How a Year of Brexit Thumped Britain’s Economy and Businesses

Joe Mayes, Bloomberg News

(Bloomberg) -- In the months after Boris Johnson signed his post-Brexit trade deal with the European Union, the coronavirus masked the economic damage of leaving the bloc. As the pandemic drags on, the cost is becoming clearer -- and voters are noticing.

Brexit has been a drag on growth. It brought new red tape on commerce between Britain and its largest and closest market, and removed a large pool of EU labor from the country on which many businesses had come to rely. The combination has exacerbated supply chain shortages, stoked inflation, and hampered trade.

The prime minister hailed the signing of the trade accord almost a year ago as the moment when Britain took back control of its destiny. If it was, voters appear to be increasingly unhappy with the result. According to a November poll by Savanta Comres, a majority of the British population would now vote to re-join the the EU -- including one in ten who voted to leave in the 2016 referendum. In June, only 49% wanted to reverse Brexit.

In recent days, David Frost, Johnson’s key partner in negotiating Brexit, resigned, becoming the third Brexit minister to quit. In his resignation letter, Frost urged Johnson to use Brexit to turn the U.K. into “a lightly regulated, low-tax, entrepreneurial economy” but expressed dismay at the prime minister’s direction of travel, a sign that Brexit is disappointing those who saw it as a once-in-a-generation opportunity to roll back government regulation.

A year on from the signing of the trade deal, here is a look at how Brexit affected British business and the economy, and how the early outcome compares with economists’ and analysts’ predictions.

Trade

Britain’s trade with the EU has declined since the country quit the bloc, with firms hit by new customs paperwork and checks.

As of October, U.K. goods trade with the EU was 15.7% lower than it would have been had Britain stayed in the EU’s single market and customs union, according to modeling by the Centre for European Reform, an independent think-tank. That tallies with a U.K. government analysis of 2018, which predicted a 10% decline in trade.

But the figures may be flattered by the fact the U.K. has delayed implementing many of its post-Brexit border controls until 2022. From January, imports from the EU will need to be immediately accompanied by a customs declaration, and food products will face extra physical inspections from the summer.

Britain has made only limited progress in signing trade deals that go beyond the agreements it enjoyed as a member of the EU. Earlier this month, the U.K. signed its first wholly independent trade deal -- with Australia -- and preliminary terms have been agreed with New Zealand. But the economic boost from both accords is forecast to be limited. A trade deal with the U.S., touted as one of the major prizes of Brexit, appears years away.

Growth

Even before Britain completed its split from the EU at the end of 2020, Brexit had reduced the size of the U.K. economy by about 1.5%, according to estimates from the Office for Budget Responsibility. That was due to a fall in business investment and a transfer of economic activity to the EU in anticipation of higher trade barriers.

Since the U.K.-EU free trade deal came into force, the decline in trade volumes means Brexit is on course to cause a 4% reduction in the size of Britain’s economy over the long-run, according to the OBR. That’s in line with its pre-Brexit forecast.

“A loss of 4-5% of GDP is a big deal,” wrote John Springford, deputy director of the CER, in a research note, agreeing with the OBR’s prediction. “Governments everywhere would leap on a policy that would raise GDP by 5%.” 

And of all the regions of the U.K., Northern Ireland -- which remained in the EU’s single market for goods as part of the post-Brexit settlement -- appears to have fared best. The province has largely recovered from the hit of the pandemic, with third-quarter output only 0.3% below the final quarter of 2019, according to data from the Office for National Statistics. The U.K. as a whole is down 2.1% over the same time period.

Labour

Brexit has exacerbated a crunch in the U.K. labor supply. 200,000 European nationals left Britain in 2020, pushed away by tougher immigration rules and the deepest economic slump in three centuries. That’s helped to trigger staff shortages in sectors such as hospitality and retail, which have historically relied on EU workers, and led to empty shelves.

A smaller pool of EU labor also worsened a fuel crisis in Britain, with a shortfall of tanker drivers contributing to spate of fuel shortages during the summer. Johnson’s government has since eased visa requirements for EU workers, and the driver shortfall has since been reduced as more domestic drivers have been trained.

Finance

Brexit has pushed financial firms to move at least some of their operations, staff, assets or legal entities out of London and into to the bloc -- but the shift has been smaller than predicted, in part because the pandemic has hampered staff relocations.

According to a survey by accounting firm EY published this week, London has lost about 7,400 jobs -- down from an earlier estimate of 7,600. That’s far short of some estimates made before Britain left the bloc. In 2018, Bruegel, a think tank said that London could ultimately lose 10,000 banking jobs and 20,000 roles in the financial services industry.

Britain’s financial firms are still waiting for full access to the EU’s single market, something that relies on the EU granting a so-called equivalence decision. But progress has been glacial as disputes over Northern Ireland have soured EU-U.K. relations.

Read more: JPMorgan’s Paris Traders Are Only Part of the Threat to London

Longer term, the bigger threats to London are likely to come from New York -- which has grown its share of derivatives trading -- and the unseen opportunity cost of new jobs being created in the EU that, but for Brexit, might have been created in the U.K.

©2021 Bloomberg L.P.

What a mess! The Brexit fiasco

By Lord William Wallace | Wed 22nd December 2021 - 

Brexit has not been done. There never was an oven-ready deal. Whatever Johnson thought was ready for the oven is now burnt to a cinder.

It’s time to use ridicule to explain how this UKIP-Tory government has made such a mess of Brexit. Five and a half years since the Brexit referendum, and Liz Truss has just become the sixth minister in charge of getting Brexit done. The public are beginning to understand that Johnson did not have a clue what sort of Brexit he wanted when he was campaigning to leave and is now struggling to come to terms with the failure to deliver.

A succession of incompetent ministers have attempted to reconcile the Leave campaign’s contradictory objectives. We started with David Davis – who went to meetings with Michel Barnier without any briefing papers. He lasted nearly two years as Brexit secretary. Olly Robbins did most of the work, reporting to Theresa May, against a backdrop of hostile briefings from Tory MPs. Dominic Raab picked up the poisoned chalice when Davis and Johnson resigned over May’s Chequers package. He lasted four months, a period distinguished only by his admission that he had not understood how important the port of Dover was.

Stephen Barclay was a steadying influence over the 13 months until the Brexit Department was abolished. Johnson kept him on for a few months after he became Prime Minister but brought in David Frost to do the actual negotiation. Once the UK had left in January 2020 Michael Gove in the Cabinet Office took charge of sorting out the post-Brexit relationship – with Frost as ‘Chief Negotiator’ formally reporting to him, changing status from special adviser to politician on his appointment to the Lords that summer. In March 2021 Frost was made a Minister of State, sidelining Gove and attending the Cabinet. Now he’s resigned because he thinks Johnson is too left-wing, and Liz Truss as foreign secretary takes over the role.

Oh, and the wonderful trade deals that the UK was going to negotiate with the rest of the world have been handled by a newly-created Department of International Trade. Liam Fox, who sincerely believed that the Indians remain so grateful for the benefits of British imperial rule that they would offer us a generous trade agreement, lasted three years as secretary of state, without achieving anything worthwhile. He was confident from long friendships with right-wing US Republicans that Washington would rapidly give Britain a free trade agreement but discovered that US politics is more complicated than he’d imagined.

Johnson replaced him with Liz Truss on becoming prime minister. She’s best known for taking her personal photographer wherever she goes, and for refusing to listen to critical advice. She followed Fox in asserting that geography doesn’t matter when it comes to trade, completed agreements with Australia and New Zealand which most commentators think have given them more advantages than the UK, and has pursued membership of the Trans-Pacific Partnership. Her permanent secretary is a New Zealander; there are Australian advisers in No.10. Anne-Marie Trevelyan took over the Department in the summer 2021 reshuffle – comparative stability compared to other Cabinet positions in this chaotic government, with only three secretaries of state in six years.

