Tag: sanctions

Inside the deal: How Boris Johnson’s departure paved the way for a grand Brexit bargain

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LONDON — It was clear when Boris Johnson was forced from Downing Street that British politics had changed forever.
But few could have predicted that less than six months later, all angry talk of a cross-Channel trade war would be a distant memory, with Britain and the EU striking a remarkable compromise deal over post-Brexit trade rules in Northern Ireland.
Private conversations with more than a dozen U.K. and EU officials, politicians and diplomats reveal how the Brexit world changed completely after Johnson’s departure — and how an “unholy trinity” of little-known civil servants, ensconced in a gloomy basement in Brussels, would mastermind a seismic shift in Britain’s relationship with the Continent.

They were aided by an unlikely sequence of political events in Westminster — not least an improbable change of mood under the combative Liz Truss; and then the jaw-dropping rise to power of the ultra-pragmatic Rishi Sunak. Even the amiable figure of U.K. Foreign Secretary James Cleverly would play his part, glad-handing his way around Europe and smoothing over cracks that had grown ever-wider since 2016.
As Sunak’s Conservative MPs pore over the detail of his historic agreement with Brussels — and await the all-important verdict of the Democratic Unionist Party of Northern Ireland — POLITICO has reconstructed the dramatic six-month shift in Britain’s approach that brought us to the brink of the Brexit deal we see today.
Bye-bye Boris
Johnson’s departure from Downing Street, on September 6, triggered an immediate mood shift in London toward the EU — and some much-needed optimism within the bloc about future cross-Channel relations.
For key figures in EU capitals, Johnson would always be the untrustworthy figure who signed the protocol agreement only to disown it months afterward.
In Paris, relations were especially poisonous, amid reports of Johnson calling the French “turds”; endless spats with the Elysée over post-Brexit fishing rights, sausages and cross-Channel migrants; and Britain’s role in the AUKUS security partnership, which meant the loss of a multi-billion submarine contract for France. Paris’ willingness to engage with Johnson was limited in the extreme.
Truss, despite her own verbal spats with French President Emmanuel Macron — and her famously direct approach to diplomacy — was viewed in a different light. Her success at building close rapport with negotiating partners had worked for her as trade secretary, and once she became prime minister, she wanted to move beyond bilateral squabbles and focus on global challenges, including migration, energy and the war in Ukraine.
“Boris had become ‘Mr. Brexit,’” one former U.K. government adviser said. “He was the one the EU associated with the protocol, and obviously [Truss] didn’t come with the same baggage. She had covered the brief, but she didn’t have the same history. As prime minister, Liz wanted to use her personal relationships to move things on — but that wasn’t the same as a shift in the underlying substance.”
Indeed, Truss was still clear on the need to pass the controversial Northern Ireland Protocol Bill, which would have given U.K. ministers powers to overrule part of the protocol unilaterally, in order to ensure leverage in the talks with the European Commission.
Truss also triggered formal dispute proceedings against Brussels for blocking Britain’s access to the EU’s Horizon Europe research program. And her government maintained Johnson’s refusal to implement checks on goods entering Northern Ireland from Great Britain, causing deep irritation in Brussels.
But despite the noisy backdrop, tentative contact with Brussels quietly resumed in September, with officials on both sides trying to rebuild trust. Truss, however, soon became “very disillusioned by the lack of pragmatism from the EU,” one of her former aides said.
“The negotiations were always about political will, not technical substance — and for whatever reason, the political will to compromise from the Commission was never there when Liz, [ex-negotiator David] Frost, Boris were leading things,” they said.
Former British Prime Minister Liz Truss announces her resignation outside 10 Downing Street in central London on October 20, 2022 | Daniel Leal/AFP via Getty Images
Truss, of course, would not be leading things for long. An extraordinary meltdown of the financial markets precipitated her own resignation in late October, after just six weeks in office. Political instability in Westminster once again threatened to derail progress.
But Sunak’s arrival in No. 10 Downing Street — amid warnings of a looming U.K. recession — gave new impetus to the talks. An EU official said the mood music improved further, and that discussions with London became “much more constructive” as a result.
David Lidington, a former deputy to ex-PM Theresa May who played a key role in previous Brexit negotiations, describes Sunak as a “globalist” rather than an “ultra-nationalist,” who believes Britain ought to have “a sensible, friendly and grown-up relationship” with Brussels outside the EU.
During his time as chancellor, Sunak was seen as a moderating influence on his fellow Brexiteer Cabinet colleagues, several of whom seemed happy to rush gung-ho toward a trade war with the EU.
“Rishi has always thought of the protocol row as a nuisance, an issue he wanted to get dealt with,” the former government adviser first quoted said.
One British official suggested the new prime minister’s reputation for pragmatism gave the U.K. negotiating team “an opportunity to start again.”
Sunak’s slow decision-making and painstaking attention to detail — the subject of much criticism in Whitehall — proved useful in calming EU jitters about the new regime, they added.
“When he came in, it wasn’t just the calming down of the markets. It was everyone across Europe and in the U.S. thinking ‘OK, they’re done going through their crazy stage,’” the same official said. “It’s the time he takes with everything, the general steadiness.”
EU leaders “have watched him closely, they listened to what he said, and they have been prepared to trust him and see how things go,” Lidington noted.
Global backdrop
As months of chaos gave way to calm in London, the West was undergoing a seismic reorganization.
Russia’s large-scale invasion of Ukraine triggered a flurry of coordinated work for EU and U.K. diplomats — including sanctions, military aid, reconstruction talks and anti-inflation packages. A sense began to emerge that it was in both sides’ common interest to get the Northern Ireland protocol row out of the way.
“The war in Ukraine has completely changed the context over the last year,” an EU diplomat said.
A second U.K. official agreed. “Suddenly we realized that the 2 percent of the EU border we’d been arguing about was nothing compared to the massive border on the other side of the EU, which Putin was threatening,” they said. “And suddenly there wasn’t any electoral benefit to keeping this row over Brexit going — either for us or for governments across the EU.”
A quick glance at the electoral calendar made it clear 2023 offered the last opportunity to reach a deal in the near future, with elections looming for both the U.K. and EU parliaments the following year — effectively putting any talks on ice.
“Rishi Sunak would have certainly been advised by his officials that come 2024, the EU is not going to be wanting to take any new significant initiatives,” Lidington said. “And we will be in election mode.”
The upcoming 25th anniversary of the Belfast/Good Friday peace agreement on April 10 heaped further pressure on the U.K. negotiators, amid interest from U.S. President Joe Biden in visiting Europe to mark the occasion.
“The anniversary was definitely playing on people’s minds,” the first U.K. official said. “Does [Sunak] really want to be the prime minister when there’s no government in Northern Ireland on the anniversary of the Belfast/Good Friday Agreement?”
The pressure was ramped up further when Biden specifically raised the protocol in a meeting with Truss at the U.N. General Assembly in New York in late September, after which British officials said they expected the 25th anniversary to act as a “key decision point” on the dispute.
The King and I
Whitehall faced further pressure from another unlikely source — King Charles III, who was immediately planning a state visit to Paris within weeks of ascending the throne in September 2022. Truss had suggested delaying the visit until the protocol row was resolved, according to two European diplomats.
The monarch is now expected to visit Paris and Berlin at the end of March — and although his role is strictly apolitical, few doubt he is taking a keen interest in proceedings. He has raised the protocol in recent conversations with European diplomats, showing a close engagement with the detail.
One former senior diplomat involved in several of the king’s visits said that Charles has long held “a private interest in Ireland, and has wanted to see if there was an appropriately helpful role he could play in improving relations [with the U.K].”
