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Alexei Navalny’s detention to test Russian activist’s support

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If Vladimir Putin thought locking up Alexei Navalny would silence his most vocal domestic critic, Russia’s president was swiftly proved otherwise.

Less than 24 hours after Mr Navalny was sentenced to 30 days in jail and threatened with years more, his supporters hit back by publishing a two-hour-long video investigation that alleged a coterie of oligarchs had funded the construction of a lavish palace for Russia’s president on the country’s Black Sea coast, complete with indoor ice hockey rink, theatre, casino and secret tunnel to the beach.

The investigation, which has been viewed more than 37m times since Tuesday afternoon, was a stark reminder of the threat that the anti-corruption campaigner poses to Mr Putin’s regime. And it also allayed fears that the 44-year-old’s team of investigators and community organisers could be cowed or discombobulated by the detention of their leader.

Mr Putin’s iron-like grip on the levers of Russia’s skeleton democracy means Mr Navalny’s operation will struggle to make electoral inroads. But the charismatic campaigner’s ability to stir up popular outrage at examples of alleged government corruption and mobilise tens of thousands in street protests has long represented a major challenge for the Kremlin.

Attempts to sideline him through temporary detention, criminal cases and — according to Mr Navalny and a number of western governments — an assassination attempt in Siberia using the nerve agent novichok last August have all failed.

However, this week’s arrest, on charges of breaching the terms of a suspended prison sentence, that could see him sentenced to a total of three and a half years behind bars, is set to test just how popular Mr Navalny and his team are among ordinary Russians, and whether his incarceration will smother his movement or prove a rallying call against Mr Putin’s 21-year regime.

“Navalny now is not just a physical person, Navalny is somehow a movement: with its values, regional infrastructure and activists,” said Tatiana Stanovaya, founder of Russian political consultancy R. Politik. “So if the Kremlin just puts Navalny in prison and does nothing else, it will make the work of [his team] more difficult but will not stop it.”

Oligarchs are alleged to have funded the construction of a lavish palace for Vladimir Putin, featuring an indoor ice hockey rink, theatre, casino and secret tunnel to the beach © Mikhail Klimentyev/Kremlin via Reuters

In a message to his followers recorded shortly before he was taken to Moscow’s notorious Matrosskaya Tishina prison on Monday, Mr Navalny urged his supporters to protest on Saturday. The Kremlin has suggested this would be in breach of Russian law, and Moscow’s mayor has rejected an application for a public gathering, raising the possibility of clashes between police and protesters.

A heavy-handed attempt to suppress protests, combined with the arrest of Mr Navalny and dozens of his supporters this week, may mark the beginning of a renewed crackdown on opposition voices. That comes as the Kremlin gears up for critical parliamentary elections in September, with the ruling United Russia polling at historic lows, thanks to a moribund economy and falling real incomes.

“The use of chemical weapons against — and the subsequent detention of — the Kremlin’s most prominent critic Alexey Navalny . . . suggest[s] an increasingly restrictive civic and political environment in Russia ahead of the September State Duma election,” said Andrius Tursa of Teneo, a political risk consultancy.

The Kremlin has denied any role in the attacks on Mr Navalny and claimed he could have been poisoned outside Russia. It has also denied that Mr Putin is the beneficial owner of the Black Sea palace.

Late last year Mr Putin signed new laws that could be used to target political opponents and those who support, or are supported by, Mr Navalny’s organisation, by branding them “foreign agents”. This is a term loaded with espionage connotations and which carries with it serious bureaucratic and legal ramifications.

Vyacheslav Volodin, chairman of Russia’s parliament and a close ally of Mr Putin, on Tuesday told the chamber that Mr Navalny “is backed by foreign special services”, while Gennady Zyuganov, leader of Russia’s Communist party, claimed he was sent back to the country to incite insurrection. Vladimir Zhirinovsky, leader of the nationalist Liberal Democratic party, called for him to be banished to “the northern tundra, where birds freeze and fall to the ground mid-flight”.

The Communists and Liberal Democrats are members of the “systemic opposition”, who officially do not caucus with United Russia but receive support from Mr Putin’s regime and almost always support Kremlin policies.

“I don’t regret coming back . . . I refuse to put up with the lawlessness perpetrated by the authorities of my country,” Mr Navalny wrote in an Instagram post from prison on Tuesday.