The Leave campaign ignored well-informed warnings that a hard Brexit would create problems for Northern Ireland – including from a concerned Irish Government. They asserted that they would take back control of Britain’s borders without considering the need for cooperation in border management with those on the other side – a simple truth that I first heard from Finnish officials about relations with the Soviet Union before the cold war had ended. Attacking the French still substitutes for any coherent policy towards our European neighbours – and without a European policy, Britain has no effective foreign policy.

Brexit has not been done. Cross-Channel trade has shrunk sharply, and trade with New Zealand and Australia cannot make up for the loss. Liberal Democrats and others need now to craft an alternative economic and political approach to our European neighbours, on which a policy group is now working. Meanwhile, remind all those who you meet that this government is not only corrupt but also incompetent, on the central issues of international economic strategy and foreign policy.

* Lord Wallace of Saltaire is a Liberal Democrat member of the House of Lords. He has taught at Manchester and Oxford Universities and at the LSE.

Food shortages hitting Britons more than

 many in EU, poll finds

Survey suggests UK residents more likely to have faced

 shortages than those in France, Germany and Spain

The UK government has argued the shortages are part of 

a worldwide pattern and no worse in the UK than elsewhere. 

Photograph: Anadolu Agency/Getty Images


Jon Henley 

Europe correspondent

THE GUARDIAN
Wed 22 Dec 2021 

Britons are many times more likely to have experienced shortages of food and fuel than people in half a dozen EU member states, according to a poll.

Global supply chain problems prompted by the pandemic have disrupted the international trade network since the summer, with transport backlogs combining with labour shortages to create scarcities of various goods around the world.

The government has argued that the shortages are part of a worldwide pattern and no worse in the UK than elsewhere, although logistics experts and other professionals – particularly in the food sector - have said the problems are amplified in Britain by a shortage of east European workers, including drivers, since Brexit.

The YouGov poll showed residents of the UK were multiple times more likely to have experienced, or to know people who have experienced, shortages of food and fuel than people in France, Germany, Spain, Italy, Sweden and Denmark, and somewhat more likely to have experienced them than those in the US.

Asked in early December whether they had personally experienced any scarcity of foodstuffs in recent weeks, 56% of respondents in the UK said yes, while 9% said they had not personally experienced any but knew people who had.

The corresponding figures in the US were 49% and 10%, but in continental Europe, the proportion of people who said they had been personally affected was between three and nine times lower: 18% in Germany, 16% in France, 12% in Sweden, 8% in Denmark, 7% and 6% in Italy.

The proportion saying they knew people who had experienced food shortages ranged from 13% in France to 8% in Denmark and Italy – where 58% of respondents said they were not even aware that supply chain problems had led to food shortages.

The UK was also the only country where substantial numbers of people said they had experienced fuel shortages in recent weeks, since the crisis in September and October. One in three Britons (33%) said they had personally experienced a recent scarcity of fuel, compared with no more than 10% in any other country.

Only 8% of German respondents, 7% of those in France and 5% of those in Italy said they had been personally experienced fuel scarcity, with 37%, 38% and 53% respectively saying they had not even heard of the issue – compared with just 11% of respondents in Britain.

Tories’ deal with Australia will harm UK farming – government’s own report concludes

“This impact assessment proves what so many feared – buried in the small print is a £100m hit to our farming and fishing sectors that will hit rural communities hardest," Lib Dem Tim Farron has said.

 by Andra Maciuca
2021-12-22 

Save British Farming: Wiltshire farmer Liz Webster and Lib Dem Tim Farron, who focuses on food, environment and rural affairs. Photo: Supplied by Liz Webster.

The Tories’ post-Brexit trade deal with Australia will harm UK’s farming sector by hundreds of millions of pounds, according to the government’s own assessment.

A new document from the Department for International Trade revealed British farming and fishing will lose an astonishing £94 million because of the Australia agreement.

On top of this, the government also predicts a £225 million loss in gross value added for the semi-processed food sector compared to 2019.

Overall, the new assessment shows the government does not rule out further losses “over the long-run” because of its own free trade agreement.

The losses have been put down to the higher import competition of beef and sheep meat in the report.
‘Prioritising a press release’

Lib Dem environment spokesperson Tim Farron told The Independent: “This impact assessment proves what so many feared – buried in the small print is a £100m hit to our farming and fishing sectors that will hit rural communities hardest.

“Boris Johnson has sold farmers down the river to make a quick buck in a misguided trade deal with Australia. Now the reality of what’s on the table is clear, it’s vital that parliament is given a vote on the deal.”

And shadow international trade secretary Nick Thomas-Symonds hit out at the “shocking revelations” and at Tory ministers who “failed to stand up for UK’s interests”.

The Labour further accused ministers of “prioritising a press release” boasting about the deal being done over UK people’s lives.

And think tank The Resolution Foundation told the newspaper that the government i willing to “accept losses” in order to “deliver its Global Britain agenda.”
Department for International Trade insists Australia deal is brilliant

But a Department for International Trade spokesperson insisted the deal will help the UK in levelling up and benefit towns, cities and rural areas across the UK.

“The deal is expected to increase trade with Australia by 53 per cent, boost the economy by £2.3bn and add £900m to household wages each year in the long-run,” the spokesperson said.

They added: “Maintaining our high standards is a red line in all our trade negotiations. That is why this deal contains safeguards to support the most sensitive parts of the UK farming community, including a gradual removal of tariffs over 10 years and a safety net that allows tariffs or restrictions to be reimposed if the industry faces serious harm.”

Last week, Dr Nick Palmer, head of compassion at World Farming UK hit out at the UK government, saying the Australia deal proves government promises on maintaining animal welfare outside the EU have been broken.

“The weak wording in this agreement must not be repeated in future trade deals, with countries like the US, Canada and India, which are likely to be signed in the future,” Palmer added.

Related: British public are being ‘blindfolded’ on post-Brexit trade deals, farmers warn

Dye & Durham to Acquire Australia’s Link for $2.5 Billion

Harry Brumpton
Tue, December 21, 2021


(Bloomberg) -- Dye & Durham Ltd., a Canadian provider of software for legal professionals, has agreed to buy Australian data services firm Link Administration Holdings Ltd. for about C$3.2 billion ($2.5 billion).

The cash offer represents A$5.50 per share of Link, a premium of about 15% over Tuesday’s closing price, the Toronto-based company said in a statement. As part of the deal, Dye & Durham will also indirectly acquire Link Group’s 43% ownership in the recently spun-out conveyancing business PEXA Group Ltd.

Just last month, the biggest back-office service provider to Australia’s booming pension industry had received a renewed A$2.8 billion ($2 billion) offer from U.S. buyout firm Carlyle Group Inc. The private equity firm was granted due diligence to revise its indicative takeover proposal.

The late Tuesday announcement by Dye & Durham ends a yearlong race to acquire Link. Before last month’s offer, Carlyle had made an approach in October 2020 in league with Australian private equity firm Pacific Equity Partners. That prompted Link to embark on a strategic review of its business.

Dye & Durham was attracted by “the overlaps between customers in their corporate markets business and in our core legal business,” Chief Executive Officer Matthew Proud said in a telephone interview. “It’s a good, sticky business that’s well entrenched and generates significant revenue cash flow we can redeploy.”

Dye & Durham said it plans to net about C$125 million of cost savings from the merger.

Meanwhile, Link’s other segments including its funds solutions and banking and credit management businesses are “non-core” to Dye & Durham, and will be divested, according to the statement.

