanks to the residual oil and gas revenues, Russia continues to make incremental progress, although clearly the collapse of oil prices in 2014, and the associated deep devaluation of the ruble, have knocked the country back; but after a decade of 10% annual wages increases, there is a very large income cushion to fall back on. But to escape the trap the government will have to make radical and deep reforms – and that boils down to getting the work force off the government teat and into the private sector.

Another myth about Russia is the size of the public sector. The most widely quoted estimate is the estimates of the Federal Antimonopoly Service (FAS), which said state-owned companies actually account for a whopping 70% of GDP. However, as bne IntelliNews reported the actual size of the public sector is more like 40% – although there is a lot of uncertainty over the actual number.

The problem the Kremlin faces is that to really make a difference it needs to basically sack half the workforce and tell them to find a better job – and in most regions these private sector jobs simply don’t exist. Even after the elections are passed and with radical reforms clearly on the agenda, the Kremlin is unlikely to make this move.

Moreover, the people themselves don’t want it. A fascinating survey by Carnegie Endowment for International Peacefound that Russians are evenly divided on the need for radical reform: 42% of Russians advocate decisive and full-scale changes, another 41% called for minor changes and a gradual improvement of the current situation. It was the poor that are keenest on fast change, while the middle class are for the status quo. Surprisingly, the young were least keen on change.

And this “it used to be a lot worse,” thinking is part of the reason so many Russians will vote for Putin: a poll by the state-owned pollster, the Russian Public Opinion Research Centre (VTsIOM), reported 84% will vote to keep Putin and 70% will turn out to vote.

But the people are discontented. The standard of living has clearly fallen over the last four years so Russians want something to change. Another survey by the Institute of Sociology of the Russian Academy of Sciences found that the phlegmatic Russians are keener on change than ever before. Unsurprisingly the respondents to this survey were wholly focused on raising the standard of living and improving social services, while political changes remain a secondary concern. There is a basic tension in Russian society between the desire for change and the fear of reforms that may upset the hard-won “not that bad” status quo.

The survey found that over the past 10 years, most respondents preferred stability to change: in 2007 the ratio was 60% to 40%, in 2012 72%/28%, and in October 2016 61%/39%. The tables finally turned this autumn and by December the ratio had flipped to 49%/51%.

This survey, by contrast with Carnegie’s, found that the desire for change was much stronger with the young than the old: of Russians aged 30, 62% support the reforms; of 31-40-year-olds 51% want changes; and over 41-years the majority are for keeping the status quo. The crisis has gone on too long and people are tired of coping. While there is a mild economic recovery at the federal level, on the ground real incomes only went positive earlier this year and the more important real disposable incomes (money left after spending on food and utilities) is still just in negative territory.

What  can the government do to get out of this trap? The answer is pretty obvious and most of the key elements are already in the plans being proposed. New economic drivers need to be found in the form of new business, technology and added value production, but so far the only effective investment the government has made is into agriculture. The government has gone a bit blockchain bonkers, but this initiative has yet to produce many jobs. To get these to work, institutions need to be made more efficient, rules simplified and the rule of law and property rights vigorously enforced.

One indicator of the problems is the lack of small and medium-sized enterprises (SMEs) in the economy. Large business is more productive everywhere, but the gap between large and small business in Western Europe is 40%, and in Eastern Europe it is 70%, according to the EBRD. Another recent survey found that 80% of SMEs had been approached by officials for bribes.

Most of Central Europe had the needed deep reforms forced on them by their EU accession bids and are booming as they begin to move beyond the middle income trap. None of the Eastern European countries have made these changes. The earliest these changes could appear is in the second half of next year, but don’t hold your breath.

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BREAKING: Explosion in Crimea, Russia kills many, injuring dozens, terrorism suspected

According to preliminary information, the incident was caused by a gas explosion at a college facility in Kerch, Crimea.

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“We are clarifying the information at the moment. Preliminary figures are 50 injured and 10 dead. Eight ambulance crews are working at the site and air medical services are involved,” the press-service for the Crimean Ministry of Health stated.

Medics announced that at least 50 people were injured in the explosion in Kerch and 25 have already been taken to local hospital with moderate wounds, according to Sputnik.

Local news outlets reported that earlier in the day, students at the college heard a blast and windows of the building were shattered.

