The widespread practice of illicit acquisition of a business or part of a business in the former Soviet states, known as ‘reiderstvo’ or asset-grabbing, is a major risk that disincentivises investment in the region.

It is distinct from the way corporate raiding occurs in the West and enabled by factors such as corruption and weak protection of property rights.

This roundtable will assess the practice of corporate raiding in Russia, Ukraine and Kazakhstan: its evolution over time, knock-on effects and potential solutions. The speakers will also address the implications for the UK legal system and possible policy responses.

Persistent internet rumours claiming the coronavirus outbreak originated from a secret American pharmaceutical company with the aim of destroying China from within were quickly discredited. Pop culture fans recognised the supposed activities of the Umbrella Corporation as being from the famous Japanese video games series Resident Evil.

However, although fake news, it can likely be attributed to Russian trolls conducting this and other similar activities online, especially when considered within the wider context of how the Russian regime is using this worldwide crisis to further destabilize the West and test its resolve.

Russian trolls never sleep

Russia’s COVID-19 related actions first and foremost take the form of a vast information warfare campaign, with media outlets simultaneously downplaying the threat of the pandemic - ‘it is less dangerous than seasonal flu’ - while stoking fear about what is happening elsewhere in Europe.

For the domestic audience in Russia, some media are reporting the pandemic marks the collapse of the Western world and liberalism altogether, calling it a form of collective punishment. Other point out how fast liberal democracies have curbed individual and entrepreneurial freedoms in order to slow down the viral outbreak, and seek to diminish the credibility of the Western response to the crisis.

Exploiting the coronavirus crisis in this way is a new low in Russia’s wider political warfare campaign to undermine global governance overall, as these activities are detrimental to people's very safety. For example, in Ukraine, it is thought a Russian-engineered disinformation operation may have caused the outburst of violence in the city of Novi Sanzhary following the arrival of evacuees from China.

In the military realm, fake news has been targeting the US-led multinational exercise DEFENDER-Europe 2020. The Russian leadership criticized the exercise as an offensive ‘anti-Russian scenario’ but then used accompanying propaganda that it could actively facilitate the spread of COVID-19 across Europe because of the arrival and movement of large numbers of troops.

The large-scale drills were planned to involve 18 participating nations and should have taken place across ten European countries from April to May 2020. But the exercise has now been scaled down – as has the Russian disinformation targeting it.

And while the world is pre-occupied with managing COVID-19, Moscow is able to grow bolder in its provocations. Recent air incursions were reported into Irish controlled airspace as well as over the North Sea. Although this practice is - unfortunately - routine as part of Russian constant military sabre-rattling, it does increase the risk of tactical errors and miscalculation.

Self-isolation, Kremlin style

Meanwhile, just when a global response is needed to fight the pandemic, Moscow’s response has been, at best, self-serving. On March 22, Russian military reportedly started sending medical equipment and supplies to Italy. While the nature and the scope of this assistance can be doubted, it still represents a charm offensive for Russia to be brought back in from the cold in Europe - since successive Italian leaderships have been accommodating to the Kremlin. And sending virologists to Italy might also be a useful learning curve for Russia’s regime.

But within Russia itself, Vladimir Putin does have to face the problem that, on top of all the projected social and healthcare costs, the coronavirus is also having negative political consequences. On March 25, the ‘popular vote’ - a mock referendum designed to rubber-stamp Putin’s recent constitutional changes - was pushed back. And the Ministry of Communications has been forced to postpone a major exercise aimed at ensuring the ‘stable and safe operation of Runet’ - namely eliminating vulnerabilities in the Russian ‘sovereign’ internet to potential external threats.

Certainly it would be naive to believe Moscow will put self-interest to one side during this pandemic. ‘International distancing’ is not new for the Kremlin, and Russia has been practising self-isolation since at least 2008 through its own actions, most notably in Georgia and Ukraine.

Its self-perception as a ‘besieged fortress’ is being reinforced by this crisis and Russia will, at the very least, likely come out of the crisis feeling vindicated in its view that internationalism is dying or already dead.

