FRANKFURT — Swiss banking giant UBS will buy the country’s second-largest bank Credit Suisse in a deal that will come as a relief to financial markets in Europe and across the world.
UBS said in a statement that the total price is 3 billion Swiss francs, or about $3.25 billion, in UBS shares.
The deal was pushed through in an effort to avoid further turmoil in global banking following the failure of Silicon Valley Bank and another regional lender in the U.S.
“With the takeover of Credit Suisse by UBS, a solution has been found to secure financial stability and protect the Swiss economy in this exceptional situation,” the Swiss National Bank said in a separate statement, noting that the deal was made possible with the support of the Swiss federal government, the Swiss Financial Market Supervisory Authority FINMA and the Swiss National Bank.
The central bank added that UBS and Credit Suisse can obtain a liquidity assistance loan of up to 100 billion francs.
Highlighting the urgency of securing a deal for the bank before markets open on Monday, Swiss authorities adjusted laws to allow further provision of liquidity by the Swiss central bank, while the government agreed to provide additional guarantees.
The expeditious rescue of Credit Suisse was welcomed by the European Central Bank as well as the Federal Reserve in the U.S.
The “swift action” by the Swiss authorities “are instrumental for restoring orderly market conditions and ensuring financial stability,” ECB President Christine Lagarde said in a statement.
The 167-year-old Credit Suisse has been involved in a series of scandals that have undermined the confidence of investors and clients. It has thus found itself in the eye of the storm when the collapse of Silicon Valley Bank sparked fears of a banking crisis.
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( With inputs from : www.politico.eu )
As he jets off for a state visit to Moscow this week, China’s President Xi Jinping is doing so in defiance of massive international pressure. Vladimir Putin, the man Xi once called his “best, most intimate friend,” has just become the world’s most wanted alleged war criminal.
The International Criminal Court issued an arrest warrant for Putin on March 17 for his alleged role in illegally transferring Ukrainian civilians into Russian territories. But that isn’t deterring Xi, who broke Communist Party norms and formally secured a third term as Chinese leader this month.
But why is China’s leader so determined to stand by Putin despite the inevitable backlash, at a time when the West is increasingly suspicious of Beijing’s military aims — and scrutinizing prized Chinese companies like TikTok — more closely than ever?
For a start, Beijing’s worldview requires it to stay strategically close to Russia: As Beijing’s leaders see it, the U.S. is blocking China’s path to global leadership, aided by European governments, while most of its own geographical neighbors — from Japan and South Korea to Vietnam and India — are increasingly skeptical rather than supportive.
“The Chinese people are not prone to threats. Paper tigers such as the U.S. would definitely not be able to threaten China,” declared a commentary on Chinese state news agency Xinhua previewing Xi’s trip to Russia. The same article slammed Washington for threatening to sanction China if it provided Russia with weapons for its invasion of Ukraine. “The more the U.S. wants to crush the two superpowers, China and Russia, together … the closer China and Russia lean on each other.”
It’s a view that chimes with the rhetoric from the Kremlin. “Washington does not want this war to end. Washington wants and is doing everything to continue this war. This is the visible hand,” Putin’s spokesman Dmitry Peskov said earlier this month.
10-year bromance
To understand Xi’s preference for Putin even though China’s economy is so intertwined with the West, analysts say it’s not just important to factor in Beijing’s vision for the future, but also to grasp the history that the Chinese and Russian leaders share.
“They’re just six months apart in terms of age. Their fathers both fought in World War II … Both men had hardships in their youths. Both have daughters,” said Alexander Gabuev, a senior fellow at the Carnegie Endowment for International Peace think tank and an expert on Russo-Chinese relations. “And they are both increasingly like an emperor and a tsar, equally obsessed with Color Revolutions.”
Their “bromance,” as Gabuev put it, began in 2013 when Xi met Putin toward the end of the Asia-Pacific Economic Cooperation summit in Bali — on Putin’s birthday. Citing two people present at the impromptu birthday party, Gabuev said the occasion was “not a boozy night, but they opened up and there was a really functioning chemistry.”
Russian President Vladimir Putin with Chinese President Xi Jinping on the sidelines of the Asia-Pacific Economic Cooperation Summit in Nusa Dua in 2013 | Mast Irham/AFP via Getty Images
According to Putin himself, Xi presented him with a cake while the Russian leader pulled out a bottle of vodka for a toast. The pair then reminisced over shots and sandwiches. “I’ve never established such relations or made such arrangements with any other foreign colleague, but I did it with President Xi,” Putin told the Chinese CCTV broadcaster in 2018. “This might seem irrelevant, but to talk about President Xi, this is where I would like to start.”
Those remarks were followed by a trip to Beijing, where Xi presented Putin with China’s first friendship medal. “He is my best, most intimate friend,” Xi said. “No matter what fluctuations there are in the international situation, China and Russia have always firmly taken the development of relations as a priority.”
Xi has stuck to those words, even after Putin launched his invasion of Ukraine just over a year ago. Less than three weeks beforehand, Putin visited Beijing and signed what China once referred to as a “no limits” partnership. Chinese officials have steered clear of criticizing Russia — and they wouldn’t even call it a war — while echoing Putin’s narrative that NATO expansion was to blame.
