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Friday, October 18, 2019

Russia in Review: The Kremlin's Outreach to Singapore

Russia in Review is a weekly intelligence summary (INTSUM) produced by the Institute for the Study of War (ISW). This ISW INTSUM series sheds light on key trends and developments related to the Russian government’s objectives and its efforts to secure them. Receive future Russia in Review INTSUM products via-email by signing up for the ISW mailing list.

Authors: George Barros and Nataliya Bugayova

Key Takeaway: The Kremlin is intensifying its outreach to Singapore, a U.S. partner. The Kremlin-led Eurasian Economic Union signed a free trade agreement with Singapore on October 1. The Kremlin is also pushing for cybersecurity cooperation with Singapore. Russian President Vladimir Putin intends to leverage Singapore as an important nexus point as he expands Russia’s influence and networks in Asia. The Kremlin might also seek to create additional avenues to evade sanctions through trade diversification and money laundering for Russia, Putin’s associates, and Russia’s partners, such as Iran.

The Kremlin-led Eurasian Economic Union (EEU) signed a free trade agreement (FTA) with Singapore on October 1.[1] The EEU and Singapore completed an FTA calling for mutual tariff reduction following two years of negotiations. Singaporean officials described the pace of negotiations as proceeding at “breakneck speed.”[2] Singapore is a major trading and financial hub in Asia. Most of Asia’s metals and metallurgical products transit through Singapore, and many hedge and private equity funds station their Asian headquarters in Singapore.[3] The Kremlin seeks to mitigate the effects of Western sanctions through trade diversification.

The Kremlin may also seek additional opportunities to launder money. Executives from Russian state-owned technology and defense giant Rostec, led by Putin’s close ally Sergey Chemezov, called for increased economic ties between Russia, Singapore and Cyprus on October 11, shortly after the FTA was signed.[4] The Kremlin has leveraged Cyprus for money laundering for years. The effects of Western sanctions and stricter anti-laundering regulations have reduced the utility of this relationship, however.[5] Russia thus might seek to create Russia-controlled linkages between two major financial hubs, Cyprus and Singapore. The Kremlin is engaged in a broader global campaign to establish additional revenue sources and ways to evade sanctions through money laundering, including in Africa.[6]

Russia may attempt to use the EEU to help its partner Iran mitigate the consequences of Western trade restrictions in the long term.[7] The EEU and Iran will launch an interim FTA on October 27.[8] The Kremlin might leverage FTAs with both Iran and Singapore to route Iranian goods and services that fall under Western sanctions. Iranian goods could potentially be exported to any of the five EEU member states (Armenia, Belarus, Kazakhstan, Kyrgyzstan, Russia), which might then rebrand and export them to global markets. Iran has also recently called for greater cooperation with Singapore.[9] Iran established a joint commerce committee with Singapore in February 2019.[10]

The Kremlin is engaging Singapore as part of a global effort to expand its network of alliances and to boost the EEU’s credibility.[11] Russia likely sees Singapore as a potential conduit to increase cooperation between the EEU and the Association of Southeast Asian Nations (ASEAN). Russia has intensified its efforts to engage ASEAN in recent years as Putin desires access to Asia’s stronger economies.[12]

The Kremlin is also employing FTAs to build the EEU’s credibility. Putin initially envisioned the EEU as a customs union integrating the economies of its member states. The EEU failed to provide significant economic value to its members.[13] Putin adapted by expanding the EEU’s reach through FTAs. The EEU signed its first FTA with Vietnam in 2015. Russia’s recent agreement with Singapore marks the EEU’s second successful FTA. Russia will likely sign an FTA with Serbia on October 25. The EEU also announced plans to create an Industrial Zone in Egypt on October 10 – in addition to the Russian Industrial Zone the Kremlin is already constructing in eastern Egypt at Port Said.[14] The Kremlin seeks to boost its industrial zone in Egypt through the capabilities of the EEU member states – another example of the Kremlin interlinking its networks and gains.