With the health systems of many countries under massive strain, and societal resilience being tested by social distancing, the Kremlin continues to probe for weaknesses, and is also carefully watching other countries’ responses to the crisis in terms of adaptation and mobilization of resources.

COVID-19 provides a major intelligence-gathering opportunity for Moscow to learn how well others can implement wartime-like planning in peacetime. In a rapidly changing world, Russia is still Russia.

Politically speaking, Russia has been isolating itself from the West for some years now, feeding its citizens a ‘besieged fortress’ mentality. Its uniqueness, however, means its approach to - and outcome from - the COVID-19 pandemic will also be distinctive. 

This webinar will explore how Russia is adapting its internal politics and its international relations to the ‘new normal’ of today. 

In early March, global oil prices fell sharply, hitting lows of under $30 a barrel. Two factors explain this collapse: firstly the decrease in global demand for oil as a result of the COVID-19 pandemic and, secondly, the breakdown in OPEC-Russian relations and the subsequent Saudi-Russian price war which has seen both countries move to flood the market with cheap oil.
 
Against this backdrop, the panellists will reflect on the challenges currently facing OPEC as well as the oil industry as a whole. How are OPEC countries affected by the ever-evolving Covid-19 pandemic? What are the underlying causes behind the Saudi-Russian price war? Is the conflict likely to be resolved soon? And what are the implications of these challenges for the oil industry?

This event is part of a fortnightly series of 'Business in Focus' webinars reflecting on the impact of COVID-19 on areas of particular professional interest for our corporate members and giving circles.

Not a corporate member? Find out more.

COVID-19 has put a serious strain on healthcare and economic systems around the world. This virtual roundtable will explore its impact on Russia, Ukraine, Georgia and Kazakhstan. Through a comparative examination of government and society responses, this event will show how COVID-19 has laid bare the region’s broader social, economic and political challenges.

Since the World Health Organisation (WHO) declared COVID-19 a pandemic, few countries have chosen to ignore social distancing recommendations. But, even among those states which have, the Belarusian official response to its epidemic remains unique.

President Aliaksandr Lukashenka’s statements that vodka, sauna and tractors are protecting Belarusians from coronavirus attracted amused attention in international media. Lukashenka also described other societies’ response to COVID-19 as ‘a massive psychosis’.

Although Lukashenka is notorious for his awkward style of public communication, the fact that Belarus is refusing to impose comprehensive confinement measures is of concern. Belarusians continue to work, play football and socialise.

Lukashenka, himself playing ice hockey in front of state cameras, claims it is the best way to stay healthy. Belarusian authorities clearly appear to be in denial – and this could have dire humanitarian consequences.

From denial to half measures

Belarus actually has one of the largest numbers of hospital beds in the world per 1,000 of the population. But in the absence of quarantine measures its health system, already crippled by corruption and embezzlement, is likely to be overwhelmed.

Patients being treated for pneumonia in hospitals have suggested medical staff are uninformed and inadequately equipped. It is claimed doctors are not reporting COVID-19 as the suspected cause of death, either through a lack of testing or for fear of reprisals.

Observers believe the real mortality rate is already well above official figures (40 deaths as of 16 April). Based on an Imperial College London model, between 15,000 and 32,000 people could die under the current mild confinement regime – and such a high death toll would hugely impact the country’s political stability. Citing personal data protection, the Ministry of Health has imposed a total news blackout; the only cluster officially acknowledged so far is the city of Vitsebsk.

Although specific Belarusian cities and some individuals started changing their approach – by extending school vacations or cancelling weddings – such measures remain half-hearted.

Clearly a major reason for such an apparently irresponsible reaction is that Belarus cannot afford a massive lockdown that would freeze its already underdeveloped economy and drive it deeper into recession. Unlike many other nations, Belarus lacks budgetary resources for a sizable stimulus package. But a delayed response might backfire on the economy.