By calling the deal the Windsor framework and presenting it at a press conference in front of Windsor Castle, one of the king’s residences, No. 10 lent Monday’s proceedings an unmistakable royal flavor.
The king also welcomed von der Leyen for tea at the castle following the signing of the deal. A Commission spokesperson insisted their meeting was “separate” from the protocol discussion talks. Tory MPs were skeptical.
Cleverly does it
The British politician tasked with improving relations with Brussels was Foreign Secretary Cleverly, appointed by Truss last September. He immediately began exploring ways to rebuild trust with Commission Vice-President and Brexit point-man Maroš Šefčovič, the second U.K. official cited said.
His first hurdle was a perception in Brussels that the British team had sabotaged previous talks by leaking key details to U.K. newspapers and hardline Tory Brexiteers for domestic political gain. As a result, U.K. officials made a conscious effort to keep negotiations tightly sealed, a No. 10 official said.
“The relationship with Maroš improved massively when we agreed not to carry out a running commentary” on the content of the discussions, the second U.K. official added.
This meant keeping key government ministers out of the loop, including Northern Ireland Minister Steve Baker, an arch-Brexiteer who had been brought back onto the frontbench by Truss.
British Foreign Secretary James Cleverly is welcomed by European Commission Vice-President Maroš Šefčovič ahead of a meeting at the EU headquarters in Brussels on February 17, 2023 | Kenzo Tribouillard/AFP via Getty Images
The first U.K. official said Baker would have “felt the pain,” as he had little to offer his erstwhile backbench colleagues looking for guidance while negotiations progressed, “and that was a choice by No. 10.”
Cleverly and Šefčovič “spent longer than people think just trying to build rapport,” the second U.K. official said, with Cleverly explaining the difficulties the protocol was raising in Northern Ireland and Šefčovič insistent that key economic sectors were in fact benefiting from the arrangement.
Cleverly also worked at the bilateral relationship with German Foreign Minister Annalena Baerbock, while Sunak made efforts to improve ties with French President Emmanuel Macron, Lidington noted.
A British diplomat based in Washington said Cleverly had provided “a breath of fresh air” after the “somewhat stiff” manner of his predecessors, Truss and the abrasive Dominic Raab.
By the Conservative party conference in early October, the general mood among EU diplomats in attendance was one of expectation. And the Birmingham jamboree did not disappoint.
Sorry is the hardest word
Baker, who had once described himself as a “Brexit hard man,” stunned Dublin by formally apologizing to the people of Ireland for his past comments, just days before technical talks between the Commission and the U.K. government were due to resume.
“I caused a great deal of inconvenience and pain and difficulty,” he said. “Some of our actions were not very respectful of Ireland’s legitimate interests. I want to put that right.”
The apology was keenly welcomed in Dublin, where Micheál Martin, the Irish prime minister at the time, called it “honest and very, very helpful.”
Irish diplomats based in the U.K. met Baker and other prominent figures from the European Research Group of Tory Euroskeptics at the party conference, where Baker spoke privately of his “humility” and his “resolve” to address the issues, a senior Irish diplomat said.
“Resolve was the keyword,” the envoy said. “If Steve Baker had the resolve to work for a transformation of relationships between Ireland and the U.K., then we thought — there were tough talks to be had — but a sustainable deal was now a possibility.”
There were other signs of rapprochement. Just a few hours after Baker’s earth-shattering apology, Truss confirmed her attendance at the inaugural meeting in Prague of the European Political Community, a new forum proposed by Macron open to both EU and non-EU countries.
Sunak at the wheel
The momentum snowballed under Sunak, who decided within weeks of becoming PM to halt the passage of the Northern Ireland Protocol Bill in the House of Lords, reiterating Britain’s preference for a negotiated settlement. In exchange, the Commission froze a host of infringement proceedings taking aim at the way the U.K. was handling the protocol. This created space for talks to proceed in a more cordial environment.
An EU-U.K. agreement in early January allowed Brussels to start using a live information system detailing goods moving from Great Britain to Northern Ireland, seen as key to unlocking a wider agreement on physical checks under the protocol.
The U.K. also agreed to conduct winter technical negotiations in Brussels, rather than alternating rounds between the EU capital and London, as was the case when Frost served as Britain’s chief negotiator.
Trust continued to build. Suddenly the Commission was open to U.K. solutions such as the “Stormont brake,” a clause giving the Northern Ireland Assembly power of veto over key protocol machinations, which British officials did not believe Brussels would accept when they first pitched them.
The Stormont brake was discussed “relatively early on,” a third U.K. official said. “Then we spent a huge amount of effort making sure nobody knew about it. It was kept the most secret of secret things.”
Yet a second EU diplomat claimed the ideas in the deal were not groundbreaking and could have been struck “years ago” if Britain had a prime minister with enough political will to solve the dispute. “None of the solutions that have been found now is revolutionary,” they said.
An ally of Johnson described the claim he was a block on progress as “total nonsense.”
The ‘unholy trinity’
Away from the media focus, a group of seasoned U.K. officials began to engage with their EU counterparts in earnest. But there was one (not so) new player in town.
Tim Barrow, a former U.K. permanent representative to the EU armed with a peerless contact book, had been an active figure in rebuilding relations with the bloc since Truss appointed him national security adviser. He acquired a more prominent role in the protocol talks after Sunak dispatched him to Brussels in January 2023, hoping EU figures would see him as “almost one of them,” another adviser to Sunak said.
Ensconced in the EU capital, Barrow and his U.K. team of negotiators took over several meeting rooms in the basement of the U.K. embassy, while staffers were ordered to keep quiet about their presence.
Besides his work on Northern Ireland trade, Barrow began to appear in meetings with EU representatives about other key issues creating friction in the EU-U.K. relationship, including discussions on migration alongside U.K. Home Secretary Suella Braverman.
Barrow “positioned himself very well,” the first EU diplomat quoted above said. “He’s very close to the prime minister — everybody in Brussels and London knows he’s got his ear. He’s very knowledgeable while very political.”
But other British officials insist Barrow’s presence was not central to driving through the deal. “He has been a figure, but not the only figure,” the U.K. adviser quoted above said. “It’s been a lot of people, actually, over quite a period of time.”
When it came to the tough, detailed technical negotiations, the burden fell on the shoulders of Mark Davies — the head of the U.K. taskforce praised for his mastery of the protocol detail — and senior civil servant and former director of the Northern Ireland Office, Brendan Threlfall.
The three formed an “unholy trinity,” as described by the first U.K. official, with each one bringing something to the table.
Davies was “a classic civil servant, an unsung hero,” the official said, while Threlfall “has good connections, good understanding” and “Tim has met all the EU interlocutors over the years.”
Sitting across the table, the EU team was led by Richard Szostak, a Londoner born to Polish parents and a determined Commission official with a great CV and an affinity for martial arts. His connection to von der Leyen was her deputy head of cabinet until recently, Stéphanie Riso, a former member of Brussels’ Brexit negotiating team who developed a reputation for competence on both sides of the debate.
Other senior figures at the U.K. Cabinet Office played key roles, including Cabinet Secretary Simon Case and senior official Sue Gray.
The latter — a legendary Whitehall enforcer who adjudicated over Johnson’s “Partygate” scandal — has a longstanding connection to Northern Ireland, famously taking a career break in the late 1980s to run a pub in Newry, where she has family links. More recently, she spent two years overseeing the finance ministry.
Gray has been spotted in Stormont at crunch points over the past six months as Northern Ireland grapples with the pain of the continued absence of an executive.
Some predict Gray could yet play a further role, in courting the Democratic Unionist Party as the agreement moves forward in the weeks ahead.
For U.K. and EU officials, the agreement struck with Brussels represented months of hard work — but for Sunak and his Cabinet colleagues, the hardest yards may yet lie ahead.
This story was updated to clarify two parts of the sourcing.