Putin Orders that Assistance Be Provided to Victims of Blast in Kerch – Kremlin Spokesman

“The president has instructed the Ministry of Health and the rescue services to take emergency measures to assist victims of this explosion, if necessary, to ensure the urgent transportation of seriously wounded patients to leading medical institutions of Russia, whether in Moscow or other cities,” Kremlin spokesman Dmitriy Peskov said.

The president also expressed his condolences to all those affected by the tragic incident.

Manhunt Underway in Kerch as FSB Specialists Investigate Site of Explosion – National Anti-Terrorist Committee

The site of the blast that rocked a city college in Kerch is being examined by FSB bomb disposal experts and law enforcement agencies are searching for clues that might lead to the arrest of the perpetrators, the National Anti Terrorism Committee said in a statement.

“Acting on orders from the head of the NAC’s local headquarters, FSB, Interior Ministry, Russian Guards and Emergency Ministry units have arrived at the site. The territory around the college has been cordoned off and the people inside the building evacuated… Mine-disposal experts are working at the site and law enforcement specialists are investigating,” the statement said.

Terrorist Act Considered as Possible Cause of Blast in Kerch – Kremlin Spokesman

“The tragic news that comes from Kerch. Explosion. The president was informed … The data on those killed and the number of injured is constantly updated,” Peskov told reporters.

“[The version of a terrorist attack] is being considered,” he said.

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Russian Orthodox Church officially breaks ties with Constantinople

Biggest separation in almost 1,000 years as world’s largest Orthodox Church cuts communion with Constantinople over legitimizing schismatics.

Seraphim Hanisch

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The schism between the Russian Orthodox Church and the Ecumenical Patriarchate became official today, October 15, 2018, as the Russian Holy Synod reviewed the recent granting of communion to two schismatic groups in Ukraine, pursuant to Constantinople’s intent to grant autocephaly (full self-rule, or independence) to the agglomeration of these groups.

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RT reported that the Synod ruled that any further clerical relations with Constantinople are impossible, given the current conditions. Metropolitan Hilarion Alfeyev told journalists today about the breach in relations:

“A decision about the full break of relations with the Constantinople Patriarchate has been taken at a Synod meeting” that is currently been held in the Belarusian capital of Minsk, Hilarion said, as cited by TASS.

The move comes days after the Synod of the Constantinople Patriarchate decided to eventually grant the so-called autocephaly to the Ukrainian Orthodox Church, thus making the clerical organization, which earlier enjoyed a broad autonomy within the Moscow Patriarchate, fully independent.

The Moscow Patriarchate also said that it would not abide by any decisions taken by Constantinople and related to the status of the Ukrainian Orthodox Church. “All these decisions are unlawful and canonically void,” Hilarion said, adding that “the Russian Orthodox Church does not recognize these decisions and will not follow them.”

At the same time, the Russian Church expressed its hope that “a common sense will prevail” and Constantinople will change its decision. However, it still accused the Ecumenical Patriarch of initiating the “schism.”

The marks the most significant split in the Orthodox Church since the Great Schism of 1054, in which Rome excommunicated Constantinople, a breach between the Roman Catholics and Orthodox which has persisted ever since then, becoming hardened and embittered after the Roman Catholic armies sacked Constantinople during the Fourth Crusade in 1204.

Many other local Orthodox Churches expressed support for the Moscow Patriarchate’s position prior to today’s announcement, but the break in relations between these two churches does not have any known affect on local churches who hold communion with both Moscow and the Ecumenical Patriarchate at this time.

The website Orthochristian.com ran the entire statement of the Holy Synod regarding this situation. We offer a brief summary of statements here, taken from that source and patriarcha.ru, adding emphasis.

With deepest pain, the Holy Synod of the Russian Orthodox Church received the message of the Patriarchate of Constantinople published on October 11, 2018 about the decisions adopted by the Holy Synod of the Patriarchate of Constantinople: on the confirmation of the intention to “grant autocephaly to the Ukrainian Church”; on the opening of the “stavropegion” of the Patriarch of Constantinople in Kiev; on the “restoration in the hierarchal or priestly rank” of the leaders of the Ukrainian schism and their followers and the “return of their faithful to Church communion”; and on the “cancellation of the action” of the conciliar charter of the Patriarchate of Constantinople in 1686 concerning the transfer of the Kiev Metropolia to the Moscow Patriarchate

The Synod of the Church of Constantinople made these decisions unilaterally, ignoring the calls of the Ukrainian Orthodox Church and the entirety of the Russian Orthodox Church, as well as the fraternal Local Orthodox Churches, and their primates and bishops for pan-Orthodox discussion of the issue.