“The scoundrels in the Kremlin . . . divide us into three columns: those who are silent; those who understand but are silent; and those who refuse to be silent and fight,” he wrote. “The third column scares them . . . I urge everyone to choose the right column.”

Mr Navalny is boycotted by state-controlled and Kremlin-friendly television channels, and Mr Putin does not speak his name. State propagandists dismiss him as unknown or detested outside liberal Moscow circles.

Yet research by the Levada-Center, an independent pollster, in September found that 20 per cent of Russians support Mr Navalny’s actions, even if his overall public trust rating — at about 4 per cent — was far below Mr Putin’s 33 per cent.

With him in jail, attempts to close that gap will rely mainly on the continued work of his community organisers spread all across Russia’s regions, and the anti-corruption researchers, some of whom are crucially based overseas.

“The Kremlin demonstrates very hardline intentions,” said Ms Stanovaya. “So the question is whether the Kremlin will opt for steamroller tactics? It seems to me rather logical.”

“[They] can really suppress regional infrastructure; hamper the work of Navalny’s team in Russia, as well as impeding the spread of the investigations in social media and on the internet in general, including YouTube,” she added. “But what they can’t do is to hamper work for those investigators who are abroad.”



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Australia’s treasurer warns global stimulus threatens financial stability

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Australia has warned that unprecedented global stimulus efforts during the coronavirus pandemic are creating financial stability risks that will only intensify when interest rates inevitably rise.

Canberra has also defended tough new foreign investment rules that have led to a collapse in Chinese investment, arguing the number of proposed deals motivated by strategic, rather than purely commercial gain, was increasing.

Josh Frydenberg, Australia’s treasurer, said the Pacific nation was in a strong economic position as its net debt to gross domestic product was about half that of other advanced economies, even as it begins unwinding fiscal stimulus.

“There is no doubt elevated debt levels will create challenges for many countries. While global interest rates are low those debt levels can be serviceable — but there will be a time when the monetary policy settings change,” he told the Financial Times.

Frydenberg’s comments on the risks posed by global stimulus followed a similar warning delivered last week by Peter Costello, a close political ally and former Australia treasurer.

Australia will be among the first advanced economies to taper off Covid-19 fiscal stimulus with the closure of its A$90bn (US$70bn) JobKeeper wage subsidy scheme this month.

Canberra has argued that the recovery is already under way, citing a fall in unemployment to 6.4 per cent in January and a 3.3 per cent economic expansion in the three months to September last year.

Frydenberg, who counts Margaret Thatcher and Ronald Reagan among his role models, said the government’s A$250bn stimulus was required to stabilise the economy during the pandemic. But he said JobKeeper, which supported 3.6m workers at its peak, was no longer needed as the recovery could be supported by tax cuts, which were announced last year.

Asked if he thought the economic policies of Thatcher and Reagan were still relevant, he said: “[Reagan and Thatcher] achieved a lot when they were in office and they were committed to lower taxes. They were committed to cutting regulation and that’s certainly what I’ve been committed to as well.”

But trade unions and businesses that are still suffering as a result of border closures and restrictions, particularly in the tourism and entertainment sectors, have warned that the scheme’s closure will dent the economy.

“JobKeeper should be extended for those businesses that are still affected by coronavirus. [Through] no fault of their own, they are suffering that downturn,” said Sally McManus, secretary of the Australian Council of Trade Unions, last week. “And we say that because that will save jobs.”

Josh Frydenberg, Australia’s treasurer, is a rising star in the country’s conservative government and is tipped as a future prime minister © AP

Frydenberg, who was the architect of foreign investment rules aimed at countering rising Chinese influence, said he made no apologies for putting “national interest” at the heart of Australia’s investment policies.

Chinese investment fell 61 per cent last year to A$1bn, down from A$2.6bn in 2019 and a peak in 2016 of A$16.5bn, data showed. Frydenberg was instrumental in blocking two potential deals: China Mengniu’s A$600m bid for Japan-owned Lion Dairy and China State Construction Engineering Corp’s A$300m bid for Probuild, a South Africa-owned construction company.

“We absolutely reserve the right to make decisions around foreign investment based on national interest and having put in place an explicit national security test allows us to do that,” he said.

“Increasingly we’ve seen foreign investment proposals that have been motivated not by purely commercial gains but more strategic ones. When those foreign investment proposals potentially compromise the national interest, then we reserve the right to say no.”

