LONDON — Prime Minister Rishi Sunak’s trade deal with India will not include legally enforceable commitments on labor rights or environmental standards, five people briefed on the text have told POLITICO.
British businesses and unions now fear the deal’s already-finalized labor and environment chapters will undercut U.K. workers’ rights and efforts to combat climate change.
Sunak’s government is racing to score a win with the booming South Asian economy ahead of the 2024 election. His plans for a return trip to India in October with the aim of sealing the pact are still on track.
Sunak and Indian Prime Minister Narendra Modi added impetus to negotiations when they met on the sidelines of the G20 in New Delhi early this month. The 13th round of talks continues in London this week.
Just days after Sunak’s meeting with Modi, Badenoch’s team shared the deal’s labor and environment chapters with businesses, unions and trade experts on a September 13 briefing call.
Key enforceable dispute resolution powers which the U.K. set out to negotiate are missing from those chapters, said the five people briefed on the text. It means neither London nor New Delhi can hold the other to their climate, environmental and workers’ rights commitments.
Businesses, unions and NGOs now fear the deal could undercut British firms because Indian firms operate to less stringent and expensive environmental and labor standards. Firms and unions say their access to the negotiations was curtailed earlier this year as talks progressed.
“Industry also wants binding commitments — partly for greater certainty, partly because businesses are made up of people who themselves want to be properly treated and to avoid climate catastrophe,” said a senior British businessperson from the services sector briefed on the chapters. They were granted anonymity to speak candidly about the negotiations.
“Suppression of trade unions, child labor and forced labor are all widespread in India,” said Rosa Crawford, trade lead at the Trades Union Congress (TUC) — the largest coalition of unions in Britain. “But the labor chapter that the U.K. government has negotiated cannot be used to clamp down on these abuses and could lead to more good jobs being offshored to exploitative jobs in India.”
The Department for Business and Trade said it does not comment on live negotiations and that it will only sign a deal that benefits the U.K. and its economy.
‘Everyone was deeply unhappy’
At the outset of the talks, the British government committed to negotiating enforceable labor and environment chapters as it laid out its strategic approach. “We remain committed to upholding our high environmental, labour, food safety and animal welfare standards in our trade agreement with India,” the government said in January 2022.
Indian and British officials say the labor and environment chapters are now closed and are not up for discussion. The U.K.’s first post-Brexit trade pacts with Australia and New Zealand have dispute settlement mechanisms in both these chapters. Three people POLITICO spoke to for this piece said it was an achievement in itself that Britain was able to get such chapters in a deal with India.
Businesses, unions and NGOs have all been concerned after Kemi Badenoch closed the key forums in February to carry out a required review of their activities | Dan Kitwood/Getty Images
But, as the U.K.-India deal stands, if either country were to weaken its environmental standards or workers’ rights “the other party would not have recourse to initiate consultations on changes in laws,” said a person familiar with the content of the chapters. “There is no dispute settlement in the environment and labor chapters.”
British firms and unions are also concerned that the pact the EU is negotiating with India has enforceable chapters “bound by sanctions in case the parties don’t comply,” the same person said. Those EU-India chapters are not yet finalized.
British stakeholders “are totally up in arms,” said a former trade department official familiar with the briefing. “Everyone was deeply unhappy.”
Adding enforceable chapters would only slow down negotiations, said an Indian government official. “If you put in too much of these things into a trade deal, then it delays the process.” The U.K. and India are already “bound by” their international commitments on labor and climate, they added.
The deal “is dire for working people because trade unions were excluded from the trade talks,” said the TUC’s Crawford. Nearly three years ago, ministers pitched the idea of involving unions in 11 influential Trade Advisory Groups (TAGs) that gave input on ongoing trade negotiations.
Businesses, unions and NGOs have all been concerned after Britain’s trade chief Kemi Badenoch closed the key forums in February to carry out a required review of their activities. International Trade Minister Nigel Huddleston received officials’ recommendations to restructure the groups in mid-August. A final decision is expected before the end of the year.
With 40-50 people on the U.K. government’s current briefing calls about the India trade deal there’s little businesses or unions can do to feed into negotiations. Officials can “only really be in transmit mode,” said a business representative familiar with the briefings.
“What this means in real terms is that decisions are being made about the future of people’s livelihoods, people’s health, and the environment we all depend on without any input from those who will be impacted,” said Hannah Conway, trade and agriculture policy advisor at the NGO Transform Trade.
“It’s crucial,” she said, “that the government addresses its democratic deficit on trade policy by undertaking meaningful consultation with civil society and businesses.”
“It’s high time the government rethinks its approach,” said the TUC’s Crawford, “and includes unions in trade talks — that’s how you get trade deals that work for working people.”
Booming social media application TikTok needs to pay up in Europe for violating children’s privacy.
The popular Chinese-owned app failed to protect children’s personal information by making their accounts publicly accessible by default and insufficiently tackled risks that under-13 users could access its platform, the Irish Data Protection Commission (DPC) said in a decision published Friday.
The regulator slapped TikTok with a €345 million fine for breaching the EU’s landmark privacy law, the General Data Protection Regulation (GDPR).
The penalty comes amid high tensions between the European Union and China, following the EU’s announcement that it plans to probe Chinese state subsidies of electric cars. European Commission Vice President Věra Jourová is also set to visit China next Monday-Tuesday and meet Vice Premier Zhang Guoqing to discuss the two sides’ technology policies, amid growing concerns over Beijing’s data gathering and cyber espionage practices.
“Alone the fine of [€345 million] is a headline sanction to impose but reflects the extent to which the DPC identified child users were exposed to risk in particular arising from TikTok’s decision at the time to default child user accounts to public settings on registration,” said Helen Dixon, the Irish data protection commissioner, in a written statement.
The Irish privacy regulator said that, in the period from July to December 2020, TikTok had unlawfully made accounts of users aged 13 to 17 public by default, effectively making it possible for anyone to watch and comment on videos they posted. The company also did not appropriately assess the risks that users under the age of 13 could gain access to its platform. It also found that TikTok is still pushing teenagers joining the platform to make their accounts and videos public through manipulative pop-ups. The regulator ordered the firm to change these misleading designs, known as dark patterns, within the next three months.
Minors’ accounts could be paired up with unverified adult accounts during the second half of 2020. The authority said the video platform had also previously failed to explain to teenagersthe consequences of making their content and accounts public.
“We respectfully disagree with the decision, particularly the level of the fine imposed,” said Morgan Evans, a TikTok spokesperson. “The [Data Protection Commission]’s criticisms are focused on features and settings that were in place three years ago, and that we made changes to well before the investigation even began, such as setting all under-16 accounts to private by default.”
TikTok added it will comply with the order to change misleading designs by extending such default-privacy settings to accounts of new users aged 16 and 17 later in September. It will also roll out in the next three months changes to the pop-up young users get when they first post a video.
The decision marks the largest-ever privacy fine for TikTok, which is now actively used by 134 million Europeans monthly, and the fifth-largest fine imposed on any tech company under the GDPR.
The platform popular among teenagers has previously faced criticism for insufficiently mitigating harms it poses to its young users, including deadly viral challenges and its addictive algorithm. TikTok — like 18 other online platforms — also now has to limit risks like cyberbullying or face steep fines under the Digital Services Act (DSA).
The costly fine adds to TikTok’s woes in Europe, after it saw a wave of new restrictions on its use earlier this year due to concerns about its connection to China.
The social media app, whose parent company ByteDance is based in Beijing, has struggled to quash concerns over its data security. The company said this month it had started moving its European data to a center within the bloc. Yet, it is still under investigation by the Irish Data Protection Commission over the potentially unlawful transfer of European users’ data to China.
The social media app, whose parent company ByteDance is based in Beijing, has struggled to quash concerns over its data security | Roslan Rahman/AFP via Getty Images
The Irish data authority in 2021 started probing whether TikTok was respecting children’s privacy requirements. TikTok set up its legal EU headquarters in Dublin in late 2020, meaning the Irish privacy watchdog has been the company’s supervisor for the whole bloc under the GDPR.
Other national watchdogs weighed in on the investigation over the summer via the European Data Protection Board (EDPB), after two German privacy agencies and Italy’s regulator disagreed with Ireland’s initial findings. The group instructed Ireland to sanction TikTok for nudging its users toward public accounts in its misleading pop-ups.
The board of European regulators also had “serious doubts” that TikTok’s measures to keep under-13 users off its platform were effective in the second half of 2020. The EDPB said the mechanisms “could be easily circumvented” and that TikTok was not checking ages “in a sufficiently systematic manner” for existing users. The group said, however, that it couldn’t find an infringement because of a lack of informationavailable during their cooperation process.
The United Kingdom’s data regulator in April fined TikTok £12.7 million (€14.8 million) for letting children under 13 on its platform and using their data. The company also received a €750,000 fine in 2021 from the Dutch privacy authority for failing to protect Dutch children by not having a privacy policy in their native language.
VIENNA — No one does victimhood quite like Austria.
Over the past century, the Central European country has presented itself to the outside world as an innocent bystander on an island of gemütlichkeit, doing what it can to get by in a treacherous global environment.
“Austria was always apolitical,” insists Herr Karl, the archetypal Austrian opportunist, brought to life in 1961 by Helmut Qualtinger, the country’s greatest satirist. “We were never political people.”
Recalling Austria’s collaboration with the Nazis, Herr Karl, a portly stockist who speaks in a working-class Viennese dialect, was full of self pity: “We scraped a bit of cash together — we had to make a living…How we struggled to survive!”
Russia’s war on Ukraine offers a bitter reminder that Austria remains a country of Herr Karls, playing all sides, professing devotion to Western ideals, even as they quietly look for ways to continue to profit from the country’s friendly relations with Moscow.
The most glaring example of this hypocrisy is Austria’s continued reliance on Russian natural gas, which accounts for about 55 percent of the country’s overall consumption. Though that’s down from 80 percent at the beginning of 2022, Austria, in contrast to most other EU countries, remains dependent on Russia.
Confront an Austrian government official with this fact and you’ll be met with a lengthy whinge over how the country, one of the world’s richest, is struggling to cope with the economic crosswinds triggered by the war. That will be followed by a litany of examples of how a host of other EU countries is guilty of much more egregious behavior vis a vis Moscow.
The unspoken, if inevitable, conclusion: the real victim here is Austria.
The myth of Austrian victimhood has long been a leitmotif of the country’s bilious tabloids, which serve readers regular helpings of all the ways in which the outside world, especially Brussels and Washington, undermines them.
Outside supervision
Earlier this month, the EU’s representative in Austria, Martin Selmayr, ended up in the sights of the tabloids — and the government — for uttering the inconvenient truth that the millions Vienna pays to Russia for gas every month amounted to “blood money.”
“He’s acting like a colonial army officer,” fumed Andreas Mölzer, a right-wing commentator for the Kronen Zeitung, Austria’s best-selling tabloid, noting with delight that both of Selmayr’s grandfathers were German generals in the war.
A few weeks before his “blood money” remarks, Selmayr told a Vienna newspaper that “the European army is NATO” | Patrick Seeger/EPA
“The Eurocrats have this attitude that they can just tell Austrians what to do,” Mölzer concluded.
Yet if Austria’s history since the collapse of the Habsburg empire in 1918 has shown anything, it’s that the country needs outside supervision. Left to their own devices, Austrians’ worst instincts take hold.
One needn’t look further than 1938 to understand the implications. But there’s no shortage of other examples: voters’ enthusiastic support for former United Nations Secretary-General Kurt Waldheim as president in 1986, despite credible evidence that he had lied about his wartime service as an intelligence officer for the Nazis; the state’s foot-dragging on paying reparations to slave laborers used by Austrian companies during the war; the resistance to return valuable artworks looted from Jews by the Nazis to their rightful owners.