The Kremlin is developing connections with Singapore across multiple sectors. Singapore and Russia signed six agreements, including urban transport management, technology transfers, international investment, and technical education, on September 6 at the 10th Session of the Russia-Singapore Inter-Governmental Commission.[15] Putin’s visit to Singapore in November 2018 to meet President Halimah Yacob likely began Russia’s renewed push for cooperation. The presidents laid the cornerstone of Singapore’s first Russian cultural center affiliated with the Russkiy Mir Foundation. The Russian cultural center will also house a Russian Orthodox Church (ROC).[16] The Kremlin uses the Russkiy Mir Foundation and ROC as foreign policy and diplomatic tools.[17]

The Kremlin is expanding security and cybersecurity cooperation with Singapore. Russian Security Council Secretary Nikolai Patrushev signed a Memorandum of Understanding on Security Cooperation with Singapore on August 30. Patrushev highlighted the Kremlin’s intent to cooperate on countering terrorism, drug trafficking, and “transnational crime.”[18] Patrushev discussed cooperation on countering cybercrime with Singapore’s Cyber Security Agency.[19] Patrushev also visited Interpol’s Innovation Center in Singapore during his trip.[20] Russian Group IB opened its new global headquarters to Singapore earlier in 2019.[21] Group IB is a Russian cybersecurity company with a global client base. Group IB markets itself as a “clean” alternative to its competitor, Kaspersky Lab, a Kremlin-affiliated cybersecurity company.[22] Group IB chose Singapore as the location of its new global headquarters due to its proximity to Interpol’s cyber-crime headquarters, among other factors.[23] The Kremlin might attempt to leverage Russia’s business presence in Singapore to advance its push for cybersecurity cooperation.

The Kremlin’s cybersecurity outreach to Singapore is a part of Russia’s broader efforts to cast itself a cybersecurity partner. Russia is marketing itself as a cybersecurity partner despite being a malign actor in cyberspace.[24] The U.N. adopted two Russia-sponsored international information security resolutions in December 2018.[25] Russia co-sponsored a cybersecurity center at the World Economic Forum.[26] Russia and Spain agreed to establish a joint cybersecurity group in 2018 to investigate and prevent disinformation campaigns.[27] Spain welcomed Russian cybersecurity cooperation despite reports that Russian ‘bots’ drove a cyber disinformation campaign surrounding a referendum on Catalan separatism in 2017.[28] Russia also has initiated similar cybersecurity cooperation with India.[29] The Kremlin unsuccessfully pushed for a cybersecurity deal with the U.S. in 2018.[30] The Kremlin likely intends to sign numerous cybersecurity and information security cooperation agreements in order to both expand Russia’s global influence and set up conditions to provide Russia long-term access to information networks.