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( With inputs from : www.politico.eu )

February 21, 2023
Western firms say they’re quitting Russia. Where’s the proof?

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BERLIN — In an earlier life as a reporter in Moscow, I once knocked on the door of an apartment listed as the home address of the boss of company that, our year-long investigation showed, was involved in an elaborate scheme to siphon billions of dollars out of Russia’s state railways through rigged tenders.
To my surprise, the man who opened the door wore only his underwear. He confirmed that his identity had been used to register the shell company. But he wasn’t a businessman; he was a chauffeur. The real owner, he told us, was his boss, one of the bankers we suspected of masterminding the scam. “Mr. Underpants,” as we called him, was amazed that it had taken so long for anyone to take an interest.
Mr. Underpants leapt immediately to mind when, nearly a decade on, I learned that a sulfurous academic dispute had erupted over whether foreign companies really are bailing out of Russia in response to President Vladimir Putin’s invasion of Ukraine and subsequent international sanctions.

Attempting to verify corporate activity in Russia — a land that would give the murkiest offshore haven a run for its money — struck me as a fool’s errand. Company operations are habitually hidden in clouds of lies, false paperwork and bureaucratic errors. What a company says it does in Russia can bear precious little resemblance to reality.
So, who are the rival university camps trying to determine whether there really is a corporate exodus from Russia?
In the green corner (under the olive banner of the University of St. Gallen in Switzerland) we have economist Simon Evenett and Niccolò Pisani of the IMD business school in Lausanne. On January 13, they released a working paper which found that less than 9 percent of Western companies (only 120 firms all told) had divested from Russia. Styling themselves as cutting through the hype of corporate self-congratulation, the Swiss-based duo said their “findings challenge the narrative that there is a vast exodus of Western firms leaving the market.”
Nearly 4,000 miles away in New Haven, Connecticut, the Swiss statement triggered uproar in Yale (the blue corner). Jeffrey A. Sonnenfeld, from the university’s school of management, took the St. Gallen/IMD findings as an affront to his team’s efforts. After all, the headline figure from a list compiled by Yale of corporate retreat from Russia is that 1,300 multinationals have either quit or are doing so. In a series of attacks, most of which can’t be repeated here, Sonnenfeld accused Evenett and Pisani of misrepresenting and fabricating data.
Responding, the deans of IMD and St. Gallen issued a statement on January 20 saying they were “appalled” at the way Sonnenfeld had called the rigor and veracity of their colleagues’ work into question. “We reject this unfounded and slanderous allegation in the strongest possible terms,” they wrote.
Sonnenfeld doubled down, saying the Swiss team was dangerously fueling “Putin’s false narrative” that companies had never left and Russia’s economy was resilient.
That led the Swiss universities again to protest against Sonnenfeld’s criticism and deny political bias, saying that Evenett and Pisani have “had to defend themselves against unsubstantiated attacks and intimidation attempts by Jeff Sonnenfeld following the publication of their recent study.”
How the hell did it all get so acrimonious?
Let’s go back a year.
The good fight
Within weeks of the February 24 invasion, Sonnenfeld was attracting fulsome coverage in the U.S. press over a campaign he had launched to urge big business to pull out of Russia. His team at Yale had, by mid-March, compiled a list of 300 firms saying they would leave that, the Washington Post reported, had gone “viral.”
Making the case for ethical business leadership has been Sonnenfeld’s stock in trade for over 40 years. To give his full job titles, he’s the Senior Associate Dean for Leadership Studies & Lester Crown Professor in the Practice of Management at the Yale School of Management, as well as founder and president of the Chief Executive Leadership Institute, a nonprofit focused on CEO leadership and corporate governance.
And, judging by his own comments, Sonnenfeld is convinced of the importance of his campaign in persuading international business leaders to leave Russia: “So many CEOs wanted to be seen as doing the right thing,” Sonnenfeld told the Post. “It was a rare unity of patriotic mission, personal values, genuine concern for world peace, and corporate self-interest.”
Fast forward to November, and Sonnenfeld is basking in the glow of being declared an enemy of the Russian state, having been added to a list of 25 U.S. policymakers and academics barred from the country. First Lady Jill Biden topped the list, but Sonnenfeld was named in sixth place which, as he told Bloomberg, put him “higher than [Senate minority leader] Mitch McConnell.”
Apparently less impressed, the Swiss team had by then drafted a first working paper, dated October 18, challenging Sonnenfeld’s claims of a “corporate exodus” from Russia. This paper, which was not published, was circulated by the authors for review. After receiving a copy (which was uploaded to a Yale server), Sonnenfeld went on the attack.
Apples and oranges
Before we dive in, let’s take a step back and look at what the Yale and Swiss teams are trying to do.
Sonnenfeld is working with the Kyiv School of Economics (KSE), which launched a collaborative effort to track whether companies are leaving Russia by monitoring open sources, such as regulatory filings and news reports, supported where possible through independent confirmation.
Kyiv keeps score on its Leave Russia site, which at the time of writing said that, of 3,096 companies reviewed, 196 had already exited and a further 1,163 had suspended operations.
Evenett and Pisani are setting a far higher bar, seeking an answer to the binary question of whether a company has actually ditched its equity. It’s not enough to announce you are suspending operations, you have to fully divest your subsidiary and assets such as factories or stores. This is, of course, tough. Can you find a buyer? Will the Russians block your sale?
The duo focuses only on companies based in the G7 or the European Union that own subsidiaries in Russia. Just doing business in Russia doesn’t count; control is necessary. To verify this, they used a business database called ORBIS, which contains records of 400 million companies worldwide.
The first thought to hold onto here, then, is that the scope and methodology of the Yale and Swiss projects are quite different — arguably they are talking about apples and oranges. Yale’s apple cart comprises foreign companies doing business in Russia, regardless of whether they have a subsidiary there. The Swiss orange tree is made up of fewer than half as many foreign companies that own Russian subsidiaries, and are themselves headquartered in countries that have imposed sanctions against the Kremlin.
So, while IKEA gets an ‘A’ grade on the Yale list for shutting its furniture stores and letting 10,000 Russian staff go, it hasn’t made the clean equity break needed to get on the St. Gallen/IMD leavers’ list. The company says “the process of scaling down the business is ongoing.” If you simply have to have those self-assembly bookshelves, they and other IKEA furnishings are available online.
The second thing to keep in mind is that ORBIS aggregates records in Russia, a country where people are willing to serve as nominee directors in return for a cash handout — even a bottle of vodka. Names are often mistranslated when local companies are established — transliteration from Russian to English is very much a matter of opinion — but this can also be a deliberate ruse to throw due diligence sleuths off the trail.
Which takes us back to the top of this story: I’ve done in-depth Russian corporate investigations and still have the indelible memory of those underpants (they were navy blue briefs) to show for it.
Stacking up the evidence
The most obvious issue with the Yale method is that it places a lot of emphasis on what foreign companies say about whether they are pulling out of Russia.
There is an important moral suasion element at play here. Yale’s list is an effective way to name and shame those companies like Unilever and Mondelez — all that Milka chocolate — that admit they are staying in Russia.
