Hackers shut down the internet as ‘Russian Davos’ adjusts to new reality


  • Russian companies make a splash, but Western companies are missing
  • Deputy PM speaks of ‘painful’ move to proprietary technology
  • Energy giant seeks state funds while gas prices are high

June 17 (Reuters) – Hackers on Friday delayed the start of President Vladimir Putin’s speech at Russia’s main economic forum, devoid of strong Western participation as Russia adjusts to the “new reality” of life under Western sanctions.

State-owned companies made sure to sign deals publicly, and many firms had booths with floor-to-ceiling screens and glamorous attendees at the 25th St. Petersburg International Economic Forum, which is meant to compete with the World Economic Forum in Davos.

But the Western investors and investment bankers who had appeared in previous years were conspicuous by their absence.

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“New business on the Italian side is just frozen,” Italian businessman Vincenzo Trani told Reuters on the sidelines of a session titled “Western investors in Russia: new realities.”

“New investment is simply impossible and people are not increasing investments.”

Kremlin spokesman Dmitry Peskov said a denial-of-service attack, which works by flooding servers with bogus traffic, had affected the forum’s accreditation and admission systems. He did not spread the blame, but the situation in the Ukraine was looming.

When Russian forces entered Ukraine on February 24, Kyiv turned to “hacktivists” for help. There was no immediate response from Ukraine to what is known as “distributed denial of service,” a basic form of digital disruption that has been used heavily by both sides of the Russian-Ukrainian conflict.

Connectivity and internet speeds suffered at the forum, and Putin’s speech, in which he accused the West of trying to crush his country with an economic “blitzkrieg,” was delayed by just over 100 minutes. read more

Western sanctions against Russia for its actions in Ukraine combined with related supply chain issues have dramatically altered Russia’s export-import dynamics, with the country now looking to countries like China and India and turning away from the West.

Key banks have lost access to the global payments system SWIFT, Western brands are avoiding the country and selling off in a hurry, writing off billions of dollars in assets, and the European Union has promised an embargo on Russian oil.

Deputy Prime Minister Dmitry Chernyshenko lamented Russia’s technological backwardness, saying Russia’s “painful process” of switching to its own technology was underway.

“You are competing with global companies that have outperformed you for entire generations,” he told an audience of Russian trade representatives.

GRIM BUSINESS OUTLOOK

The CEO of Russia’s top lender Sberbank (SBER.MM) summed up the situation with grim irony.

“They say that everything is fine with business in Russia, there are only small problems: there is no one to buy from and no one to sell to, it is impossible to pay and impossible to supply,” German Gref said on Friday. “This is a joke, but it reflects reality.”

Tadzio Schilling, director of the Association of European Companies, which groups hundreds of companies inside and outside Russia, said the losses for those doing business in Russia “can be colossal today.”

“The short-term outlook for business is bleak,” he said.

Leonid Mikhelson, CEO of Russian energy giant Novatek asked for more state support.

A global gas price contraction had created a window of opportunity that Russia, which relies heavily on its vast fossil fuel exports, needed to take advantage of before closing, he said.

But his company was unable to start up a compression line, a key part of its industry, without components that are now restricted by sales sanctions to Russia.

“We have to create a domestic liquefaction technology for this,” he said. “A full localization program, provided with full funding, is required.”

‘KEEP VERY QUIET’

Russian companies often host interviews and make big announcements at the forum, the main event on Russia’s business calendar, but this year speakers were few and far between.

Many Russian companies are grappling with how to handle their communications, said Ksenia Kasyanova, director of R&D at public relations firm CROS.

She said they were torn between wanting to restore the lawsuit and fearing that any comments would not be published with all the context they would like.

“Faced with this dilemma, entrepreneurs are finally settling on the complicated task of ‘keep quiet out loud,'” Kasyanova said, putting the company in the public arena but downplaying communications and publicity.

Italian investor Trani, who founded one of Russia’s largest car-sharing firms, Delimobil, said Russian and international companies were craving stability.

“No company can have aggressive development in this period,” he said. “We have to wait for peace.”

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Information from Reuters; Edited by Kevin Liffey and Philippa Fletcher

Our standards: The Thomson Reuters Trust Principles.



Reference-www.reuters.com

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