On May 18, Markus Lanz dedicated his talkshow to the Republic of Moldova. Guests in the studio were politician Michael Roth, journalist Liudmila Corlăteanu, political scientist Hannes Meissner and Russia expert Boris Schumatsky. Please watch the video in the ZDF mediathek.
Johannes Leitner spoke at DHK Business Breakfast
Central Asia and the South Caucasus are experiencing an economic boom. At the same time, increasingly stringent regulations apply to business activities in the region.Johannes Leitner, expert in the field of political risk management and business strategy, shared insights into opportunitites and risks in the region at the DHK Business Breakfast at DHK's offices in Vienna.
Building on his project experience, Johannes provided details on economic dynamics, regulatory and political risks, and classic compliance challenges and management strategies. "The regulatory environment does not affect every company equally. Retailers face different challenges than a logisticis company or equipment manufacturer," the political risk expert highlighted. However, the fact is - despite geopolitical obstacles and sanctions - there is strong growth in the region, he said.
Johannes further emphasized that the war in Ukraine is going along with geopolitical shifts of global dimension. As a result of this, a return to the pre-war constellation and business as usual is unlikely, even in the long-term.
The post-Soviet region of Central Asia, and here in particular Uzbekistan and Kazakhstan, have recently attracted increased interest from German and Austrian companies, Johannes said. In addition to the opportunities offered by the markets themselves, this is primarily due to the shift in trade flows as a result of the Ukraine war and the sanctions against Russia and Belarus. The establishment of new business partnerships, and the shift of supply and distribution chains are accompanied by compliance challenges that need to be managed against the backdrop of increasingly strict national and international compliance rules, the consultant said.
Johannes Leitner (left) and Thomas Gindele (right), head of the DHK in Austria
Kevin Schulte (NTV) dedicates his latest podcast to Turkmenistan. Thanks to the high income from the export of natural gas, the ruling elite lives in wealth, while the population is impoverished. The money is systematically wasted on gigantic construction projects and the personality cult around the president. An entire provincial capital is now being dedicated to the former president, which is being built. Hannes Meissner provides the background to the story.
On 17 and 18 April, workshops and discussion panels took place within the framework of the "Vienna Dialogue". The event took place in the premises of the WKO. The format is organized by the Konrad Adenauer Foundation (Vienna Office) and the University of Passau. The Vienna Dialogue aims at developing concrete proposals for utilizing the potentials of German-Austrian cooperation in order to inspire European Union (EU) policy by providing innovative ideas.
In the course of the event, L&M PRISK contributed its own expertise to the working group on enlargement policy. In this group, experts with technical and regional expertise discussed European responses to climate change and the conditions for joint initiatives. The experts analyzed the impact of climate change in Southeast Europe, especially on agriculture and tourism. In addition, they developed adequate responses, paying particular attention to processes and reforms that individual states should implement in the field of energy policy. Another focus was put on the question of how to maximize the influence of the European Union in the enlargement process. One conclusion was that state capture and corruption are major problems in the Western Balkan states. Transparent tender processes, the strengthening of the European Public Prosecutor's Office, new institutions and shared sovereignty, as well as innovative and small-scale projects tailored to SMEs could make a significant contribution in the future.
Hannes Meissner (L&M PRISK) during the presentation of the results of the working groups.
The topic could not be more relevant today. Russia's war in Ukraine, sanctions, fragile supply chains, reputational risks, conflict between the USA/EU and China/Russia and their respective allies, the list goes on.
In the midst of this mishmash of disruptive developments on a geopolitical level, public companies must set the strategic course for their business development. And they must explain these decisions to their investors, the capital market, in a well-founded manner. A difficult task, but one that can be accomplished.
For this purpose, CIRA organized a CIRA TV webinar on April 20, 2023, moderated by Hannes Roither (Palfinger) and Johannes Leitner (LM PRISK) as an expert for the management of geopolitical risks.
