February 25, 2021
The U.S. and EU are coordinating new sanctions on Russia for the poisoning and imprisonment of political dissident Alexey Navalny, and the U.S. is also planning sanctions related to the SolarWinds hack and other recent cyber incidents traced back to Moscow. The EU sanctions, set to take effect sometime next week, entail an asset freeze and travel ban on the heads of Russia’s national guard and its prison service – the organizations it says are responsible for Navalny’s detention and prosecution. U.S. Secretary of State Anthony Blinken discussed the new sanctions with EU officials via teleconference, in which they also covered broader Russia and China issues and a possible revival of the Iran nuclear deal from which the U.S. withdrew in 2018. The U.S. plans to announce new sanctions on Russia in coming weeks for Navalny’s poisoning and imprisonment in coordination with the EU, but also as a broader response to various Russian activities, including the SolarWinds hack that targeted nine U.S. government agencies and ~100 private sector firms and efforts to influence U.S. electoral politics and steal vaccine research. The U.S. is simultaneously developing stronger defensive cyber measures to complicate Russian efforts to penetrate both public and private sector networks. Part of the U.S. approach is to label Russia’s hack of SolarWinds as “indiscriminate”, contrasting it with legitimate, state-vs-state cyberespionage activities. This classification also forms the basis of international limitations on certain classes of weaponry – like chemical and biological weapons – that do not distinguish between combatant and civilian targets. This approach provides clues to how the U.S. may seek to engage allies and other like-minded entities in establishing multilateral rules of the road for cyberwarfare.
Petrobras shares took a tumble following the sacking of the Brazilian oil and gas giant’s CEO by President Jair Bolsonaro. Last Friday, Bolsonaro fired Petrobras chief executive Roberto Castello Branco and has replaced him with an army general, Joaquim Silva e Luna, who has no experience in the oil and gas sector but is considered a loyalist to the president. The abrupt firing of the CEO came after a dispute over pricing and the company’s policy of setting fuel prices in accordance with international levels at a time when energy prices are increasing globally. The move resulted in a tumultuous week in trading for the São Paulo-listed company – its stock fell 20% on Monday – and the broader market, with the Bovespa index falling as well. Petrobras has recovered some ground in the days since, but investors have reacted negatively to the move by Bolsonaro, which they see as government interference in Petrobras specifically and free markets more generally. In what has become typical Bolsonaro style, he denied interfering and doubled down on his populist message by seemingly threatening government intervention in the electricity sector next, saying: “If the press is worried about yesterday’s switch [in CEO], next week there will be more.” Economists are now concerned that Bolsonaro could remove the finance minister, Paulo Guedes, who has been in favor of reducing the role of the state in the economy. At the same time, the Petrobras situation raises real concerns for Brazil’s economic recovery as it emerges from the pandemic.
India and Pakistan have announced their shared intentions to observe conditions of a cease-fire agreement reached in 2003 which, if upheld, would bring an end to regular skirmishes across the two countries’ shared border. The directors general of the Indian and Pakistani militaries held discussions over the phone this morning, and the two sides agreed to a cease fire along the Line of Control – the 460-mile de facto border between the two countries in the disputed region of Kashmir – and all other border areas from midnight tomorrow. While violence at the border is mostly limited to small-scale confrontations, these occur regularly and cause dozens of fatalities annually, including civilian deaths. There were more than 5,000 incidents last year involving the trading of fire across the Line of Control in Kashmir alone. Decades of simmering conflict between the two nuclear-armed neighbors has long posed a major risk to regional stability, and if localized hostilities were to meaningfully escalate, they could trigger a larger conflict with global repercussions. This latest announcement should be regarded as a positive sign, but it is by no means a guarantee of a lasting peace. A definitive end to regular confrontations will require that both sides uphold their end of the bargain. Historical precedent offers plenty of reason for skepticism.