Economic recession has been forecast to amount to at least 10% of GDP. For Lukashenka, who openly challenged conventional wisdom regarding the need for quarantine and isolation, such an economic downturn would harm his confidence rating in the eyes of Belarusian voters, mindful of the state’s mismanagement of the crisis. And it could create doubt within the ruling elite itself, with Lukashenka seeking re-election for a sixth mandate in late August.

Against this backdrop, a radicalization of the opposition-minded part of society is also to be expected, with greater reliance on social networks in the face of official secrecy and disinformation. The expected response of the regime is then likely to be pre-emptive repression. Evidence is emerging that law enforcement agencies have already stepped up judicial and paralegal harassment of dissenters, notably independent journalists and bloggers.

Russia’s initial reluctance to address the coronavirus crisis may also have influenced Belarus. Lukashenka and his administration often react to public health challenges by the Soviet rulebook, reminiscent of the Soviet authorities’ mismanagement of the Chernobyl disaster in 1986.

Russia has unilaterally closed its borders with Belarus and, as bilateral relations continue to deteriorate, this casts further doubt on the viability of the Union State of Belarus and Russia. Pro-Russian media forecast Moscow will be unwilling to alleviate the expected socio-economic crisis, as it continues to reject Minsk’s demands regarding subsidised oil deliveries. Yet the Kremlin might use the crisis as an opportunity to resume its integrationist pressure on Belarus.

China, with which Belarus engaged in a seemingly privileged strategic partnership in the 2010s, was actually the first country to dispatch humanitarian aid to beef up Belarusian capacity to fight the virus.

But Minsk should not expect Beijing to rescue its economy and, unless it commits to more internal reforms, Belarus is not likely to receive much from the EU either. The regime has already applied to the IMF for emergency financial support, but conditions are attached and, even if successful, the funds would amount to no more than $900m.

The government’s decision to take only half measures so far is rooted in the hope COVID-19 is not as bad as foreign experts fear. But, unless the leadership acknowledges the public health crisis and mitigates its economic impact, COVID-19 will accelerate Belarus’s slide back into international self-isolation. If combined with a humanitarian crisis, this will put the Belarusian regime under considerable stress.

This crisis does risk a new ‘Chernobyl moment’ for the authorities, but the population could react more vocally this time. As volunteers self-organise to fight the epidemic, it might become more difficult for the authorities to say that it is efficient in running the country. But the bottom line is Belarus desperately needs money. Whoever steps up to support Belarus financially will also be able to heavily influence its politics.

Ukrainians are accustomed to crisis. As COVID-19 spread, forest fires were raging in the Chernobyl exclusion zone, turning Kyiv into the most polluted city in the world. The fighting in Donbas continued, claiming the lives of more Ukrainian soldiers, bringing the total to more than 4,000 — and, on top of that, President Zelenskyy overhauled his government. So Ukraine is fighting three battles at the same time — war with Russia, the struggle against its own ineffective system, and now COVID-19.

Every crisis is a reality check — the coronavirus provoked and exposed the strategic vulnerabilities and deep-rooted features of Ukraine’s system of governance. Three trends have come to the fore. First, the inefficiency and paralysis of many state agencies, particularly the lack of coordination between them and the prevalence of vested interests. Second, the reliance of the country’s leaders on large financial-industrial groups (FIGs) to compensate for weak institutional capacity. Third, a strong societal and private sector mobilization to fill the gaps in the dilapidated public health system.

State agencies are rigid and ineffective. Despite the modern Prozorro digital public procurement system, and the government’s allocation of $2.5 million from the early days of the epidemic, the Ministry of Health blocked COVID-related purchases for over a month. This was a tactic by — now ex-minister — Yemets to pressure the state medical procurement agency into appointing a protégé of his as one of its deputy heads.

Lowest testing rate in Europe

Similarly, in some regions, notably Odesa, procurement stalled and orders went to politically connected businesses at higher-than-market prices. Lack of tests and laboratory equipment means Ukraine has administered only 72,000 tests within a population of 42 million to date — the lowest rate in Europe.

Doctors were given orders to ensure they only test patients in hospitals with COVID-19 symptoms and only those arriving from Asia, while ignoring the fact that millions of Ukrainian labour migrants were in Europe. Indeed, the first confirmed case was imported from Italy.

