I tried adding a Localizable.strings file and add some strings to test with, everything works fine.
However, when I try to add a localization things starts to get weird. I am able to add a localization (english and russian) and I can see in finder that the files are listed in the two folders; ru.lproj and en.lproj.
When I clean and build I get the following compilation error:
Copy .strings file Error
The file "Localizable.strings" couldn't be opened because there is no such file.
Fixed it by a push in the right direction from this link provided by tiguero in the comment.
I looked further into the .pbxproj file and found this funky row, that looked fishy:
I removed it, cleaned and rebuild. It is now replaced by the following line:
And it works!