CRIMINAL CAPITALI$M
Metro Bank Fined £5.38 Million For Inaccurate Reporting to U.K. Watchdog

Tom Metcalf
Wed, December 22, 2021



(Bloomberg) -- The Bank of England’s Prudential Regulatory Authority fined Metro Bank Plc 5.38 million pounds ($7.1 million) for misreporting its capital position to the watchdog.

Metro Bank applied an incorrect risk weighting to certain commercial loans in December 2018 and as a result presented an inaccurate picture of its regulatory capital position to the PRA, the U.K. bank supervisor said in a statement Wednesday.

The PRA and the Financial Conduct Authority opened investigations into how Metro Bank misclassified those assets. The lender, which had a market value of about 3.6 billion pounds at its peak, has seen its shares slide since then.

“We expect firms to invest appropriate and adequate resources to ensure that they submit accurate regulatory returns,” Sam Woods, chief executive officer of the PRA, said in the statement. “In this case, Metro Bank failed to meet the standards of governance and controls expected of it, resulting in today’s enforcement action.”

Metro Bank, which agreed the resolution of this matter with the PRA and therefore qualified for a 30% reduction in the fine imposed, said in a separate statement that it didn’t have an update on the FCA investigation “at this time.”

Earlier this week, the PRA handed Standard Chartered Plc a record fine after it delayed notifying it about a spreadsheet error that resulted in the bank overestimating its access to U.S. dollar funding.

CRIMINAL CRYPTO CAPITALI$M

Companies Linked to Russian Ransomware Hide in Plain Sight

Cybersecurity experts tracing money paid by American businesses to Russian ransomware gangs found it led to one of Moscow’s most prestigious address

Cybersecurity experts say millions of dollars paid by American companies in ransomware have passed through Federation Tower East, the tallest building in Russia’s capital.

Credit...Sergey Ponomarev for The New York Times


By Andrew E. Kramer
Dec. 6, 2021


MOSCOW — When cybersleuths traced the millions of dollars American companies, hospitals and city governments have paid to online extortionists in ransom money, they made a telling discovery: At least some of it passed through one of the most prestigious business addresses in Moscow.

The Biden administration has also zeroed in on the building, Federation Tower East, the tallest skyscraper in the Russian capital. The United States has targeted several companies in the tower as it seeks to penalize Russian ransomware gangs, which encrypt their victims’ digital data and then demand payments to unscramble it.

Those payments are typically made in cryptocurrencies, virtual currencies like Bitcoin, which the gangs then need to convert to standard currencies, like dollars, euros and rubles.

That this high-rise in Moscow’s financial district has emerged as an apparent hub of such money laundering has convinced many security experts that the Russian authorities tolerate ransomware operators. The targets are almost exclusively outside Russia, they point out, and in at least one case documented in a U.S. sanctions announcement, the suspect was assisting a Russian espionage agency.

“It says a lot,” said Dmitry Smilyanets, a threat intelligence expert with the Massachusetts-based cybersecurity firm Recorded Future. “Russian law enforcement usually has an answer: ‘There is no case open in Russian jurisdiction. There are no victims. How do you expect us to prosecute these honorable people?’”

Recorded Future has counted about 50 cryptocurrency exchanges in Moscow City, a financial district in the capital, that in its assessment are engaged in illicit activity. Other exchanges in the district are not suspected of accepting cryptocurrencies linked to crime.

Moscow’s financial district, called Moscow City, with the 97-floor Federation Tower East, center, dominating the skyline.

Credit...Sergey Ponomarev for The New York Times


Cybercrime is just one of many issues fueling tensions between Russia and the United States, along with the Russian military buildup near Ukraine and a recent migrant crisis on the Belarus-Polish border.

The Treasury Department has estimated that Americans have paid $1.6 billion in ransoms since 2011. One Russian ransomware strain, Ryuk, made an estimated $162 million last year encrypting the computer systems of American hospitals during the pandemic and demanding fees to release the data, according to Chainalysis, a company tracking cryptocurrency transactions.

The hospital attacks cast a spotlight on the rapidly expanding criminal industry of ransomware, which is based primarily in Russia. Criminal syndicates have become more efficient, and brazen, in what has become a conveyor-belt-like process of hacking, encrypting and then negotiating for ransom in cryptocurrencies, which can be owned anonymously.

At a summit meeting in June, President Biden pressed President Vladimir V. Putin of Russia to crack down on ransomware after a Russian gang, DarkSide, attacked a major gasoline pipeline on the East Coast, Colonial Pipeline, disrupting supplies and creating lines at gas stations.

President Biden has pressured Russia to crack down on hackers based in its territory.

Credit...T.J. Kirkpatrick for The New York Times

American officials point to people like Maksim Yakubets, a skinny 34-year-old with a pompadour haircut whom the United States has identified as a kingpin of a major cybercrime operation calling itself Evil Corp. Cybersecurity analysts have linked his group to a series of ransomware attacks, including one last year targeting the National Rifle Association. A U.S. sanctions announcement accused Mr. Yakubets of also assisting Russia’s Federal Security Service, the main successor to the K.G.B.

But after the State Department announced a $5 million bounty for information leading to his arrest, Mr. Yakubets seemed only to flaunt his impunity in Russia: He was photographed driving in Moscow in a Lamborghini partially painted fluorescent yellow.

The cluster of suspected cryptocurrency exchanges in Federation Tower East, first reported last month by Bloomberg News, further illustrates how the Russian ransomware industry hides in plain sight.

The 97-floor, glass-and-steel high-rise resting on a bend in the Moscow River stands within sight of several government ministries in the financial district, including the Russian Ministry of Digital Development, Signals and Mass Communications.

Maksim Yakubets, right, who is accused of helping lead a cybercrime group called Evil Corp, next to his Lamborghini in Moscow.

Credit...Courtesy of the UK National Crime Agency

Two of the Biden administration’s most forceful actions to date targeting ransomware are linked to the tower. In September, the Treasury Department imposed sanctions on a cryptocurrency exchange called Suex, which has offices on the 31st floor. It accused the company of laundering $160 million in illicit funds.

In an interview at the time, a founder of Suex, Vasily Zhabykin, denied any illegal activity.

And last month, Russian news media outlets reported that Dutch police, using a U.S. extradition warrant, had detained the owner, Denis Dubnikov, of another firm called EggChange, with an office on the 22nd floor. In a statement issued by one of his companies, Mr. Dubnikov denied any wrongdoing.

Ransomware is attractive to criminals, cybersecurity experts say, because the attacks take place mostly anonymously and online, minimizing the chances of getting caught. It has mushroomed into a sprawling, highly compartmentalized industry in Russia known to cybersecurity researchers as “ransomware as a service.”

The organizational structure mimics franchises, like McDonald’s or Hertz, that lower barriers to entry, allowing less sophisticated hackers to use established business practices to get into the business. Several high-level gangs develop software and promote fearsome-sounding brands, such as DarkSide or Maze, to intimidate businesses and other organizations that are targets. Other groups that are only loosely related hack into computer systems using the brand and franchised software.

The hacking of Colonial Pipeline, which caused lines at gas stations, underscored just how vulnerable government and industry are to assaults on computer networks.

Credit...Drone Base/Reuters

The industry’s growth has been abetted by the rise of cryptocurrencies. That has made old-school money mules, who sometimes had to smuggle cash across borders, practically obsolete.

Laundering the cryptocurrency through exchanges is the final step, and also the most vulnerable, because criminals must exit the anonymous online world to appear at a physical location, where they trade Bitcoin for cash or deposit it in a bank.

The exchange offices are “the end of the Bitcoin and ransomware rainbow,” said Gurvais Grigg, a former F.B.I. agent who is a researcher with Chainalysis, the cryptocurrency tracking company.

A Guide to Cryptocurrency

Card 1 of 7

A glossary. Cryptocurrencies have gone from a curiosity to a viable investment, making them almost impossible to ignore. If you are struggling with the terminology, let us help:

Bitcoin. A Bitcoin is a digital token that can be sent electronically from one user to another, anywhere in the world. Bitcoin is also the name of the payment network on which this form of digital currency is stored and moved.