But what the supposed good kids — who say they are pulling out — are really up to is a murkier business. Even if a company is an A-grade performer on the Yale list, that does not mean that Russia’s economy is starved of those goods during wartime. There can be many reasons for this. Some companies will rush out a pledge to leave, then dawdle. Others will redirect goods to Russia through middlemen in, say, Turkey, Dubai or China. Some goods will be illegally smuggled. Some companies will have stocks that last a long time. Others might hire my old friend Mr. Underpants to create an invisible corporate structure.
A stroll through downtown Moscow reveals the challenges. Many luxury brands have conspicuously shut up shop but goods from several companies on the Yale A list and B list (companies that have suspended activities in Russia) were still easy to find on one, totally random, shopping trip. The latest Samsung laptops, TVs and phones were readily available, and the shop reported no supply problems. Swatch watches, Jägermeister liquor and Dr. Oetker foods were all also on sale in downtown Moscow, including at the historic GUM emporium across Red Square from the Kremlin.
Swatch watches, Jägermeister liquor and Dr. Oetker foods can all be bought in downtown Moscow, including at the historic GUM emporium across Red Square from the Kremlin | POLITICO
All the companies involved insisted they had ended business in Russia, but acknowledged the difficulties of continued sales. Swatch said the watches available would have to be from old stocks or “a retailer over which the company has no control.” Dr. Oetker said: “To what extent individual trading companies are still selling stocks of our products there is beyond our knowledge.” Jägermeister said: “Unfortunately we cannot prevent our products being purchased by third parties and sold on in Russia without our consent or permission.” Samsung Electronics said it had suspended Russia sales but continued “to actively monitor this complex situation to determine our next steps.”
The larger problem emerging is that sanctions are turning neighboring countries into “trading hubs” that allow key foreign goods to continue to reach the Russian market, cushioning the economic impact.
Full departure can also be ultra slow for Yale’s A-listers. Heineken announced in March 2022 it was leaving Russia but it is still running while it is “working hard to transfer our business to a viable buyer in very challenging circumstances.” It was also easy to find a Black & Decker power drill for sale online from a Russian site. The U.S. company said: “We plan to cease commerce by the end of Q2 of this year following the liquidation of our excess and obsolete inventory in Russia. We will maintain a legal entity to conduct any remaining administrative activities associated with the wind down.”
And those are just consumer goods that are easy to find! Western and Ukrainian security services are naturally more preoccupied about engineering components for Putin’s war machine still being available through tight-lipped foreign companies. Good luck trying to track their continued sales …
Who’s for real?
Faced with this gray zone, St. Gallen/IMD sought to draw up a more black-and-white methodology.
To reach their conclusions, Evenett and Pisani downloaded a list of 36,000 Russian companies from ORBIS that reported at least $1 million in sales in one of the last five years. Filtering out locally owned businesses and duplicate entries whittled down the number of owners of the Russian companies that are themselves headquartered in the G7 or EU to a master list of 1,404 entities. As of the end of November, the authors conclude, 120 companies — or 8.5 percent of the total — had left.
The Swiss team was slow, however, to release its list of 1,404 companies and, once Sonnenfeld gained access to it, he had a field day. He immediately pointed out that it was peppered with names of Russian businesses and businessmen, whom ORBIS identified as being formally domiciled in an EU or G7 country. Sonnenfeld fulminated that St. Gallen/IMD were producing a list of how few Russian companies were quitting Russia, rather than how few Western companies were doing so.
“That hundreds of Russian oligarchs and Russian companies constitute THEIR dataset of ‘1,404 western companies’ is egregious data misrepresentation,” Sonnenfeld wrote in one of several emails to POLITICO challenging the Swiss findings.
Fair criticism? Well, Sonnenfeld’s example of Yandex, the Russian Google, on the list of 1,404 is a good one. Naturally, that’s a big Russian company that isn’t going to leave Russia.
On the other hand, its presence on the list is explicable as it is based in the Netherlands, and is reported to be seeking Putin’s approval to sell its Russian units. “Of course, a large share of Yandex customers and staff are Russian or based in Russia. However, the company has offices in seven countries, including Switzerland, Israel, the U.S., China, and others. What criteria should we use to decide if it is Russian or not for the purpose of our analysis?” St. Gallen/IMD said in a statement.
Answering Sonnenfeld’s specific criticism that its list was skewed by the inclusion of Russian-owned companies, the Swiss team noted that it had modified its criteria to exclude companies based in Cyprus, a favored location for Russian entrepreneurs thanks to its status as an EU member country and its business-friendly tax and legal environment. Yet even after doing so, its conclusions remained similar.
Double knockout
Sonnenfeld, in his campaign to discredit the Swiss findings, has demanded that media, including POLITICO, retract their coverage of Evenett and Pisani’s work. He took to Fortune magazine to call their publication “a fake pro-Putin list of Western companies still doing business in Russia.”
Although he believes Evenett and Pisani’s “less than 9 percent” figure for corporates divesting equity is not credible, he bluntly declined, when asked, to provide a figure of his own.
Instead, he has concentrated on marshaling an old boys’ network — including the odd ex-ambassador — to bolster his cause. Richard Edelman, head of the eponymous public relations outfit, weighed in with an email to POLITICO: “This is pretty bad[.] Obvious Russian disinformation[.] Would you consider a retraction?” he wrote in punctuation-free English. “I know Sonnenfeld well,” he said, adding the two had been classmates in college and business school.
Who you were at school with hardly gets to the heart of what companies are doing in Russia, and what the net effect is on the Russian economy.
The greater pity is that this clash, which falls miles short of the most basic standards of civil academic discourse, does a disservice to the just cause of pressuring big business into dissociating itself from Putin’s murderous regime.
And, at the end of the day, estimates of the number of companies that have fully left Russia are in the same ballpark: The Kyiv School of Economics puts it at less than 200; the Swiss team at 120.
To a neutral outsider, it would look like Sonnenfeld and his mortal enemies are actually pulling in the same direction, trying to work out whether companies are really quitting. Yet both methodologies are problematic. What companies and databases say offers an imprecise answer to the strategic question: What foreign goods and services are available to Russians? Does a year of war mean no Samsung phones? No. Does it mean Heineken has sold out? Not yet, no.
This has now been submerged in a battle royal between Sonnenfeld and the Swiss researchers.
Appalled at his attacks on their work, St. Gallen and IMD finally sent a cease-and-desist letter to Sonnenfeld.
Yale Provost Scott Strobel is trying to calm the waters. In a letter dated February 6 and seen by POLITICO, he argued that academic freedom protected the speech of its faculty members. “The advancement of knowledge is best served when scholars engage in an open and robust dialogue as they seek accurate data and its best interpretation,” Strobel wrote. “This dialogue should be carried out in a respectful manner that is free from ad hominem attacks.”
With reporting by Sarah Anne Aarup, Nicolas Camut, Wilhelmine Preussen and Charlie Duxbury.
Douglas Busvine is Trade and Agriculture Editor at POLITICO Europe. He was posted with Reuters to Moscow from 2004-08 and from 2011-14.

