In Other News: Russia Accused of Trying to Steal Vaccine Research, Brazil Claims Modest Growth & More – July 17, 2020

The UK, U.S., and Canada have accused Russia’s intelligence services of hacking into research centers to steal information on Covid-19 vaccine development efforts. The UK’s official statement on the matter links the hacks to APT29, also known as Cozy Bear, the state-backed group behind the hack of the Democratic National Committee in the lead-up to the 2016 U.S. presidential election. News about these latest hacking attempts is unsurprising. Russian intelligence is suspected of trying to steal a wide variety of intellectual property across various sectors – diplomatic, commercial, military, etc. Furthermore, Russia has a vested interest in assuming a global leadership role in battling Covid-19. The country has deployed pandemic relief as a public relations strategy, with notable examples including a well-publicized shipment of medical and personal protective equipment to the U.S. in April. Russia is not alone in trying to bolster its international image by appearing to be a front-runner in initiatives to combat the pandemic. China shipped huge quantities of masks and testing kits to Spain, Turkey, and the Netherlands – many of which were found to be faulty – and has skillfully deployed social media to highlight donations and relief efforts in Africa. Nor is Russia unique in its efforts to steal government, commercial, and other secrets from western systems. The U.S. alleged that China attempted to hack vaccine research data back in May, and new reports have just emerged of Iran-linked hackers (Charming Kitten) penetrating the accounts of U.S. government officials and military servicemembers. Efforts to steal the vaccine may not be solely in the interest of PR. Once a vaccine is developed, rollout is expected to be a protracted process, and some countries may fear delayed or restricted access. There are multiple actors that will use any means necessary to press their advantage in navigating the pandemic, and until an effective vaccine or treatment is widely available, these attacks will continue.

Brazil is beginning to see some modest economic growth, even as President Jair Bolsonaro has tested positive for coronavirus and the country has surpassed the 2 million mark in confirmed Covid-19 cases. Brazil’s economy ticked upward in May after sharp declines in March and April, leading Brazil’s Central Bank President Roberto Campos Neto to announce this month that Brazil was beginning to see a “V-shaped” recovery with increasing growth, particularly in the manufacturing sector. However, this recovery may be short-lived. Neto’s expectations appear overly optimistic, with official unemployment numbers remaining high at 12%, and the economy expected to shrink by more than 6% in 2020. A return in some economic activity has come with a cost, too. Brazil has the second-highest number of coronavirus cases after the United States. On July 16, Brazil announced it surpassed 2 million confirmed cases with more than 75,000 deaths. Bolsonaro, who tested positive for coronavirus for a second time this week, has downplayed the disease since the beginning. His popularity has suffered from his handling of the virus and is currently at just 33%.

The U.S. and China are navigating a delicate balance, simultaneously attacking each other politically and trying to sustain the phase 1 trade deal. The two countries have been locked in a tit-for-tat exchange of sanctions, starting with the U.S. sanctioning four Chinese four human rights abuses against Uighurs in western China last week. China then sanctioned four U.S. government officials on Tuesday, and the U.S. announced plans to impose sanctions on officials, banks, and businesses involved in restricting Hong Kong’s autonomy on Wednesday, to which China responded with a “vow to retaliate”. Though the sanctions themselves (announced and imposed) have been largely symbolic on both sides, they continue a trend of escalating political confrontation. The U.S. is finding increasing success in convincing (and forcing) allies to curtail Chinese tech giant Huawei’s access to their 5G infrastructure and has also threatened to follow India’s lead in banning major Chinese apps for national security reasons, a threat it may make good on. China is not retaliating directly, but is continuing aggressive actions elsewhere (e.g. targeting South China Sea neighbors, revoking Hong Kong’s autonomy, blocking Canadian canola imports, warning Chinese tourists not to visit Australia), signaling that it has no intention of caving to U.S. pressure. Despite the cycle of escalation, both sides are still trying to de-link political tensions from implementation of the phase 1 trade deal, which has both economic and geopolitical implications. A breakdown of the deal wouldn’t trigger an immediate crisis or crash, but it is not only a means of facilitating economic recovery in both countries, it also acts as a check on more aggressive impulses from either side.

Demonstrators in Russia’s eastern city of Khabarovsk staged several consecutive days of protests against President Vladimir Putin following the arrest of a popular governor for the alleged murder of two businessmen and recent constitutional changes allowing Putin to serve as president until 2036. Khabarovsk saw what is being described as the city’s largest-ever demonstration last Saturday, when tens of thousands turned out to call for Putin to resign. The protests continued for several days and spread to Moscow on Wednesday, leading to the arrests of dozens of anti-Putin demonstrators, who were in defiance of Covid-19-related restrictions on large gatherings. Meanwhile, Putin has postponed implementation of a $360 billion national investment plan, citing the economic impact of the pandemic. The country’s finances suffered from a drastic fall in oil prices earlier this year, triggered by the pandemic but exacerbated by an oil price war that Russia itself instigated. The impact of the oil price crash has been compounded by economic hardship linked to Russia’s own Covid-19 outbreak. Russia ranks among the top five countries worldwide in absolute number of infections, and Putin has been harshly criticized for his ineffective pandemic response. Delays to the investment plan are expected to prolong what is already forecast to be a protracted climb out of recession, and economic hardship and political unrest can be a volatile combination. Near-term regime change is very unlikely, but Putin’s response, which could entail brutal suppression of demonstrations or external shows of Russian force to fan nationalist sentiment, could themselves be potentially destabilizing.