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[1] Adrian Lim, “Free trade deal with Eurasian Economic Union will cut tariffs, boost trade and investment links,” The Straits Times, October 2, 2019, https://www.straitstimes(.)com/politics/free-trade-deal-with-eurasian-economic-union-will-cut-tariffs-boost-trade-and-investment; Adrian Lim, “Pacts will cut tariffs, boost trade and investment links,” The Straits Times, October 2, 2019, https://www.straitstimes(.)com/politics/pacts-will-cut-tariffs-boost-trade-and-investment-links; Jeremy Koh, “Eurasian Economic Union-Singapore FTA shows resolve to resist tide of protectionism: PM Lee,” Channel News Asia, October 1, 2019, https://www.channelnewsasia(.)com/news/business/singapore-eurasian-economic-union-free-trade-agreement-11960654; “Free Trade Agreement Between the Eurasian Economic Union and its Member States, of the One Part, and The Republic of Singapore, of the Other Part,” Eurasian Economic Union, October 1, 2019, https://docs.eaeunion(.)org/docs/en-us/01423247/iatc_04102019; Goods that will benefit from the tariff reduction include mineral fuels, oils and their distillates, prepared foodstuffs, machinery, chemical and pharmaceutical products, and precision instruments.
[2] Adrian Lim, “Pacts will cut tariffs, boost trade and investment links,” The Straits Times, October 2, 2019, https://www.straitstimes(.)com/politics/pacts-will-cut-tariffs-boost-trade-and-investment-links; Jeremy Koh, “Eurasian Economic Union-Singapore FTA shows resolve to resist tide of protectionism: PM Lee,” Channel News Asia, October 1, 2019, https://www.channelnewsasia(.)com/news/business/singapore-eurasian-economic-union-free-trade-agreement-11960654.
[3] Anshuman Daga, “Singapore steps up scrutiny of shell firms to combat money laundering,” Reuters, August 12, 2019, https://www.reuters(.)com/article/us-singapore-cenbank/singapore-steps-up-scrutiny-of-shell-firms-to-combat-money-laundering-idUSKCN1V2231.
[4] [“Cyprus-Russia-Singapore: One More Step in Development of Eurasian Union Integration”], Vestnik Kipera, October 11, 2019, https://vkcyprus(.)com/articles/9788-kipr-rossiya-singapur-eshchjo-odin-shag-k-razvitiyu-evrazijskoj-integratsii; “Cyprus – Russia – Singapore: one more step towards the Eurasian integration development,” Russia-Singapore Business Council, October 11, http://www.rsbctrade(.)com/cyprus-russia-singapore-one-more-step-towards-the-eurasian-integration-development.
[5] Nektaria Stamouli and Drew Hinshaw, “U.S. Takes on Russia’s Favorite Money Haven: Cyprus,” The Wall Street Journal, September 30, 2018, https://www.wsj.com/articles/u-s-takes-on-russias-favorite-money-haven-cyprus-1538316001; Paul Tugwell and Georgios Georgiou, “Cyprus No Longer Mediterranean Haven for Russian Businesses,” Bloomberg, January 9, 2019, https://www.bloomberg.com/news/articles/2019-01-10/cyprus-loses-luster-as-mediterranean-haven-for-russian-business.
[6] Nataliya Bugayova and Darina Regio, “The Kremlin’s Campaign in Africa: Assessment Update,” Institute for the Study of War, August, 2019, http://www.understandingwar.org/sites/default/files/ISW%20-%20The%20Kremlin%20Campaign%20in%20Africa%20-%20August%202019.pdf.
[7] Nicholas Trickett, “Russia and the Rest: Putin’s East Asia Summit Visit,” The Diplomat, November 22, 2018, https://thediplomat(.)com/2018/11/russia-and-the-rest-putins-east-asia-summit-visit/.
[8] “EAEU, Iran to launch interim free trade zone,” Kazinform, October 11, 2019, https://www.inform(.)kz/en/eaeu-iran-to-launch-interim-free-trade-zone_a3574159; [“EAEU sets Deadline for Creating Free Trade Zones with Singapore and Egypt,”] RBC, September 30, 2019 https://www.rbc(.)ru/politics/30/09/2019/5d891b059a79470807abedb7; “Iran to start economic interaction with Eurasian bloc from October 27,” Tehran Times, October 6, 2019, http://www.tehrantimes(.)com/news/440868/Iran-to-start-economic-interaction-with-Eurasian-bloc-from-October; “Iran, EEU to Engage in All-Embracing Free Trade by Early 2022,” Financial Tribune, August 28,2018, https://financialtribune(.)com/articles/economy-domestic-economy/92586/iran-eeu-to-engage-in-all-embracing-free-trade-by-early-2022.
[9] “Iran-Singapore Ties,” The Iran Project, accessed October 18, 2019, https://theiranproject(.)com/blog/tag/iran-singapore-ties/.
[10] “Iran-Singapore joint commerce committee holds 1st official meeting,” Tehran Times, February 6, 2019, http://www.tehrantimes(.)com/news/432780/Iran-Singapore-joint-commerce-committee-holds-1st-official-meeting.
[11] Frederick Kagan, Nataliya Bugayova, and Jennifer Cafarella, “Confronting the Russian Challenge: A New Approach for the U.S.,” Institute for the Study of War, June 2019, http://www.understandingwar.org/sites/default/files/ISW%20CTP%20Report%20-%20Confronting%20the%20Russian%20Challenge%20-%20June%202019.pdf.
[12] “Overview ASEAN-Russia Dialogue Relations,” ASEAN, August 2016, https://asean(.)org/storage/2012/05/Overview-ASEAN-Russia-August-2016-r4cl.pdf.