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( With inputs from : www.politico.eu )

February 21, 2023
Baltics and Poland push to make sanctioning oligarchs’ associates easier

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The Baltic states and Poland want to make it easier to sanction the family members and entourage of Russia’s richest men and women but are facing resistance from Hungary, several EU diplomats told POLITICO.
Under its current rules, the EU can freeze the assets and impose visa bans on “leading businesspersons operating in Russia.” Lithuania, Latvia, Estonia and Poland now want to expand this definition, according to their proposal seen by POLITICO, to include “their immediate family members, or other natural persons, benefitting from them.”
The EU has sanctioned more than 1,400 people in relation to Russia’s activities in Ukraine, many of who are Russian oligarchs. An additional 96 people could be added to the EU’s next sanctions package, draft documents seen by POLITICO indicate. Including oligarchs’ family members and other associates of oligarchs would make it possible to sanctions thousands more people without having to prove that they are directly involved in the war in Ukraine or acting in the economic interest of the Russian state.
This could, for example, apply to the ex-wife of Russian President Vladimir Putin, Lyudmila Ocheretnaya, whose daughters have been sanctioned but has not been herself, and other members of the oligarchs’ entourage.
While some countries had doubts, legal experts are on board, said one of the diplomats.
Yet, in a meeting on Tuesday, at which EU ambassadors discussed the bloc’s next round of sanctions, Hungary resisted such plans, the diplomats said. Budapest argued that this is not part of the 10th sanctions package, said one of the diplomats. Hungary has long been skeptical of including too many names on the list.
Hungary also pushed to strike four people out the already existing sanctions list, two of the diplomats said.
It was not immediately possible to learn the identity of the four individuals.