Blockchain. A blockchain is a database maintained communally, that reliably stores digital information. The original blockchain was the database on which all Bitcoin transactions were stored, but non-currency-based companies and governments are also trying to use blockchain technology to store their data.

Cryptocurrencies. Since Bitcoin was first conceived in 2008, thousands of other virtual currencies, known as cryptocurrencies, have been developed. Among them are Ether, Dogecoin and Tether.

Coinbase. The first major cryptocurrency company to list its shares on a U.S. stock exchange, Coinbase is a platform that allows people and companies to buy and sell various digital currencies, including Bitcoin, for a transaction fee.

Crypto finance. The development of cryptocurrencies spawned a parallel universe of alternative financial services, known as Decentralized Finance, or DeFi, allowing crypto businesses to move into traditional banking territory, including lending and borrowing.

NFTs. A “nonfungible token,” or NFT, is an asset verified using blockchain technology, in which a network of computers records transactions and gives buyers proof of authenticity and ownership. NFTs make digital artworks unique, and therefore sellable.

The computer codes in virtual currencies allow transactions to be tracked from one user to another, even if the owners’ identities are anonymous, until the cryptocurrency reaches an exchange. There, in theory, records should link the cryptocurrency with a real person or company.

“They are really one of the key points in the whole ransomware strain,” Mr. Grigg said of the exchange offices. Ransomware gangs, he said, “want to make money. And until you cash it out, and you get it through an exchange at a cash-out point, you cannot spend it.”

It is at this point, cybersecurity experts say, that criminals should be identified and apprehended. But the Russian government has allowed the exchanges to flourish, saying that it only investigates cybercrime if Russian laws are violated. Regulations are a gray area in Russia, as elsewhere, in the nascent industry of cryptocurrency trading.

Inside Federation Tower in November. Moscow’s financial district is home to about 50 cryptocurrency exchanges, according to one cybersecurity firm. 

Credit...Sergey Ponomarev for The New York Times

Russian cryptocurrency traders say the United States is imposing an unfair burden of due diligence on their companies, given the quickly evolving nature of regulations.

“The people who are real criminals, who create ransomware, and the people working in Moscow City are completely different people,” Sergei Mendeleyev, a founder of one trader based in Federation Tower East, Garantex, said in an interview. The Russian crypto exchanges, he said, were blamed for crimes they are unaware of.

Mr. Mendeleyev, who no longer works at the company, said American cryptocurrency tracking services provide data to non-Russian exchanges to help them avoid illicit transactions but have refused to work with Russian traders — in part because they suspect the traders might use the information to tip off criminals. That complicates the Russian companies’ efforts to root out illegal activity.

He conceded that not all Russian exchanges tried very hard. Some based in Moscow’s financial district were little more than an office, a safe full of cash and a computer, he said.

People seen through the glass of the Federation Tower high-rise, which is home to at least 15 cryptocurrency exchanges.

Credit...Sergey Ponomarev for The New York Times


At least 15 cryptocurrency exchanges are based in Federation Tower East, according to a list of businesses in the building compiled by Yandex, a Russian mapping service.

In addition to Suex and EggChange, the companies targeted by the Biden administration, cyberresearchers and an international cryptocurrency exchange company have flagged two other building tenants that they suspect of illegal activity involving Bitcoin.

The building manager, Aeon Corp., did not respond to inquiries about the exchanges in its offices.

Like the banks and insurance companies they share space with, those firms are likely to have chosen the site for its status and its stringent building security, said Mr. Smilyanets, the researcher at Recorded Future.

“The Moscow City skyscrapers are very fancy,” he said. “They can post on Instagram with these beautiful sights, beautiful skyscrapers. It boosts their legitimacy.”
Ransomware Gangs’ Enablers

Secret Chats Show How Cybergang Became a Ransomware Powerhouse
May 29, 2021

Cyberattack Forces a Shutdown of a Top U.S. Pipeline
May 8, 2021

U.S. Imposes Stiff Sanctions on Russia, Blaming It for Major Hacking Operation
April 15, 2021

Andrew E. Kramer is a reporter based in the Moscow bureau. He was part of a team that won the 2017 Pulitzer Prize in International Reporting for a series on Russia’s covert projection of power. @AndrewKramerNYT

CRIMINAL CRYPTO CAPITALI$M

A Growing Army of Hackers Helps Keep Kim Jong Un in Power
Jon Herskovitz and Jeong-Ho Lee - 

(Bloomberg Businessweek) -- Kim Jong Un marked a decade as supreme leader of North Korea in December. Whether he can hold on to power for another 10 years may depend on state hackers, whose cybercrimes finance his nuclear arms program and prop up the economy.

According to the U.S. Cybersecurity & Infrastructure Security Agency, North Korea’s state-backed “malicious cyberactivities” target banks around the world, steal defense secrets, extort money through ransomware, hijack digitally mined currency, and launder ill-gotten gains through cryptocurrency exchanges. Kim’s regime has already taken in as much as $2.3 billion through cybercrimes and is geared to rake in even more, U.S. and United Nations investigators have said.

The cybercrimes have provided a lifeline for the struggling North Korean economy, which has been hobbled by sanctions. Kim has shown little interest in returning to negotiations that could lead to a lifting of sanctions if North Korea winds down its nuclear arms program.


© BloombergNorth Korea real GDP under Kim Jong Un

Money from cybercrimes represents about 8% of North Korea’s estimated economy in 2020, which is smaller than when Kim took power, according to the Bank of Korea in Seoul. (The bank for years has provided the best available accounting on the economic activity of the secretive state.) Kim’s decision to shut borders because of Covid-19 suspended the little legal trade North Korea had and helped send the economy into its biggest contraction in more than two decades.

Kim’s regime has two means of evading global sanctions, which were imposed to punish it for nuclear and ballistic missile tests. One is the ship-to-ship transfer of commodities such as coal: A North Korean vessel will shift its cargo to another vessel, or the other way around, and both vessels typically try to cloak their identity.

The other is the cyberarmy. Its documented cybercrimes include attempts to steal $2 billion from the Swift (Society for Worldwide Interbank Financial Telecommunication) system of financial transactions. North Korea has also illegally accessed military technology that could be used for financial gain, according to a UN Security Council panel charged with investigating sanctions-dodging by the government.

North Korea “is not afraid to be brazen and destructive in order to achieve the task at hand,” says Jenny Jun, a nonresident fellow at the Atlantic Council’s Cyber Statecraft Initiative, who’s researched North Korea’s cyberoperations and cyberstrategies. “And this sets it apart from some of the other, more careful—and therefore more restrained—nation-state hackers.”

The government has deployed malware called AppleJeus that poses as a cryptocurrency trading platform to steal funds from people who try to use it. Since 2018 various versions of the malware have been used to target more than 30 countries. From 2019 to November 2020, AppleJeus hackers stole virtual assets valued at $316.4 million, according to UN and U.S. investigators. By comparison, North Korea’s coal exports are capped at $400 million a year under global sanctions.

Targets of the regime include central banks, the militaries of the world’s most powerful countries, and corner ATMs. It even tried to hack Pfizer Inc. for Covid vaccine data. South Korea said hacking attempts directed at it by its neighbor increased about 9% in the first half of 2021 from the second half of 2020.

The money North Korea gets from cybercrimes likely helps it to “fund government priorities, such as its nuclear and missile program,” the U.S. Office of the Director of National Intelligence said in an unclassified report in 2021. The cyberprogram poses a growing threat, the report said, warning that the North Korean government probably has the expertise to cause “temporary, limited disruptions” of some critical infrastructure and business networks in the U.S.