Ukrainian government and public health officials lack information to take informed decisions. There is no accurate electronic database of registered deaths and reporting is lagging behind events. Information on testing availability in the regions is missing.

Thirteen days after the first case of the virus was recorded, Zelenskyy exhorted business tycoons to come to the rescue. Taking a populist tone, Zelenskyy said ‘Ukraine has been feeding you for a long time and it is time that you helped the country’. The tycoons divided the regions among themselves to deliver relief efforts according to the location of their enterprises.

It is believed FIGs have donated around $25 million to procure testing kits, ventilators, personal protective equipment (PPE) and disinfectants. This may sound impressive, but many of those same tycoons actually owe millions to the state, some even billions, and cause serious problems by perpetuating the current rent-seeking system, where public resources benefit those groups resulting in serious social losses.

Reliance on these groups makes Zelenskyy a hostage to their favour in any potential reform efforts. It is a dangerous solution, as these tycoons often obstruct Ukraine’s economic development.

An alternative — and more transformative — trend of public-private partnerships is emerging in some regions. Across Ukraine, hundreds of small- and medium-sized enterprises (SMEs) have led efforts to deliver PPE, support the vulnerable with food supplies, and to procure ventilators for key hospitals.

They have mobilised hundreds of volunteers to deliver assistance and partnered with local non-profits. Fundraising initiatives have begun in Lviv, Odesa, Kyiv and Poltava with donations and expenditure has been posted online for transparency. Companies have repurposed to produce PPE kits and medical equipment. The efforts unfolded quickly and, in some cases, in smooth collaboration with municipal and regional authorities.

Ukraine cannot afford to ‘waste’ this crisis, which could help accelerate healthcare reform, decentralization, modernize governance, and boost citizen empowerment. But for this to happen, the country has to deploy a ‘smart response’.

Such ‘smart response’ means applying a resilience framework that nurtures the agility of the system of governance, ensures a diversity of actors in decision-making, supporting both self-regulation and better coordination. Rather than reaching out to tycoons, Zelenskyy should enter a coalition with true agents of change — SME leaders, volunteers, and mayors who have mobilized effective grassroots action. These actors demand a level playing field with accountable governance and effective state institutions.

Civic COVID-19 response hubs and local authorities should be joined in a network that spans the regions, and connected with the national agencies designing pandemic responses. For a national strategy to be effective, central headquarters should draw information from local communities and manage a ‘team of teams’ in a decentralised fashion.

Ensuring effective public service delivery without compromising integrity and keeping the risk of corruption low should also be a priority of political reform, with volunteers and the private sector ensuring civic oversight of both regional and national funding.

Civic engagement such as this can be transformative as it defies the Soviet legacy of paternalism and expands the belief among citizens that society can work for them. By assisting the relief effort, citizens are gaining valuable insights into quality of public services and participate in holding them to account.

Citizens are also developing a better understanding of the purpose of having effective armed forces, police, border guards and modern hospitals. They are coming to understand the value of taxpayer money and witnessing how corruption erodes institutions.

This survival mobilization — if properly harnessed by the state — could drive transformative change and make Ukraine more resilient, not just against present crises, but future ones too.

Despite face-to-face diplomatic meetings being increasingly rare during the current disruption, COVID-19 will ultimately force a redefinition of national security and defence spending priorities, and this could provide the possibility of an improved political climate at RevCon when it happens in 2021.

With US presidential elections due in November and a gradual engagement growing between the EU and Iran, there could be a new context for more cooperation between states by 2021. Two key areas of focus over the coming months will be the arms control talks between the United States and Russia, and Iran’s compliance with the 2015 Joint Comprehensive Plan of Action (JCPOA), also known as the Iran Nuclear Deal.

It is too early to discern the medium- and longer-term consequences of COVID-19 for defence ministries, but a greater focus on societal resilience and reinvigorating economic productivity will likely undercut the rationale for expensive nuclear modernization.