That request is igniting tensions, and will be likely subject to another heated debate during a meeting of EU ambassadors on Wednesday. During that meeting, they will not only discuss the new package of sanctions against Russia, but also the so-called rollover of the 1,400-plus names already on the list to keep them sanctioned.
That’s because the regime is subject to a six-month review, which has hitherto been more or less a formality. Now, Hungary is using this extension review as leverage by insisting that four specific people have to be struck from the EU’s existing sanctions list before it will agree to the rollover. If Hungary blocks the rollover and refuses to compromise, all 1,400 people would be de-listed, the two diplomats warned.
One of the diplomats didn’t hide his frustration: “It shows Hungary’s disregard for unity and European values that they are willing to risk this in the week where we commemorate one year since the Russian invasion,” he said.
And those aren’t the only measure that Hungary takes issue with. It also is chiefly against sanctioning personnel working in the nuclear sector.
But a Hungarian official poured water on this last point, saying that “the only open issue for Hungary is with the length of the rollover and not with the listings.”
On the oligarchs issue and the proposal of the Baltics and Poland, the same Hungarian official said that this is not part of the 10th package.
As all EU countries have to agree to the proposal, any country could veto the move even if all other 26 EU countries were in favor. Time is running out, with the EU wanting to adopt the 10th sanctions package before the one-year anniversary of Russia’s invasion of Ukraine on Friday.

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( With inputs from : www.politico.eu )

February 21, 2023
Liz Truss: UK should have ‘done more earlier’ to counter Vladimir Putin

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LONDON — Former British Prime Minister Liz Truss argued the U.K. should have “done more earlier” to counter Vladimir Putin’s rhetoric before he invaded Ukraine, and said the West depended on Russian oil for too long.
Truss — the U.K.’s shortest-serving prime minister who resigned amid market turmoil last year — was speaking in a House of Commons debate about Ukraine, her first contribution in the chamber as a backbencher since 2012. She has been increasingly vocal on foreign policy since leaving office.
The former prime minister, who as served foreign secretary for Boris Johnson before succeeding him in the top job, recalled receiving a phone call at 3.30 a.m. on the morning of the invasion, and told MPs: “This was devastating news. But as well as being devastating, it was not unexpected.”
Truss praised the “sheer bravery” of Ukrainians defending their country, as well as Ukrainian President Volodymyr Zelenskyy and his Cabinet for not fleeing the country in the aftermath. “I remember being on a video conference that evening with the defense secretary and our counterparts, who weren’t in Poland, who weren’t in the United States,” she said of Ukraine’s top team. “They were in Kyiv and they were defending their country,” she added.
But while Truss argued Western sanctions had imposed an economic toll on Putin’s Russia, said urged reflection. “The reason that Putin took the action he took is because he didn’t believe we would follow through,” she argued, and said the West should “hold ourselves to high standards.”
Ukraine, she said, should have been allowed to join NATO.
“We were complacent about freedom and democracy after the Cold War,” she said. “We were told it was the end of history and that freedom and democracy were guaranteed and that we could carry on living our lives not worrying about what else could happen.”
Truss urged the U.K. to do all it could to help Ukraine win the war as soon as possible, including sending fighter jets, an ongoing matter of debate in Western capitals despite Ukrainian pleas.

And the former U.K. prime minister said the West should “never again” be “complacent in the face of Russian money, Russian oil and gas,” tying any future lifting of sanctions “to reform in Russia.”

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( With inputs from : www.politico.eu )

February 20, 2023
Truss to call for tough sanctions against China if it escalates Taiwan tensions

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Britain and the rest of the G7 should urgently agree a tough package of sanctions to impose on China if it escalates military tensions with Taiwan, Liz Truss will argue, as she uses her first public overseas speech to pile pressure on Rishi Sunak.
Speaking in Tokyo on Friday, the former prime minister will urge her successor to be more hawkish in standing up to Beijing, warning coordinated action is needed to block “the rise of a totalitarian China” given “the free world is in danger”.
Truss is expected to raise concerns about the threat to Taiwan’s independence, saying the self-governed island should have its diplomatic status upgraded by being accepted into international organisations.
Other calls to action Truss will make as part of a six-point plan being presented to a conference in Tokyo include the creation of “an economic Nato” and regular audits by democratic countries to reduce dependence on China across critical industries.
Her speech is a further attempt to rebuild her political reputation, after resigning in October and becoming the UK’s shortest-serving prime minister.
However, it will also be viewed as an attempt to put pressure on Sunak to ensure a promised update to the government’s defence and security plan, known as the integrated review, and a stronger stance on China.
Truss herself ordered the review be updated only 18 months after the strategy – meant to look ahead to the next decade – was published, with suggestions China would be reclassified as a “threat” instead of a “systemic challenge”.
During the summer Conservative leadership contest, the then foreign secretary and her allies sought to present her as more hawkish in standing up to Beijing and less enticed by closer economic ties, given concerns about human rights abuses in Xinjiang, the erosion of democracy in Hong Kong and military tensions with Taiwan.