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Stephan Ozsváth shares insights into Moldova - a torn country. He reports that the former Soviet republic wants to join the EU. But the country suffers from the frozen conflict over the breakaway region of Transnistria. This part of the country seeks proximity to Russia and Russian soldiers are stationed there. The Kremlin is using this conflict for a hybrid war against the pro-European government in Chisinau. For Moldova, Ukraine is a kind of life insurance. If Ukraine wins the war against Russia, Moldova will be spared. The radio report features voices from the country as well as foreign experts, including Hannes Meissner from L&M PRISK.
Discussion series with L&M PRISK at Ost-Ausschuss der Deutschen Wirtschaft, CIRA and DIHK
The post-Soviet region of Central Asia, and here again especially Uzbekistan and Kazakhstan, has recently attracted increasing interest from German and Austrian companies. Besides the opportunities offered by the markets themselves, this is mainly due to the shift of trade flows as a result of the Ukraine war and the sanctions against Russia and Belarus. The establishment of new business partnerships and the shift of supply and distribution chains is accompanied by compliance challenges that have to be managed against the background of increasingly strict national and international compliance regulations.
Based on own project experiences in Central Asia and the South Caucasus, the discussion series provides insights into classic compliance challenges and management strategies. The presentations cover Uzbekistan (under Mirziyoyev), Kazakhstan (since Tokayev), all other Central Asian states (Turkmenistan, Kyrgyzstan, Tajikistan) as well as the South Caucasus (Azerbaijan, Armenia, Georgia). Trade partners in the region are traditionally closely linked to the ruling elites. Compliance challenges relate not only to informal practices prevailing in the region and their consequences, but above all to the breach of European or U.S. sanctions regulations. In the latter perspective, the close ties of local politicians and businessmen to Russia, to Afghanistan, and to Iran (for example, via Jebel Ali Free Zone) come into play. In this respect, the presentations will provide insights into which methods (KYC Analysis, Partner Monitoring, Compliance Documentation, etc.) should be used to manage compliance challenges according to methods of national/international common practice, so that business can use the opportunities these markets offer.
For more information, please contact L&M PRISK.
In a recent podcast, Kevin Schulte (NTV) provides an overview of the political situation in the individual post-Soviet states, their attitude toward Russia, and Russia's interests toward them. Various military experts and political scientists, including Hannes Meissner of LM PRISK, contribute to the analysis.
In the Deutsche Welle TV news program "Der Tag", Hannes Meissner analyses Russian interests in the Republic of Moldova and the post-Soviet space. He argues that Russia is pursuing a hegemonic project in the post-Soviet space that also targets Moldova. Due to the precarious situation in which the country finds itself and due to multiple dependencies on Russia, the EU's possibilities for exerting influence are limited. Please follow the link to the video (in German).
The crisis in Moldova continues to escalate after the government says it has prevented a plot with Russia in the context of the anti-government protests. Hannes Meissner analyses the current situation in a news contribution by Birgit Schwarz (ORF) in the Ö1 Mittagsjournal (13 March).
“Russia's war of aggression against Ukraine shifts the focus to the small republic of Moldova. Russian soldiers are stationed in its eastern autonomous region of Transnistria - and Moldova's pro-European leadership is warning of a coup. Stephan Ozsváth talks about this with political scientist Hannes Meißner.” Please follow the link to the interview.
Johannes Leitner analyzes the current situation in Georgia in an ORF news report
Georgia is another emerging conflict zone in the post-Soviet space. While the population is pro-Western, Russia is increasingly trying to reintegrate Georgia into its own sphere of influence. The oligarch and former prime minister Bidzina Ivanishvili plays a decisive role in this game. In this context, the political risks for foreign investors and companies are also increasing. Political instability is growing, and clientelism and corruption are on the rise again.