Entering into communion with those who have departed into schism, let alone those who have been excommunicated from the Church, is tantamount to departing into schism and is severely condemned by the canons of the holy Church: “If any one of the bishops, presbyters, or deacons, or any of the clergy shall be found communicating with excommunicated persons, let him also be excommunicated, as one who brings confusion on the order of the Church” (Canon 2 of the Council of Antioch; Canon 10, 11 of the Holy Apostles).

The decision of the Patriarchate of Constantinople on the “restoration” of the canonical status and the reception into communion of the former Metropolitan Philaret Denisenko, excommunicated from the Church, ignores a number of successive decisions of the Bishops’ Councils of the Russian Orthodox Church, the legitimacy of which are beyond doubt.

By the decision of the Bishops’ Council of the Ukrainian Orthodox Church in Kharkov of May 27, 1992, Metropolitan Philaret (Denisenko) was removed from the Kiev Cathedra and was banned from the clergy for not fulfilling the oath made by him before the cross and the Gospel at the previous Bishops’ Council of the Russian Orthodox Church.

By its ruling of June 11,1992, the Bishops’ Council of the Russian Orthodox Church, confirmed the decision of the Kharkov Council and expelled Philaret Denisenko from his rank, depriving him of every degree of the priesthood on the following charges: “Cruel and arrogant attitude to the subordinate clergy, dictatorialness, and intimidation (Tit. 1:7-8; Canon 27 of the Holy Apostles); introducing temptation among the faithful by his behavior and personal life (Matthew 18:7; Canon 3 of the First Ecumenical Council, Canon 5 of the Sixth Ecumenical Council); oath-breaking (Canon 25 of the Holy Apostles); public slander and blasphemy against the Bishops’ Council (Canon 6 of the Second Ecumenical Council); the celebration of clerical functions, including ordinations, in a state of suspension (Canon 28 of the Holy Apostles); the perpetration of a schism in the Church (Canon 15 of the First-Second Council).” All ordinations performed by Philaret in a suspended state since May 27, 1992, and the punishments imposed by him, were declared invalid.

Despite repeated calls for repentance, after the deprivation of his hierarchal rank Philaret Denisenko continued his schismatic activity, including within the bounds of other Local Churches. By the ruling of the Bishops’ Council of the Russian Orthodox Church of 1997, he was given over to anathema.

The aforesaid decisions were recognized by all the Local Orthodox Churches, including the Church of Constantinople.

… Now, after more than two decades, the Patriarchate of Constantinople has changed its position for political reasons.

… St. Nikodemos of the Holy Mountain, in his Pedalion, which is an authoritative source of ecclesiastical-canonical law of the Church of Constantinople, interprets Canon 9 of the Fourth Ecumenical Council, rejecting the false opinion on the right of Constantinople to consider appeals from other Churches: “The Primate of Constantinople does not have the right to act in the dioceses and provinces of other Patriarchs, and this rule did not give him the right to take appeals on any matter in the Ecumenical Church… “ Listing a whole range of arguments in favor of this interpretation, referring to the practice of the decisions of the Ecumenical Councils, St. Nikodemos concludes: “At present … the Primate of Constantinople is the first, the only, and the last judge over the metropolitans subordinate to him—but not over those who are subject to the rest of the Patriarchs. For, as we said, the last and universal judge of all the Patriarchs is the Ecumenical Council and no one else.” It follows from the above that the Synod of the Church of Constantinople does not have canonical rights to withdraw judicial decisions rendered by the Bishops’ Council of the Russian Orthodox Church.

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Patriarch Bartholomew lifts anathemas on schismatics in Ukraine (VIDEO)

Most of the Orthodox world is in strong opposition to this move by Patriarch Bartholomew, whose motivations seem not to be of Christ.

Seraphim Hanisch

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The biggest news in the Eastern Orthodox world in recent times occurred on Thursday, October 11, 2018. The Ecumenical Patriarch of Constantinople, Bartholomew I, lifted the anathemas against two schismatic Ukrainian Churches and their leaders, paving the way to the creation of a fully independent Ukrainian national Orthodox Church.