Close but not equal
Concerns are mounting over Beijing’s potential to provide Russia with weapons. Last week, POLITICO reported that Chinese companies, including one connected to the government in Beijing, have sent Russian entities 1,000 assault rifles and other equipment that could be used for military purposes, including drone parts and body armor, according to customs data.
Chinese and Russian armed forces have also teamed up for joint exercises outside Europe. Most recently, they held naval drills together with Iran in the Gulf of Oman.
During Xi’s visit this week, the two leaders are expected to conclude up to a dozen agreements, according to Russian media TASS. Experts say Xi and Putin are likely to sign further agreements to boost trade — especially in energy — as well as make more efforts to trade in their own currencies.
Xi is also expected to reiterate China’s “position paper” with a view to settling what it calls the “Ukraine crisis.” The paper, released last month, mentions the need to respect sovereignty and resume peace talks, but also includes Russian talking points such as dissuading “expanding military blocs” — a veiled criticism of U.S. support for Ukraine to potentially join NATO. There are also reports that Xi could be talking by phone with Ukraine’s President Volodymyr Zelenskyy after the Moscow visit.
But Beijing’s overall top priority is to “lock Russia in for the long term as China’s junior partner,” wrote Ryan Hass, a senior fellow at the Brookings Institution, a think tank. “For Xi, cementing Russia as China’s junior partner is fundamental to his vision of national rejuvenation.”
To achieve this, Putin’s stay in power is non-negotiable for Beijing, he wrote: “China’s … objective is to guard against Russia failing and Putin falling.”
What better way, then, to show support than attending a state banquet when your notorious friend needs you most?
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( With inputs from : www.politico.eu )
As U.S. banking regulators begin their post-mortem of Silicon Valley Bank, some pundits are pointing the finger at crypto markets, whose own collapse over the past year left the tech-focused lender hopelessly exposed.
The conventional wisdom about crypto is that it’s “self-referential” — a separate universe to conventional finance — and that its inherent volatility can be contained. The emerging “contagion” theory is that there are enough linkages for extreme turmoil to spill over, much as a virus can sometimes jump from one species to another.
That’s what happened here, according to Barney Frank, the former U.S. congressman who wrote sweeping new banking rules after the banking crisis in 2008, and joined the crypto-friendly Signature Bank as a board member in 2015.
“I think, if it hadn’t been for FTX and the extreme nervousness about crypto, that this wouldn’t have happened,” Frank told POLITICO this week. “That wasn’t something that could have been anticipated by regulators.”
FTX, the crypto exchange that collapsed in November amid allegations of massive fraud, capped a year of turmoil in crypto markets, as investors began withdrawing funds from riskier ventures in response to rising interest rates, which in turn exposed the shaky foundations underpinning the industry. The ensuing “crypto winter” saw the value of the industry plummet by two-thirds, from a peak of $3 trillion in 2021.
Policymakers sought to reassure the public that volatility in the crypto market, blighted by scams and charlatans who sought to profit from investors’ fear of missing out, would naturally be contained. With the collapse of SVB, that claim is facing its biggest test yet.
Patient zero
Under the contagion theory, “patient zero” could be traced back to the implosion of TerraUSD, an “algorithmic stablecoin” that relied on financial engineering to keep its value on par with the U.S. dollar. That promise fell short in May last year following a mass sell-off, creating panic among investors who had used the virtual asset as a safe haven to park cash between taking punts on the crypto market. The origin of the crash is still subject to debate but rising interest rates are often cited as one of the main culprits.
TerraUSD’s demise was catastrophic for a major crypto hedge fund called Three Arrows Capital, dubbed 3AC. The money managers had invested $200 million into Luna, a crypto token whose value was used to prop up TerraUSD, which had become the third largest stablecoin on the market. A British Virgin Islands court ordered 3AC to liquidate its assets at the end of June.
The fund’s end created even more problems for the industry. Major crypto lending businesses, such as BlockFi, Celsius Network and Voyager, had lent hundreds of millions of dollars to 3AC to finance its market bets and were now facing massive losses.
Customers who had deposited their digital assets with the industry lender were suddenly locked out of their accounts, prompting FTX — then the third largest crypto exchange — to step in and bail out BlockFi and Voyager. Meanwhile, central banks continued to raise rates.
The contagion seemed under control for a few months until revelations emerged in November that FTX had been using client cash to finance risky bets elsewhere. The exchange folded soon after, as its customers rushed to get their money out of the platform. BlockFi and Voyager, meanwhile, were left stranded.
Outbreak widens
This is the point where the outbreak of risk in the crypto industry might have jumped species into the banking sector.
Silvergate Bank and Signature Bank, two smaller banks that also failed last week, had extensive business with crypto exchanges, including FTX. Silvergate tried to downplay its exposure to FTX but ended up reporting a $1 billion loss over the last three months of 2022 after investors withdrew more than $8 billion in deposits. Signature also did its best to distance itself from FTX, which made up some 0.1 percent of its deposits.
FTX, the crypto exchange that collapsed in November amid allegations of massive fraud, capped a year of turmoil in crypto markets | Leon Neal/Getty Images
SVB had no direct link to FTX, but was not immune to the broader contagion. Its depositors, including tech startups, crypto firms and VCs, started burning their cash reserves to run their businesses after venture capital funding dried up.