NTV Podcast by Kevin Schulte with Hannes Meissner
In a new NTV podcast, Kevin Schulte analyzes the worsening political crisis and security situation in the Republic of Moldova. The Western-oriented government is facing hybrid influence and destabilization attempts by Moscow. A military invasion is currently unlikely, as Russian troops are tied up in Ukraine. However, the country is dependent on Moscow in many respects and has not built up any resilience in recent decades, making it highly vulnerable to hybrid warfare and possible attempts to overthrow the pro-Western government. In the podcast, Hannes Meissner provides an in-depth analysis of the constellation (in German).
Hannes Meissner as a guest on the radio program Ö1 Punkt eins "Moldawien”.
The crisis in the Republic of Moldova continues to escalate. As tensions rise between supporters of the pro-European government and pro-Russian demonstrators, fears are being raised that Russia may be planning a coup d'état. On February 22, Hannes Meissner discussed current developments with Barbara Zeithammer (Ö1 moderator), including questions from the audience. Please follow the link to the radio discussion.
The Republic of Moldova is dependent on Russia. At the same time, Moscow threatens the small country. While the government wants to join the EU, the opposition has strong connections to Russia. Putin's extended arm is an oligarch who lives in Israel to avoid a prison sentence in his homeland. Dr. Hannes Meissner analyses the situation in an NTV Podcast with Kevin Schulte (in German).
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Eastblog article by Dr. Hannes Meissner, Dr. Johannes Leitner and Dr. Elkhan Nuriyev
The war in Ukraine is a geopolitical conflict of global dimension, as Putin is determined to change the global balance of power and transform Russia into a world power. It is a proxy confrontation, essentially between Russia and the USA. Increasingly, the global fault lines are becoming apparent along the axis of Russia, China, Iran and their allies on the one hand, and the U.S., Europe and their partners on the other.
In spite of Ukraine’s recent war successes, it is unlikely that Putin’s Russia will give in before the actual goals are achieved: The reintegration of Ukraine into Russia's sphere of influence and the recognition of Russia as a world power by the United States, through acceptance that the post-Soviet space is Russia’s geopolitical zone of interest and the assurance of associated security guarantees. However, the current constellation is a non-win situation. The initiation of talks with Russia would be a painful step for the U.S. and the Western community of states, which would not only be associated with a massive loss of face. It would rather be the admission that the Western-dominated, treaty-based world order, which has had unipolar features since the 1990s, finally belongs to the past.
Dr. Hannes Meissner, Dr. Johannes Leitner, and Dr. Elkhan Nuriyev analyze the motives and goals behind the war in Ukraine. The article was published by the platform Eastblog and the Austrian daily newspaper "Der Standard". Please follow the link to the full article (in German).
Stabilität, Kontinuität und politische Risiken im Zeichen pragmatischer Kooperation mit Moskau
Der geopolitische Konflikt zwischen dem Westen und Russland steigert das öffentliche Interesse an Zentralasien – einer strategisch zunehmend wichtigen Region zwischen China und Europa, die traditionell als Moskaus geopolitische Einflusszone gilt. Zuletzt beschäftigte sich eine Reihe von Expertenmeetings mit damit verbundenen Fragestellungen. Auf einer dieser geschlossenen Veranstaltungen teilte Dr. Hannes Meissner zuletzt Einblicke in das Fallbeispiel Turkmenistan.
Die leitenden Fragen des Vortrages waren: Wie positioniert sich Turkmenistan in der Region, seit der Sohn des vormaligen Präsidenten Gurbanguly Berdymuchamedow, Serdar Berdymuchamedow, die Macht übernommen hat? Und welche innerstaatlichen Veränderungsprozesse sind zu erwarten?
