From injured civilians, to fleeing refugees and traumatised children, images of the Russian invasion of Ukraine have hit our TV screens with full force.
The West has come together with great unity in facing arguably its greatest military crisis since the Second World War. This has clearly wrong-footed Putin, and the invasion has not gone according to his plan. It has been a grave miscalculation.
The forces behind this geopolitical explosion have been gathering steam for some time as the international balance of power has shifted towards multipolarity. We now urgently need a strategy to correct the mistakes we have made in ignoring these forces in the past and ensure that the current hostilities are not the starting pistol of a new age of global conflict.
That strategy should, first of all, recognise what we have missed. We have either failed to see – or in some cases turned a blind eye to – the exploitation of weaknesses in the global system by bad actors.
In effect, we have been letting these malign forces in through the back door.
Many are now recognising this threat. Parliament’s Foreign Affairs Select Committee, for one, has launched an inquiry examining this very subject and, being a former member of the Committee myself, I know the inquiry’s findings will not be easy reading.
The situation is extremely dangerous. It is clear that malignant state and non-state actors are constantly looking for ways to develop their hold over vulnerable parts of our global system.
Their modus operandi is to exploit jurisdictions that are part of key international economic and political networks, with ties to desirable centres for capital – like London. They then use these jurisdictions for money-laundering or criminal activity. The states they target are often inherently weak in some way – such as in their compliance or governance structures.
While many of these vulnerable nations have been identified by international governance regimes such as the Financial Action Task Force (FATF), more must be done to ensure that these states are given the support required to protect and extricate themselves from these malicious actors.
The UK, through the FCDO, has a critical role to play here, given London’s key position as a global finance centre. Britain has long held other countries to account and supported democracy and, as the recent Heads of Government summit in Rwanda has reinforced, has a great responsibility to do so in Commonwealth countries.
Of particular concern, however – especially in the light of the invasion of Ukraine by Russia, and the resultant UK, EU and US sanctions – is the odious flow of Russian money into Malta.
An EU state and Commonwealth member, Malta is a desirable funnel through which Russian oligarchs can pour their cash. This has been made possible by the country’s golden passport schemes, leading it to become the EU visa of choice for Russian oligarchs for the past decade, as other safe havens such as Cyprus have undergone reform.
The EU attempted to ban citizenship-for-investment schemes in the wake of the Ukraine conflict. Malta has refused to end its ‘golden passport’ schemes, prompting legal action from the EU. Expelling this reliable source of foreign investment is too difficult an ask for Malta’s government, which has had similar difficulty with Russian oil. Malta was successful in lobbying against an EU ban on the transportation of Russian oil by its member states and is still ferrying barrels across the Mediterranean.
Of added relevance in the context of Ukraine is Malta’s alleged role as the Forward Operating Base of the Wagner Group for its activities in North Africa. This has been of great concern to our American allies for some time. Wagner is a group of Russian mercenaries used to do Putin’s bidding by proxy overseas. They have left a string of war crimes and human rights abuses in their wake as they plundered through Libya, Syria and Mali in recent years and are now active in Ukraine.
The Wagner Group’s activities in Malta naturally link to the illicit finance practices that are commonplace on the island. Malta has been used by Wagner as a conduit for counterfeit currency to flow through. Nine billion US dollars worth of fake Libyan Dinars was transported through Malta between 2016 and 2020.
Research shows that networks of illicit activities are closely linked. Whether it is copyright piracy, human trafficking, terrorist financing, or the sale of nuclear weapons and technology, the same multinational criminal networks are invariably involved.
We can see in Malta that the flow of illicit money establishes a downward spiral, creating an environment for corruption and the undermining of governance. And we must not be naive in assuming that sanctions on Russia will stop this spiral – China will look to fill the gap.
Malta enjoys strong ties to China, also an autocratic regime keen to exert its influence on the world stage. Malta signed up to China’s ‘One-Belt, One-Road’ initiative in 2018 and China also owns Malta’s state energy company, Enemalta. Malta’s membership of the UN Security Council for the next two years will increase this desire further as China looks for friends who will turn a blind eye to their human rights abuses.
To address these issues, the UK must exert all necessary soft power and influence to facilitate the tightening of these states’ financial and political systems and end their reliance on money from corrupt dictatorships like Russia.
At this time of battle between good and evil, they must choose which system they belong to. There is no longer an option to hide in the shadows where illicit funds can be legitimised, or golden passports purchased.
This is a moment for the forces of good to step up, acting together to uphold democracy and stand firm alongside Ukraine. And make no mistake, history will judge us – let us ensure that in tightening up our global systems, we remember that we hold this system in trust for our children and theirs, and at this terrible moment, the children of Ukraine.
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