Sunak has backed away from escalating a diplomatic row with China, but stressed in November that the so-called “golden era” of relations was over.
Defence and foreign affairs officials in Whitehall believe that China is closely watching the west’s response to Russia’s invasion of Ukraine, and acknowledge that deep economic sanctions were in part designed to deter other potential aggressors.
But Russia’s economy is substantially smaller, and any sanctions against China would carry potentially much greater consequences for the global economy.
The Guardian revealed earlier this week that government officials were strategising a series of scenarios about the economic fallout if China invaded Taiwan – both due to the disruption to supply chains of items like microchips and the impact of sanctions.
China’s government claims Taiwan as a province, and its authoritarian premier, Xi Jinping, is set on what he terms “reunification”.
Truss herself will admit that having “rolled out the red carpet” for Xi on his state visit in 2015, when she was a cabinet minister, was a mistake. In her speech to the Inter-Parliamentary Alliance on China symposium, she is will say: “I should know – I attended a banquet in his honour. Looking back, I think this sent the wrong message.”
Taiwan is a “beacon of freedom” and “flourishing democracy, with a thriving free press and an independent judiciary”, Truss will stress, adding that the UK should “learn from the past” and “ensure that Taiwan is able to defend itself”.
Some Conservatives still want Sunak to take a more lenient approach to China. Philip Hammond, a Tory peer and former chancellor under Theresa May, wrote an article for China Daily suggesting the UK and China should “return to business as usual”.
He acknowledged “the background noise to that relationship over the last three years has been challenging”, but said political differences should “not become an impediment” to boosting trade ties.
“Quite honestly, if we only trade with people with whom we have no political differences, we can close half our ports tomorrow,” Hammond added.
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( With inputs from : www.theguardian.com )

February 17, 2023
China talks ‘peace,’ woos Europe and trashes Biden in Munich

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MUNICH — China is trying to drive a fresh wedge between Europe and the United States as Russia’s invasion of Ukraine trudges past its one-year mark.
Such was the motif of China’s newly promoted foreign policy chief Wang Yi when he broke the news at the Munich Security Conference on Saturday that President Xi Jinping would soon present a “peace proposal” to resolve what Beijing calls a conflict — not a war — between Moscow and Kyiv. And he pointedly urged his European audience to get on board and shun the Americans.
In a major speech, Wang appealed specifically to the European leaders gathered in the room.

“We need to think calmly, especially our friends in Europe, about what efforts should be made to stop the warfare; what framework should there be to bring lasting peace to Europe; what role should Europe play to manifest its strategic autonomy,” said Wang, who will continue his Europe tour with a stop in Moscow.
In contrast, Wang launched a vociferous attack on “weak” Washington’s “near-hysterical” reaction to Chinese balloons over U.S. airspace, portraying the country as warmongering.
“Some forces might not want to see peace talks to materialize,” he said, widely interpreted as a reference to the U.S. “They don’t care about the life and death of Ukrainians, [nor] the harms on Europe. They might have strategic goals larger than Ukraine itself. This warfare must not continue.”
Yet at the conference, Europe showed no signs of distancing itself from the U.S. nor pulling back on military support for Ukraine. The once-hesitant German Chancellor Olaf Scholz urged Europe to give Ukraine even more modern tanks. And French President Emmanuel Macron shot down the idea of immediate peace talks with the Kremlin.
And, predictably, there was widespread skepticism that China’s idea of “peace” will match that of Europe.
“China has not been able to condemn the invasion,” NATO Secretary-General Jens Stoltenberg told a group of reporters. Beijing’s peace plan, he added, “is quite vague.” Peace, the NATO chief emphasized, is only possible if Russia respects Ukraine’s sovereignty.
Europe watches with caution
Wang’s overtures illustrate the delicate dance China has been trying to pull off since the war began.
Keen to ensure Russia is not weakened in the long run, Beijing has offered Vladimir Putin much-needed diplomatic support, while steering clear of any direct military assistance that would attract Western sanctions against its economic and trade relations with the world.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich | Johannes Simon/Getty Images
“We will put forward China’s position on the political settlement on the Ukraine crisis, and stay firm on the side of peace and dialogue,” Wang said. “We do not add fuel to the fire, and we are against reaping benefit from this crisis.”
According to Italy’s Foreign Minister Antonio Tajani, who met Wang earlier this week, Xi will make his “peace proposal” on the first anniversary of the war, which is Friday.
Ukrainian Foreign Minister Dmitro Kuleba is expected to hold a bilateral meeting with Wang while in Munich. He said he hoped to have a “frank” conversation with the Beijing envoy.
“We believe that compliance with the principle of territorial integrity is China’s fundamental interest in the international arena,” Kuleba told journalists in Munich. “And that commitment to the observance and protection of this principle is a driving force for China, greater than other arguments offered by Ukraine, the United States, or any other country.”
EU foreign policy chief Josep Borrell is also expected to meet Wang later on Saturday.
Many in Munich were wary of the upcoming Chinese plan.
German Foreign Minister Annalena Baerbock welcomed China’s effort to use its influence to foster peace but told reporters she had “talked intensively” with Wang during a bilateral meeting on Friday about “what a just peace means: not rewarding the attacker, the aggressor, but standing up for international law and for those who have been attacked.”
“A just peace,” she added, “presupposes that the party that has violated territorial integrity — meaning Russia — withdraws its troops from the occupied country.”
One reason for Europe’s concerns is the Chinese peace plan could undermine an effort at the United Nations to rally support for a resolution condemning Russia’s invasion of Ukraine, which will be on the U.N.’s General Assembly agenda next week, according to three European officials and diplomats.
Taiwan issue stokes up US-China tension
If China was keen to talk about peace in Ukraine, it’s more reluctant to do so in a case closer to home.
When Wolfgang Ischinger, the veteran German diplomat behind the conference, asked Wang if he could reassure the audience Beijing was not planning an imminent military escalation against Taiwan, the Chinese envoy was non-committal.
Nato Secretary-General Jens Stoltenberg said “what is happening in Europe today could happen in east Asia tomorrow” | Johannes Simon/Getty Images
“Let me assure the audience that Taiwan is part of Chinese territory. It has never been a country and it will never be a country in the future,” Wang said.
The worry over Taiwan resonated in a speech from NATO Secretary-General Jens Stoltenberg, who said “what is happening in Europe today could happen in east Asia tomorrow.” Reminding the audience of the painful experience of relying on Russia’s energy supply, he said: “We should not make the same mistakes with China and other authoritarian regimes.”
But China’s most forceful attack was reserved for the U.S. Calling its decision to shoot down Chinese and other balloons “absurd” and “near-hysterical,” Wang said: “It does not show the U.S. is strong; on the contrary, it shows it is weak.
Wang also amplified the message in other bilateral meetings, including one with Pakistani Foreign Minister Bilawal Bhutto Zardari. “U.S. bias and ignorance against China has reached a ridiculous level,” he said. “The U.S. … has to stop this kind of absurd nonsense out of domestic political needs.”
It remains unclear if Wang will hold a meeting with U.S. Secretary of State Antony Blinken while in Germany, as has been discussed.
Hans von der Burchard and Lili Bayer reported from Munich, and Stuart Lau reported from Brussels.