Frydenberg said Australia was not alone in tightening its rules, noting that other countries shared Canberra’s views on national sovereignty and foreign investment.

“Obviously we have had some challenges with China,” he said when asked about Beijing’s imposition of trade sanctions on a range of Australia’s exports following Canberra’s call last year for an inquiry into the origins of Covid-19 in Wuhan.

Frydenberg insisted that Australian ministers were prepared to sit down with their Chinese counterparts to discuss the bilateral relationship but only on a “no conditions attached” basis.

“It is a mutually beneficial trading relationship — we supply the bulk of their iron ore and that iron ore has helped underpin their economic growth,” he said.

Frydenberg is a rising star in Australia’s conservative government and is tipped as a future prime minister.

Last week, he shot to global attention following several days of negotiation with Facebook’s Mark Zuckerberg over the social media company’s decision to block news on its platforms in Australia in response to a law forcing it to pay news publishers.

On Friday, Facebook “refriended Australia” and returned news to its Australian platform following amendments that may make it easier for the company to avoid the toughest elements of the law.

“Trying to negotiate with these guys is a bit like playing chess against a chess master,” said Frydenberg, who joked that he spoke to Zuckerberg more than his own wife last week.

“The reality is they are massive companies with huge balance sheets and global reach. If this was easy other countries would have done it [made Big Tech pay for news] long ago.” 



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Ecuador’s exporters caught between US and China after debt deal

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Exporters in Ecuador are worried that their all-important trade with China will suffer as a result of a controversial agreement the US says is aimed at shutting China out of the South American country’s 5G telecoms network.

The agreement, signed by the US International Development Finance Corporation (DFC) and the Ecuadorean government just days before Donald Trump left office in January, envisages the US buying oil and infrastructure assets in Ecuador on the understanding Quito uses the proceeds to pay off its debt to China.

It also obliges Ecuador to sign up to what the Trump administration called the “Clean Network” — a state department initiative designed to ensure that nations exclude Chinese telecoms services and equipment providers as they build out their high-speed 5G mobile networks.

Adam Boehler, the recently departed chief executive of DFC, has described the deal as a “novel model” to eject China from the Latin American nation.

But it has caused unease in Ecuador, which has become increasingly reliant on exports to China.

“The announcement has generated a lot of inquiries and a lot of doubts,” said Gustavo Cáceres, head of the Ecuadorean-China Chamber of Commerce (CCECH). “We hope our authorities handle this in the best way possible so as not to give the impression that we’re turning our backs on China.”

One of the smallest countries in South America, Ecuador has traditionally exported primarily to the US and Europe, but China is fast catching up. Its share of Ecuador’s exports jumped from 3.9 per cent in 2015 to 15.8 per cent. In the same period, the US’s share fell from 39.4 per cent to 23.7 per cent.

The Chinese buy oil, shrimp, bananas, cut flowers, cacao and timber from Ecuador. Last year, despite the coronavirus pandemic, Ecuador’s exports to China grew more than 10 per cent and, for the first time, the country boasted a trade surplus with Beijing.

The shrimp industry has become particularly important. Since 2016, Ecuador’s shrimp exports worldwide have jumped 86 per cent. The nation of just 17.4m people is now the largest exporter of shrimp in the world, having overtaken India last year, when it exported 676,000 metric tonnes of the crustaceans in trade worth $3.6bn. After oil, shrimp were the country’s most lucrative export commodity.

Over half of that went to China, which, with its expanding middle class, is acquiring a taste for seafood once seen as a luxury.

“China will remain our main market,” forecast José Antonio Camposano, president of Ecuador’s National Chamber of Aquaculture (CNA), which oversees the industry. “We need a smart approach to China. A market of 1.4bn people with the acquisitive power that the Chinese have? I’m a businessman, how can I say no to that?”

The CNA was sufficiently worried by Ecuador’s agreement with the US that it sent a three-page letter to Ecuador’s president Lenin Moreno reminding him of China’s buying power.

While the letter did not mention the DFC deal directly, it urged Moreno — who in his four years in power has shifted Ecuador’s axis away from Beijing and towards Washington, reviving relations with the IMF and renegotiating the country’s debt to bondholders — “to reinforce with senior Chinese leaders the point that the excellent relationship between Ecuador and China remains intact”.