Trotz der Machtübernahme durch seinen Sohn, zieht Vater Gurbanguly im Hintergrund weiter die Fäden. Zentrales Steuerungselement ist dabei der Sicherheitsapparat. Demzufolge sind im Inneren keine Reformen zu erwarten. Turkmenistan zählt nach wie vor zu den repressivsten, korruptesten, am meisten verschlossenen und autoritärsten Staaten der Welt. Die damit verbundenen hohen politischen Risiken für Unternehmen behindern den sozioökonomischen Aufschwung, da ausländische Investitionen fernbleiben, insbesondere von Unternehmen aus dem Westen. Drei Politikbereiche politische Entscheidungsprozesse zeugen davon, dass das Land von seiner bisherigen Politik im Inneren unter Serdar nicht abrückt:
1) Die Rolle der Farbe Weiß, die Lieblingsfarbe von Gurganguly Berdymuchamedow, wird im öffentlichen Lebensalltag weiter verankert. Nachdem nur noch weiße Autos zugelassen sind, wurden zuletzt auch schwarze FFP2 Masken verboten.
2) Nachdem zuletzt Nordkorea Covid19 Fälle eingeräumt hat, bleibt Turkmenistan nun das einzige Land der Welt, das nach offiziellen Angaben von der Pandemie ausgespart worden ist.
3) Der Umgang mit Frauen: Frauen ist das Autofahren offiziell verboten, auch wenn dieses Gesetz in der Praxis nicht hart umgesetzt wird. Zuletzt wurde allerdings auch beschlossen, dass Frauen unter 40 Autos auch nicht mehr kaufen, und auf dem Beifahrersitz nicht mehr Platz nehmen dürfen.
In der Außenpolitik, bzw. regionalen Wirtschaftspolitik, gilt die propagierte immerwährende Neutralität fortan. In der Praxis allerdings strebt das Land im regionalen Raum pragmatische Kooperationen an, darunter mit den Taliban und dem Iran. Auf solche Weise wird versucht, sich vom zuletzt starken wirtschaftlichen Einfluss Chinas ein wenig zu lösen.
Gleichzeitig sind alle Blicke der herrschenden Elite auf Moskau gerichtet. Die Staatsbesuche Serdars in Moskau zeugen von der pragmatischen Nähe des Landes zu Russland. Am Ukrainekrieg, über den nach Ausbruch in den staatlichen Medien tagelang nicht berichtet wurde, wird nur vorsichtig Kritik geübt, auch wenn in internationalen Foren das Prinzip der Souveränität und Nichteinmischung durch äußere Mächte in innere Angelegenheiten unterstrichen wird. Auch gratulierte Serdar dem ukrainischen Präsidenten Wolodymyr Selensky zum Unabhängigkeitstag. In der Praxis stehen die Beziehungen zu Moskau aber im Zeichen einer engen Kooperation, die vor allem auch aus sicherheitspolitischen Interessen getrieben ist. Das Interesse Russlands für Stabilität und Herrschaftskontinuität in den Ländern der Region zu sorgen, ist mit den Interessen der herrschenden Elite kompatibel.
Unter diesen Bedingungen sind auch mittelfristig Herrschaftskontinuität, ausbleibende Reformen und damit anhaltend hohe politische Risiken für westliche Unternehmen in Turkmenistan zu erwarten.
Auf Einladung des Multilateralen Dialogs der Konrad Adenauer Stiftung hat Johannes Leitner an einem zweitägigen Expertenpanel an der Universität Passau teilgenommen. Dabei wurden EU-Initiativen und Politikstrategien wie der Green Deal, die Erweiterungspolitik, Außen- und Sicherheitspolitik sowie die Wirtschafts- und Währungspolitik analysiert.
Johannes Leitner hat besonders die unternehmensrelevanten regulatorischen Maßnahmen wie die ESG-Berichterstattungspflichten, aber auch die Anforderungen des im Entwurf befindlichen Lieferkettengesetzes an Unternehmen in die Diskussion eingebracht.