Ji Seong-ho, who defected from North Korea to South Korea, where he’s now a member of the national assembly, says cyberactivity development under Kim is advancing rapidly. “The cybercapability in North Korea is bound to get more advanced, and the money it earns from hacking is likely to dramatically increase in the next decade,” says Ji, who sits on the assembly’s foreign affairs committee.

One of Kim’s top priorities when he took power was stepping up cyberwarfare capabilities. Operations under North Korea’s Reconnaissance General Bureau have grown significantly since then. At present it has more than 6,000 members in its cyberwarfare guidance unit, also known as Bureau 121, according to assessments in U.S. and South Korean unclassified defense reports.

The bureau’s four main divisions include Bluenoroff, with about 1,700 hackers, “whose mission is to conduct financial cybercrime by concentrating on long-term assessment and exploiting enemy network vulnerabilities,” said a 2020 U.S. Army report on North Korean military capabilities. The Andariel group has about 1,600 members, who look at computer networks and try to find vulnerabilities, according to the same report.

The U.S. government has been going after alleged North Korean agents, filing criminal complaints against people who, it says, illegally obtained confidential data from Sony Pictures Entertainment Inc. in 2014 and stole $81 million from Bangladesh’s central bank in 2016. (North Korea has denied any involvement in those hacks.) It also charged an American cryptocurrency expert, Virgil Griffith, with violating the International Emergency Economic Powers Act by offering North Korea advice on how to use cryptocurrency to launder money and evade sanctions; Griffith pleaded guilty in federal court in September.

Because North Korea’s hackers operate under the auspices of the isolated state and are rewarded at home for their thefts abroad, there is little that can realistically be done to punish those responsible. Counterstrikes on the country’s web infrastructure are limited because North Korea has few connected devices and its cellphone data network is mostly cut off from the rest of the world. “The fight against North Korea’s illicit activities is like a whack-a-mole game—cracking down will lead to displacement rather than cause [the regime] to stop or focus on legitimate economic activity,” the Atlantic Council’s Jun says.

Kim is using his sparse resources to invest in information technology training, sending experts abroad. He sees them as crucial for his survival, according to Kang Mi-jin, a North Korean defector who now runs a company in South Korea that watches the economy of her former home.

“The hackers consider what they are doing as being directly related to the fate of the Kim regime,” she says, “and what they are doing is likely to be one of [its] major sources of income.”

CRIMINAL CRYPTO CAPITALI$M

Pegasus Spyware Maker NSO Group Throws Cash at New Ventures to Survive

Davide Scigliuzzo
Tue, December 21, 2021




(Bloomberg) -- Israeli spyware firm NSO Group burned through most of its cash this year in a desperate bid to move past the scandal surrounding its phone-hacking tool Pegasus, according to a person with knowledge of the matter and private financial documents seen by Bloomberg News.

NSO has been spending heavily to build up drone-monitoring technology and a big-data analytics platform that executives are pitching as key assets in discussions with two U.S.-based funds that have expressed interest in acquiring the company, according to the person, who asked not to be identified because the talks are private.

The strategy shows NSO fighting for a path to survival as it battles accusations that its Pegasus software has been used by government clients to spy on political dissidents, human-rights activists and journalists. With its loans trading at deeply distressed levels, the company has been exploring options including shutting down Pegasus and selling itself in an effort to tackle its $500 million debt load.

The NSO unit that controls Pegasus used up two-thirds of its $44 million of cash during the first nine months of 2021, ending the third quarter with just $16 million in its coffers, according to the financial documents provided to lenders. Part of that money was used to fund NSO’s new ventures, which sit in separate entities, the person said.

A representative for Herzliya-based NSO declined to comment.

Phone Surveillance

Last month, the Commerce Department placed the company on an export blacklist for engaging in activities that it said “are contrary to the national security or foreign policy interests of the United States.” Pegasus software can track a user’s mobile phone, and the product allegedly was supplied to governments that used it to spy on political enemies. Pegasus was also reported to have been used in recent months to hack the mobile phones of State Department employees.

NSO has disputed the allegations and said that it shuts down service when clients misuse it.

Two American funds have expressed interest in NSO’s Eclipse technology -- which can detect, commandeer and land drones -- and in its new big-data analytics platform, for which the company signed its first contract this quarter, the person said. Pegasus would either be shut down or brought under the same umbrella as the other businesses in a bet that U.S. ownership would improve its standing, according to the same person.

NSO’s dwindling cash has put it at increased risk of default and was one of the factors that led Moody’s Investors Service to downgrade its rating on the company last month. Traders have been quoting NSO’s debt at between 60 cents and 70 cents on the dollar in recent weeks, levels that suggest bets on a default.

On Dec. 17, Jefferies Financial Group Inc. notified lenders of NSO of its intention to resign from performing key administrative tasks on the company’s debt, a move that could precede a debt restructuring.

Tough Quarter

The third quarter appears to have been particularly tough for NSO, the financial documents obtained by Bloomberg show.

Revenue declined 4.4% from a year earlier, while the cost of sales rose three times as fast. An increase in research-and-development spending as well as general expenses more than offset lower sales and marketing costs, leading to a 24% drop in operating profit.

Looking at the first nine months of 2021, the picture looks healthier, with the company’s core operations holding up relatively well in the first half. From the beginning of the year through the end of September, NSO recorded revenue of $176 million, up 4.1% from the same period in 2020, while operating income fell by a smaller 7.2% to $45 million.

If annualized, the 2021 revenue numbers are not far below the approximately $250 million that NSO reported in 2018, according to the person. That was the year before private equity firm Novalpina Capital acquired a majority stake in the company following a buyout orchestrated with NSO’s management. Revenue in 2019 was slightly above $290 million before falling to a little over $225 million in 2020, the person said.

Since 2019, the company has shut down services to at least seven customers with contracts worth a combined $80 million to $100 million in annual revenue after deciding that it would no longer do business with them, the person said.

Cash Burn

NSO generated $9.7 million of cash through its operations in the first nine months of 2021, a 9.2% increase from the year before. After taking into account the effect of investments and financing activities, however, the company used $29 million of cash over the period, more than seven times the amount it spent in the comparable period of 2020.

NSO started 2020 with $50 million of cash and managed to keep that balance roughly stable through the worst of the pandemic by drawing its entire $30 million bank credit line, the financial documents show. Nearly half of those funds were used to pay a $15 million distribution to shareholders that was also used to finance new investments, the person said.

A UAE agency put Pegasus spyware on phone of Jamal Khashoggi's wife months before his murder, new forensics show


A UAE agency put Pegasus spyware on phone of Jamal Khashoggi's 

wife months before his murder, new forensics show

Dana Priest
Tue, December 21, 2021

LONG READ

Emirates flight attendant Hanan Elatr surrendered her two Android cellphones, laptop and passwords when security agents surrounded her at the Dubai airport. They drove her, blindfolded and in handcuffs, to an interrogation cell on the edge of the city, she said. There, she was questioned all night and into the morning about her fiance, Saudi journalist Jamal Khashoggi.

The next day, at 10:14 a.m. on April 22, 2018, while her devices were still in official custody, someone opened the Chrome browser on one of the Androids.

They tapped in the address of a website "https://myfiles[.]photos/1gGrRcCMO", on the phone's keyboard, fumbling over the tiny keys, making two typos, and then pressed "go," according to a new forensic analysis by cybersecurity expert Bill Marczak of Citizen Lab. The process took 72 seconds.

The website sent the phone a powerful spyware package, known as Pegasus, according to the new analysis.



Over the next 40 seconds, the phone sent 27 status reports from its web browser to the website's server, updating the progress it was making installing the spyware.

