To Russia With Cauti

By Scott Stewart

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Tensions between the West and Russia are ratcheting up in the wake of the nerve agent attack on Sergei Skripal. The heightened hostilities will make day-to-day operations more challenging for foreign companies, nongovernmental organizations and journalists working in Russia. In addition to the threat of government surveillance and harassment, foreigners will likely be the targets of increased violence from nationalists and nationalist gangs.

Just when it looks like relations between Russia and the West have hit rock bottom, they manage to reach a new low. It's a pattern we've been tracking for the last decade as Russia's security services have grown more aggressive in their tactics. And sure enough, tensions have flared once again following the attack on Col. Sergei Skripal, a former Russian military intelligence officer who, along with his daughter, was poisoned with a rare nerve agent in London on March 4. The British government has since announced that the nerve agent used in the attack was a novichok, Russian for "newcomer" — a substance Russia's chemical weapons program reportedly developed to bypass the restrictions of the Chemical Weapons Convention, which Moscow signed in 1993. The compound's use was likely meant as a calling card, a warning from the Russian government to current intelligence officers not to turn against the homeland as Skripal had.

The Big Picture

Russia has long been a challenging environment for Western companies and nongovernmental organizations. As relations between Moscow and the West continue to sour in the wake of the attack against former Russian military intelligence Col. Sergei Skripal, the environment will be even more challenging.

After the novichok revelation, British Prime Minister Theresa May announced the expulsion from London of 23 Russian diplomats believed to be intelligence officers. The British government is also discussing the possibility of imposing new sanctions on Moscow, with the support of the United States and other NATO allies. But the Kremlin won't take these punishments lightly. Moscow already has kicked 23 British intelligence officers out of Russia and will doubtless snap back at new sanctions with measures of its own, as it did in response to sanctions over the invasion of Crimea in 2014. The escalating hostilities stand to make working and traveling in Russia even more difficult for Western companies and their employees.

Hostile Hosts

Relations between Russia and the West have chilled considerably since President Vladimir Putin's election in 2000, and the enmity is becoming palpable. A friend who has traveled all across Russia in his frequent trips to the country recently recounted how on a visit earlier this month, he sensed unusual hostility from ordinary Russians on the street. When he asked a security officer why the locals were treating him this way, the officer replied that it was because the Americans had killed more Russians in Syria than they did during the entire Cold War. He was referring, among other things, to reports that U.S. airstrikes in Deir el-Zour province killed dozens, if not hundreds, of Russian military contractors Feb. 7 when forces aligned with the Syrian government attempted to seize an oil field.

Though the accuracy of the security officer's statement is questionable — especially if one accounts for U.S. support to the mujahideen during the Soviet-Afghan war — the conflict in Syria does seem to explain some of the hostility. Russian state media seized on the bloody fight, and the U.S. contribution to the body count, to stir up nationalism and galvanize support for Putin in the runup to his re-election. The sanctions Washington slapped on Moscow in response to the death of Russian lawyer Sergei Magnitsky, to Russia's invasion of Crimea and to its interventions in the 2016 U.S. presidential election have only fueled the Russian public's rancor. And it's not just directed at the U.S. government or military, as my friend's anecdotal account illustrates.

Business as Usual?

For a variety of reasons, including corruption, confusing and sometimes conflicting laws and regulations, and organized crime, Russia has long been a challenging environment for foreign businesses. The blowback over Western sanctions and battlefield deaths in Syria will add yet another wrinkle for overseas companies and nongovernmental organizations active there. Beyond the repercussions for day-to-day operations, the mounting strain between Moscow and the West could have unpleasant consequences for the estimated 1 million spectators, corporate sponsors and athletes who will flock to Russia this summer for the World Cup. Many of these visitors, after all, will hail from the West.

Well before the attack on Skripal, and the subsequent death of a Russian businessman and government critic in London, we warned of the threat industrial espionage will pose to Western companies and executives during the World Cup. But these incidents and their fallout will no doubt make Russia's Federal Security Service (FSB) and Foreign Intelligence Service even more aggressive toward Westerners living or traveling in Russia.

Throughout its history, and increasingly over the last several years, Russia often has been a difficult place for companies from abroad to do business.

In 2016, Russian lawmakers passed the Yarovaya Law, requiring tech companies operating in the country, such as Twitter and LinkedIn, to store user data, limit encryption and help the FSB decipher encrypted messages. Regulators in Russia have since used the law to clamp down on virtual private networks, or VPNs, which foreign companies often use to protect proprietary data. In light of these restrictions, visitors to the country need to be careful about what data they bring in with them. They can assume that whatever they do bring in will be compromised. Tourists or business travelers may also consider using burner phones or computers — prepaid, disposable devices that will never be connected to a corporate or home network — for the duration of their stay. In addition, visitors should be aware that most high-end hotel rooms in Russia are wired for sound and video.

A Dangerous Fervor

Beyond increased intelligence attention, Western companies and travelers will probably face a greater threat of violence from Russian nationalists and nationalist gangs. Minorities and obvious foreigners in Russia have long been the targets of attacks from nationalist groups and individuals. The surging hostility toward the West will only encourage these kinds of incidents. One of the reasons Putin acts so aggressively on the global stage is that his demonstrations of bravado — like the annexation of Crimea — meet with overwhelming support from the public. In fact, the more brazenly he behaves, the higher his approval rating seems to climb. The international backlash over his actions, moreover, helps reinforce the narrative that other countries want to hold Russia back, which, in turn, perpetuates suspicion and antipathy toward foreigners.

Throughout its history, and increasingly over the last several years, Russia often has been a difficult place for companies from abroad to do business. But the latest developments between Moscow and the West are only going to make things worse — especially for British and U.S. companies, NGOs and journalists.