Not that Austrians learn from their mistakes. To this day, Austrians rarely heed the better angels of their nature unless the outside world forces them to, either by shaming them into submission or brute force.
That said, the West is almost as much to blame for Austria’s moral shortcomings as the Austrians themselves.
The Magna Carta for Austria’s cult of victimhood can be found in the so-called Moscow Declarations of 1943, in which the allied powers declared the country “the first free country to fall a victim to Hitlerite aggression.” Though the text also stresses that Austria bears a responsibility — “which she cannot evade” — for collaborating with the Nazis, the Austrians latched onto the “victim” label after the war and didn’t look back.
In the decades that followed, the country relied on its stunning natural beauty and faded imperial charm to transform its international image into that of an alpine Shangri-La, a snow-globe filled with prancing Lipizzaners and jolly folk enjoying Wiener schnitzel and Sachertorte.
Convenient excuse
A key element of that gauzy fantasy was the country’s neutrality, imposed on it in 1955 by the Soviet Union as a condition for ending Austria’s postwar allied occupation. At the time, Austrians viewed neutrality as a necessary evil towards regaining full sovereignty.
During the course of the Cold War, however, neutrality took on an almost religious quality. In the popular imagination, it was neutrality, coupled with Austrians’ deft handling of Soviet leaders, that allowed the country to escape the fate of its Warsaw Pact neighbors (while also doing business with the Eastern Bloc).
Today, Austrian neutrality is little more than a convenient excuse to avoid responsibility.
Austria’s center-right-led government insists that on Ukraine it is only neutral in terms of military action, not on political principle. In other words, it won’t send weapons to Kyiv, but it does support the EU’s sanctions and allows arms shipments destined for Ukraine to pass through Austrian territory.
Andreas Babler took over as leader of the Social Democrats in June AND has a long history of opposing not just NATO, but Austrian participation in any EU defense initiatives | Helmut Fohringer/APA/AFP via Getty Images
In the Austrian population as a whole, decades of fetishizing neutrality has left many convinced that it’s their birthright not to take sides. Most are blissfully unaware of the EU’s mutual defense clause, under which member states agree to come to one another’s aid in the event of “armed aggression.”
That mentality explains why Austria’s political parties — with the notable exception of the liberal Neos — refuse to touch, or even debate, the country’s neutrality and its security implications.
In March, just as Ukrainian President Volodymyr Zelenskyy began an address via video to Austria’s parliament, Freedom Party MPs placed signs stamped with “Neutrality” and “Peace” on their desks before standing up in unison and leaving the chamber.
The far right wasn’t alone in its disapproval of Zelenskyy. More than half of the Social Democratic MPs also boycotted the event to avoid upsetting Russia.
Geographic good fortune
Andreas Babler, who took over as leader of the Social Democrats in June, has a long history of opposing not just NATO, but Austrian participation in any EU defense initiatives.
In 2020, he characterized the EU as “the most aggressive military alliance that has ever existed,” adding that it “was worse than NATO.”
It’s an extraordinary assertion given that NATO is the only thing that kept the Soviet Union from swallowing Austria during the Cold War. The defense alliance, which Austrian leaders briefly entertained joining in the 1990s, remains the linchpin of the country’s security for a simple reason: Austria’s only non-NATO neighbor is Switzerland.
Austria’s neutrality and geographic good fortune have led it to spend next to nothing on defense. Last year, for example, spending fell to just 0.8 percent of GDP from 0.9 percent, putting it near the bottom of the EU league table with the likes of Luxembourg, Ireland and Malta.
A few years ago, the country’s defense minister even proposed doing away with “national defense” altogether so that the army could concentrate on challenges such as natural disaster relief and combatting cyber threats. The idea was ultimately rejected, but that it was proposed at all — by the person who oversees the military no less — illustrates how seriously Austria takes its security needs.
Over the past year, the government has pledged to increase defense spending, yet those plans are still well below what the country would be obligated to pay were it in NATO.
Put simply, Austria is freeloading on its neighbors and the United States and will continue to do so until it’s pressured to change course.
Reality check
That’s why it needs more straight talk from people like Selmayr, not less.
A few weeks before his “blood money” remarks, the diplomat told a Vienna newspaper that “the European army is NATO,” noting that the accession of Sweden and Finland to the alliance would leave only Austria and a few small island states outside the tent.
Austria’s neutrality and geographic good fortune have led it to spend next to nothing on defense | Joe Klamar/AFP via Getty Images
The reality check dashed Austria’s hope that it could avoid paying its share for EU defense by waiting for Brussels to create its own force.
Even so, rhetoric alone is not going to convince Austria to shift course. Nearly 80 percent of Austrians support neutrality because it’s so comfortable. The EU and the U.S. need to make it uncomfortable.
At the moment, most Austrians only see the upsides to neutrality; yet that’s only because the West has refused to impose any costs on the country for freeriding. That needs to change.
Critics of a more aggressive approach towards Vienna argue that it will only harden the population’s resolve to sustain neutrality and bolster the far right. That may be true in the short term, but the history of foreign pressure on Austria, especially from Washington — be it the isolation it faced during the Waldheim affair or the push to compensate slave laborers from the war — shows that the interventions ultimately work.
If forced to choose between remaining in the Western fold or facing isolation, Austrians will always chose the former.
Though almost no Austrian security officials will say so publicly, few have any illusions about the necessity of a sea change. More than one-third acknowledge that the country’s neutrality is no longer credible, according to a study published this month by the Austrian Institute for European and Security Policy. A further third say the country’s participation in the EU’s common foreign and security policy has a “strong influence” on the credibility of its neutrality claim (presumably not in a good way).
And nearly 60 percent say the country needs to improve its interoperability with NATO in order to fight alongside its EU allies in the event of an armed conflict.
The problem is that no one is forcing them.
If Austria’s partners continue to avoid a confrontation, the country is likely to continue its slide towards Orbánism.
The Freedom Party, which wants to suspend EU aid for Ukraine and lift sanctions against Russia, leads the polls by a widening margin with just a year until the next national election. With neighboring Slovakia on a similar trajectory, Russian President Vladimir Putin may soon have a major foothold in the heart of the EU.
So far, the EU and Washington have been silent on the Freedom Party’s worrying rise, counting on Austrians to snap out of it.
Barring foreign pressure, they won’t. Why would they? With its populist prescriptions and beer hall rhetoric, the Freedom Party encourages Austrians to see themselves as what they most want to be: victims.
Or as Herr Karl famously put it: “Nothing that they accused us of was true.”
NEW DELHI — A last-minute agreement on the Ukraine portion of the G20’s summit statement kept the entire document from the trash heap — but it took dropping a reference to Russia’s aggression against Ukraine to do it.
All the members of the group of top world economies spent weeks in fierce negotiations over every element of the 35-page communiqué. The greatest sticking point was what to say about the war raging in Eastern Europe, not least because Russia, a member of the bloc, would oppose condemnations of Moscow and shows of support for Kyiv.
What ultimately led to an agreement in the dark, early hours of Saturday morning was new language drafted by officials from India, the host nation, and delegates from Brazil and South Africa.
Russia, which spent weeks offering alternatives that wouldn’t leave it isolated in the G20 club, relented after key developing countries presented the formulation: All countries should “refrain from action against the territorial integrity and sovereignty or political independence of any state.” That phrasing was not included in the G20’s Bali declaration nearly a year ago.
But the final text was also acceptable to the Kremlin because it didn’t “deplore” or condemn “the aggression by the Russian Federation against Ukraine” as the Bali statement did. Language about there being a “war in Ukraine,” without specifically blaming Moscow for the conflict, is in both the Bali and the New Delhi declarations. “There were different views and assessments of the situation,” the new communiqué reads.
In effect, the G20 dropped its accusations against Russia in order to maintain unity on broader concepts of war and peace —concepts that were not so explicitly endorsed last November in Bali.
“The fact that we have consensus around the document was far from clear until the very last moment,” explained a senior EU official who, like four others from the Biden administration and European governments, was granted anonymity to discuss sensitive diplomatic dealings.
The G20, as a grouping, is geared toward issues of global economics and finance, not international conflict. But Western leaders, and U.S. President Joe Biden in particular, have leveraged multilateral gatherings since Russia invaded Ukraine 18 months ago to show they stand united with Kyiv.
Text on monetary policy was finalized well before presidents, princes and prime ministers descended on the Indian capital for this weekend’s summit. But the Ukraine section was being worked on well into Saturday morning, mere hours before official proceedings began.
Russia, represented in New Delhi by its foreign minister, not President Vladimir Putin, repeatedly demurred when iteration after iteration of the text sided more firmly with Ukraine. Moscow proposed competing language, the senior EU official said, including an entire section railing against Western-imposed sanctions that have complicated the Kremlin’s procurement of military materials.
India, as the host, shuttled Russian objections to officials from other G20 members, and sent their responses back to Moscow’s delegation.
In the end, so-called “sherpas” from the BRICS consortium’s three democratic countries settled on an idea: The communiqué should borrow language and principles from the United Nations Charter, which states that no country can seize territory from another using force. Russia, as a permanent member of the U.N. Security Council, should have no objection to it, they reasoned.
British Prime Minister Rishi Sunak publicly called the final language on Ukraine a “good and strong outcome” | Dan Kitwood/Getty Images
Sergey Lavrov, the Russian foreign minister who was deeply involved in the final negotiations, said the Kremlin could live with that language. Western nations were satisfied because the language genuinely reflected the overwhelming sentiment within the G20.
A senior U.S. official insisted that the New Delhi version is far superior to the Bali statement because of that reflection, noting that Russia would never sign anything that directly accused it of illegally capturing land.
Jon Finer, Biden’s deputy national security adviser, noted that the G20 leaders endorsed the Bali language last year and have supported U.N. resolutions.
“The joint statement issued yesterday builds on that to send an unprecedented and unified statement,” Finer told reporters. Biden is working to rally nations around the world against Russian aggression, he said. “This statement is a major step forward in this effort.”
U.K. officials, meanwhile, argued that in referring to the U.N.’s resolution against the invasion of Ukraine, the Bali communiqué didn’t directly condemn Russia’s aggression but instead indirectly referenced the fact that some countries had “deplored” it. “By achieving consensus in New Delhi, the G20 has forced Putin to commit to cessation of attacks on infrastructure, to withdrawal of troops, and to the return of territory,” a U.K. official said.
British Prime Minister Rishi Sunak publicly called the final language on Ukraine a “good and strong outcome.”
But others expressed their reservations. “Of course, if it was a document written by the EU alone, then this would probably look different, but then this would not be a consensus document,” the senior EU official said.
Kyiv had a much harsher reaction. “Ukraine is grateful to its partners who tried to include strong wording in the text,” Ukraine’s Foreign Ministry spokesperson Oleg Nikolenko wrote on social media. “At the same time, the G20 has nothing to be proud of in the part about Russia’s aggression against Ukraine.”
Officials from the G20, from India to Western nations, professed satisfaction with the joint declaration. They insisted that they achieved what they could in New Delhi in terms of being more pointed in their view of the war, even if the document had to drop the “aggression” reference about Russia.
According to a second U.S. official: “The focus was different for this one.”
Heineken has sold its business in Russia for one euro more than a year after it vowed to pull out of the country in response to Russia’s invasion of Ukraine.
The Dutch brewer is taking a €300 million loss, or roughly $325 million, by selling its business to Russian manufacturer Arnest Group, making Heineken one of the latest companies to pull out of Russia since the start of the war in Ukraine in February 2022.
Heineken had faced criticism for the slow pace of its exit, which CEO Dolf van den Brink attributed to the company’s efforts to protect its Russian employees during the sale process.
“While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner,” he said in a statement on Friday.
More than 1,000 global companies have withdrawn or voluntarily curtailed operations in Russia so far, according to Yale University data.