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This announcement was given in English and is shown here in video with the textual transcript following:

“Presided by His All Holiness the Ecumenical Patriarch Bartholomew, the Holy and Sacred Synod convened for its regular session from October 9 to 11, 2018 in order to examine and discuss items on its agenda. The Holy Synod discussed in particular and at length, the ecclesiastical mater of Ukraine in the presence of His Excellency Archbishop Daniel of Pamphilon and His Grace Bishp Ilarion of Edmonon, Patriarchal Exarchs to Ukraine, and following extensive deliberations decreed (emphasis added):

First, to renew the decision already made, that the Ecumenical Patriarchate proceed to the granting of autocephaly to the Church of Ukraine;

Second, to re-establish at this moment the stavropegion of the Ecumenical Patriarchate in Kiev—one of its many starvorpegion in Ukraine that existed there always;

Third, to accept and review the petitions of appeal of Philaret Denisenko and Makary Maletich and their followers who found themselves in schism not for dogmatic reasons, in accordance with the canonical prerogatives of the Patriarchate of Constantinople to receive such petitions by hierarchs and other clergy of all the autocephalous Churches. Thus, the above mentioned have been canonically reinstated to their hierarchical or priestly rank, and their faithful have been restored to communion with the Church;

Fourth, to revoke the legal binding of the Synodal letter of the year 1686, issued for the circumstances of that time, which granted the right through economia to the Patriarch of Moscow to ordain the Metropolitan of Kiev elected by the clergy-laity assembly of his eparchy, who would commemorate the Ecumenical Patriarch as the first hierarch at any celebration, proclaiming and affirming his canonical dependence to the Mother Church of Constantinople;

Fifth, to appeal to all sides involved that they avoid appropriation of churches, monasteries, and other properties as well as every other act of violence and retaliation so that he peace and love of Christ may prevail.”

There are a few things that must be said about what this declaration is not before we get to the matter of what the points of actually are. The point of reference is the strict letter of the text above itself.

  • This is not a granting of autocephaly (full independent self-rule status) like the fourteen universally canonical Orthodox jurisdictions in the world. However, it is a huge step towards this status.
  • As far as Constantinople is concerned, Filaret Denisenko, the leader and “Patriarch” of the “Kyiv Patriarchate of the Ukrainian Orthodox Church” and Makary, the “Metropolitan” of the “Ukrainian Orthodox Autocephalous Church”, and all their faithful are now restored to communion. The statement says that this applies to “The Church” which may be trying to state that these two men (and all the faithful that they lead), are now in communion with the entirety of canonical Orthodoxy, but more likely, this may be a carefully worded statement to say they now are in communion with Constantinople alone.
  • There is an official call for the cessation of the violence directed against the Moscow Patriarchate parishes and communities, who are the only canonically recognized Orthodox Church in Ukraine, and who are also the largest by far in that country. The Kyiv Patriarchate and Uniate (Roman oriented) Greek Catholics in Ukraine have gone on record for seizing MP church properties, often by force, with neo-Nazi sympathizers and other radical Ukrainian nationalists. So this official call to cease the violence is now a matter of public record.

However, the reaction has been far less civil than the clergy wished for.

Ukrainian President Petro Poroshenko: “Expressing his view of the Moscow Patriarchate, Poroshenko added, “This is a great victory of the God-loving Ukrainian people over the Moscow demons, the victory of Good over Evil, the victory of Light over Darkness.”’

Perhaps this is the reason Metropolitan Onuphry of Ukraine (exarch under the Moscow Patriarchate) has been labeled an enemy of Ukraine and is now receiving death threats. Very civil.

Poroshenko’s statement is all the more bizarre, considering that it has been Ukrainian ultra-nationalists that have been violently attacking Moscow – related parishes in Ukraine. This has been corroborated by news sources eager to pin the blame on Russia, such as the U.K. Guardian.

The Union of Orthodox Journalists, based in Kiev and supportive of the Moscow Patriarchate, has been under intense cyber attack since October 11th, when the EP’s announcement was issued.