“SVB and Silvergate had the same balance sheet structure and risks — massive duration mismatch, lots of uninsured runnable deposits backed by securities not marked to market, and inadequate regulatory capital because unrealized fair value losses excluded,” former Natwest banker and industry expert Frances Coppola told POLITICO.
Eventually, the deposit drain forced SVB to liquidate underwater assets to accommodate its clients, while trying to handle losses on bond portfolios and an outsized bet on interest rates. As word got out, the withdrawals turned into a bank run as frictionless and hype-driven as a crypto bubble.
Zachary Warmbrodt and Izabella Kaminska contributed reporting from Washington and London, respectively.
This article has been updated to correct the value of the crypto industry.
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( With inputs from : www.politico.eu )
LONDON — The U.K. government was scrambling on Sunday to limit the fallout for the British tech sector from the collapse of Silicon Valley Bank, a big U.S. lender to many startups and technology companies.
The government is treating the potential reverberations as “a high priority” after a run on deposits drove California-based SVB into insolvency, marking the largest bank failure since the global financial crisis, U.K. Chancellor of the Exchequer Jeremy Hunt said in a statement Sunday morning. U.S. Treasury Secretary Janet Yellen and other policymakers were on alert that problems at SVB could spread.
Hunt said the British government is working on a plan to backstop the cashflow needs of companies affected by SVB’s implosion and the halt in trading of its British unit, Silicon Valley Bank UK. The Bank of England announced on Friday that the U.K. unit is set to enter insolvency.
Silicon Valley Bank’s “failure could have a significant impact on the liquidity of the tech ecosystem,” Hunt said.
The government is working “to avoid or minimize damage to some of our most promising companies in the U.K.,” the chancellor said. “We will bring forward immediate plans to ensure the short-term operational and cashflow needs of Silicon Valley Bank UK customers are able to be met.”
Hunt told the BBC Sunday morning that the government would have a plan that deals with the operational cashflow needs of companies “in the next few days.”
Discussions between the governor of the Bank of England, the prime minister and the chancellor were taking place over the weekend, according to the statement.
Speaking on Sky News Sunday morning, Hunt said that Bank of England Governor Andrew Bailey had made it clear that there was “no systemic risk to our financial system.” But Hunt warned that there was a “serious risk” to the technology and life-sciences sectors in the U.K.
Ministers held talks with the tech industry on Saturday after tech executives in an open letter warned Hunt that the SVB collapse posed an “existential threat” to the U.K. tech sector. They called for government intervention.
Britain’s science and technology minister on Saturday pledged to do “everything we can” to limit the repercussions on U.K. tech companies.
Michelle Donelan, who heads the newly created Department for Science, Innovation and Technology, said in a tweet: “We recognize that the tech sector is often not cashflow positive as they grow and I am determined to stand with them as we do everything we can to minimize impact on the sector.”
Chancellor Jeremy Hunt said protecting the U.K. sector from the impacts of SVB’s collapse was a “high priority” | Justin Tallis/AFP via Getty Images
A bank insolvency procedure for Silicon Valley Bank UK would mean eligible depositors would be paid the protected limit of £85,000, or up to £170,000 for joint accounts.
The Bank of England said in its Friday statement that SVB UK “has a limited presence in the U.K. and no critical functions supporting the financial system.”
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( With inputs from : www.politico.eu )
Nearly six months on from the subsea gas pipeline explosions, which sent geopolitical shockwaves around the world in September, there is still no conclusive answer to the question of who blew up Nord Stream.
Some were quick to place the blame squarely at Russia’s door — citing its record of hybrid warfare and a possible motive of intimidation, in the midst of a bitter economic war with Europe over gas supply.
But half a year has passed without any firm evidence for this — or any other explanation — being produced by the ongoing investigations of authorities in three European countries.
Since the day of the attack, four states — Russia, the U.S., Ukraine and the U.K. — have been publicly blamed for the explosions, with varying degrees of evidence.
Still, some things are known for sure.
As was widely assumed within hours of the blast, the explosions were an act of deliberate sabotage. One of the three investigations, led by Sweden’s Prosecution Authority, confirmed in November that residues of explosives and several “foreign objects” were found at the “crime scene” on the seabed, around 100 meters below the surface of the Baltic Sea, close to the Danish Island of Bornholm.
Now two new media reports — one from the New York Times, the other a joint investigation by German public broadcasters ARD and SWR, plus newspaper Die Zeit — raised the possibility that a pro-Ukrainian group — though not necessarily state-backed — may have been responsible. On Wednesday, the German Prosecutor’s Office confirmed it had searched a ship in January suspected of transporting explosives used in the sabotage, but was still investigating the seized objects, the identities of the perpetrators and their possible motives.
In the information vacuum since September, various theories have surfaced as to the culprit and their motive:
Theory 1: Putin, the energy bully
In the days immediately after the attack, the working assumption of many analysts in the West was that this was a brazen act of intimidation on the part of Vladimir Putin’s Kremlin.