The reality of exiting Russia is tougher than it may appear. Moscow has imposed increasingly stringent requirements for foreign businesses to exit the country after facing tough sanctions and the beginning of an exodus of companies last year.
The Russian government requires foreign companies to provide a 50% on their businesses after government-selected consultants value them, Reuters reported. It also requires foreign companies to contribute of 10% of their business’ sale price to the Russian budget.
Heineken’s sale covers all of its assets in Russia, including seven breweries. The company said that Arnest has guaranteed the employment of Heineken’s 1,800 local staff for three years.
Heineken brand beer was removed from the Russian market last year. One of its other major brands, Amstel, will be phased out within six months, the company said.
The brewery isn’t the only company to swallow big losses from bowing out of the Russian market. Last year, McDonalds said it expected to lose more than $1 billion to divest its Russia business.
The Associated Press contributed reporting.
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Russia has fined Google 3 million rubles — around €30,000 — for not deleting what it says is fake news about the war in Ukraine.
A Moscow court found Google guilty on Thursday for failing to remove from YouTube what it considers “prohibited information” — allegedly detailing how to enter certain protected facilities — and “false information” about the “special military operation in Ukraine,” despite having been ordered to do so by Russian authorities, according to Russian state-run news agency TASS.
Since its full-scale invasion of Ukraine, Russia has ramped up its efforts to control online content that does not agree with its narrative. On Tuesday, social media site Reddit was fined for the first time for not removing “false content.” Earlier this month, a Russian court fined Apple and Wikipedia for similar reasons. Wikimedia Foundation, which owns Wikipedia, has been fined numerous times, but has refused to comply with any of the demands to take down information, according to a spokesperson.
Google is also not new to these rulings. Last year, it was slapped with a hefty penalty of 21.1 billion rubles — over €360 million at the time — for once again failing to remove allegedly false content on the war in Ukraine.
Like many other Western technology companies, Google scaled down its activities in Russia, in part due to Western sanctions and Russian countermeasures, and in part due to pressure from the Ukrainian government to throw up a “digital blockade” to stop Russia from accessing services. Google’s local subsidiary in Russia filed for bankruptcy in 2022 because Moscow’s measures against the U.S. company made it impossible to do business there, according to the firm.
KORNIDZOR, Armenia — Maria Musayelyan gave birth to twin girls on Sunday — now she’s worried about being able to keep them alive.
With Azerbaijan accused of blocking all supplies to the ethnic Armenian enclave of Nagorno-Karabakh, fears are growing over the fate of the 100,000 people living there.
“There were days during my pregnancy when I know I didn’t get enough food. And now it’s not just about food,” the 25-year-old lawyer said in a telephone interview from the region’s capital, Stepanakert. “There’s no toilet paper, no toothpaste, no baby formula, no clothes for the children.”
Nagorno-Karabakh’s Armenians fought a war against Azerbaijan in the early 1990s; hundreds of thousands of Azerbaijanis were killed or forced to flee their homes as the Armenians took control and declared the independence of their unrecognized breakaway state — inside Azerbaijan’s internationally-recognized borders but cut off from the rest of the country by trenches and fortifications.
Azerbaijan turned the tables in 2020 with a lightning offensive that reconquered key parts of the enclave. The war was halted by a Russian-brokered ceasefire, but in recent months Azerbaijan has tightened the noose on the Lachin Corridor, a mountainous road that is the only link between Nagorno-Karabakh and Armenia.
Blockade
In Kornidzor, an Armenian village on the border with Azerbaijan, a line of white aid trucks — laden with hundreds of tons of flour, cooking oil and other supplies from the Armenian government — has been stuck at an army checkpoint for the last month. Azerbaijan is refusing to let it pass. Nearby, half a dozen boys chase a football up and down a dusty field, every now and then letting out a cheer as it bounces off the burned-out armored vehicle rusting behind the goal.
Aid organizations, including the International Committee of the Red Cross, are also warning that they are unable to get food and fuel into the breakaway region and that a humanitarian crisis looms.
“The situation is close to catastrophe,” said Sergey Ghazaryan, the foreign minister of Nagorno-Karabakh’s unrecognized government. “There’s no sphere of life that isn’t suffering.”
Azerbaijan insists there is a solution — it’s just not one that’s palatable for Karabakh Armenians hoping to preserve some semblance of independence.
Hikmet Hajiyev, Azerbaijani President Ilham Aliyev’s foreign policy adviser, insisted to POLITICO that “the Lachin road is open” — while refusing to explain why the Red Cross and other international organizations are unable to use it.
He said his government wants aid to be delivered, just not via the Lachin Corridor from Armenia but from the Azerbaijani city of Aghdam, because it “historically links Karabakh to mainland Azerbaijan” and is “less costly and more convenient.” Russia tentatively backs the idea, while the EU and the U.S. say it’s not an alternative to Lachin.
Baku’s motive for the shift is clear. While the Lachin Corridor offers Nagorno-Karabakh a contiguous lifeline to Armenia, deliveries through Aghdam — which lies to the east of the enclave — would require long, looping transit through Azerbaijan.
Karen Minasyan/AFP via Getty Images
“Why are the Armenians refusing to use the Aghdam road?” Hajiyev asked. “Because they don’t seek reintegration — they simply seek separatism and they seek irredentism and would like to preserve their illegal puppet regime on the territory of Azerbaijan.”
Ghazaryan warned that Azerbaijan’s offer to bring in aid via Aghdam is an effort to force the Karabakh Armenians to give up their independence and accept being part of Azerbaijan. ““If we accept the opening of the Aghdam road and supply from the Azerbaijani side, we legitimize the crime they are committing,” he said.
“In case of the reopening of the Lachin Corridor we will reestablish our self-sufficiency and there will be no need to receive cargo from Aghdam,” he added.
For now, the Armenians are hanging on, but the humanitarian cost is rising.
In July, one Karabakh Armenian doctor said miscarriages had tripled as a result of malnutrition and a lack of medical care, while local media reported a woman lost her baby after she was unable to get to hospital due to a shortage of fuel for the ambulance.
Agricultural work has all but ground to a halt without fuel to power farm machinery or get food from the countryside to the Karabakh Armenian capital, local officials said. They also claim Azerbaijani forces have fired on farmers in their fields, making it almost impossible to sow crops and harvest hay for their animals.
Nagorno-Karabakh’s leadership is calling on the EU, U.S. and others to impose sanctions on Azerbaijan and to push for a return to the status quo ante to prevent a catastrophe.
At a meeting of the U.N. Security Council last week, nations including the U.S., U.K., France and Russia acknowledged the ongoing blockade and called for aid to be allowed in.
But the debate underlined how far apart the two sides are.
Yashar Aliyev, the country’s permanent representative to the U.N., responded to Armenian allegations by holding up printouts of Instagram posts purportedly showing Karabakh Armenians eating food and living life as normal. “People are happy,” he said. “They are dancing at their wedding party. This is a celebration. Very tasty cookies!”
Looking for help
Pressure is growing on Azerbaijan to relent.
Luis Moreno Ocampo, the former chief prosecutor of the International Criminal Court, published a report earlier this month calling the situation “an ongoing genocide.”
Luis Moreno-Ocampo | Roel Rozenburg/AFP via Getty Images
Russia’s failure to guarantee safe passage in and out of the region, which it vowed to do under the terms of the 2020 ceasefire, means the Karabakh Armenians are looking West for security assurances.
“We’ve been seeing two major trends since the start of the war in Ukraine,” said Tigran Grigoryan, head of the Regional Center for Democracy and Security think tank in the Armenian capital of Yerevan. “Russia’s interest in the region is decreasing and its priorities are shifting. Militarily, diplomatically, politically, they don’t have the leverage they used to have.”
Azerbaijan is seeking to reassure the international community that warnings of an ongoing ethnic cleansing campaign are overblown. It has hired London lawyer Rodney Dixon to write a rejection of the Moreno Ocampo report.
“If you’re going to make an allegation as serious as genocide, you have to look at all the factors,” Dixon said. “There might be many other issues between the parties, but there’s no evidence that’s been identified a genocide is underway.”
He said Azerbaijan’s offer to redirect aid via Aghdam shows it is not intent on driving out Nagorno-Karabakh’s Armenian population.
But there are doubts as to the Azerbaijani government’s long-term intentions.
“No plan, white paper or document setting out a positive vision for the future of Karabakh Armenians has ever been made public by the Azerbaijani authorities,” said Laurence Broers, an expert on the conflict and associate fellow at Chatham House.
According to him, assurances that locals will receive equal treatment under the constitution of Azerbaijan fail to acknowledge that they “are not just any population but one that has been in protracted conflict with the Azerbaijani state for decades.”
“The Aghdam offer would be more credible if it was linked to deescalation — rhetorically and militarily — and to a vision for an ongoing transformation of the troubled relationship between Azerbaijani state and Karabakh Armenian population,” Broers said.
Meanwhile, in Stepanakert, Musayelyan and her neighbors struggle to survive.
“We are eating whatever can be grown here, mostly vegetables — there’s some potatoes, some pears, some plums,” she said.
The British parliament has for the first time referred to Taiwan as an “independent country” in an official document, breaking a political taboo as Foreign Secretary James Cleverly visits China this week.
The new language, adopted in a report published Wednesday by the influential foreign affairs committee of the House of Commons, risks a stinging backlash from Beijing and comes as Cleverly becomes the first top British envoy to visit Beijing in five years amid a frosty relationship.
Beijing has long denied Taiwan’s statehood, insisting the self-governing democratic island is part of its territory. Only 13 countries around the world recognize Taipei instead of Beijing diplomatically.
“Taiwan is already an independent country, under the name Republic of China,” the committee report says. “Taiwan possesses all the qualifications for statehood, including a permanent population, a defined territory, government, and the capacity to enter into relations with other states — it is only lacking greater international recognition.”
According to Committee Chairperson Alicia Kearns, from the ruling Conservative Party, it’s the first time a U.K. parliament report is making such a declaration. “We acknowledge China’s position, but we as [the foreign affairs committee] do not accept it,” Kearns told POLITICO. “It is imperative the foreign secretary steadfastly and vocally stand by Taiwan and make clear we will uphold Taiwan’s right to self-determination.”
“This commitment aligns not only with British values but also serves as a poignant message to autocratic regimes worldwide that sovereignty cannot be attained through violence or coercion,” Kearns added.
The committee report criticized the government for not being bold enough in supporting Taiwan, calling on officials to start preparing sanctions with allies in order to deter Beijing’s military action and economic blockade over the island that supplies 90 percent of the world’s most advanced semiconductors.
“The U.K. could pursue closer relations with Taiwan if it were not over-cautious about offending the [Chinese Communist Party],” the committee said. “The U.K. should loosen self-imposed restrictions on who can interact with Taiwanese officials. The U.S. and Japan have shown that communication is possible even at the highest level.”
London should also work with Tokyo and Taipei for trilateral cooperation on cyber and space defence capabilities, it said.
On Taiwan’s bid to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Britain is a new member, the committee urged the government to campaign for Taiwan’s admission.
Meanwhile, the report also criticized the British government for keeping its China strategy under wraps.
“Given the publication by Germany of a China strategy, it is evidently possible for the U.K. government to publish a public, unclassified, version which would give the public and private sectors the guidance they are seeking,” it said.
Whitehall, it said, should be tougher on China’s “transnational repression” on British soil, such as sanctioning U.K. lawmakers or harassing dissidents.
Cleverly “must be absolute that defense is not an escalation, and that the U. K. will stand resolute and take action against any efforts at transnational repression,” Kearns said.
Prime Minister Rishi Sunak’s government has stopped short of defining China as a broad “threat,” instead pitching it as an “epoch-defining and systemic challenge.”