[13] Golam Mostafa and Monowar Mahmood, “Eurasian Economic Union: Evolution, challenges and possible future directions,” Sage Journal of Eurasian Studies, July 1, 2018, https://journals.sagepub(.)com/doi/full/10.1016/j.euras.2018.05.001; Rilka Dragneva and Kataryna Wolczuk, “The Eurasian Economic Union: Deals, Rules and the Exercise of Power,” Chatham House, May 2017, https://www.chathamhouse(.)org/sites/default/files/publications/research/2017-05-02-eurasian-economic-union-dragneva-wolczuk.pdf.
[14] “Egypt and Russia sign 50-year industrial zone agreement,” Reuters, May 23, 2018, https://www.reuters(.)com/article/egypt-russia-industry/egypt-and-russia-sign-50-year-industrial-zone-agreement-idUSL5N1SU5SI.
[15] “The 10th Session of the High-Level Russia-Singapore Intergovernmental Commission, 6 September 2019,” Ministry of Foreign Affairs of Singapore, September 6, 2019, https://www.mfa(.)gov.sg/Newsroom/Press-Statements-Transcripts-and-Photos/2019/09/06092019-10th-IGC.
[16] “Putin begins meeting with Singapore’s president,” TASS, November 13, 2018, https://tass(.)com/world/1030583; “Vladimir Putin Launches Russian Cultural Center Construction in Singapore,” Russkiy Mir Foundation, November 13, 2018, https://russkiymir(.)ru/en/news/248724/.
[17] Orysia Lutsevych, “Agesnts of the Russian World: Proxy Groups in the Contested Neighborhood,” Chatham House, April 2016, https://www.chathamhouse(.)org/sites/default/files/publications/research/2016-04-14-agents-russian-world-lutsevych.pdf;, Andis Kudors and Robert Orttung, “Russian Public Relations Activities and Soft Power,” Russian Analytical Digest, June 16, 2010, https://www.research-collection(.)ethz.ch/handle/20.500.11850/26212; Alexis Mrachek, “How Putin Uses Russian Orthodoxy to Grow His Empire,” Heritage Foundation, February 22, 2019, https://www.heritage.org/europe/commentary/how-putin-uses-russian-orthodoxy-grow-his-empire.
[18] “Meeting between Senior Minister and Coordinating Minister for National Security Teo Chee Hean and Secretary of the National Security Council of the Russian Federation Nikolai Patrushev, 30 August 2019,” Ministry of Foreign Affairs of Singapore, August 30, 2019, https://www.mfa(.)gov.sg/Newsroom/Press-Statements-Transcripts-and-Photos/2019/08/300819_SM-Teo-meeting.
[19] “Russian security chief discusses cooperation within Interpol, cybersecurity in Singapore,” TASS, August 23, 2019, https://tass(.)com/society/1075608.
[20] “Russian security chief discusses cooperation within Interpol, cybersecurity in Singapore,” TASS, August 23, 2019, https://tass(.)com/society/1075608.
[21] Claudia Chong, “Cybersecurity firm Group-IB opens global HQ in Singapore,” The Business Times, June 10, 2019, https://www.businesstimes(.)com.sg/technology/cybersecurity-firm-group-ib-opens-global-hq-in-singapore.
[22] Maria Kolomychenko and Katya Golubkova, “Russian cybersecurity firm Group IB to open global HQ in Singapore: CEO,” Reuters, November 12, 2018, https://www.reuters(.)com/article/us-russia-cyber-group-ib/russian-cybersecurity-firm-group-ib-to-open-global-hq-in-singapore-ceo-idUSKCN1NH0IT.
[23] Maria Kolomychenko and Katya Golubkova, “Russian cybersecurity firm Group IB to open global HQ in Singapore: CEO,” Reuters, November 12, 2018, https://www.reuters(.)com/article/us-russia-cyber-group-ib/russian-cybersecurity-firm-group-ib-to-open-global-hq-in-singapore-ceo-idUSKCN1NH0IT.
[24] “Significant Cyber Incidents Since 2006,” CSIS, September 2019, https://csis-prod.s3.amazonaws.com/s3fs-public/190904_Significant_Cyber_Events_List.pdf.
[25] Dipanjan Roy Chaudhury, “United Nations adopts two Russia sponsored resolutions backed by India on International Information Security,” The Economic Times, December 29, 2018, https://economictimes.indiatimes(.)com/news/politics-and-nation/united-nations-adopts-two-russia-sponsored-resolutions-backed-by-india-on-international-information-security/articleshow/67298500.cms./
[26] “World Economic Forum Centre for Cybersecurity,” World Economic Forum, accessed October 18, 2019, https://www.weforum(.)org/centre-for-cybersecurity/partner-with-us.
[27] “Russia and Spain Agree to Cooperate on Cyber Security, Fight Fake News,” The Moscow Times, November 7, 2018, https://www.themoscowtimes(.)com/2018/11/07/russia-and-spain-agree-to-cooperate-on-cyber-security-fight-fake-news-a63417; “Spain and Russia agree to set up joint cybersecurity group,” Associated Press, November 6, 2018, https://www.businessinsider(.)com/ap-spain-and-russia-agree-to-set-up-joint-cybersecurity-group-2018-11.
[28] Vasco Cotovio and Emanuella Grinberg, “Spain: 'Misinformation' on Catalonia referendum came from Russia,” CNN, November 13, 2017, https://www.cnn.com/2017/11/13/europe/catalonia-russia-connection-referendum/index.html.
[29] “Russia, India Agree to Boost Information Security Cooperation,” BRICS Information Portal, March 12, 2019, http://infobrics(.)org/post/28263/.
[30] “Russia Wants a Deal with the United States on Cyber Issues. Why Does Washington Keep Saying No?,” Council on Foreign Relations, August 27, 2018, https://www.cfr(.)org/blog/russia-wants-deal-united-states-cyber-issues-why-does-washington-keep-saying-no.