The spyware had been developed by an Israeli firm, NSO Group, for what it says is use against terrorists and criminals. The website was configured by NSO for a United Arab Emirates customer, said Marczak, whose research group is based at the University of Toronto and devoted to uncovering cyberespionage.

The new analysis provides the first indication that a UAE government agency placed the military-grade spyware on a phone used by someone in Khashoggi's inner circle in the months before his murder.

"We found the smoking gun on her phone," said Marczak, who examined Elatr's two Androids at The Washington Post's and her request. Emirati authorities returned them to her several days after her release.

Marczak said he could see the Android trying to install Pegasus, but he could not determine whether the spyware had successfully infected the phone, which would enable Pegasus to steal its contents and turn on its microphone. But he said the UAE operator did not type the website address in a second time, which would ordinarily be expected in the event of a failed first attempt.

Elatr's phone was confiscated just after she and Khashoggi had gotten engaged and were in a long-distance relationship. Because both traveled frequently, with Elatr based in Dubai and Khashoggi in Washington, they often discussed travel and meeting plans in the United States and abroad using apps on their phones, according to Elatr and her phone records.

Marczak discovered the https://myfiles[.]photos address in 2017 while researching the presence of Pegasus spyware on global networks. By scanning the internet, Citizen Lab was able to identify a network of computers and more than a thousand web addresses used to deliver Pegasus spyware to the phones of targets in 45 countries, according to group's landmark "Hide and Seek" report. The methodology has been used by other cyber-researchers to identify Pegasus hacks worldwide.

The researchers found a particular set of web addresses, including https://myfiles[.]photos, associated with Pegasus targets primarily in the UAE.

Working with an international journalism consortium led by the Paris-based nonprofit Forbidden Stories, The Washington Post reported in July that an unknown operator employing Pegasus sent five SMS text messages over an 18-day period in November 2017 and a sixth one on April 15, 2018, according to an analysis by Amnesty International's Security Lab of Elatr's Androids. The research could not determine if the texts resulted in Pegasus being installed inside the phone.

Marczak's research advances the understanding of what happened to Elatr's phone by identifying a UAE agency operator in the process of trying to install Pegasus on the device while she was in UAE custody. He also found forensic data indicating her Android was also trying to install Pegasus.

Following The Post's report in July, NSO Group chief executive Shalev Hulio said a thorough check of the firm's client records showed none had used Pegasus to attack the phones of Khashoggi or Elatr before a Saudi hit team murdered him in Istanbul on Oct. 2, 2018.

"Regarding the wife of Saudi journalist Jamal Khashoggi . . . We checked and she was not a target," Hulio told an Israeli technology publication in July. "There are no traces of Pegasus on her phone because she was not a target."

After The Post's most recent reporting, NSO's attorney, Thomas Clare, said, "NSO Group conducted a review which determined that Pegasus was not used to listen to, monitor, track, or collect information about Ms. Elatr. The Post's continued efforts to falsely connect NSO Group to the heinous murder of Mr. Khashoggi are baffling."

Clare said the premise was "deeply flawed" and the details "make no sense from a technical standpoint." He said Pegasus is installed remotely and that it would therefore be "completely unnecessary and make no sense" that a human would type the address of a Pegasus-linked website into a target's phone.

That capability is described in NSO's own marketing materials, first published in an unauthorized leak in 2014. The documents were filed as an exhibit in an ongoing lawsuit WhatsApp brought against NSO in 2019, alleging that Pegasus used the WhatsApp messaging service to infect phones. The materials state, "When physical access to the device is an option, the Pegasus agent can be manually injected and installed in less than five minutes."

Clare acknowledged that the spyware uses SMS texts to send website links that deliver Pegasus attacks. But he said that "technological safeguards prevent" this method from being used six times in an 18-day period. The NSO marketing materials say that "the system operator can choose to send a regular text message (SMS) or an email, luring the target to open it . . . although the target clicked the link they will not be aware that software is being installed on their device."

Clare said the marketing materials "are outdated and do not necessarily provide accurate descriptions of the software's capabilities and limitations as of 2018."

The Israeli Ministry of Defense requires NSO to get its approval before selling Pegasus to a foreign country to ensure the sale is in Israel's national interest. NSO says it has sold Pegasus to 60 government agencies in 40 countries.

NSO said it has no visibility into the real-time targeting of individuals by its clients after it licenses its software to them. But the firm can demand access to customer records to investigate allegations of abuse. The company has said it has shut down five clients in the past several years and foregone millions of dollars in revenue because of its concern for human rights. It also said its technology has saved many lives by enabling law enforcement agencies to catch terrorists and criminals.

"There is one thing I want to say: We built this company to save life. Period," Hulio told The Post in July.

He said of the reports of the attacks on journalists and other abuse: "It's horrible. I am not minimizing it. But this is the price of doing business. . . . This technology was used to handle literally the worst this planet has to offer. Somebody has to do the dirty work."

The international investigation found that authoritarian governments have used Pegasus against journalists, human rights defenders, diplomats, lawyers and pro-democracy opposition leaders. New revelations continue to roll out. France found traces of the spyware on the phones of five ministers. The U.S. State Department announced that indications of Pegasus were found on the phones of 11 employees in Uganda. After initial denials, Hungary admitted it used the spyware.

Countries have responded forcefully. The United States, Britain and France each spoke with high-level Israel officials to express their consternation. The Biden administration blacklisted NSO Group from receiving access to certain U.S. technologies last month, adding it to an "entities list" reserved for companies whose activities are "contrary to the national security or foreign policy interests of the United States." NSO said it was "dismayed" by the move and is seeking its reversal. Apple is suing NSO to prevent it from targeting iPhones with Pegasus in the future.

"I'm glad governments are beginning to understand that the lack of regulation can lead to deadly consequences," said Randa Fahmy, Elatr's Washington-based pro bono attorney.

The UAE, a federation of monarchies in the Persian Gulf, has been one of NSO's most notorious clients. It has used Pegasus against anti-regime activists, journalists and even a royal princess attempting to escape her father, the international media investigation and others have found. In October, a British court revealed that NSO Group ended its contract with the UAE because Dubai's ruler had used it to hack the phones of his ex-wife and her lawyer, a member of Britain's House of Lords.

The UAE continues to deny all allegations against it. The UAE Embassy in Washington did not respond to multiple requests for comment. In the past, the UAE has denied allegations that it used Pegasus against human rights activists and other civil society figures.

The UAE is a longtime ally of Saudi Arabia. In 2013, the two countries signed a mutual security agreement promising cooperation on intelligence and law enforcement matters. The UAE has spied on Saudi dissidents abroad and sent them to Riyadh, according to human rights groups and a recent lawsuit filed in federal court in Portland, Ore., on behalf of an imprisoned Saudi human rights activist.

- - -

Three years ago, Hanan Elatr was a globe-trotting supervisor for the Emirates airlines. She was married to a pro-democracy icon and earning a salary that allowed her to support her mother and siblings. Today, she said, she fears for her life.

"Every day when I see the daylight, I don't know why I'm still alive, because I'm the second victim after Jamal in this tragedy," she said in a recent interview, tearing up. "I lost my life . . . I used to provide for my family and now I can't even find my own food."

She has spent most of her savings and for a time was sleeping on an air mattress in an empty apartment. At age 53, she recently moved into a basement bedroom of a stranger while waiting for her political asylum case to work its way through the system.

With the help of Rep. Jamie Raskin, D-Md., she recently received a temporary work visa. In addition to organizing her new life, she dresses in her finest clothes and high heels, does her makeup and hair and then takes the Metro or buses to job interviews at local hotels and restaurants. Last week she landed a job as a waitress for $2.70 an hour plus tips.

Elatr said she feels forgotten in the wake of Khashoggi's murder. She found out he had disappeared via Twitter after waking up from a long flight, alone in her apartment in Dubai. While she was dealing with the likelihood he had been murdered, she was also learning that he was planning to marry another woman, an accepted practice among Muslims in some countries.