Diesel, kerosene and other fuels refined from Russian crude are flooding into Europe, prompting Kyiv to call for tightening sanctions against Moscow.
In an interview with POLITICO, Oleg Ustenko, an economic adviser to Ukrainian President Volodymyr Zelenskyy, appealed for the EU, as well as the U.K. and the U.S., to close the “loophole” that allows third countries like India, China and Turkey to refine crude bought from Moscow’s state energy firms into petrol, diesel and other products before selling them on without restrictions.
In December, the G7 agreed to set a price cap of $60 a barrel on Russian crude, meaning sales below that price are allowed. The idea was to squeeze Moscow financially while allowing oil markets to continue functioning.
The result has been that countries like India are buying up cheap Russian crude and then refining it — which earns local companies the refining margin — before selling it to other countries.
Indian imports of Russian crude hit a high of 69 million barrels in May, an almost tenfold increase from the same period in 2021 prior to Russia’s invasion of Ukraine — and more than twice as much as the 31 million it bought in May last year.
Volumes have since fallen to around 50 million barrels in July, but remain well above pre-war levels.
As a result, Indian exports of fuel products to the EU have skyrocketed. In June, it exported 5.1 million barrels of diesel and 3.2 million barrels of jet fuel to the bloc, up from just 1.68 million barrels and 0.51 million barrels respectively in June 2021.
Ustenko singled out India, given that “before the invasion, they were buying Russian oil but the level of their imports was very marginal, only around 1 percent of their imported oil. Now it’s on the level of almost 40 percent, which is a really dramatic change.”
For New Delhi, it’s just good business.
In an interview with CNBC last week, India’s Minister of Petroleum and Natural Gas Hardeep Singh Puri acknowledged his country’s privately owned refineries were snapping up Russian crude at rates well below the market price. “If there’s a 30 percent discount, the Russians are putting a ribbon around it and sending it to us free. That’s what it means.”
It’s also having a negative impact on Russia’s bottom line.
Russia’s energy export revenues have virtually halved in the first six months of this year, while the ruble has hit historic lows in recent weeks as sanctions begin to undermine the fundamentals of the Russian economy.
But as the war takes its toll on Ukraine, Kyiv wants to turn the screws even further.
Policymakers should support “a ban for all refined products going to G7 countries” if they’ve been produced using Russian oil, even if they were refined elsewhere, Ustenko said.
Ustenko added Kyiv wants to build support among G7 nations to bring the price cap down to just $30 a barrel. Poland and the Baltic countries pushed for a lower price last year, but countries like Greece — whose oil tankers transport a lot of Russian crude — balked.
These steps, Ustenko said: “Would be a huge signal to producers that it’s now completely illegal to touch Russian oil and to supply the regime with the blood money they are using to buy weapons and commit war crimes in Ukraine.”
However, the idea is unlikely to find much support, at least at the moment.
According to Maximillian Hess, a fellow at the Foreign Policy Research Institute and author of a new book on Russia sanctions, the refining of Russian crude by third countries isn’t so much a failure of the measures as it is the intended feature.
“Part of the West’s strategy, as the U.S. has said repeatedly, is to keep Russian oil flowing,” he said, while ensuring Moscow earns less for its exports and doesn’t earn the premiums that come from selling refined fuel rather than crude.
“There’s certainly appetite among some members of the G7 for a $30 price cap, but there may be some challenges introducing a ban on refined fuels,” he added.
American rock band The Killers apologized after singer Brandon Flowers invited a Russian fan onstage at a concert in Georgia.
At a performance on Tuesday at the Black Sea Arena in Batumi, Flowers brought the fan onstage to play drums on the song “For Reasons Unknown.”
Georgia is a former Soviet state and a fifth of its territory is still occupied by Russia, which invaded in 2008.
In videos circulating on social media, Flowers asked the audience: “We don’t know the etiquette of this land but this guy’s a Russian. You okay with a Russian coming up here?”
Fans responded with a mixture of boos and applause.
Part of the audience left concert of @thekillers at the Black Sea Arena in Georgia in protest after amid booing the group’s frontman who invited a Russian drummer to the stage and said everyone are “brothers and sisters” pic.twitter.com/mhtklWIOKf
Flowers attempted to placate the audience by saying: “You can’t recognize if someone’s your brother? He’s not your brother? … We all separate on the borders of our countries … Am I not your brother, being from America?
“Tonight, I want us to celebrate that we are here together and I don’t want it to turn ugly. And I see you as my brothers and my sisters,” Flowers added. Some concertgoers left the arena in protest, the Guardian reported.
The Killers later apologized on X, formerly known as Twitter. “It was never our intention to offend anyone!” the band wrote, adding that they regularly invite people on stage at their shows and “it seemed from the stage that the initial response from the crowd indicated that they were okay with tonight’s audience participation member coming onstage with us.”
Georgia declared its independence from the Soviet Union in 1991. Relations between the two nations deteriorated in the following years, with the election of a pro-Western government in Georgia in 2003 and Russia’s invasion in 2008, during which Moscow occupied northern Georgia.
Since the start of the war in Ukraine — which has caused an influx of Russians to Georgia and boosted its economy — the Georgian government has refused to participate in Western sanctions against the Kremlin.
Despite war and sanctions, Vladimir Putin is trying to haul Russia back into the space race.
In the early hours of Friday morning, state space agency Roscosmos launched the country’s first lunar mission in nearly half a century as an ambitious play in the scramble to build a base on the moon.
“If they pull it off, it will be a massive technological and scientific achievement,” said Tim Marshall, author of “The Future of Geography” on the geopolitics of space. He argues a successful Russian landing, and fruitful year of research, would mark a big step forward in plans to build a moon base with China by the 2030s.
Russia’s Luna-25 mission is being dispatched to scope out the lunar south pole, where scientists believe there’s a plentiful supply of water locked in ice in the perpetual shade of mountain ridges. Firming up water reserves is a critical requirement for supporting life on the moon with breathable oxygen, drinking water and even rocket fuel, which would then help space-faring nations further explore the cosmos from any lunar outpost in the future.
“The first goal is to find the water, to confirm that it is there … to study its abundance,” said Olga Zakutnyaya, from the Space Research Institute at the Russian Academy of Sciences in Moscow, of Luna-25’s main aim.
But simply successfully landing a spacecraft on the rocky lunar south pole — which would be a first in itself — would also prove to Beijing that Moscow still has something to offer when it comes to cutting-edge aerospace technology. The two countries have already pledged to work together to build a moon base by the 2030s, but Beijing is the clear leader these days.
“Putin knows that Russia is the junior partner in the China relationship, including in the space relationship,” said Marshall, arguing that the Luna-25 mission could help rebalance the scales.
On the other side of the geopolitical divide, the United States is planning to send astronauts to the south pole later this decade as part of its Artemis program supported by Canada and European countries.
And, despite the competition, NASA doesn’t seem worried about Moscow’s mission.
“I don’t think that a lot of people at this point would say that Russia is actually ready to be landing cosmonauts on the moon in the timeframe that we’re talking about,” NASA Administrator Bill Nelson said during a panel on Tuesday in response to Luna-25.
Pole race
Only three countries — the United States, China and the Soviet Union — have successfully landed spacecraft on the moon, and only the Americans have put boots on the lunar surface.
The likes of India, Japan and Israel have all tried and failed of late. In 2019, India’s Chandrayaan-2 mission crashed, while an earlier attempt by Israeli firms with Beresheet also failed that year. In April, Japanese start-up ipsace also saw its Hakuto-R Mission 1 crash.
Only three countries — the United States, China and the Soviet Union — have successfully landed spacecraft on the moon | Kirill Kudryavtsev/AFP via Getty Images
Trying again, India’s Chandrayaan-3 mission, which literally translates as “moon vehicle” in Sanskrit, is scheduled to reach the surface on August 23 to explore the south pole, around the same time that Luna-25 is planning to attempt to land nearby.
“The fact that both Russia and India are targeting to land in the same, albeit large, region of the moon highlights that certain areas are more valuable than others,” said Benjamin Silverstein, an analyst for the Carnegie Space Project at the Carnegie Endowment for International Peace.
While Roscosmos insists there’s no chance of collision, a lack of agreed regulations for who can do what on celestial bodies like the moon means countries are deciding their own rules of the road when planning missions.
First landers on the lunar south pole could work up their own preferred standards and expect newcomers to follow their lead rather than relying on the slow and laborious process of trying to fix agreed lunar governance norms, Silverstein said.
The U.S.-backed Artemis accords sets out Washington’s preferred principles for a fresh era of space exploration, and would controversially allow countries to claim exclusive access to certain commercial zones around, for example, a moon base next to icy or resource-rich deposits.
“The growth [of Artemis signatories] to 29 shows that without question it’s going to be the dominant space bloc of the century, but for the foreseeable future they will never get China, Russia or their allies on board,” said Marshall.
Even without the politics, landing a spacecraft on the mountainous terrain of the moon’s dark poles isn’t easy.
“The south pole has a lot of craters and is very rocky,” said Nico Dettmann, the European Space Agency’s lead on lunar exploration, adding that a target accuracy of within 100 to 200 meters is required to be certain of a soft landing.
Current thruster and mapping technology, such as that deployed on Luna-25, will only be able to home in on a location between 15 and 30 kilometers from the target point, he said. “These space technology developments take time.”
Luna-25 had been set to include demonstrator navigation camera systems from the ESA as part of a cooperation deal, but that’s been scrapped due to Russia’s invasion of Ukraine, along with a separate mission to Mars dubbed ExoMars.
This article was updated to reflect that Russia had launched the lunar mission.
Even as war rages in Ukraine, hundreds of thousands of Russians are eyeing popular holiday destinations for a summer break — or even a safe haven to wait out the conflict.
While a weaker ruble and growing economic woes means many ordinary families will be spending the warmer months on their dachas or taking a break inside Russia, those with enough cash to travel are wasting little time jetting off to sunny spots across Europe and Asia.
That means countries still willing to take their money are tapping into a lucrative market. But that can come at a cost, and the politics of taking tens of thousands of tourists from a pariah state is already creating trouble in paradise for some popular destinations.
Here are six of the top places Russians are spending their vacations.
Turkey
As lazy travel writers so often put it, Turkey is a nation that straddles East and West. That old cliché has taken on new meaning since the start of the war in Ukraine, with the NATO member state offering support to Kyiv while at the same time refusing to impose sanctions on Moscow.
Ankara, as a result, has seen much-needed foreign cash flood into the country as Russians look to move their assets abroad. It’s also one of the only European destinations not to have banned flights from Russia: While the EU’s skies are closed, Turkish operators are offering flights from Moscow to sunny destinations like Antalya and Bodrum for as little as €130.
In the first half of the year, Turkey’s tourism revenues grew by more than a quarter, hitting $21.7 billion, statistics released this week show, with as many as 7 million Russians expected to visit the country this year.
Some have even decided to stay — as many as 145,000 Russians currently have residency permits. But while they’ve escaped political instability and the risk of conscription, they are sharing their new home country with tens of thousands of Ukrainians who’ve fled Russia’s war.
That’s created tensions in resort towns like Antalya, which is popular with both Russians and Ukrainians. And given Turkey’s growing anti-migrant sentiment in the wake of May’s presidential elections, both groups could be at risk of being sent home.
Georgia
The South Caucasus country holds an almost mythical status in the minds of Russians — and its reputation for having some of the best nature, food and hospitality in the former Soviet Union has made it a go-to destination for middle-class holidaymakers, who flock to its Black Sea beaches and snow-capped mountains or kick back in trendy Tbilisi.
In 2022 alone, more than 1.1 million Russians visited Georgia, up from just 200,000 the year before. That number is on the rise after Moscow in May relaxed rules banning direct flights.
