Good morning. David Meyer here in Berlin, filling in for Alan.
The 40-mile-long Russian military “convoy” that’s heading for Kyiv appears to be stuck, with most of it still being more than 18 miles from the city center. British intelligence says it’s barely moved in the past three days, and puts it down to “staunch Ukrainian resistance, mechanical breakdown, and congestion.” Lawrence Freedman, emeritus professor of war studies at King’s College London, yesterday put it like this: “In practice it turned out to be a series of smaller convoys, jammed together because the road is blocked by vehicles that have broken down or run out of fuel. The Ukrainians do not need to go to great lengths to interdict this offensive force: It has stopped itself.”
That’s heartening news, though Putin’s deadly bombardment of Ukrainian cities continues; Russian troops may have taken the Black Sea port of Kherson; and the number of refugees who have fled Ukraine is now above 1 million. It’s also encouraging to see Russia is finding it extremely difficult to sell its oil: Even though sanctions haven’t gone there yet, buyers are staying away, and no one wants to ship the stuff.
If you believe U.S. business representatives and trade officials, the war in Ukraine may also be about to provide a silver lining for American businesses.
As you will be well aware if you do business in Europe, the U.S. and EU are currently trying to come up with a replacement for the Privacy Shield scheme that the EU’s top court struck down in 2020. The program let U.S. companies self-certify that they stuck to EU-strength data-protection rules and could therefore import Europeans’ personal data, even though U.S. law doesn’t provide adequate protections for the data. Its cancellation has left companies in legal limbo.
Sean Heather, the U.S. Chamber of Commerce’s regulatory affairs chief, told The Register this week that the conflict in Ukraine “has put a renewed emphasis on the importance of transatlantic talks,” and that a deal would come by early summer. “We and our partners in Europe are trying to conclude this negotiation as quickly as possible,” the Commerce Department’s Alex Greenstein said at a Monday conference.
It is indeed possible that the all-encompassing urgency of the geopolitical situation pushes the European Commission to quickly accept a replacement for Privacy Shield—which itself replaced a program called Safe Harbor, killed off by the EU’s Court of Justice in 2015. However, if that happens, the same geopolitical situation makes it even likelier that the new program will have the same legal flaws as its predecessors, and will go on to suffer their fate.
According to a Politico report from a month back, the U.S. is readying an “independent judicial body” that would hear complaints from Europeans about the handling of their personal data by U.S. intelligence. That could address one of the European court’s major concerns. But others remain.
As I wrote several weeks ago, the core problem with all these U.S.-EU deals is that U.S. intelligence has too much power to ensure the protection of Europeans’ fundamental rights. American laws and executive orders and guidelines and surveillance programs make it highly likely that Europeans’ data is being stored and in some cases accessed by U.S. agencies, while leaving them powerless to take legal action. Programs like PRISM do not meet European legal standards for proportionality. And now we also know the CIA is conducting a mysterious mass surveillance program in the U.S., with minimal oversight, that is scooping up Americans’ data, but that is really designed to monitor the data of foreigners.
The only way to create a legally watertight replacement for Privacy Shield—and to stop Ireland’s privacy watchdog telling Meta/Facebook it can no longer send Europeans’ data to the U.S., as it may do next month—is for the U.S. to rein in its foreign intelligence services. And there’s precisely zero chance of that happening as we enter what will be, in the best-case scenario, a new Cold War.
More news below.
Russian equities are vanishing from top international indexes as Russian companies are effectively uninvestable now. VanEck Associates investment chief Russel Chesler: “We can’t sell our Russian stocks…Even last week our brokers wouldn’t sell them when the markets were open.” The Moscow Exchange remains closed, as it has been all week. Meanwhile, Fitch and Moody’s have downgraded Russia to “junk” status—that’s six notches down in one fell swoop, which may not reflect well on the ratings agencies. Fortune
Russia and Belarus have been banned from the Winter Paralympic Games, which begin tomorrow. The International Paralympic Committee said just yesterday that the countries’ athletes could compete, owing to a fear of legal action, but members revolted. AP
Crypto and sanctions
The EU is reportedly looking into how it can stop the use of cryptocurrencies to dodge Russian sanctions and move money in and out of the country. Many big crypto exchanges don’t want to cut off their Russian dealings; new rules might force them to. Financial Times
Elon Musk has challenged the United Auto Workers union to hold a vote at Tesla’s California plant. He said Tesla’s biggest worry in the area was competition for talent. And in related news, Tesla’s new plant outside Berlin has reportedly completed its approval procedure. Fortune
AROUND THE WATERCOOLER
The Biden administration may, according to WSJ sources, launch an investigation into Beijing’s industrial subsidies, in an effort to protect the U.S.’s leading position in tech. It could also step up scrutiny of U.S. companies’ Chinese investments. Wall Street Journal
Another week, another Credit Suisse scandal. This time, the Swiss probe-magnet has reportedly been caught telling investors to “destroy and permanently erase” documents relating to its securitized portfolio of loans backed by ultrahigh-net-worth customers’ yachts and private jets. Fortune
Russia has been stockpiling reserves ever since its 2014 annexation of Crimea, and now needs the cash to weather sanctions. However, as Fortune’s Nicholas Gordon explains, “it turns out Russia’s foreign reserves strategy had a major flaw: about half of the money was held overseas in foreign banks—and now Russia can’t get to it.” Fortune
Authorities in Hamburg have seized the superyacht of Alisher Usmanov, one of Russia’s wealthiest individuals and a sanctions target. The Dilbar, named after Usmanov’s mother, is the world’s biggest superyacht by volume and worth nearly $600 million. Meanwhile, French authorities have seized the yacht of Rosneft chief Igor Sechin. Fortune
This edition of CEO Daily was edited by David Meyer.
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