Freshly caught shrimp being packed into containers in Ecuador in 2011
Ecuador’s shrimp industry has fed a growing appetite among China’s expanding middle class © Bloomberg

China’s ambassador to Ecuador, Chen Guoyou, said he was unconcerned by the DFC deal and described media reports that it excluded Chinese companies from Ecuador’s telecoms network as “over-interpretation and gratuitous assumption”.

“China respects the sovereign and independent decision of the Ecuadorean government to develop pragmatic, balanced and diverse partnerships with other countries,” he told the Financial Times in an email.

Responding to his comments, one of the former Trump administration officials who negotiated the deal said it had been made explicitly clear in the text that the agreement was contingent on the country participating in the “Clean Network” — which would prevent it from including Huawei or any other Chinese company in its telecoms network.

The future of the deal, and indeed Ecuador’s future relations with China and the US, will depend in part on the outcome of the country’s presidential election on April 11. It pits leftwing economist Andrés Arauz against Guillermo Lasso, a conservative former banker. 

Arauz has the backing of Rafael Correa who took Ecuador out of the US’s orbit and pushed it towards China while serving as president from 2007 until 2017. He broke off relations with Washington’s financial institutions and signed a series of loans-for-oil deals with the Chinese. If Arauz wins the election he is likely to seek support from Beijing and might rip up the DFC agreement, particularly now Trump is no longer in office.

In contrast, Lasso told the FT previously the deal was “a pleasant surprise” and “good news” for Ecuador.

“It’s clear that the US is our principal ally and in my government I would look for an even closer alliance with the US,” he said.



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Brazil virus variant found to evade natural immunity

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The P.1 Covid-19 variant that originated in Brazil and has spread to more than 25 countries is around twice as transmissible as some other strains and is more likely to evade the natural immunity people usually develop from prior infection, according to a new international study.

The research, conducted by a UK-Brazilian team of researchers from institutions including Oxford university, Imperial College London, the University of São Paulo, found that the P.1 variant was between 1.4 and 2.2 times more transmissible than other variants circulating in Brazil. 

It was also “able to evade 25-61 per cent of protective immunity elicited by previous infection” with any earlier variant, the researchers found, in a sign that current vaccines could also be less effective against it.

International concern about the P.1 variant has escalated recently, with more than 25 countries detecting the variant, including Belgium, Sweden and the UK, which has identified six cases.

The scientists are expected to release a paper describing the research on Tuesday. Dr Nuno Faria, the lead author, did not immediately respond to a request for comment. The study has not yet been peer reviewed.

The researchers have dated the emergence of the P.1 variant to November 6, 2020, around one month before cases began to surge for a second time in the Brazilian city of Manaus. They found that the proportion of cases classified as P.1 in Manaus increased from zero to 87 per cent in the space of 7 weeks. 

The paper concluded: “Our results further show that natural immunity waning alone is unlikely to explain the observed dynamics in Manaus, with support for P.1 possessing altered epidemiological characteristics.”

“Studies to evaluate real-world vaccine efficacy in response to P.1 are urgently needed,” it added.

The researchers also found that infections were 10 to 80 per cent more likely to result in death in Manaus after the emergence of P.1. However, the authors cautioned that it was not possible to determine whether this meant the variant was more lethal or whether it was a result of increased strain on the city’s healthcare system, or a combination of both. 

The P.1 variant has over 17 mutations, which alter its genetic sequence from the virus originally identified in Wuhan, including 3 key changes to the spike protein that it uses to enter human cells.

Researchers in Brazil have been using genetic sequencing technology developed by Oxford Nanopore in the UK to identify and track the variant. The technology was first used in Brazil during the Zika outbreak in 2015.

Dr Leila Luheshi, director of applied and clinical markets at Oxford Nanopore, told the Financial Times that while the B.1.1.7 variant in the UK has similar properties of high transmissibility to P.1 — it is thought to be around 1.5 times as transmissible as variants that preceded it — there was no evidence to date that it evaded past natural immunity in the same way. Studies so far have also shown that current vaccines retain their efficacy against B.1.1.7.

Luheshi said that the concern with P.1 is that “because it has these mutations around the spike . . . the hypothesis is that the vaccine will be less effective.” But she added that there is not yet definitive evidence to support this theory. 



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