Under the ruling Georgian Dream party, Tbilisi has sought closer relations with the Kremlin since the start of the war and aimed to profit off Russian wanderlust. But many locals are less sure.
In 2022 alone, more than 1.1 million Russians visited Georgia, up from just 200,000 the year before | Jan Kruger/Getty Images
In a poll conducted in March, only 4 percent of the 1,500 people surveyed said Russians are welcome in Georgia, while a quarter said Russians were tolerated because of the cash they spend when they visit. More than one in three insisted Russian visitors should be banned until Moscow relinquishes control of the occupied regions of Abkhazia and South Ossetia — accounting for around a fifth of Georgia’s territory.
Tensions are on the rise, with local Georgian and Ukrainian activists staging protests against Russian cruise ships docking in the port city of Batumi over the weekend. Clips shared by local media show Russian holidaymakers defending Russia’s 2008 war against Georgia and taunting the demonstrators from their balconies.
Thailand
It’s not only about the gleaming luxury resorts and party beaches. For Russians, the appeal of traveling to Thailand has a lot to do with the month of visa-free travel they’re granted.
The number of Russians visiting Thailand has shot up by more than 1,000 percent over the past year, according to a Bloomberg report. Official statistics show 791,574 Russians traveling to the country in the first half of this year alone.
The party city of Phuket has seen a particular influx, with close to half of all villassold theresince January being bought up by Russians — either as holiday homes or as party pads where they can wait out the war.
That rise in tourism comes as Moscow has also sought to forge closer ties with the kingdom. Russian Foreign Minister Sergey Lavrov — one of the most committed supporters of the war in Ukraine — flew into Bangkok in July to hail “the importance of boosting cooperation in trade and investment.”
United Arab Emirates
Dubai isn’t to everyone’s taste. But the billionaires’ playground and its pristine beaches have become a sought-after destination for many wealthy Russians looking for a friendly welcome — and a place to spend huge sums in opulent malls.
The number of Russians jetting to the Gulf nation shot up by 63 percent last year, making them the second largest tourism market. The UAE has also seen a surge in Russian expats, who report feeling more at ease in the desert city than in Western countries because there are no public displays of support for war-ravaged Ukraine.
The influx comes as ties between Russia and the UAE are also booming, with Russian firms relocating to the Gulf nation and the Kremlin selling vast volumes of discounted oil to the country.
But analysts warn that pressure from the U.S., U.K. and EU is making it increasingly difficult to the UAE to profit from sanctions evasion, meaning Russian tourists may find their welcome doesn’t last forever.
Cyprus
The island of Cyprus has long been known as Moscow on the Med — a homage to the country’s largest tourist market.
Those beach holidays are now largely out of reach for ordinary Russians, after Cyprus followed other EU member states in banning commercial flights from Russia and last year imposed an €80 fee for visas. The decision, officials say, has cost the country €600 million worth of income.
The island of Cyprus has long been known as Moscow on the Med | Roy Issa/AFP via Getty Images
But, for those who can stump up the costs, flights from Russia with a brief stop in Istanbul or Yerevan cost around €250. Cyprus has also been one of the most prolific issuers of so-called “golden passports,” which offer EU citizenship in exchange for as little as €2.5 million in investment.
While no statistics exist on how many Russians have taken advantage of the scheme, the country has been under pressure to cancel travel documents for sanctioned oligarchs. As many as 222 passports have already been withdrawn, including those belonging to several Russian billionaires.
Ukraine
For Russians with regular jobs and limited cash to spend abroad, country houses and holiday parks are still the most popular option.
Until recently, many of them would be headed to Ukraine’s occupied Crimean peninsula. An iconic spot for vacations and sanatorium breaks since the days of the Soviet Union, many Russians have bought second homes or paid for package holidays to the region’s Black Sea coast since it was illegally annexed by Moscow in 2014.
Now, a spate of explosions at military facilities and Kyiv’s insistence that Crimea will come back under its control when it wins the war has worried many Russians.
With air traffic close to the border diverted, one of the only remaining routes into the peninsula is across the car and railway bridge opened by President Vladimir Putin in 2018. That bridge has repeatedly been struck by Ukrainian forces looking to disrupt Russian military convoys.
As a result, officials say, hotels are on average more than half empty — despite heavy promotions and discounts. Local proprietors say the situation is even more dire than the government is prepared to admit.
The United States on Tuesday sharply limited Hungary’s participation in its visa waiver program over security concerns regarding new passports issued between 2011 and 2020.
Under the American Visa Waiver Program, citizens of participating countries can travel to the U.S. for tourism or business for up to 90 days without a visa, and simply need a so-called Electronic System for Travel Authorization (ESTA).
But starting Tuesday, ESTA validity for Hungarian passport holders will be reduced from two years to one, and an ESTA will only be valid for a single use.
The unprecedented move, in response to security concerns, affects Hungary as the only one of 40 countries participating in the U.S. program.
After coming to power in 2010, Hungarian Prime Minister Viktor Orbán’s government implemented a major policy change that granted citizenship to ethnic Hungarians abroad — including in Romania, Slovakia and Ukraine. Domestic critics say Orbán’s controversial move was designed to boost his electoral prospects.
David Pressman, the U.S. ambassador in Budapest, told POLITICO in an interview ahead of the announcement, “There are hundreds of thousands of passports that have been issued by the government of Hungary as part of the simplified naturalization program without stringent identity verification mechanisms in place.”
The U.S. government has been engaging the Hungarian government on this “security vulnerability” for many years and across multiple administrations, Pressman said. But “the government of Hungary has opted not to close” it.
Responding to the American decision, Hungary’s interior ministry said the country “will not disclose the data of Hungarians beyond the border with dual citizenship because that would risk their security” and accused the White House of “taking revenge on Hungarians with the new visa waiver limit.”
“This is a really unfortunate day,” Pressman said. “This is not the outcome the United States sought or is seeking.”
Washington’s move comes at a time when Hungary’s relationship with Western partners is at a low point.
Budapest’s NATO allies are deeply frustrated that Hungary’s parliament has yet to ratify Sweden’s bid to join the alliance.
There are also ongoing concerns about senior Hungarian officials promoting Kremlin-style narratives at home, as well as over efforts to water down European sanctions targeting Moscow. Earlier this year, the U.S. imposed sanctions on a Hungary-based bank linked to Russia.
Many Western countries have spoken out about deteriorating democratic standards in Hungary, as well as policies and rhetoric they say undermine the rights of LGBTQ+ people there.
Pressman underscored how American experts had previously identified ways the security concerns could be addressed.
The U.S. in 2017 made Hungary’s status in the visa waiver program provisional, while security concerns were also behind a decision to render Hungarians born outside the country ineligible starting in 2020.
Now, however, all Hungarian passport holders will be affected.
“This is about a choice,” the ambassador said. “The Hungarian government thus far has chosen not to address that security concern, which has led the United States to respond.”
This article has been updated with a response from the Hungarian interior ministry.
The pictures posted on the Chinese company’s website show a tall, Caucasian man with a crew cut and flattened nose inspecting body armor at its factory.
“This spring, one of our customers came to our company to confirm the style and quantity of bulletproof vests, and carefully tested the quality of our vests,” Shanghai H Win, a manufacturer of military-grade protective gear, proudly reported on its website in March. The customer “immediately directly confirmed the order quantity of bulletproof vests and subsequent purchase intention.”
The identity of the smiling customer isn’t clear, but there’s a fair chance he was Russian: According to customs records obtained by POLITICO, Russian buyers have declared orders for hundreds of thousands of bulletproof vests and helmets made by Shanghai H Win — the items listed in the documents match those in the company’s online catalog.
Evidence of this kind shows that China, despite Beijing’s calls for peace, is pushing right up to a red line in delivering enough nonlethal, but militarily useful, equipment to Russia to have a material impact on President Vladimir Putin’s 17-month-old war on Ukraine. The protective gear would be sufficient to equip many of the men mobilized by Russia since the invasion. Then there are drones that can be used to direct artillery fire or drop grenades, and thermal optical sights to target the enemy at night.
These shipments point to a China-sized loophole in the West’s attempts to hobble Putin’s war machine. The sale of so-called dual-use technology that can have both civilian and military uses leaves just enough deniability for Western authorities looking for reasons not to confront a huge economic power like Beijing.
The wartime strength of China’s exports of dual-use products to Russia is confirmed by customs data. And, while Ukraine is a customer of China too, its imports of most of the equipment covered in this story have fallen sharply, the figures show.
Russia has imported more than $100 million-worth of drones from China so far this year — 30 times more than Ukraine. And Chinese exports of ceramics, a component used in body armor, increased by 69 percent to Russia to more than $225 million, while dropping by 61 percent to Ukraine to a mere $5 million, Chinese and Ukrainian customs data show.
“What is very clear is that China, for all its claims that it is a neutral actor, is in fact supporting Russia’s positions in this war,” said Helena Legarda, a lead analyst specializing in Chinese defense and foreign policy at the Mercator Institute for China Studies, a Berlin think tank.
Were China to cross the red line and sell weapons or military equipment to Russia, Legarda said she would expect the EU to enforce secondary sanctions targeting enablers of Putin’s war of aggression.
But, she added, equipment like body armor, thermal imaging, and even commercial drones that can be used in offensive frontline operations are unlikely to trigger a response.
“Then there’s this situation that we’re in at the moment — all these dual-use components or equipment and how you handle those,” Legarda explained. “I would not expect the EU to be able to agree to sanctions on that.”
Disappearing customer
Shanghai H Win, like other Chinese companies producing dual-use equipment, has enjoyed a surge in business since Russia’s full-scale invasion of Ukraine.
According to customs records obtained by POLITICO, Russia has ordered hundreds of thousands of bulletproof vests and helmets made by Shanghai H Win | Genya Savilov/AFP via Getty Images
“Because of the war, a lot of trading companies are looking for us and ask: ‘Are you making this kind of vest?’ We received a lot of inquiries,” a sales representative told POLITICO over the phone.
At first, the representative said Shanghai H Win wasn’t allowed to export directly to Russia unless the Chinese military issues a certificate and it can provide documentary proof of its final customer.
Yet when asked who the man in the pictures was, and where he was from, the representative denied that he was even a customer — even though the website said so.
“He is our customer’s customer. We cannot ask him directly, ‘Where are you from?’ But I guess maybe he is from Europe — maybe Ukraine, maybe Poland, even maybe from Russia. I’m not sure.”
Shortly after the call, Shanghai H Win took down the post featuring the mystery shopper from its website.
Who are the buyers?
So, who exactly are those customers? Evidence of deals — importers, suppliers, and product descriptions — can be found in a registry of declarations of conformity by anyone with access to the Russian internet who is familiar with international customs classifications.
In an earlier story, POLITICO searched these filings and found evidence that sniper bullets made in the United States were reaching Russia, where they were freely available on the black market.
The declarations enable the final buyer to certify that the products are genuine and, in effect, make it possible to import goods without the express consent of the maker. If goods are traded through an intermediary, the maker may not even be aware that its goods are going to Russia. The registry is, however, searchable so it’s still easy to find the ultimate buyers of the Chinese kit.
One is Silva, a company headquartered in the remote Eastern Siberian region of Buryatia. It filed declarations in January of this year detailing orders for 100,000 bulletproof vests and 100,000 helmets. The manufacturer? Shanghai H Win.
Such importers often bear the hallmarks of “one-day” firms, as shell companies are known in Russia, set up by actors who want to conceal their dealings. They tend to be new, listed at obscure residential addresses, and have few staff or assets. Their financial statements often don’t report the levels of turnover that the filings would imply.
According to public records, Silva was registered only last September. It reported zero revenues for 2022. A Google Street View search of its address in Ulan-Ude, the capital of Buryatia, takes visitors to a dilapidated apartment block.
POLITICO tried to contact Silva but the phone number given on its filings rang off the hook and a message sent to its email address bounced.