Mykhailo Podolyak, an adviser to Volodymyr Zelenskyy, spelt out the hypothesis via his Twitter feed on September 27 — the day after the explosions were first detected. He branded the incident “nothing more [than] a terrorist attack planned by Russia and act of aggression towards the EU” linked to Moscow’s determination to provoke “pre-winter panic” over gas supplies to Europe.
Polish Prime Minister Mateusz Morawiecki also hinted at Russian involvement. Russia denied responsibility.
The Nord Stream pipes are part-owned by Russia’s Gazprom. The company had by the time of the explosions announced an “indefinite” shutdown of the Nord Stream 1 pipes, citing technical issues which the EU branded “fallacious pretences.” The new Nord Stream 2 pipes, meanwhile, had never been brought into the service. Within days of Gazprom announcing the shutdown in early September, Putin issued a veiled threat that Europe would “freeze” if it stuck to its plan of energy sanctions against Russia.
But why blow up the pipeline, if gas blackmail via shutdowns had already proved effective? Why end the possibility of gas ever flowing again?
Simone Tagliapietra, energy specialist and senior fellow at the Bruegel think tank, said it was possible that — if it was Russia — there may have been internal divisions about any such decision. “At that point, when Putin had basically decided to stop supplying [gas to] Germany, many in Russia may have been against that. This was a source of revenues.” It is possible, Tagliapietra said, that “hardliners” took the decision to end the debate by ending the pipelines.
Blowing up Nord Stream, in this reading of the situation, was a final declaration of Russia’s willingness to cut off Europe’s gas supply indefinitely, while also demonstrating its hybrid warfare capabilities. In October, Putin said that the attack had shown that “any critical infrastructure in transport, energy or communication infrastructure is under threat — regardless of what part of the world it is located” — words viewed by many in the West as a veiled threat of more to come.
Theory 2: The Brits did it
From the beginning, Russian leaders have insinuated that either Ukraine or its Western allies were behind the attack. Kremlin spokesman Dmitry Peskov said two days after the explosions that accusations of Russian culpability were “quite predictable and predictably stupid.” He added that Moscow had no interest in blowing up Nord Stream. “We have lost a route for gas supplies to Europe.”
Then a month on from the blasts, the Russian defense ministry made the very specific allegation that “representatives of the U.K. Navy participated in planning, supporting and executing” the attack. No evidence was given. The same supposed British specialists were also involved in helping Ukraine coordinate a drone attack on Sevastopol in Crimea, Moscow said.
The U.K.’s Ministry of Defence said the “invented” allegations were intended to distract attention from Russia’s recent defeats on the battlefield. In any case, Moscow soon changed its tune.
Theory 3: U.S. black ops
In February, with formal investigations in Germany, Sweden and Denmark still yet to report, an article by the U.S. investigative journalist Seymour Hersh triggered a new wave of speculation. Hersh’s allegation: U.S. forces blew up Nord Stream on direct orders from Joe Biden.
The account — based on a single source said to have “direct knowledge of the operational planning” — alleged that an “obscure deep-diving group in Panama City” was secretly assigned to lay remotely-detonated mines on the pipelines. It suggested Biden’s rationale was to sever once and for all Russia’s gas link to Germany, ensuring that no amount of Kremlin blackmail could deter Berlin from steadfastly supporting Ukraine.
Hersh’s article also drew on Biden’s public remarks when, in February 2022, shortly before Russia’s full-scale invasion, he told reporters that should Russia invade “there will be no longer Nord Stream 2. We will bring an end to it.”
The White House described Hersh’s story as “utterly false and complete fiction.” The article certainly included some dubious claims, not least that NATO Secretary General Jens Stoltenberg has “cooperated with the American intelligence community since the Vietnam War.” Stoltenberg, born in 1959, was 16 years old when the war ended.
Russian leaders, however, seized on the report, citing it as evidence at the U.N. Security Council later in February and calling for an U.N.-led inquiry into the attacks, prompting Germany, Denmark and Sweden to issue a joint statement saying their investigations were ongoing.
Theory 4: The mystery boatmen
The latest clues — following reports on Tuesday from the New York Times and German media — center on a boat, six people with forged passports and the tiny Danish island of Christiansø.
According to these reports, a boat that set sail from the German port of Rostock, later stopping at Christiansø, is at the center of the Nord Stream investigations.
Germany’s federal prosecutor confirmed on Wednesday that a ship suspected of transporting explosives had been searched in January — and some of the 100 or so residents of tiny Christiansø told Denmark’s TV2 that police had visited the island and made inquiries. Residents were invited to come forward with information via a post on the island’s Facebook page.
Both the New York Times and the German media reports suggested that intelligence is pointing to a link to a pro-Ukrainian group, although there is no evidence that any orders came from the Ukrainian government and the identities of the alleged perpetrators are also still unknown.
Podolyak, Zelenskyy’s adviser, tweeted he was enjoying “collecting amusing conspiracy theories” about what happened to Nord Stream, but that Ukraine had “nothing to do” with it and had “no information about pro-Ukraine sabotage groups.”
Meanwhile, Germany’s Defense Minister Boris Pistorius warned against “jumping to conclusions” about the latest reports, adding that it was possible that there may have been a “false flag” operation to blame Ukraine.
The Danish Security and Intelligence Service said only that their investigation was ongoing, while a spokesperson for Sweden’s Prosecution Authority said information would be shared when available — but there was “no timeline” for when the inquiries would be completed.