His new fiancee, Hatice Cengiz, was waiting for him outside the Saudi consulate in Istanbul. He had gone there to obtain a document necessary to marry her. Instead, he was murdered with the approval of Saudi leader Mohammed bin Salman, U.S. intelligence agencies later concluded. Mohammed has denied any involvement, and some of his underlings have been convicted and sentenced for the crime.

Cengiz, whom Le Monde later dubbed the "unofficial heiress of Jamal Khashoggi," became an effective spokeswoman in front of the crowd of television cameras that gathered outside the consulate.

Elatr, meanwhile, has struggled for attention. She was Khashoggi's fourth wife, after his three divorces. Many of Khashoggi's friends in Washington did not know about his marriage to her in Virginia in June 2018.

"Nobody knew her. Jamal had kept it a secret," said Sarah Leah Whitson, a longtime human rights advocate and the executive director of Democracy for the Arab World Now (DAWN), a Mideast-focused organization founded by Khashoggi. "I don't know what was going on in his head."

Amnesty International's initial steps to help Elatr as far back as May are still tangled in bureaucracy and miscommunication seven months later, according to correspondence between the organization and Elatr's attorney. The organization said it has been overwhelmed by surges in refugees and said that "unfortunately there were unexpected delays" in handling Elatr's case, but it intends to reconnect with her to complete a review of the matter.

In Turkey, Cengiz's life has been demolished, too, she told The Post in an interview in Istanbul this summer. Turkey has assigned her constant bodyguards, and safety considerations prevent her from traveling in the region and remaining in her academic position.

"In the case of both Hanan and Hatice, their lives have been completely upended. Both have paid a tremendous price," said Whitson. "Hanan has been interrogated and harassed by the UAE and is in dire financial straits and Hatice," too, is suffering.

- - -

On the evening of April 21, 2018, Elatr had finished a 15-hour flight from Toronto to the UAE, weary and ready for bed, when she entered immigration as usual at Dubai International Airport. She immediately noticed a cluster of official-looking men staring at her. She knew that Khashoggi was a target because of his human rights advocacy. She rushed to the bathroom to call her sister.

"Something is not right," she remembers telling her in the toilet stall. She quickly deleted WhatsApp, which she and Khashoggi used to communicate. When she came out of the restroom, a large man trapped her on one side and the sole woman in the group on the other. "Walk with us quietly and behave," the man whispered.

She felt sick and began shaking uncontrollably, she said. The agents drove her to her home, blindfolded and in handcuffs, to search for documents and computers, according to her sworn affidavit in her asylum case. Three friends of Elatr's have given her lawyers affidavits attesting that Elatr recounted the same facts to them soon after she was released.

Then they drove her to the Al Awir Central Jail, a large high-security complex, on the edge of the city. She was fingerprinted. Agents took a DNA swab from her mouth. They photographed her face from various angles. And then more intense questions about Khashoggi began late at night and into the morning.

She recalled them asking: What are Jamal's activities? Who is Jamal's network? What is Jamal's income? How is Jamal's health? She answered every question, she said. She said she told them there was no network preparing to topple the Gulf monarchies. Yes, Khashoggi wanted political activists freed from Saudi prisons. Yes, he favored democracy and respect for human rights in the Arab world. But the royal families should have roles, too, like those in Britain and Sweden. When the agents left her alone, she slid onto the floor to sleep.

The agents brought her back to her house after 17 hours, but she was put under house arrest for 10 days. The interrogations and months-long stints of house arrests continued over the next year, as did phone harassment by her intelligence agency handler, who called himself Mohammed Abdu, she said. Elatr's siblings in Dubai and Egypt also were interrogated and had their passports confiscated when they tried to travel to see their ailing mother or visit Elatr.

Unbeknown to Elatr, the Emiratis had been using Pegasus to try to spy on her as far back as November 2017, according to Amnesty's Security Lab. It was a period of telephonic courtship between two people always on the go, as she traveled for the airlines and he gave speeches and met associates in Europe and Turkey.

The profilers designed fake SMS messages to get her to click on a link and infect her phones: They tempted her with a flower bouquet she would receive at home with one click, photos from her sister Mona if she would click on another link, a package waiting at the office of a common Emirati carrier, if she would click on yet another.

The beginning of April was a big week for Elatr and Khashoggi. He had proposed to her on April 3, she said, and gave her an engagement ring. Pegasus was used in an attack on one of her phones again on April 15, 2018, with an SMS message using the "myfiles[.]photos" website address, the same one the agent would type into one of the Androids a week later.

The couple continued to meet and communicate by phone, using multiple new apps that Khashoggi told Elatr he hoped would make it harder for him to be surveilled. Just past midnight on Sept. 7, their last in-person meeting, she texted him after she had landed in New York City. They planned to stay together at the Sheraton Hotel.

Three weeks later she sent him her flight schedule, which had her arriving at Dulles International Airport on an Oct. 20 flight to Washington, where they planned to meet again.

On Sept. 30, Khashoggi was in Turkey arranging to marry Cengiz but sent Elatr birthday greetings from two phones. One message read: "Bless you, happy birthday, may you be well and happy this year."

On Oct 1, at 2:12 a.m., she replied: "I appreciate it a lot and hope you are well and happy . . . from the plane back to Dubai."

The next day he was murdered.

Elatr intends to ask Turkish authorities for his phones. The authorities have refused to release them or to publicly share what they have learned. As relations warm between Turkey and Saudi Arabia and the UAE, Elatr doubts she will ever get answers.

"I feel very devastated that I might be the tool to watching Jamal," Elatr recently told The Post. "I want to know how many countries were watching my husband move and what were the tools used against my husband."


Video:

 http://www.washingtonpost.com/video/national/investigations/i-lost-my-life-jamal-khashoggis-widow-shares-her-story/2021/12/21/60ca106d-c0da-4307-9e8c-7911bb9aae3c_video.html

Declassified papers show U.S. asked Japan for SDF support during 1990 Gulf crisis

A Maritime Self-Defense Force's minesweeper leaves the MSDF Kure Naval Base in Hiroshima Prefecture for deployment to the Persian Gulf in April 1991. | KYODO

KYODO, JIJI
Dec 22, 2021

In the wake of the Gulf crisis of August 1990, then-U.S. President George H.W. Bush urged Japan to provide logistical support to the U.S. military via its Self-Defense Forces, despite constitutional constraints, according to diplomatic records declassified Wednesday and testimony from former government officials.

The request was made directly to then-Prime Minister Toshiki Kaifu.

Japan did not fulfill Bush's request to dispatch the SDF to the Gulf War effort. However, it did deploy minesweepers in the Persian Gulf as a postwar contribution, reflecting the United States' strong influence on Tokyo's security policy.

A top secret diplomatic cable that recorded a meeting between Kaifu and Bush on Sept. 29, 1990, revealed that the former president told Kaifu that he was aware Tokyo was considering ways to contribute militarily to international efforts in the Middle East, after Iraq invaded Kuwait.

Bush added that such an action would be beneficial and appreciated by the world, expressing hope that Japan would contribute without delay.

This is the first time it has been publicly revealed that the U.S. president attempted to persuade Japan to dispatch the SDF in connection with the crisis.

Koichiro Matsuura, a former Japanese ambassador to France who served as head of the Foreign Ministry's North American Affairs Bureau, said Bush had asked earlier, in a phone call on Aug. 14, for the SDF to sweep mines and transport weapons.

In a series of talks, Kaifu responded by expressing the need to protect the war-renouncing Article 9 of the postwar Constitution, while stressing his desire to cooperate.