The sale of so-called dual-use technology that can have both civilian and military uses leaves enough deniability for Western authorities looking for reasons not to confront China | STR/AFP via Getty Images
Another Russian company called Rika declared a smaller shipment of body armor from Shanghai H Win in March. Before that, in January, Rika declared a consignment of helmets from a company called Deekon Shanghai, which shares an address with Shanghai H Win. The two companies are affiliated, another Shanghai H Win representative said.
A woman who answered the phone at Rika said: “We buy in Russia, not in China.” The company didn’t reply to a follow-up email from POLITICO.
The denial is hardly plausible: In addition to the protective gear, a search of declarations by Rika threw up hits for deals for thermal optical equipment from China. That was corroborated by customs data accessed by POLITICO, which revealed more than 220 shipments, worth $11 million, for thermal optics and protective equipment since the outbreak of the war. Rika advertises Chinese-made night sights right at the top of its website.
Another Russian company called Legittelekom, whose homepage reveals it to be a Moscow freight forwarding company, also appears as a buyer of 100,000 items of headgear and 100,000 suits of outerwear from Deekon Shanghai, according to filings dated last November 24.
A man who answered a call to Legittelekom declined to comment on POLITICO’s findings and would not say whether the company supplied the Russian military.
“This is a commercial activity and we do not disclose our commercial activities,” the man said in response to both questions.
Bigger deal
Then there’s Pozitron, a company based in Rostov-on-Don, the southern city briefly captured by warlord Yevgeny Prigozhin’s Wagner mercenaries in their failed uprising last month. It imported more than $60 million-worth of “airsoft helmets,” “miscellaneous ceramics,” and other items from Chinese firm Beijing KRNatural in November and December 2022, according to customs data shared by ImportGenius.
These flows check out with Pozitron’s own declarations of conformity between late October and December 2022, for a total of 100,000 helmets. The declarations also reveal that Pozitron acquired a range of drones from Chinese multinational SZ DJI Technology Co., Ltd last December.
Although the quantity is unclear, the models specified include ones known to have been used in the Ukrainian theater of war, like DJI’s Mavic 2 Enterprise Advanced quadcopter or the Mini 2 lightweight drone.
At first sight, the product descriptions in the declarations and customs records appear harmless enough — the “airsoft helmets,” for example, are said to be for use in paintball games and “not for military use, not for dual use.”
Sanctions and defense experts say, however, that it’s common practice to mislabel dual-use goods as being for civilian purposes when they’re in fact destined for the battlefield.
At any rate, Pozitron, which was only founded in March 2021, is having a very good war: Its revenues exploded from 31 million rubles — around $400,000 — in 2021 to 20 billion rubles — almost $300 million — in 2022, according to its financial statement.
Reached by email, Pozitron’s general director, Andrey Vitkovsky, said that his company has “never imported drones and similar products” from the People’s Republic of China.
“The main activity of Pozitron LLC is the purchase and sale of consumer goods, sporting goods, and fabrics, both produced in the Russian Federation and imported from China,” Vitkovsky added, saying that his company’s activities were “exclusively peaceful in nature, in compliance with all rules and restrictions.”
The denial is typical — Russian companies have good reason to fear Western sanctions if they are implicated in trade that supports the Kremlin’s war effort. After POLITICO reported in March that a company called Tekhkrim was importing Chinese assault weapons, and declaring them as “hunting rifles,” the firm was sanctioned by the United States.
Pozitron is on the West’s radar, said one sanctions expert, who was granted anonymity as they are not authorized to speak publicly.
As for Beijing KRNatural, POLITICO was able to trace a company with a similar name at the address given in the Pozitron filings. The company, Beijing Natural Hanhua International Trade Co., Ltd, is listed as a “small and micro enterprise.” It was founded in April 2022, a few months before the Pozitron deals. Nobody answered when POLITICO called.
Heavenly mechanics
In contrast to the bulk consignments of protective gear that appear intended to equip a large fighting force, the orders for drones found by POLITICO are more dispersed among different buyers — both companies and individuals.
In addition to Pozitron, buyers of drones from DJI and its subsidiaries include firms called Gigantshina and Vozdukh — neither of which responded to emailed requests for comment. Another is Nebesnaya Mekhanika (“Heavenly Mechanics”), which before the war was the Chinese company’s official distributor in Russia.
A DJI spokesperson said that the company and its subsidiaries had voluntarily stopped all shipments to, and operations in, Russia and Ukraine on April 26, 2022 — two months after the war broke out.
“We stand alone as the only drone company to clearly denounce and actively discourage use of products in combat,” the spokesperson said in comments emailed to POLITICO.
DJI said it had also broken off its relationship with Nebesnaya Mekhanika, although the Russian company filed further declarations for shipments of the Chinese company’s drones last September 15 and on March 27 of this year.
The spokesperson said that DJI was not in any way involved in the drafting of the declarations of conformity found by POLITICO: “These documents would have been filled out by Russian parties, and they do not indicate in any shape or form who ex- or imported the products that are being declared conform.”
“We have seen media reports and other documents that appear to show how our products are being transported to Russia and Ukraine from other countries where they can be bought off-the-shelf,” the spokesperson added. “However, it is not in our power to influence how our products are being used once they leave our control.”
Still, a search of ImportGenius shows that a Chinese company called Iflight has continued to ship DJI drones to Nebesnaya Mechnika via Hong Kong, care of a local company called Lotos. The most recent consignment was delivered last October 10. In an apparent anomaly, Russia is stated as the country of origin for the shipments.
Nebesnaya Mekhanika, which still advertises DJI drones on its website, did not respond to a request for comment.
Political will
The trafficking of low-tech body armor to high-tech drones and thermal optics highlights a vulnerability in the Western sanctions regime. The ambiguity surrounding the dual-use status of this equipment, coupled with the fact that a significant portion of it is manufactured in China, seems, at least for now, to have placed the possibility of the West taking meaningful action beyond reach.
Then there is the flow of technology through China that may include components made in the West that could be of direct military use.
Russia is fully aware of the China loophole and is using it to buy Western technology to fight its war against Ukraine, according to a recent analysis by the KSE Institute, a think tank affiliated to the Kyiv School of Economics. More than 60 percent of imported critical components in Russian weapons found on the battlefield came from U.S. companies, the researchers found.
It’s an issue that U.S. Secretary of State Antony Blinken brought up on a visit to Beijing last month — the first by Washington’s top diplomat in five years. He told reporters that China had given assurances that “it is not and will not provide lethal assistance to Russia for use in Ukraine.” Blinken, however, expressed “ongoing concerns” that Chinese firms may be providing technology that Russia can use to advance its aggression in Ukraine. “And we have asked the Chinese government to be very vigilant about that.”
U.S. Secretary of State Antony Blinken told reporters that China had given assurances that “it is not and will not provide lethal assistance to Russia for use in Ukraine” during a visit to Beijing last month | Pool photo by Leah Millis/AFP via Getty Images
France is also concerned that China is delivering dual-use equipment to Russia. “There are indications that they are doing things we would prefer them not to do,” Emmanuel Bonne, President Emmanuel Macron’s top diplomatic adviser, told the recent Aspen Security Forum. Pressed on whether China was supplying weapons, Bonne said: “Well, kind of military equipment … as far as we know they are not delivering massively military capacities to Russia but (we need there to be) no delivery.”
Yet there’s little the West can do to twist Beijing’s arm into halting flows of dual-use products into Russia. Only the United States would have the real power to impose an outright ban on dollar-denominated transactions — as Washington did when it sanctioned Iran over its secret nuclear program.
The EU, however, lacks such a strong sanctions weapon because the euro is far less ubiquitous on global markets. It’s also been hesitant to act. In its latest package of Russia sanctions last month, the EU compiled a list of seven Chinese companies that shouldn’t be allowed to trade with the bloc. But, after lobbying by Beijing, Brussels dropped four companies from the blacklist.
Elina Ribakova, one of the authors of the KSE Institute report, said indirect shipments via China pose challenges in terms of both the scope and enforcement of Western sanctions. Secondary sanctions may not be sufficient, she said. She called for manufacturers to be forced to take responsibility for where their products end up — just as banks were required by regulators to step up customer oversight and anti-money laundering operations in the wake of the 2008 financial crisis.
“What we can do differently is to create the same infrastructure for the corporates,” explained Ribakova, who is director of the international program at the Kyiv School of Economics. “We have to threaten them with serious fines.”
Maxim Mironov, a sanctions expert and assistant professor of finance at the IE Business School in Madrid, reckons that the West, despite expanding sanctions to punish Putin’s helpers, lacks the political conviction to enforce them against Beijing.
“Do politicians have enough will to put sanctions on China? Basically, the answer is no,” said Mironov.
“China signals: You can try, but I don’t care what you are trying to do,” Mironov added. “And the European Union is like: If you don’t like it, we are not going to do it. And if the Chinese see that, they are just going to continue doing what they think is in their best interest.”
The European Commission, the U.S. National Security Council and the Chinese Mission to the EU did not respond to requests for comment.
Stuart Lau contributed reporting.
Sarah Anne Aarup, Sergey Panov and Douglas Busvine
When Italian Prime Minister Giorgia Meloni walks into the Oval Office on Thursday, her transformation will be complete.
Gone is the ghoulish caricature of an extremist monster, sympathetic to Moscow, whose party was descended from fascists, and in her place stands a pragmatic conservative willing to do business with a grateful international mainstream.
For U.S. President Joe Biden and Ukraine’s backers in the West, securing Meloni’s long-term commitment to the war effort is vital: Italy will assume the leadership of the G7 next year, at what’s likely to be a critical time in the conflict.
Initially, the signs weren’t good. Before she was elected last September, Meloni alarmed officials in Western capitals with her blunt brand of far-right populism. She banged the drum for nationalist causes, vowing to slam the brakes on immigration, stand up to the European Union’s leadership in Brussels and even opposed sanctioning Russia over Ukraine.
Yet 10 months since Meloni won power, the picture has changed dramatically. She will receive VIP treatment at the White House Thursday, with a welcome from Biden that will be as sincere as for any other G7 ally. While the Democrat and the far-right populist share almost nothing in their political outlooks, their handshake is likely to be one of mutual relief.
Meloni’s Foreign Minister Antonio Tajani, leader of the center-right Forza Italia party, told POLITICO that the Ukraine war had bolstered Italy’s relationship with the U.S. The Meloni government’s “three polar stars” are now the EU, the U.N. and NATO, he said.
“Italy is part of the Western alliance and wants to be a protagonist in the Western alliance and in particular in its alliance with the U.S.A.,” Tajani said. “Since the crisis in Ukraine, our relationship on issues of security and shared policy with the U.S.A. has been getting stronger.”
Putin’s pals
It is a far cry from the sort of rhetoric that had, until recently, emanated from Rome.
As leader of the hard right Brothers of Italy, she supported Putin’s strongman politics while in opposition, congratulating him after his re-election by saying “the will of the people appears unequivocal.”
After Moscow’s 2014 invasion of Crimea she repeatedly opposed sanctions against Russia, citing the need to protect Italian exports. During the pandemic Meloni endorsed Russia’s Sputnik vaccines. In a TV interview in 2022 before Russia’s full-scale invasion of Ukraine, she highlighted how essential it was to remain on good terms with Putin and accused Biden of “using foreign policy to cover up the problems he has at home.”
If Meloni seemed like a problem to Western leaders, her coalition partners were an even worse prospect. Matteo Salvini, leader of the right wing League, who once wore a T-shirt printed with Putin’s face to the EU Parliament, attempted to arrange a peace mission to Moscow with flights paid by the Russian embassy.