The mystery continues.
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( With inputs from : www.politico.eu )
MESEBERG, Germany — German Chancellor Olaf Scholz on Sunday said China had declared it won’t supply Russia with weapons for its war against Ukraine, suggesting that Berlin has received bilateral assurances from Beijing on the issue.
Scholz was speaking at a press conference with European Commission President Ursula von der Leyen, who told reporters that the EU has received “no evidence” so far from the U.S. that Beijing is considering supplying lethal support to Moscow.
Senior U.S. officials including Secretary of State Antony Blinken have expressed deep concern in recent weeks that China could provide weapons such as kamikaze drones to Russia, which in turn triggered warnings to Beijing from EU politicians. Scholz himself urged Beijing last week to refrain from such actions and instead use its influence to convince Russia to withdraw its troops from Ukraine.
Yet speaking at Sunday’s press conference, which was held at the German government retreat in Meseberg north of Berlin, Scholz claimed that China had provided assurances that it would not send weapons to Russia.
“We all agree that there should be no arms deliveries, and the Chinese government has declared that it will not deliver any either,” the chancellor said in response to a question by POLITICO. “We insist on this and we are monitoring it,” he added.
Scholz’s comments came as a surprise because China has not publicly rejected the possibility of weapons deliveries to Russia. The chancellor appeared to suggest that Beijing had issued such reassurances directly to Germany.
EU foreign policy chief Josep Borrell received similar private assurances last month. Borrell told reporters that China’s top diplomat Wang Yi had told him in a private discussion at the Munich Security Conference in mid-February that China “will not provide arms to Russia.”
“Nevertheless, we have to remain vigilant,” Borrell said.
Von der Leyen, who attended the first day of a two-day German government retreat in Meseberg, told reporters that the EU still had not seen any proof that China is considering sending arms to Russia.
“So far, we have no evidence of this, but we have to observe it every day,” the Commission president said. She did not reply to the question on whether the EU would support sanctions against China should there be such weapon deliveries, saying that was a “hypothetical question” she would not answer.
Stuart Lau contributed reporting.
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( With inputs from : www.politico.eu )
Iran pledged to re-install monitoring equipment at its nuclear facilities and to assist an investigation into uranium traces detected at undeclared sites, the head of the U.N.’s nuclear agency said Saturday after a visit to Tehran.
Rafael Mariano Grossi, director general of the International Atomic Energy Agency, met with Iranian President Ebrahim Raisi and other top officials in Tehran on Saturday.
“Over the past few months, there was a reduction in some of the monitoring activities” related to cameras and other equipment “which were not operating,” Grossi told reporters upon his return to Vienna. “We have agreed that those will be operating again.”
A joint statement issued on Saturday by the IAEA and Iran’s nuclear agency included assurances that Tehran would address long-standing complaints about access to its disputed nuclear program. But the text went into little detail, and similar promises by Iran have yielded little in the past.
“Iran expressed its readiness to continue its cooperation and provide further information and access to address the outstanding safeguards issues,” according to the joint statement.
“These are not words. This is very concrete,” Grossi said of the assurances he received in Tehran, the Associated Press reported.
The visit to Iran followed a recent report from the IAEA, seen by CNN and other media, that confirmed that uranium particles enriched to 83.7 percent purity, close to the 90 percent needed to make a nuclear bomb, were found at an Iranian nuclear site. The report raised concerns that Tehran was speeding up its enrichment.
Grossi said the Iranians had agreed to increase inspections at that site by 50 percent, the AP reported.
Iran also will allow the re-installation of extra monitoring equipment that had been put in place under the 2015 nuclear deal, but then removed last year as the agreement fell apart, Reuters reported.
The 2015 deal gave Tehran relief from most international sanctions as long as it allowed the U.N. watchdog to monitor its nuclear activities. But it began to unravel after the U.S.’s unilateral withdrawal in 2018 under then-President Donald Trump.
Iran also “will allow the IAEA to implement further appropriate verification and monitoring activities,” according to Saturday’s joint statement. “Modalities will be agreed between the two sides in the course of a technical meeting which will take place soon in Tehran,” it said.
Grossi said there was a “marked improvement” in his dialogue with Iranian officials, according to the AP. “I hope we will be seeing results soon. We will see.”
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( With inputs from : www.politico.eu )
LONDON — Britain was rebuffed by the Biden administration after multiple requests to develop an advanced trade and technology dialogue similar to structures the U.S. set up with the European Union.
On visits to Washington as a Cabinet minister over the past two years, Liz Truss urged U.S. Commerce Secretary Gina Raimondo and senior Biden administration officials to intensify talks with the U.K. to build clean technology supply chains and boost collaboration on artificial intelligence (AI) and semiconductors.
After Truss became prime minister in fall 2022, the idea was floated again when Raimondo visited London last October, people familiar with the conversations told POLITICO. But fear of angering the U.S.’s European partners and the U.K.’s diminished status outside the EU post-Brexit have posed barriers to influencing Washington.
Businesses, lawmakers and experts worry the U.K. is being left on the sidelines.
