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Security Brief: IFET Week of December 6, 2021

Week of Monday, December 6, 2021 | Issue 52

Ciro Mazzola, Illicit Finance and Economic Threats Team


The EU Flag[1]


Date: December 6, 2021

Location: Brussels, Belgium

Parties involved: EU; French government; Russian government; the Wagner Group

The event: The EU imposed sanctions on the Russian private military contractor the Wagner Group after the French government urged for a response to the group’s human rights violations. In January 2020, Russian President Vladimir Putin said that the Wagner Group does not represent the Russian State nor are they funded by it. Despite this, the Russian government has repeatedly told the EU that sanctions on Russian private entities will be interpreted as interference with Russia’s domestic affairs.[2]

Analysis & Implications:

  • Russia will likely exploit Europe’s reliance on Russia’s gas to respond to sanctions. An increase in gas prices will likely hurt Europe, especially in the winter months as people will rely on it to stay warm. A likely response from Russia would be to supply less gas to the EU through the Nord Stream pipeline, imposing additional costs on European governments as they would likely need to import energy sources from other countries using more expensive methods.

  • Russian hackers will likely conduct more cyberattacks in the EU as retaliation for the sanctions. The Putin administration will likely exploit hackers to target EU agencies, such as the European Central Bank, to disrupt their operations. Along with the disruption from these attacks, Russian hackers are likely to leak data, potentially jeopardizing sensitive information of EU agencies.

Date: December 8, 2021

Location: Ukraine

Parties involved: Ukrainian government; Ukrainian cryptocurrency companies; Oleksandr Bornyakov, Ukrainian Deputy Minister for Digital Transformation

The event: CEOs of Ukrainian cryptocurrency companies and Deputy Minister Oleksandr Bornyakov are discussing a future law meant to legalize and regulate the country’s cryptocurrency businesses. Ukraine is witnessing an increase in imports and exports paid with cryptocurrencies, making it difficult for the process to be transparent without regulation. The government is optimistic as it believes that the new law will allow cryptocurrency businesses to comply more easily with laws without impacting their growth. Local cryptocurrency companies worry about the country’s instability and fear that governmental interference may limit their activities and cause companies to leave the country.[3]

Analysis & Implications:

  • If the law is passed, increased regulation will likely decrease criminal exploitation of cryptocurrencies, such as terrorism financing and money laundering.

  • Ukraine will likely try to use similar cryptocurrency regulations to the EU. This would likely enable the country to implement comprehensive regulations of these companies while also trying to attract business opportunities legally. It is also very likely that Ukraine’s increased cryptocurrency regulations are an attempt to support its likely future application for EU membership.

Date: December 9, 2021

Location: Geneva, Switzerland

Parties involved: International Monetary Fund (IMF); Gita Gopinath, IMF’s chief economist

The event: Gita Gopinath, the IMF’s chief economist, stated that inflationary pressures are increasing around the world as the COVID-19 pandemic continues. There is also an increasing risk of stagflation, a situation displaying slow economic growth, inflation, and high unemployment, within the global economy. The appearance of the COVID-19 Omicron variant hinders the world’s economic recovery and is projected to cost the global economy $5.3 trillion USD, in addition to the previously estimated $12.5 trillion USD loss.[4]

Analysis & Implications:

  • The Omicron variant will very likely have a mixed short-term impact on businesses. It will almost certainly continue to hurt the global tourism and hospitality sectors that rely on the holiday season. However, with increasing restrictions and people canceling travel plans to stay home, businesses that suffer when locals leave for the holidays are likely to see an improvement in their performances for at least the next month.

  • Governments will very likely increasingly mandate the COVID-19 vaccine to minimize the economic threat the new COVID-19 variant represents. If the vaccine becomes obligatory, there will very likely be violent reactions by individuals opposed to such government-mandated measures. These reactions will likely include riots that force businesses to temporarily close, resulting in further economic losses.

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________________________________________________________________________ The Counterterrorism Group (CTG)

[1]European Union Flag” by pixel2013 licensed under Pixabay

[2] EU to impose sanctions on Russian military contractor Wagner Group, official says, Reuters, December 2021, https://www.reuters.com/article/us-eu-sanctions-wagner-idAFKBN2IP18U

[3] Ukraine's new crypto law could make it a trading hub. Some would rather it stayed in the shadows, Euronews, December 2021, https://www.euronews.com/next/2021/12/07/ukraine-s-new-crypto-law-could-make-it-a-trading-hub-others-would-rather-it-stayed-in-the-

[4] IMF chief economist sees inflationary pressures, risks from Omicron, Reuters, December 2021, https://www.reuters.com/business/imf-chief-economist-sees-inflationary-pressures-2021-12-09/

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