And Meloni’s coalition partner Silvio Berlusconi, who led the center-right Forza Italia party until his death in June, blamed Ukraine for the war and had a personal friendship with Vladimir Putin, continuing to exchange gifts with the Russian leader even after the invasion.
When she took power, there were deep, if private, fears within the White House, according to several Biden administration officials who were granted anonymity to speak candidly, that Meloni might shatter the G7 support for Ukraine.
But Meloni surprised U.S. officials at the G7 summit in Hiroshima in May with just how eager she seemed to build a strong relationship with Biden, according to two government officials who witnessed their interactions.
At the NATO summit earlier this month in Vilnius, Meloni stood just a few feet from both Biden and Ukrainian President Volodymyr Zelenskyy when the G7 nations announced additional security guarantees for Kyiv that were meant as something of a make-good after NATO declined to fast-track Ukraine’s membership.
At the NATO summit earlier this month in Vilnius, Meloni stood just a few feet from both Biden and Ukrainian President Volodymyr Zelenskyy | Odd Andersen/AFP via Getty Images
With Italy set to take over the presidency of the G7 in January, Meloni’s support for the cause has prompted sighs of relief from both sides of the Atlantic.
“The President and the Prime Minister have built a good, productive relationship as they have worked together closely on a variety of issues such as our support for Ukraine and our approach to China, and President Biden is looking forward to continuing that conversation,” said Adrienne Watson, a spokesperson for Biden’s national security council.
Pleasantly surprised
Biden has told those around him he has been pleasantly surprised by Meloni’s leadership in the war effort but is eager to get to know the Italian leader better, according to multiple administration officials.
For Alessandro Politi, Director of the NATO Defense College Foundation in Rome, Meloni “understood very quickly that when you get into government you have responsibilities and the U.S.A. is a primary ally.”
Her visit to Kyiv in February was a clear sign she was following “an orthodox path” and a moment when “she convinced the wider international community that she was in charge of the coalition and that her allies had to follow her political line.”
Meloni’s support for the Western stance does not mean the whole of Italy feels the same way.
Some populists on both the left and right of Italian politics still hold pro-Russian views, and the question of whether it’s right to send arms to Ukraine elicits fierce debate in the media. Italy’s longstanding position on Russia has always been to try to act as a bridge, facilitating good relations between East and West.
But although a majority of Italians are opposed to it, Meloni has continued to back Ukraine with military aid. Ukrainians are “defending freedom and democracy on which our civilization is based,” she told the Italian Senate in March.
While Biden and Meloni are likely to agree on Ukraine, it is not certain that they will be in harmony on all issues.
In 2019 Italy became the only G7 country to join China’s Belt and Road global infrastructure initiative. Later this year it is up for renewal, but in the new cold war climate the U.S. expects the deal to be scrapped.
While Meloni has indicated that she might not extend the agreement with Beijing, calling it “a big mistake,” this position is not yet confirmed. If she does return to the more traditional Italian line of walking a middle ground, the cracks in the Biden-Meloni relationship will open up again.
African leaders have long been reluctant to criticize Russia and now that President Vladimir Putin has killed off a deal to allow Ukraine to export grain, they know they are more dependent than ever on Moscow’s largesse to feed millions of people at risk of going hungry.
Having canceled the pact on Monday, Moscow unleashed four nights of attacks on the Ukrainian ports of Odesa and Chornomorsk — two vital export facilities — damaging the infrastructure of global and Ukrainian traders and destroying 60,000 tons of grain. In the latest assault, on Thursday night, a barrage of Kalibr missiles hit the granaries of an agricultural enterprise in Odesa.
“The decision by Russia to exit the Black Sea Grain Initiative is a stab [in] the back,” tweeted Abraham Korir Sing’Oei, a senior foreign ministry official from Kenya, one of the African countries that has received donations of Russian fertilizer in recent months.
The resulting rise in global food prices “disproportionately impacts countries in the Horn of Africa already impacted by drought,” he added.
Sing’Oei’s was a solitary voice, however. Rather than reproaching Moscow, African leaders have remained largely silent as they prepare to attend a summit hosted by Putin in St Petersburg next week. This follows an African mission led by South African President Cyril Ramaphosa last month to Kyiv and St Petersburg in a bid to broker peace.
The diplomatic stakes could hardly be higher.
Putin had been due to make a return visit to Africa next month to attend a summit of the BRICS emerging economies in Johannesburg. That trip has been called off, however, “by mutual agreement” to avoid exposing the Kremlin chief to the risk of arrest under an indictment for war crimes issued by the International Criminal Court in The Hague.
Without the Black Sea Grain Initiative, a deal brokered a year ago by the United Nations and Turkey that enabled Ukraine to export 33 million metric tons of grains and oilseeds, many African governments now have nowhere else to turn to but Russia.
“It’s going to be based on political alignments,” said Samuel Ramani, an Oxford-based academic and author of a book on Russia’s resurgent influence in Africa.
Comparing Russia’s tactics to blackmail, Ramani added: “They’re going to be offering free grain to some, they’re going to be selling to others. It’s full-fledged grain diplomacy.”
No deal
Russia said on Monday it would no longer guarantee the safety of ships passing through a transit corridor as it announced its official withdrawal from the deal, declaring the northwestern Black Sea to be once again “temporarily dangerous.” It followed up by threatening to fire on all ships going across the Black Sea to Ukrainian ports, sparking a tit-for-tat warning from Kyiv that it would do the same to all vessels sailing to Russian-controlled Black Sea ports.
Over the 12 months it functioned, the grain deal helped bring down global food prices by as much as 20 percent from the peak set in the aftermath of Russia’s full-scale invasion in February 2022. It also provided aid agencies with vital supplies.
Russia repeatedly claimed it has not seen the benefits of the three-times extended agreement, however.
Although Western sanctions carve out exemptions for food and fertilizer the Kremlin argues that sanctions targeting Russian individuals and its state agriculture bank are hindering its own exports, thus contravening a second deal agreed last July under which the U.N. committed to facilitating these exports for a three-year period.
The Kremlin said Wednesday that it would resume talks on the Black Sea grain deal only if the U.N. implements this part of the deal within the next three months.
Propaganda war
Another of Moscow’s criticisms is that cargoes of Ukrainian grain have headed mostly to rich countries; not to those in Africa and Asia bearing the brunt of the global food crisis.
Over the last year, a quarter of all the grain and oilseeds shipped under the initiative have headed to China, the largest recipient, while some 18 percent went to Spain and 10 percent to Turkey, according to U.N. data.
This is not the whole story, however. Trade data from the World Bank shows that much of the wheat exported to Turkey is processed and re-exported, as flour, pasta and other products, to Africa and the Middle East.
Most importantly, all grain that flows onto global markets reduces prices, wherever it ends up, counter the U.N. and others.
Russia has canceled the Black Sea deal and unleashed attacks on the Ukrainian ports of Odesa and Chornomorsk | Chris McGrath/Getty Images
“It is not a question of where the Black Sea food actually goes; it is a question of it [bringing] international prices down, so whether you are a rich country or poor country, you can benefit,” said Arif Husain, the U.N. World Food Programme’s chief economist, speaking at an event on the Black Sea Grain Initiative in Rome recently.
These arguments have been at the center of a months-long propaganda battle between Moscow and Kyiv over who can rightly claim to be feeding the world and who is responsible for soaring food prices.
In the aftermath of Russia’s invasion of Ukraine last year, the Kremlin’s narrative — that western sanctions are to blame — was quick to take hold in many parts of Africa.
Ukraine sought to counter this with a humanitarian food program, Grain from Ukraine, launched in November 2022, but shiploads of fertilizer donated to countries, including Malawi and Kenya, served to sweeten the Kremlin’s message.
“A true friend knows no weather. A true friend comes to the rescue when you need them the most. And you just demonstrated that to us,” Malawi’s Agriculture Minister Sam Dalitso Kawale said upon receiving a fertilizer gift from Russian firm Uralchem in March.
Feeling the pinch
Now, countries like Malawi need friends in Moscow more than ever. Not only does the end of the grain deal cut them off from flows of Ukrainian grain, leaving them dependent on Russian supplies, but it also pushes up prices.
Moscow’s withdrawal from the agreement is unlikely to have the same impact on prices as its full-scale invasion in February 2022. Over the last year, Ukraine has opened up alternative export routes and a slowdown in shipments moving under the initiative also meant commodity markets had been expecting Moscow to quit the deal.
While Ukraine can continue to export grain through alternative routes, these come with extra logistical and transport costs, squeezing prices for Ukrainian farmers, at one end, and pushing up costs for buyers, at the other.
For food-insecure countries in the Horn of Africa even a small increase in prices could spell disaster, said Shashwat Saraf, emergency director in East Africa for the International Rescue Committee (IRC).
Domestic production has dropped amid conflict and severe drought, leaving the region increasingly reliant on food imports and food aid. As such, higher food prices will hit hard, he said, adding that traders already report “feeling the pinch.”
With the cost of food rising, the IRC and other humanitarian organizations will be forced to either reduce the number of people they provide cash transfers or reduce the value of these themselves — and this at a time when the number of food insecure people is rising, said Saraf. “When we should be expanding our coverage, we will be actually reducing [it].”
Slap in the face
African leaders attending Putin’s summit next week will be silent on such issues, predicted Christopher Fomunyoh, African regional director at the U.S. National Democratic Institute for International Affairs and one of the Grain from Ukraine ambassadors appointed by Kyiv.
But they must not return empty-handed again, he said. Russia’s discontinuation of the grain deal, following the South African-led visit to St Petersburg, is a “slap in the face,” Fomunyoh told POLITICO. “Their own credibility is now at stake. And my hope is that they will have to speak out in order to not further lose credibility with their own populations.”
In 2022, Russia’s narrative was dominant in Africa, but that has slowly changed through the course of this year, he explained, adding that Africans were starting to see through Moscow’s propaganda.
“There is always a time delay,” said Fomunyoh. “But my sense is that in the days and weeks to come, people are going to see very clearly [that] the destruction of infrastructure in Odessa, the destruction of stock, wheat, and grain in Chornomorsk is contributing to scarcity and the inflation in prices.”
Kyiv is unlikely to renew a gas transit deal that allows Russia’s Gazprom to export natural gas to the EU using pipelines running across Ukraine, Energy Minister German Galushchenko told POLITICO.
The 2019 transit deals runs until the end of 2024 and allows Gazprom to export more than 40 million cubic meters of gas a year via Ukraine, which earns Kyiv about $7 billion.
“I believe, by the winter of 2024, Europe will not need Russian gas at all,” Galushchenko said in a telephone interview. “If now profits from Russian gas pay for Russia’s war of aggression against Ukraine and Gazprom’s private army, the only thing they should pay for in the future shall be reparations.”
He added that the war means “bilateral negotiations are impossible.”
The land route across Ukraine is one of only two pipeline links between Russia and the West. It still accounts for around 5 percent of the bloc’s gas imports, but that’s only a third of the prewar level.
It’s not only Ukraine that’s casting doubt on the future of gas transit.
Gazprom chief Alexei Miller warned last week his company will stop exports if Ukraine doesn’t drop its efforts to seize Russian state assets to enforce a $5 billion award for the energy infrastructure Moscow illegally expropriated when it annexed Crimea in 2014. Gazprom and Ukraine’s Naftogaz are also at loggerheads over a dispute on transit fees.
“If Naftogaz continues such unfair actions, it cannot be ruled out that the Russian Federation will impose sanctions. Then, any relations between Russian companies and Naftogaz will be simply impossible,” Miller said, according to the TASS news agency.
Despite the bombs, missiles and drones wreaking havoc on Ukrainian energy infrastructure, the web of pipelines has kept pumping gas to the EU — where it ends up mainly in Austria, Slovakia, Italy and Hungary.
Russian pipeline gas is not subject to sanctions but the European Commission has plans to end the bloc’s reliance on Moscow’s fossil fuels by 2027.