Europa hat mit dem Green Deal einen besonderen Weg eingeschlagen. Das Konzept beruht auf der Annahme, dass durch eine schnelle, ökologische Transformation der Ökonomie und somit auch der Unternehmen, eine Technologieführerschaft europäischer Anbieter geschaffen werden kann.
Der Green Deal soll die Nachhaltigkeitsagenda mit Industriepolitik koppeln, um die Wettbewerbsfähigkeit auszubauen. Für Unternehmen geht aber gerade die Transformationsphase mit regulatorischen und nicht-finanziellen Risiken einher, die durch Transparenz und spezifischem Fachwissen abgefedert werden können.
Herzlichen Dank für die hervorragende Veranstaltung an das Team der KAS Wien und das Team des Jean-Monnet-Lehrstuhls an der Universität Passau!
Comment by Dr. Johannes Leitner on the Rotax case
The Austrian company Rotax is currently receiving high attention in the media. Engines produced by this company are installed in Iranian combat drones, which are inter alia used by Russia in Ukraine. The company, which produces in Upper Austria and is part of the Bombardier Group based in Canada, once again faces high reputation risks.
The company itself has so far been very reticent about the incidents, stating that an investigation has already been initiated. Already in 2020, Rotax was confronted with similar allegations, when alleged Rotax engines were used in Turkish combat drones deployed against the Kurdish PKK as well as by Azerbaijan in the fight against Armenia. Back then, the company proclaimed it would no longer supply engines to countries characterised by unclear usage.
The question arises how to evaluate this incident. The implicit power of the message is enormous: Austrian technology is killing innocent people in Ukraine.
The company complies with all regulations – on the surface at least
Since these engines were certified as products for purely civilian use, there is no need on the part of the company for approval by the Austrian bodies of export control. One may of course be surprised that no dual-use classification was made, but that is the way it is. This in turn means that Rotax is allowed to sell its engines abroad, unless other export restrictions such as sanctions and embargoes take effect, which was again not the case.
Rotax, on the other hand, does not sell its engines directly to end customers, but through distributors. These usually buy the products and sell them on to further intermediaries or end customers.
It is precisely at this point that the question arises as to the producer's obligations to ensure that its products are not put to abusive end uses. This abusive end use has obviously taken place through the installation in military combat drones, assuming the engines are indeed from Rotax and not a copy from another manufacturer.
Where does the company's responsibility end?
Maintaining a widespread, international dealer network is nothing atypical and even less reprehensible. But it does not absolve the manufacturer from fulfilling its obligations. These obligations are aimed, among other things, at ensuring, with reasonable effort, that the products will not be subject to abusive end uses.
In this respect, the question arises whether the company can critically scrutinize and elicit the actual market volume for civil applications for Rotax engines. If dealers order volumes that do not correspond to the market volume, the manufacturer must at least ask himself what happens to the products ordered by dealers but which are above the expected sales volume. How plausible and resilient are the dealers' explanations? Are the deviations substantial, or marginal?
In Europe and particular in Austria, companies have done very well for years with the strategy, better not to look closely. The motto has rather been, the less I know, the less I can be accused of.
Accountability and the "ethical risk"
However, the (international) legal environment has evolved. Increasingly stringent compliance regulations, stricter case law, rising accountability requirements and, not least, more active media and civil society attention mean that companies can no longer pretend not to know. Instead, companies must prove and document that they have done everything reasonable to avoid breaking the rules. In other words, they must have implemented a well-functioning compliance management system, conducted a risk assessment, and so on.
Just as in similar incidents in the past, the "ethical risk" is by far the most relevant risk factor in this context. "Ethical risk" refers to public expectations that companies have to act in a "morally correct" manner. There is no doubt that it is an unethical action, when engines are installed in combat drones that are then used in a war of aggression, attacking civilians. It is then irrelevant whether the company has complied with the legal framework in this case. In other words, even if Rotax has not violated any legal regulations, the company is now posed to public "blaming and shaming". Rotax now has to respond to this.