“We tried many times,” said a former senior Downing Street official, of the British government’s efforts to set up a U.K. equivalent to the U.S.-E.U. Trade and Technology Council (TTC), noting Truss’ overtures began as trade chief in July 2021. They requested anonymity to speak on sensitive issues.
“We did speak to Gina Raimondo about that, saying ‘we think it would be a good opportunity,’” said the former official — not necessarily to join the EU-U.S. talks directly, “but to increase trilateral cooperation.”
Set up in June 2021, the TTC forum co-chaired by Raimondo, Secretary of State Antony Blinken and U.S. trade chief Katherine Tai gives their EU counterparts, Margrethe Vestager and Valdis Dombrovskis, a direct line to shape tech and trade policy.
The U.S. is pushing forward with export controls on advanced semiconductors to China; forging new secure tech supply chains away from Beijing; and spurring innovation through subsidies for cutting-edge green technology and microprocessors.
The TTC’s 10 working groups with the EU, Raimondo said in an interview late last year, “set the standards,” though Brussels has rebuffed Washington’s efforts to use the transatlantic body to go directly after Beijing.
But the U.K. “is missing the boat on not being completely engaged in that dialogue,” said a U.S.-based representative of a major business group. “There has been some discussion about the U.K. perhaps joining the TTC,” they confirmed, and “it was kind of mooted, at least in private” with Raimondo by the Truss administration on her visit to London last October.
The response from the U.S. had been ‘’let’s work with what we’ve got at the moment,’” said the former Downing Street official.
Even if the U.S. does want to talk, “they don’t want to irritate the Europeans,” the same former official added. Right now the U.K.’s conversations with the U.S. on these issues are “ad hoc” under the new Atlantic Charter Boris Johnson and Joe Biden signed around the G7 summit in 2021, they said, and “nothing institutional.”
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up | Pool photo by Olivier Matthys/AFP via Getty Images
Securing British access to the U.S.-EU tech forum or an equivalent was also discussed when CBI chief Tony Danker was in Washington last July, said people familiar with conversations during his visit.
The U.K.’s science and tech secretary, Michelle Donelan, confirmed the British government had discussed establishing a more regular channel for tech and trade discussions with the U.S., both last October and more recently. “My officials have just been out [to the U.S.],” she told POLITICO. “They’ve had very productive conversations.”
A U.K. government spokesperson said: “The U.K. remains committed to working closely with the U.S. and EU to further our shared trade and technology objectives, through the EU-UK Trade and Cooperation Agreement, the U.S.-U.K. Future of Atlantic Trade dialogues, and the U.K.-U.S. technology partnership.
“We will continue to advance U.K. interests in trade and technology and explore further areas of cooperation with partners where it is mutually beneficial.”
Britain the rule-taker?
Last October, Washington and London held the first meeting of the data and tech forum Johnson and Biden set up. Senior officials hoped to get a deal securing the free flow of data between the U.S. and U.K. across the line and addressed similar issues as the TTC.
They couldn’t secure the data deal. The U.K. is expected to join a U.S.-led effort to expand data transfer rules baked into the Asia-Pacific Economic Cooperation trading agreement as soon as this year, according to a former and a current British official, who spoke on the condition of anonymity to discuss internal deliberations. The next formal meeting between the U.K. and U.S. is penciled in for January 2024.
Ongoing dialogue “is vital to secure an overarching agreement on U.K.-U.S. data flows, without which modern day business cannot function,” said William Bain, head of trade policy at the British Chambers of Commerce (BCC). “It would also provide an opportunity to set the ground rules around a host of other technological developments.”
In contrast, the U.S. and EU are always at work, with TTC officials in constant contact with the operation — though questions have been raised about how long-term the transatlantic cooperation is likely to prove, ahead of next year’s U.S. presidential election.
“Unless you have a structured system or setup, often overseen by ministers, you don’t really get the drive to actually get things done,” said the former Downing Street official.
Right now cooperation with the U.S. on tech issues is not as intense or structured as desired, the same former official said, and is “not really brought together” in one central forum.
Britain has yet to publish a formal semiconductor strategy | Thomas Coex/AFP via Getty Images
“This initiative [the TTC] between the world’s two regulatory powerhouses risks sidelining the U.K.,” warned lawmakers on the UK parliament’s foreign affairs committee in a report last October. Britain may become “a rule-taker rather than a rule-maker,” MPs noted, citing the government’s “ambiguous” position on technology standards. Britain has yet to publish a formal semiconductor strategy, and others on critical minerals — like those used in EV batteries — or AI are also missing.
Over the last two years, U.S. trade chief Tai has “spoken regularly to her three successive U.K. counterparts to identify and tackle shared economic and trade priorities,” said a spokesperson for the U.S. Trade Representative, adding “we intend to continue strengthening this partnership in the years to come.”
All eyes on Europe
For its part, the EU has to date shown little interest in closer cooperation with the U.K.
Three European Commission officials disregarded the likelihood of Britain joining the club, though one of those officials said that London may be asked to join — alongside other like-minded countries — for specific discussions related to ongoing export bans against Russia.
Even with last week’s breakthrough over the Northern Ireland protocol calming friction between London and Brussels, the U.K. was not a priority country for involvement in the TTC, added another of the EU officials.
