Geopolitics

As Virus Takes Hold, Russia (And Russians) Caught In Limbo

As the coronavirus pandemic tightens its grip, Moscow is struggling to put together a coherent strategy to repatriate Russian nationals and allow foreigners to leave.

Ukrainian citizens from Russia walk at the central railway station in Kiev after the evacuation.
Ukrainian citizens from Russia walk at the central railway station in Kiev after the evacuation.
Alastair Gill

MOSCOW — U.S. ballet dancer Julian Mackay and his brother Nicholas were settling into their seats on board Aeroflot Flight SU102 from Moscow to New York on April 3 when the cabin crew made an unexpected announcement: The flight was canceled.

The brothers, who both live in Russia, were desperate to reach their dying father and had been trying to leave for weeks before managing to get tickets for the flight, which the U.S. embassy had warned could be the last one of the month.

"It's chaos, people are yelling and screaming at flight attendants …" said Nicholas in a video posted to Julian's Instagram account, as passengers vented their fury in the aisles behind them.

It soon became clear that they were not alone: more than 100 Russian citizens were left marooned in New York after the corresponding flight was also pulled, and flights to Russia from Istanbul and the Maldives were canceled too.

Aeroflot later issued a statement announcing that the flight had been grounded "following a decision by Russian aviation authorities to suspend all permits previously granted to carriers for charter flights to repatriate Russian and C.I.S. citizens."

As the Kommersant business daily reported, the reason was a government decision to suspend all flights in and out of Russia while Moscow reorganizes its repatriation strategy in light of the coronavirus crisis. Deputy Prime Minister Tatyana Golikova said that the halt was necessary in order to understand exactly how many citizens required repatriation, their location and their identity.

Yet almost an entire day had passed before this became clear, with embassies (whose citizens were unable to leave Russia due to the cancelation of flights) and journalists left in the dark as they made frantic calls to government agencies. When officials did actually pick up the phone they either refused to discuss the situation or admitted that they themselves had no idea what was going on.

The U.S. State Department has now announced that it will provide a special charter flight on April 9 for its citizens still in Russia following the cancelations. Meanwhile, more than 30,000 Russian citizens are still stranded abroad, many of whom say their funds are dwindling.

The confusion over repatriation is symbolic of Russia's haphazard approach to dealing with the outbreak so far.

A Kommersant government source told the paper that the suspension was a temporary measure and was intended to last only "until the creation of certain special conditions."

Indeed, on Monday, April 6 the Foreign Ministry announced that it was relaunching its repatriation program with two flights from Kyrgyzstan and Bangladesh, to be followed on April 7 by two flights from Bangkok. But the confusion over repatriation is symbolic of Russia's haphazard approach to dealing with the outbreak so far, despite having had plenty of time to formulate a response.

Mixed messages

For a long time the numbers of COVID-19 cases in Russia were low, allowing the Kremlin to indulge in soft power stunts such as sending medical aid to Italy, while state media peddled conspiracy theories and mocked Europe's struggles to cope with the outbreak.

Now, however, with the official number of those infected in Russia at over 7,000 and steadily rising, the government is seeking to emphasize the seriousness of the situation. Yet while the country is now effectively under a lockdown until the end of April, President Vladimir Putin has failed to declare a state of emergency, instead describing the measures as a "non-working" period.

These mixed messages are hampering efforts to limit the spread of infection, with many people continuing to ignore social distancing recommendations. The situation illustrates the problems Russian officials face, as they attempt to implement a coherent strategy to fight the virus while keeping imported infections under control.

Citizens returning from abroad have given the Kremlin another headache, with almost every day bringing a fresh story of passengers slipping out of airports on arrival in Russia in order to avoid being placed into quarantine. In the Pacific port of Vladivostok, police had to track down 12 "runaways' who disappeared after returning on a flight from Thailand on April 2.

Calling the Motherland

According to the foreign ministry, the vast majority of Russian citizens who have expressed a desire to return home are in Thailand — around 19,000 in total. Kommersant writes that while some of these are holidaymakers, many live in Thailand, making use of the relatively liberal visa regime, but have decided to return to Russia in light of the circumstances. There are also around 5,000 Russian nationals in India, and another 5,000 in Indonesia, mainly in Bali.

There is little sympathy in some quarters for the plight of stranded Russians.

Yevgeniya Starovoit, who flew to Australia with her husband in early March, is stuck in Melbourne. "To begin with we thought that we were the only ones here, but at the consulate they told us that around 500 Russians wanted to leave Australia and another 150 wanted to leave New Zealand," she told Kommersant. They had return tickets for April 6 via Abu Dhabi with Etihad Airways, but on March 24 the company sent them an email informing them that the flight had been cancelled.