He sought to compromise by establishing a nonmilitary U.N. peacekeeping operations team and having some SDF personnel be part of that. But the plan ran into difficulties after a bill aimed at allowing Japan to cooperate in U.N. peacekeeping operations was scrapped in November of that year due to public opposition.

Japan was embroiled in a heated debate at the time over dispatching the SDF overseas under the constraints of the pacifist Constitution. In a meeting of political party leaders held before Kaifu's trip to New York for the summit meeting, the Japan Socialist Party and Komeito expressed their opposition to SDF deployment overseas.

According to diplomatic cables and former government officials, the United States effectively notified Japan of its intention to use force on Jan. 14, 1991 — three days before the Gulf War began.

Then-U.S. Secretary of State James Baker secretly told his Japanese counterpart Taro Nakayama during his visit to the United States that the blood of Americans would be shed.

The records and testimonies also revealed that of the $13 billion Japan provided to the multinational coalition in aid, $9 billion was added in response to a request by then-U.S. Treasury Secretary Nicholas Brady during a meeting with his Japanese counterpart Ryutaro Hashimoto in New York.

Multiple former Japanese government officials have testified that while there was no basis for the total amount sought by the United States, there was "no other choice" but to meet the request.

But Japan's response to the Gulf War was internationally criticized as "too little, too late," making it a traumatic experience for lawmakers and government officials that have strongly influenced the course of the country's security and foreign policies ever since.

Taizo Miyagi, a Sophia University professor who specializes in the history of international politics, said Japan was "overwhelmingly strong as an economic superpower" at the time of the Gulf War, and that U.S. "dissatisfaction" with Tokyo's reluctance to bear "a reasonable burden" is reflected in the diplomatic records.

"The Gulf War became a trauma for Japan, and the axis for evaluating foreign affairs since then has become the perspective of the United States," Miyagi said.

The two countries also discussed Japan's involvement in the Gulf War at a meeting between then-U.S. Undersecretary of State for Political Affairs Robert Kimmitt and then-Japanese Ambassador to the United States Ryohei Murata on Aug. 22 the same year, before the summit meeting.

Noting that West Germany was considering amending its Basic Law at the time, Kimmitt said that Japan would suffer from being bound to its historical position and not being able to respond to new challenges, according to the diplomatic documents.

Bush's request for an SDF deployment was treated as top secret within the Japanese government. Although some news outlets reported the contents of the summit meeting, the First North America Division of the Foreign Ministry prepared a document that denied Japan had received a request to dispatch the SDF.

The denial was likely made out of fear of harsh reactions from the public and from opposition parties.

Kaifu was unable to pass the bill on U.N. peacekeeping cooperation under his administration. Legislation that enabled full-scale deployment of SDF troops overseas was enacted under the administration of Prime Minister Kiichi Miyazawa in June 1992.

Legal changes now allow the SDF to be dispatched to overseas peacekeeping operations even if they are not under the control of the United Nations.

Still, sending the SDF abroad for Japan's defense or international security cooperation needs to meet some conditions and remains a sensitive issue under the pacifist Constitution.

WHY THE US WILL DECRIMINALIZE

Marijuana Is on the Minds of Young Conservatives at Turning Point USA’s AmericaFest

Natasha Yee
Tue, December 21, 2021

Trump Supporters In Phoenix Hold "America First" Event - Credit: Spencer Platt/Getty Images

It’s day two of Charlie Kirk’s AmericaFest, and freedom is in the air. At a gathering aimed primarily at Gen Z and Millennial conservatives, the theme is threaded throughout the event, and it can be seen everywhere: Never has the American flag been donned in some many iterations. The red, white, and blue motif graces blazers, cowboy hats, and high heels, as well as the photo backdrops and stage lighting.

Freedom is the implicit message of Sunday’s opening worship led by Sean Feucht, a Christian musician and former worship leader at Bethel Church in Redding, California. Feucht hosted a mass religious gathering in downtown Nashville in October 2020, to the chagrin of city health officials. Thousands of young adults and students pile in as early as 7:30 a.m. to hear his tunes.

Who Needs a License? New York Weed Dispensaries Are Already Opening

An hour or so later, Donald Trump, Jr. takes the stage and reminds the young MAGA fans what they’re nominally here for. “You guys are the frontline of freedom. Fight for your country because it’s worth it,” he urges, between laughing at the military for promoting transgender pilots and calling “Let’s Go Brandon” the biggest cultural phenomenon of the last 50 years. He calls Democrats hypocrites. “If I was doing crack, you probably wouldn’t give me the pass,” he says, alluding to Hunter Biden.

A familiar herby floral scent wafts toward me and I avert my gaze from Trump Jr.’s dogged comedy show. The guy in the next seat asks if I’d like a hit from his vape pen. “THC?” I ask. He nods mischievously.

It’s a surprise, but it’s not all that surprising. The young people here displayed traditional values with a penchant for partying, and — like many young conservatives — their views on cannabis legalization and drug decriminalization are complicated.

Eighteen states, two territories, and the District of Columbia currently allow recreational marijuana use, while 36 states and four territories allow medical use. According to Pew Research Center, 63% of Republicans ages 18 to 29 believe that marijuana should be legal for recreational and medical use. But as age increases, that number decreases: 53% of those ages 30 to 49, 48% of those 50 to 64, and just 27% of Republicans 65 and up favor making marijuana legal recreationally and medically.

Oregon decriminalized non-commercial amounts of illegal drugs like cocaine, heroin, and methamphetamine through Measure 110, which went into effect on February 1st. The jury is still out on the consequences for a state that didn’t have the robust recovery systems in place to prepare for decriminalization.

“Marijuana should be legalized,” says Tyler Pemberton, a 27-year-old donning a khaki cowboy getup.

“The war on drugs is a losing war. I don’t partake recreationally, but as long as it’s used in moderation and not abused, it’s fine,”says the Grand Canyon University student. “I’ve never heard of anyone overdosing on marijuana, but I have heard of people overdosing on meth and heroin. But I don’t think throwing people in jail helps. The only thing that should be criminalized is the intent to distribute.”

At AmericaFest, views on marijuana are mixed, but questions about harder drugs gleaned a more hesitant approach.

Ishmael Sharif, a 20-year-old from Chicago, doesn’t stand by recreational legalization of marijuana. “Marijuana legalization is a gimmick in Illinois to extract more revenue from communities. I don’t think the state believes in it and I don’t believe in it,” he says. They’re just doing it to make money off people.” Sharif said that he could get behind medical legalization, but advised against the decriminalization of hard drugs.

Illinois residents could buy recreational marijuana starting on January 1st, 2020. The state collected $205 million in tax revenue from its sales last year, according to Marijuana Moment, and $31 million of that went to nonprofits.

The attitudes here reflect a broad public reimagining of how to deal with drugs and the people who use them — a shift that politicians are slowly catching up with. In June, Democrats initiated a bill to end President Nixon’s famous “War on Drugs” declaration 50 years prior. The Drug Policy Reform Act, introduced by Reps. Cori Bush (D-Mo.) and Bonnie Watson Coleman (D-N.J.) would decriminalize personal use and possession of all drugs, expunge current records and allow for re-sentencing and invest in health-centered responses to drug addiction.

Rep. Nancy Mace (R-S.C.) introduced the States Reform Act in November, which would decriminalize cannabis at the federal level, delisting it as a Schedule I drug under Drug Enforcement Agency rules. The bill would also allow for expungement of federal convictions in nonviolent cases and lay the groundwork for federal regulation and enforcement in states that allow marijuana sales.

As I talk about drugs with TPUSA attendees, for many of them, it comes back to freedom, or at least, to the absence of government. “The less government the better when it comes to marijiuana legalization; it has clearly shown promise for pain relief,” says Czeena Devera, a 31-year-old children’s book publisher from Michigan. “But harder drugs are a different story and have the potential to wreck a society. Those need to be regulated.”