“The U.K. was extremely keen to be part of a dialogue of some sort of equivalent of TTC,” said a senior business representative in London, who requested anonymity to speak about sensitive issues.
U.K. firms see “the Holy Grail” as Britain, the U.S. and EU working together on this, they said. “We’re very keen to see a triangular dialogue at some point.”
The U.K.’s haggling with the EU over the details of the Northern Ireland protocol governing trade in the region has posed “a political obstacle” to realizing that vision, they suggested.
Yet with a solution to the dispute announced in late February, the same business figure said, “there will be a more prominent push to work together with the U.K.”
TTC+
Some trade experts think the U.K. would increase its chances of accession to the TTC if it submitted a joint request with other nations.
But prior to that happening, “I think the EU-U.S. TTC will need to first deliver bilaterally,” said Sabina Ciofu, an international tech policy expert at the trade body techUK.
Representatives speak to the media following the Trade and Technology Council Meeting in Maryland | Saul Loeb/AFP via Getty Images
When there is momentum, Ciofu said, the U.K. should join forces with Japan, South Korea and other advanced economies to ask for a TTC+ that could include the G7 or other partners. At the last TTC meeting in December, U.S. and EU officials said they were open to such an expansion around specific topics that had global significance.
But not all trade experts think this is essential. Andy Burwell, director of international trade at the CBI, said he doesn’t “think it necessarily matters” whether the U.K. has a structured conversation with the U.S. like the TTC forum.
Off the back of a soon-to-be-published refresh of the Integrated Review — the U.K.’s national security and foreign policy strategy — Prime Minister Rishi Sunak should instead seize the opportunity, Burwell said, to pinpoint where Britain is “going to own, collaborate and have access to various aspects of the supply chains.”
The G7, Burwell said, “could be the right platform for having some of those conversations.”
Yet the “danger with the ad hoc approach with lots of different people is incoherence,” said the former Downing Street official quoted above.
Too many countries involved in setting the standards can, the former official said, “create difficulty in leveraging what you want — which is all of the countries agreeing together on a certain way forward … especially when you’re dealing with issues that relate to, for example, China.”
Mark Scott, Annabelle Dickson and Tom Bristowcontributed reporting.
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( With inputs from : www.politico.eu )
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 officialsuggested 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 officialsaid. “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. officialsaid, 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 )
KYIV — As the distant howl of air raid sirens echoes around them, a dozen Ukrainian soldiers clamber out of camouflaged tents perched on a hill off a road just outside Kyiv, hidden from view by a thick clump of trees. The soldiers, pupils of a drone academy, gather around a white Starlink antenna, puffing at cigarettes and doomscrolling on their phones — taking a break between classes, much like students around the world do.
But this isn’t your average university.
The soldiers have come here to study air reconnaissance techniques and to learn how to use drones — most of them commercial ones — in a war zone. Their training, as well as the supply chains that facilitate the delivery of drones to Ukraine, are kept on the down low. The Ukrainians need to keep their methods secret not only from the Russian invaders, but also from the tech firms that manufacture the drones and provide the high-speed satellite internet they rely on, who have chafed at their machines being used for lethal purposes.
Drones are essential for the Ukrainians: The flying machines piloted from afar can spot the invaders approaching, reduce the need for soldiers to get behind enemy lines to gather intelligence, and allow for more precise strikes, keeping civilian casualties down. In places like Bakhmut, a key Donetsk battleground, the two sides engage in aerial skirmishes; flocks of drones buzz ominously overhead, spying, tracking, directing artillery.
So, to keep their flying machines in the air, the Ukrainians have adapted, adjusting their software, diversifying their supply chains, utilizing the more readily available commercial drones on the battlefield and learning to work around the limitations and bans foreign corporations have imposed or threatened to impose.
Enter: The Dronarium Academy.
Private drone schools and nongovernmental organizations around Ukraine are training thousands of unmanned aerial vehicle (UAV) pilots for the army. Dronarium, which before Russia’s invasion last year used to shoot glossy commercial drone footage and gonzo political protests, now provides five-day training sessions to soldiers in the Kyiv Oblast. In the past year, around 4,500 pilots, most of them now in the Ukrainian armed forces, have taken Dronarium’s course.
What’s on the curriculum
On the hill outside Kyiv, behind the thicket of trees, break time’s over and school’s back in session. After the air raid siren stops,some soldiers grab their flying machines and head to a nearby field; others return to their tents to study theory.
A key lesson: How to make civilian drones go the distance on the battlefield.
“In the five days we spend teaching them how to fly drones, one and a half days are spent on training for the flight itself,” a Dronarium instructor who declined to give his name over security concerns but uses the call sign “Prometheus” told POLITICO. “Everything else is movement tactics, camouflage, preparatory process, studying maps.”
Drone reconnaissance teams work in pairs, like snipers, Prometheus said. One soldier flies a drone using a keypad; their colleague looks at the map, comparing it with the video stream from the drone and calculating coordinates. The drone teams “work directly with artillery,” Prometheus continued. “We transfer the picture from the battlefield to the servers and to the General Staff. Thanks to us, they see what they are doing and it helps them hit the target.”