Russia has allocated 500 million rubles ($6.6 million) for temporary accommodation for citizens who are unable to return home, and says applicants need to sign up on a special online government register, though it is unclear how they will be able to access these funds or how people will be able to prove they need them.

However, there is little sympathy in some quarters for the plight of stranded Russians. Writing for Ria Novosti on April 6, Irina Alksnis echoed the thoughts of some online commentators when she accused many Russians stuck in limbo of "flagrant irresponsibility."

"Some — who live permanently abroad — hoped that this would blow over, and sat tight until the moment when they needed emergency evacuation," she wrote. "Others left Russia for vacations in March (all the way up to the 20th and beyond!), when an epidemic was already raging in the world, and states were closing their borders one after another. What all these people were thinking, one can only guess."


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Economy

Air Next: How A Crypto Scam Collapsed On A Single Spelling Mistake

It is today a proven fraud, nailed by the French stock market watchdog: Air Next resorted to a full range of dubious practices to raise money for a blockchain-powered e-commerce app. But the simplest of errors exposed the scam and limited the damage to investors. A cautionary tale for the crypto economy.

Sky is the crypto limit

Laurence Boisseau

PARIS — Air Next promised to use blockchain technology to revolutionize passenger transport. Should we have read something into its name? In fact, the company was talking a lot of hot air from the start. Air Next turned out to be a scam, with a fake website, false identities, fake criminal records, counterfeited bank certificates, aggressive marketing … real crooks. Thirty-five employees recruited over the summer ranked among its victims, not to mention the few investors who put money in the business.

Maud (not her real name) had always dreamed of working in a start-up. In July, she spotted an ad on Linkedin and was interviewed by videoconference — hardly unusual in the era of COVID and teleworking. She was hired very quickly and signed a permanent work contract. She resigned from her old job, happy to get started on a new adventure.


Others like Maud fell for the bait. At least ten senior managers, coming from major airlines, airports, large French and American corporations, a former police officer … all firmly believed in this project. Some quit their jobs to join; some French expats even made their way back to France.

Share capital of one billion 

The story began last February, when Air Next registered with the Paris Commercial Court. The new company stated it was developing an application that would allow the purchase of airline tickets by using cryptocurrency, at unbeatable prices and with an automatic guarantee in case of cancellation or delay, via a "smart contract" system (a computer protocol that facilitates, verifies and oversees the handling of a contract).

The firm declared a share capital of one billion euros, with offices under construction at 50, Avenue des Champs Elysées, and a president, Philippe Vincent ... which was probably a usurped identity.

Last summer, Air Next started recruiting. The company also wanted to raise money to have the assets on hand to allow passenger compensation. It organized a fundraiser using an ICO, or "Initial Coin Offering", via the issuance of digital tokens, transacted in cryptocurrencies through the blockchain.

While nothing obliged him to do so, the company owner went as far as setting up a file with the AMF, France's stock market regulator which oversees this type of transaction. Seeking the market regulator stamp is optional, but when issued, it gives guarantees to those buying tokens.

screenshot of the typo that revealed the Air Next scam

The infamous typo that brought the Air Next scam down

compta online

Raising Initial Coin Offering 

Then, on Sept. 30, the AMF issued an alert, by way of a press release, on the risks of fraud associated with the ICO, as it suspected some documents to be forgeries. A few hours before that, Air Next had just brought forward by several days the date of its tokens pre-sale.

For employees of the new company, it was a brutal wake-up call. They quickly understood that they had been duped, that they'd bet on the proverbial house of cards. On the investor side, the CEO didn't get beyond an initial fundraising of 150,000 euros. He was hoping to raise millions, but despite his failure, he didn't lose confidence. Challenged by one of his employees on Telegram, he admitted that "many documents provided were false", that "an error cost the life of this project."

What was the "error" he was referring to? A typo in the name of the would-be bank backing the startup. A very small one, at the bottom of the page of the false bank certificate, where the name "Edmond de Rothschild" is misspelled "Edemond".

Finding culprits 

Before the AMF's public alert, websites specializing in crypto-assets had already noted certain inconsistencies. The company had declared a share capital of 1 billion euros, which is an enormous amount. Air Next's CEO also boasted about having discovered bitcoin at a time when only a few geeks knew about cryptocurrency.

Employees and investors filed a complaint. Failing to find the general manager, Julien Leclerc — which might also be a fake name — they started looking for other culprits. They believe that if the Paris Commercial Court hadn't registered the company, no one would have been defrauded.

Beyond the handful of victims, this case is a plea for the implementation of more secure procedures, in an increasingly digital world, particularly following the pandemic. The much touted ICO market is itself a victim, and may find it hard to recover.

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