Therefore, extending the current New START (Strategic Arms Reduction Treaty) would be the best, most practical option to give both Russia and the United States time to explore more ambitious multilateral arms control measures, while allowing their current focus to remain on the pandemic and economic relief.

Continuing distrust

But with the current treaty — which limits nuclear warheads, missiles, bombers, and launchers — due to expire in February 2021, the continuing distrust between the United States and Russia makes this extension hard to achieve, and a follow-on treaty even less likely.

Prospects for future bilateral negotiations are hindered by President Donald Trump’s vision for a trilateral arms control initiative involving both China and Russia. But China opposes this on the grounds that its nuclear arsenal is far smaller than that of the two others.

While there appears to be agreement that the nuclear arsenals of China, France, and the UK (the NPT nuclear-weapons states) and those of the states outside the treaty (India, Pakistan, North Korea, and Israel) will all have to be taken into account going forward, a practical mechanism for doing so proves elusive.

If Joe Biden wins the US presidency he seems likely to pursue an extension of the New START treaty and could also prevent a withdrawal from the Open Skies treaty, the latest arms control agreement targeted by the Trump administration.

Under a Biden administration, the United States would also probably re-join the JCPOA, provided Tehran returned to strict compliance with the deal. Biden could even use the team that negotiated the Iran deal to advance the goal of denuclearization of the Korean peninsula.

For an NPT regime already confronted by a series of longstanding divergences, it is essential that Iran remains a signatory especially as tensions between Iran and the United States have escalated recently — due to the Qassim Suleimani assassination and the recent claim by Iran’s Revolutionary Guard Corps to have successfully placed the country’s first military satellite into orbit.

This announcement raised red flags among experts about whether Iran is developing intercontinental ballistic missiles due to the dual-use nature of space technology. The satellite launch — deeply troubling for Iran’s neighbours and the EU countries — may strengthen the US argument that it is a cover for the development of ballistic missiles capable of delivering nuclear weapons.

However, as with many other countries, Iran is struggling with a severe coronavirus crisis and will be pouring its scientific expertise and funds into that rather than other efforts — including the nuclear programme.

Those European countries supporting the trading mechanism INSTEX (Instrument in Support of Trade Exchanges) for sending humanitarian goods into Iran could use this crisis to encourage Iran to remain in compliance with the JCPOA and its NPT obligations.

France, Germany and the UK (the E3) have already successfully concluded the first transaction, which was to facilitate the export of medical goods from Europe to Iran. But the recent Iranian escalatory steps will most certainly place a strain on the preservation of this arrangement.

COVID-19 might have delayed Iran’s next breach of the 2015 nuclear agreement but Tehran will inevitably seek to strengthen its hand before any potential negotiations with the United States after the presidential elections.

As frosty US-Iranian relations — exacerbated by the coronavirus pandemic — prevent diplomatic negotiations, this constructive engagement between the E3 and Iran might prove instrumental in reviving the JCPOA and ensuring Iran stays committed to both nuclear non-proliferation and disarmament.

While countries focus their efforts on tackling the coronavirus pandemic, it is understandable resources may be limited for other global challenges, such as the increasing risk of nuclear weapons use across several regions.

But the potential ramifications of the COVID-19 crisis for the NPT regime are profound. Ongoing tensions between the nuclear-armed states must not be ignored while the world’s focus is elsewhere, and the nuclear community should continue to work together to progress nuclear non-proliferation and disarmament, building bridges of cooperation and trust that can long outlast the pandemic.

Lord Tu'ivakano, will deliver a keynote address on the development of the Tonga Energy Road Map (TERM), which plans for 50% of the country's energy to come from renewable energy sources by 2020. 

The Kingdom of Tonga is highly susceptible to both climate change as well as changes in global energy prices due to its high dependency on imported oil. The TERM has required both ground-breaking whole-of-sector institutional changes in Tonga as well as innovative coordination across a range of development partners, including the World Bank, ADB and the UN. Key players in the international community have closely watched the development and implementation of the TERM as it presents a complete change in the aid paradigm that is not just specific to Tonga, or the energy sector. 

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