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( With inputs from : www.politico.eu )

February 16, 2023
UN Security Council extends Yemen sanctions until November

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United Nations: The UN Security Council adopted a resolution to renew Yemen sanctions measures of asset freeze and travel ban until November 15, 2023.
Resolution 2675, unanimously adopted by the 15-member council, said that the situation in Yemen continues to constitute a threat to international peace and security, Xinhua news agency reported.
The council reaffirmed in the resolution “its strong commitment to the unity, sovereignty, independence, and territorial integrity of Yemen”.
The council also decided to extend the mandate of the Panel of Experts tasked to assist in the implementation of the sanctions regime until December 15, 2023, and requested the Panel of Experts to provide a final report to the Security Council no later than October 15, 2023.
(Except for the headline, the story has not been edited by Siasat staff and is published from a syndicated feed.)
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( With inputs from www.siasat.com )

February 16, 2023
Syria says US claims to waive sanctions for earthquake relief ‘misleading’

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Damascus: The US’ latest move to ease the sanctions imposed on Syria to support earthquake relief efforts is “misleading and aims to give a false humanitarian impression,” the Syrian Foreign Ministry said in a statement.
On Thursday, the US Treasury Department issued a so-called six-month sanctions exemption for Syria-bound humanitarian aid, saying the US sanctions in Syria “will not stand in the way” of live-saving efforts.
The Syrian Ministry responded in the statement on Friday that the US’ decision “stipulates alleged exemptions for humanitarian purposes, and the facts on the ground proved its falsehood”.
The US’ coercive measures and US’ policies have deprived the Syrian people of their natural wealth, it added, urging the US to end immediately, without hesitation, conditions or exceptions, the sanctions and to stop its cruel practices and violations of international law and the principles and purposes of the UN Charter, Xinhua news agency reported.
The Syrian government has repeatedly said that the sanctions were unjust and targeted the livelihoods and the well-being of the Syrian people, particularly after the earthquake that hit the country on Monday.
According to figures released by the Syrian Health Ministry on Friday, Syria’s death toll from the Monday earthquakes rose to 1,387 and the injuries to 2,326.
Meanwhile, the Syrian Observatory for Human Rights war monitor said that the earthquake in Syrian government and rebel-held areas had killed 4,500 people.

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( With inputs from www.siasat.com )

February 11, 2023
Syrian health sector suffers from US sanctions: Minister

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Damascus: Syria’s Health Minister has said that the Syrian health sector is reeling under pressure from the US sanctions.
Speaking at a press conference, Hassan al-Ghabbash on Thursday stressed that the suffering of the Syrian medical sector is not a result of the recent massive earthquake that hit the country on Monday but rather the Western sanctions imposed on Syria for 12 years.
He also stated that the death toll from the earthquake rose to 1,347 and the injuries to 2,295, Xinhua news agency reported.
Al-Ghabbash stressed that from the first moments of the earthquake, the Syrian Health Ministry’s emergency room was mobilised to coordinate the response and send ambulances, mobile clinics, and supply trucks to the most affected provinces.
The hospitals and health centres are working at their maximum capacity to provide medical services, he said, adding that one of the most important priorities and challenges is to continue to provide health services in shelters and prepare for any emergency.
“We are determined to provide services to Syrian citizens despite all the circumstances and challenges, and the Syrian state has largely succeeded,” he said.
Al-Ghabbash added that the shortfall caused by Western sanctions would be made up through the concerted efforts of private sector institutions, trade unions, non-governmental organisations and civil society.
The Minister called on the UN, the International Committee of the Red Cross and other international organisations to provide assistance to Syria to deal with the disaster.

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( With inputs from www.siasat.com )

February 10, 2023
Zelenskyy in surprise London visit to meet Sunak and King Charles

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LONDON — Ukrainian President Volodymyr Zelenskyy is in London to meet the U.K. prime minister and King Charles III as Britain announces new training programs for fighter pilots and marines.
Zelenskyy’s surprise trip includes a visit to see Ukrainian troops being trained by the British armed forces and an address to the U.K. parliament. He will be granted an audience with the British monarch at Buckingham Palace Wednesday afternoon.
This is Zelenskyy’s second trip overseas since Russia invaded Ukraine in February 2022. The Ukrainian leader had also been expected to visit EU leaders in Brussels later this week, but that stop has been cast in doubt after the plans leaked on Monday.

In a statement Wednesday, Prime Minister Rishi Sunak announced the U.K. will now train pilots on the operation of NATO-standard fighter jets as well as marines. This comes in addition to an expansion of U.K. training Ukrainian recruits from 10,000 to 20,000 soldiers this year.
The new training programs show Britain’s commitment “to stand shoulder-to-shoulder with Ukraine for years to come,” Sunak said.
During their talks, Sunak is expected to offer the Ukrainian president longer-range weapons and his backing for Zelenskyy’s plans to work toward peace, No. 10 Downing Street said.
“President Zelenskyy’s visit to the U.K. is a testament to his country’s courage, determination and fight, and a testament to the unbreakable friendship between our two countries,” Sunak added.
The U.K. will also announce further sanctions Wednesday in response to Russia’s continued bombardment of Ukraine, the prime minister’s office said.

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( With inputs from : www.politico.eu )

February 8, 2023