However, there is growing criticism the EU countries still using Russian gas aren’t moving fast enough to diversify. Austria’s Russian gas imports are back to prewar levels. Hungary gets around 4.5 billion cubic meters a year. In April, its government signed a deal with Gazprom to secure additional volumes.
Kyiv ending the gas deal could cause problems for those countries.
“If Ukrainian transit stops, Gazprom pipeline gas deliveries to EU countries could drop to between 10 and 16 billion cubic meters (45 to 73 percent of current levels),” said a June analysis by Columbia University’s Center on Global Energy Policy. That could leave Europe with a shortfall in 2025 before additional liquefied natural gas capacity from the U.S. and Qatar comes online.
“For Europe as a whole, it’s pretty manageable. But for some countries at the end of the pipeline, Austria, Hungary and so on, the picture is a bit different,” said Georg Zachmann, senior fellow at economic think tank Bruegel. “We’d have to see a reshuffle of physical capacities, physical flows. That might come with additional cost for them.”
It would represent a much more permanent potential break with Moscow.
“Keeping the thing alive means there’s maybe a chance in the future to go back to that. But if the flows are stopped there’s a risk it’s going to be completely dismantled, and the privilege these countries had in the past of getting access to cheap Siberian gas is going to be gone forever,” Zachmann said.
Ukraine’s long-term goal is to boost its own gas production to meet EU demand, Oleksiy Chernyshov, CEO of Naftogaz, told POLITICO in May.
The Kremlin said on Monday that a U.N.-brokered deal to allow the safe passage of Ukrainian grain exports through the Black Sea is terminated, claiming that Russia’s conditions had not been met.
“The Black Sea agreements ceased to be valid today,” Dmitry Peskov, President Vladimir Putin’s press secretary, was quoted by state news agency TASS as saying.
“As the president of the Russian Federation said earlier, the deadline is July 17. Unfortunately, the part relating to Russia in this Black Sea agreement has not been implemented so far. Therefore, its effect is terminated,” Peskov said.
“As soon as the Russian conditions are met, the Russian Federation will return to the implementation of the deal,” he said.
Russia notified the other parties of its withdrawal from the initiative in a letter sent to the Istanbul-based Joint Coordination Center, set up to monitor the deal’s implementation, a U.N. official confirmed to POLITICO.
The Black Sea grain initiative, which was first brokered by the United Nations and Turkey a year ago in the wake of Russia’s invasion of Ukraine, was last renewed on May 17 for two months. Some 33 million metric tons of grain and oilseeds have so far been exported under the deal, which has been extended three times, offering a lifeline to Ukraine’s farmers and to food-insecure countries in the Global South.
Dutch Foreign Minister Wopke Hoekstra blasted Moscow’s move, saying it threatens food prices and market stability. “It is utterly immoral that Russia continues to weaponise food,” Hoekstra said in a tweet.
‘Enough is enough’
Moscow has repeatedly said it would not agree to a further extension, claiming that it is not seeing the benefit of the pact. “Hidden” Western sanctions, the Kremlin says, are hindering Russia’s own food and fertilizer exports and thus contravening a second deal agreed last July under which the U.N. committed to facilitate these exports for a three-year period.
Last Tuesday, U.N. Secretary-General António Guterres sent a letter to Putin putting forward a compromise proposal to meet a Kremlin demand that Russia’s state agricultural bank be readmitted to the SWIFT payments system.
Two days later, however, Putin reiterated that conditions required for Russia to extend the pact had not been met. “We voluntarily extended this so-called deal many times. Many times. But listen, in the end, enough is enough,” the Russian president said in a TV interview on Thursday night.
“Russia is exporting record amounts of grain,” Ambassador Jim O’Brien, head of the State Department’s Office of Sanctions Coordination, told POLITICO ahead in an interview ahead of Monday’s announcement in Moscow.
“There’s no evidence that Russia is impeded in its exports,” he said, adding that the EU, the U.S., the U.K and U.N. have worked very closely with specific companies said to be facing difficulties to address their concerns.
Last ship
The last ship to travel under the pact left Ukraine’s Odesa port on Sunday morning, according to Reuters. In the run-up to the July 17 deadline, the number of shipments had fallen — dropping to 1.3 million metric tons in May from 4.2 million last October — while no new vessels have been registered under the initiative since the end of June.
Kyiv, which accuses Moscow of sabotaging the deal, is readying alternative routes to export its grain and oilseed crops.
Aid agencies, meanwhile, are bracing for the impact of the deal’s end on global food prices, which they say will hit the world’s most vulnerable in food-insecure countries the hardest.
Wheat prices rose 3 percent on Monday, bringing cumulative gains since the middle of last week to 12 percent, said Carlos Mera, head of agricultural commodities markets at Rabobank. Without the deal, Ukraine will have to export most of its grain and oilseeds via the Danube river, driving up transport and logistics cost and pushing down prices for farmers, who may subsequently plant less, he said.
“This situation means poor countries in Africa and the Middle East will be more dependent on Russian wheat,” said Mera.
Russia’s withdrawal from the initiative “would make it solely responsible for a devastating blow to global grain security,” said O’Brien. “President Putin is well aware that if he chooses to impede or end this arrangement, that he’ll be causing a great deal of trouble for the Global South.”
Beijing — U.S. Treasury Secretary Janet Yellen, in Beijing for meetings with top Chinese officials and American companies that do business in the country, said the U.S. welcomes healthy economic competition with China, but only if it’s fair. Yellen also said she was concerned about new export controls announced by China on two critical minerals used in technologies like semiconductors.
“We are still evaluating the impact of these actions,” she said, “but they remind us of the importance of diversified supply chains.”
Her message to company representatives, including from corporate giants such as Boeing and Bank of America that have significant operations in China, was that the U.S. government understands it’s not been an easy time.
“I’ve been particularly troubled by punitive actions that have been taken against U.S. firms,” the Treasury chief said, referring to raids carried out in the spring by police on three companies that the Chinese government — without offering any evidence — said were suspected of spying.
But in spite of some friction and chilly Beijing-Washington relations overall, U.S.-China trade is booming. It reached an all-time high in 2022, with everything from iPhones to solar panels and soybeans creating an eye-watering $700 billion in trade.
At that level, the economic ties are crucial to both countries, and as Yellen told the second-most powerful man in China on Friday afternoon, they need protecting.
Chinese Premier Li Qiang shakes hands with U.S. Treasury Secretary Janet Yellen during a meeting at the Great Hall of the People in Beijing, China, July 7, 2023.
MARK SCHIEFELBEIN/POOL/AFP/Getty
She defended “targeted actions” taken by the U.S., a reference to limits on the export of some advanced processor chips and other high-tech goods to China, saying they were necessary for national security reasons.
“You may disagree,” she told Chinese Premier Li Qiang. “But we should not allow any disagreement to lead to misunderstandings that needlessly worsen our bilateral economic and financial relationships.”
China’s Finance Ministry said in a statement Friday that it hoped the U.S. would take “concrete actions” to improve the two countries’ economic and trade ties going forward, stressing that there would be “no winners” in a trade war or from the two massive economies “decoupling.”
Li, who had met Yellen previously, seemed to be in a receptive mood, telling Yellen in welcoming remarks that a rainbow had appeared as her plane landed from the U.S., and “there is more to China-U.S. relations than just wind and rain. We will surely see more rainbows.”
The goal of Yellen’s trip is to pave the way for more bilateral talks, but she has a tough message to deliver, too: That the U.S. is not prepared to soften its stance on some of the things the Chinese are most angry about, including the controls on the sale of sophisticated U.S. technology to China.
Elizabeth Palmer has been a CBS News correspondent since August 2000. She has been based in London since late 2003, after having been based in Moscow (2000-03). Palmer reports primarily for the “CBS Evening News.”
New Delhi — China’s Xi Jinping urged the leaders of Russia, Iran and other allied allies to boost ties and resist Western sanctions on Tuesday as the leaders of the Shanghai Cooperation Organization met virtually for a summit hosted by India. The Shanghai alliance encompasses a vast stretch of the globe from Moscow to Beijing and includes around half the world’s population when observer and “dialogue partner” nations are included.
Alongside Russia, China, India and brand-new member Iran, the other full members of the trade and security alliance are Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan. Russian ally Belarus, which holds observer status, was also told it would become a member at the next SCO summit.
Below are some of the main points made by the bloc’s leaders on Tuesday, and what’s behind them.
Putin thanks allies for support during “rebellion”
Russian President Vladimir Putin thanked his Shanghai organization partners for their support during a brief, failed mutiny staged by the head of the Wagner mercenary group. Putin spoke via video link at the meeting, which was his first summit since Yevgeny Prigozhin ordered units from his private army — which has been a key component in Russia’s war in Ukraine for a year — to march on Moscow after accusing Russia’s military commanders of treason and ineptitude.
“Russia is confidently resisting and will continue to resist external pressure, sanctions and provocations,” Putin said, adding his thanks to the other SCO nations for their support during the Wagner putsch attempt, which he previously labelled a “rebellion.”
“I would like to thank my colleagues from the SCO countries who expressed support for the actions of the Russian leadership to protect the constitutional order and the life and security of citizens,” he said.
China and Russia have in recent years ramped up economic cooperation and diplomatic contacts, with their strategic partnership having only grown closer since Moscow’s invasion of Ukraine last year.
China wants to “ensure common security”
During the virtual meeting, Xi “called for efforts to safeguard regional peace and ensure common security,” China‘s state news agency Xinhua said, adding that he urged SCO member states to “enhance their solidarity.”
While China says it is a neutral party to the Ukraine conflict, it has been criticized by Western nations for refusing to condemn Moscow’s offensive, and accused by current and former U.S. officials of supporting Putin’s war effort by buying more Russian energy and other goods since the invasion began.
“We must be highly vigilant against external forces fomenting a ‘new Cold War’ and creating confrontation in the region, and resolutely oppose any country interfering in internal affairs and staging a ‘color revolution’ for any reason,” Xi said, referring to pro-Western popular uprisings in Eastern Europe in recent decades — most notably in Ukraine.
“Strengthening unity” with Iran
Iran joined the Shanghai Cooperation Organization as a full member on Tuesday, with Tehran having intensified its diplomacy with friends and foes alike in recent months, seeking to reduce its isolation, improve its economy and project strength.
Tehran’s membership will support “collective security… expanding ties and communications (and) strengthening unity,” Iranian President Ebrahim Raisi said.
Iran‘s membership will feed concerns of some Western critics who worry about “Russia, China, Pakistan and Iran coming together, so there is a collection of countries that are inherently anti-Western in their orientation,” said Harsh V. Pant, a professor at King’s College London. But he added that the SCO was not that organization.
“If this kind of an axis is to be formed, it will be formed independent of the SCO, because the Central Asians and countries like India do not see SCO as inherently anti-West,” Pant told AFP.
India’s Prime Minister Narendra Modi warned of the risk of Afghanistan serving as a base to “spread instability,” while his Pakistani counterpart Shehbaz Sharif called for an “urgent reset” in international engagement with Afghanistan’s Taliban rulers.
Since retaking power over Afghanistan when the U.S. and its allies withdrew in the summer of 2021, the hard-line Islamic Taliban movement has robbed women and girls of virtually every right they’d gained in the 20 years since they were last ousted from power by the U.S.-led invasion.
The group’s draconian policies and rampant human rights abuses have seen their de-facto Afghan government all but cut off from most of the world, with millions of dollars in cash reserves frozen and the a long list of sanctions in place. The circumstances for the Afghan people, meanwhile, have deteriorated significantly, with
Uniquely, it is a member of both the Shanghai Cooperation Organization and “The Quad,” a small cooperative group set up with the United States, Japan and Australia to counter Beijing’s growing assertiveness.