Ukrainian Orthodox Church (Moscow Patriarchate) Chancellor, Metropolitan Anthony of Boryspil and Brovary: “What happened at the Synod in Istanbul yesterday shocked the entire Orthodox world. It seems the Patriarchate of Constantinople is consciously embarking on a path of schism in world Orthodoxy. Patriarch Bartholomew ignored the calls of the Local Churches to convene a meeting of the primates to work out a common and conciliar solution to the Ukrainian Church issue and unilaterally made very serious but erroneous decisions. I hope the Orthodox world will give this action an objective evaluation… Having received the schismatics into communion, Patriarch Bartholomew did not make them canonical, but has himself embarked on the path of schism. The schismatics remain schismatics. They did not receive any autocephaly or tomos. It seems they have lost even that independence, although non-canonical, that they had and which they always emphasized.”

Metropolitan Rostislav of the Czech Lands and Slovakia:“The Orthodox world recognizes the only canonical primate of the Ukrainian Orthodox Church—His Beatitude Metropolitan Onuphry of Kiev and All Ukraine. This fact was repeatedly mentioned and confirmed by the primate of the Great Church of Christ His Holiness Ecumenical Patriarch Bartholomew on behalf of all present at the Synaxis of the Primates of the Local Orthodox Churches that was held in Chambésy (Switzerland) from January 21 to 27, 2016. Therefore, any attempt to legalize the Ukrainian schismatics by the state authorities should be strongly condemned by all the primates of the Local Orthodox Churches.

Patriarch Irinej of Serbia wrote two letters to the Ecumenical Patriarch, advocating that the provision of a new autocephaly is possible only with the consent of all local Orthodox Churches. According to Sedmitza.ru (Translation by Pravoslavie.ru),

“In these letters, it was very clearly stated that the granting of autocephaly cannot be the prerogative the Patriarchate of Constantinople alone, that new autocephalies must be created only with the consent of all the Local Orthodox Churches, as the Holy Synod of Antioch also said in its recent statement.”

Pat. Irinej also warned the Patriarchate of Constantinople against making such major decisions unilaterally, because “it will not bring harmony and peace to the Ukrainian land, but, on the contrary, will cause new divisions and new schisms.”

The Holy Synod of Antioch, the oldest Orthodox Church, and actually the very first place where the disciples of Christ were even called “Christians” weighed in on the issue as well and they had several things to say:

“The fathers examined the general Orthodox situation. They stressed that the Church of Antioch expresses her deep worries about the attempts to change the boundaries of the Orthodox Churches through a new reading of history. She considers that resorting to a unilateral reading of history does not serve Orthodox unity. It rather contributes to the fueling of the dissensions and quarrels within the one Church. Thus, the Church of Antioch refuses the principle of establishing parallel jurisdictions within the canonical boundaries of the Patriarchates and the autocephalous Churches as a way to solve conflicts, or as a de facto situation in the Orthodox world.

To summarize, this move by Constantinople is not being warmly received by many, many people. Most of the local Churches are on record giving their reaction to this process. In brief, here is the list most of the Local Churches and a one or two word summary of their reactions.

Patriarchate of Georgia: Unilateral action is wrong; Constantinople and Moscow must cooperate and find a solution together.

Patriarchate of Jerusalem: recognizes Ukraine as a canonical territory of the Russian Orthodox Church alone, as do all other local Churches

Patriarchate of Alexandria and all Africa: The Church does not bow to politicians. Moscow-led church is the only canonical Church in Ukraine.

Archbishop of Cyprus: Decries the Ukrainian situation but offered to mediate a discussion between Moscow and Constantinople

Bulgarian Patriarchate: Interference of the State in Church affairs leads to serious and negative consequences for both.

Polish Orthodox Church: Metropolitan Sawa called for a council of Orthodox ruling hierarchs to discuss this situation.

Estonian Orthodox Church: Condemns Constantinople’s actions in Ukraine.

Greek Archdiocese of America: Supports Constantinople’s actions in Ukraine.

The Orthodox Church of Greece (Metropolitan Seraphim of Piraeus quoted): “Schismatics, as we know, are not the Church, and communion with them is forbidden by the Divine and holy canons and the Apostolic and Ecumenical Councils. Why then this persistence of the Ecumenical Patriarch Bartholomew in recognizing schismatics as an autocephalous Church? To provoke schisms and divisions in the one universal and Apostolic Church of Christ?”

Russian Orthodox Church Outside of Russia (ROCOR): Ceased commemoration of Constantinople, ceased concelebration with Constantinople.

This issue has also rocked the secular geopolitical world.

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