Private drone schools and nongovernmental organizations around Ukraine are training thousands of unmanned aerial vehicle (UAV) pilots for the army | John Moore/Getty Images
Before Russia launched its full-scale invasion of Ukraine, many of these drone school students were civilians. One, who used to be a blogger and videogame streamer but is now an intelligence pilot in Ukraine’s eastern region of Donbas, goes by the call sign “Public.” When he’s on the front line, he must fly his commercial drones in any weather — it’s the only way to spot enemy tanks moving toward his unit’s position.
“Without them,” Public said, “it is almost impossible to notice the equipment, firing positions and personnel in advance. Without them, it becomes very difficult to coordinate during attack or defense. One drone can sometimes save dozens of lives in one flight.”
The stakes couldn’t be higher: “If you don’t fly, these tanks will kill your comrades. So, you fly. The drone freezes, falls and you pick up the next one. Because the lives of those targeted by a tank are more expensive than any drone.”
Army of drones
The war has made the Bayraktar military drone a household name, immortalized in song by the Ukrainians. Kyiv’s UAV pilots also use Shark, RQ-35 Heidrun, FLIRT Cetus and other military-grade machines.
“It is difficult to have an advantage over Russia in the number of manpower and weapons. Russia uses its soldiers as meat,” Ukraine’s Digital Transformation Minister Mykhailo Fedorov said earlier this month. But every Ukrainian life, he continued, “is important to us. Therefore, the only way is to create a technological advantage over the enemy.”
Until recently, the Ukrainian army didn’t officially recognize the position of drone operator. It was only in January that Commander-in-Chief of the Armed Forces of Ukraine Valerii Zaluzhnyi ordered the army to create 60 companies made up of UAV pilots, indicating also that Kyiv planned to scale up its own production of drones. Currently, Ukrainian firms make only 10 percent of the drones the country needs for the war, according to military volunteer and founder of the Air Intelligence Support Center Maria Berlinska.
In the meantime, many of Ukraine’s drone pilots prefer civilian drones made by Chinese manufacturer DJI — Mavics and Matrices — which are small, relatively cheap at around €2,500 a pop, with decent zoom lenses and user-friendly operations.
Choosing between a military drone and a civilian one “depends on the goal of the pilot,” said Prometheus, the Dronarium instructor. “Larger drones with wings fly farther and can do reconnaissance far behind enemy lines. But at some point, you lose the connection with it and just have to wait until it comes back. Mavics have great zoom and can hang in the air for a long time, collecting data without much risk for the drone.”
But civilian machines, made for hobbyists not soldiers, last two, maybe three weeks in a war zone. And DJI last year said it would halt sales to both Kyiv and Moscow, making it difficult to replace the machines that are lost on the battlefield.
In response, Kyiv has loosened export controls for commercial drones, and is buying up as many as it can, often using funds donated by NGOs such as United24 “Army of Drones” initiative. Ukraine’s digital transformation ministry said that in the three months since the initiative launched, it has purchased 1,400 military and commercial drones and facilitated training for pilots, often via volunteers. Meanwhile, Ukraine’s Serhiy Prytula Charitable Foundation said it has purchased more than 4,100 drones since Russia’s full-scale invasion began last year — most were DJI’s Mavic 3s, along with the company’s Martice 30s and Matrice 300s.
But should Ukraine be concerned about the fact many of its favorite drones are manufactured by a Chinese company, given Beijing’s “no limits” partnership with Moscow?
Choosing between a military drone and a civilian one “depends on the goal of the pilot,” said Prometheus, the Dronarium instructor | Sameer Al-Doumy/AFP via Getty Images
DJI, the largest drone-maker in the world, has publicly claimed it can’t obtain user data and flight information unless the user submits it to the company. But its alleged ties to the Chinese state, as well as the fact the U.S. has blacklisted its technology (over claims it was used to surveil ethnic Uyghurs in Xinjiang), have raised eyebrows. DJI has denied both allegations.
Asked if DJI’s China links worried him, Prometheus seemed unperturbed.
“We understand who we are dealing with — we use their technology in our interests,” he said. “Indeed, potentially our footage can be stored somewhere on Chinese servers. However, they store terabytes of footage from all over the world every day, so I doubt anyone could trace ours.”
Dealing with Elon
Earlier this month, Elon Musk’s SpaceX announced it had moved to restrict the Ukrainian military’s use of its Starlink satellite internet service because it was using it to control drones. The U.S. space company has been providing internet to Ukraine since last February — losing access would be a big problem.
“It is not that our army goes blind if Starlink is off,” said Prometheus, the drone instructor. “However, we do need to have high-speed internet to correct artillery fire in real-time. Without it, we will have to waste more shells in times of ongoing shell shortages.”
But while the SpaceX announcement sparked outcry from some of Kyiv’s backers, as yet, Ukraine’s operations haven’t been affected by the move, Digital Transformation Minister Fedorov told POLITICO.
Prometheus had a theory as to why: “I think Starlink will stay with us. It is impossible to switch it off only for drones. If Musk completely turns it off, he will also have to turn it off for hospitals that use the same internet to order equipment and even perform online consultations during surgeries at the war front. Will he switch them off too?”
And if Starlink does go down, the Ukrainians will manage, Prometheus said with a wry smile: “We have our tools to fix things.”
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( With inputs from : www.politico.eu )
