This week,

  1. Ukraine vs Petya/Not Petya: to be continued?
  2. Russia approves the “Digital Economy” draft;
  3. The Yarovaya Law may be postponed;
  4. Telecom updates in Ukraine, Kazakhstan, Kyrgyzstan, Russia, and Belarus;
  5. The Cybersecurity Concept for Armenia is being developed;
  6. E-Commerce taxation discussed in the region;
  7. Russia signs the innovations development agreement with China;
  8. Kyrgyzstan estimates the cost for the e-document management system.

1. Petya’s Aftermath in Ukraine.

On June 27, the biggest cyber-attack in Ukraine’s history swept through the country. According to ESET, Ukraine experienced the main brunt of the attack nearly 75,24%. On July 4, the Ukrainian Cyberpolice announced that it prevented the second wave of attacks. Arsen Avakov, the Minister of Interior, stated that security services blocked the mailing and activation of Petya from the M.E.Doc servers, an accounting software developer, involved in the first attack. The Cyberpolice confiscated these servers and opened an investigation possibly leading to negligence charges. On the same day, it was announced that NATO will give Ukraine cyber defense equipment worth €1 mil. to increase Ukrainian cybersecurity in the case of new cyberattacks.

Following the second attack, on July 5, the National Bank of Ukraine (NBU) suggested the establishment of the Cybersecurity Center of the National Bank (CSIRT-NBU). According to the press release, the establishment of the CSIRT-NBU should enable rapid response and information exchange between the banking sector actors and law enforcement agencies in real time.

DR Comments: The cost of the cyberattack has yet to be determined, as Ukraine continues mitigating the damage. While Russia remains the main suspect for Petya attacks, cybersecurity experts expect more attacks of this nature and are concerned about the rising potential for escalation of the global cyber-arms race.

2. The “Digital Economy” Program Approved by President Putin.

On July 5, the Presidential Council for Strategic Development and Priority Projects approved the preliminary draft of the national “Digital Economy” program. Experts and Council representatives emphasized that the program must be further developed. According to the Ministry of Communications estimates, the program will require USD $1.68 billion annually until 2025. The estimates include the costs of upgrading the infrastructure, developing regulations and educating human resources. For instance, Russia will allocate USD $83 mil. annually for Digital Economy education.

Nikolai Nikiforov, the Minister of Communication, proposed to begin the implementation of the program in “such significant social areas as health care, public administration, and ‘smart city’”. Minister also clarified that the “Digital Economy” draft is a strategic plan to be achieved by 2024, while the 2017-2020 Action Plan (to be developed by 31 August) will serve as an operational document outlining program stages, implementation mechanisms, and funding.

DR Comments: Although a large part of the program implementation costs is already in the budget, some experts believe that claims for additional funding in support of ‘new initiatives’ are likely to occur, which in turn may lead to possible corruption and embezzlement of state funds. All eyes are now focused on the Action Plan, as it must outline mechanisms for project approvals and budgetary controls.

3. Will Russia Postpone the Yarovaya Law?

The government commission on legislative activity is considering the possibility of postponing the entry into force of the “Yarovaya Law” until 2023. The law, designed to increase public safety, has become one of the most controversial Russian laws of the last decade due to its potential impact on private businesses that would be carrying the main cost for implementing it. According to the law, by 1 July 2018, all telecommunication and ISPs must retain the content of user communications for six months and related metadata for three years.

Telecom representatives complained that the deadlines imposed by the government are impossible to comply with. Moreover, they are deeply concerned that by-laws specifying equipment and software requirements are not ready yet.

DR Comments: Until recently, the authorities refused to postpone the law despite all its flaws and unpreparedness of ICT operators. Some experts believe that the renewal of the discussion stems from the introduction of the “Digital Economy” program. To engage business sector in the program implementation, the authorities might be ready to postpone the Yarovaya Law. Thus, the costs that telecom operators would have to incur for data storage could be invested in the development of the national digital economy.  

4. Ukraine and Kazakhstan Are Counting Revenues and Investments; Belarus and Russia Consider Roaming Cancellation.

The Ukrainian National Commission of Communication and Information is preparing the LTE frequencies tender to introduce 4G in the country. The state budget revenue from the sale of 4G frequencies is estimated at USD $250 million.

In Kazakhstan, investments into the telecom sector between Jan-May 2017 reached USD $56 million. While the investment amounts overall were lower compared with the previous period, market analysts emphasize that the rate of decline has slowed down.

The Russian Ministry of Communications supported the initiative to cancel roaming between Russia and Belarus. However, customers in both countries may not be able to benefit from the cancellation since operators may increase tariffs to compensate for the loss of a significant part of their revenues.

Kyrgyzstan will introduce a paid system for the telecom numbering service. The authorities stated that the aim is to stimulate free market competition.

5. The National Cybersecurity Concept in Armenia.

A group of independent experts is completing the development of the draft concept of “Cybersecurity of Armenia”. The initiative is implemented with support from DR Analytica experts. The concept will offer a balanced approach ensuring the security and integrity of fundamental rights and freedoms, establishing rules for coordinated interaction for all relevant parties and enabling the development of a comprehensive national cybersecurity strategy.

Contact us for your cybersecurity consulting needs in Eastern Europe, Central Asia, and Caucasus.

6. What Will Be the E-Commerce Taxation in the EAEU and Eurasia?

The Eurasian Economic Commission (EEC) conducts an analysis of e-commerce taxation options within the Eurasian Economic Union (EAEU) with a view to developing a general regulatory framework of this sphere. According to our sources, the member-states are expected to exchange experience in this area later in 2017 and discuss options for avoiding the double taxation.

7. Russia and China Increase Cooperation on Innovations Development.

The Russian Foundation of Direct Investments and China Investment Corporation signed an agreement to invest USD $500 million in the joint development of innovative projects in Russia and the Chinese province of Hainan. It is expected that priority will be given to the development of industrial and innovative parks, high-tech medical services, tourism and social infrastructure facilities. According to the official statement of this newly created joint Russian-Chinese fund, the implementation of projects should begin in the near future.

8. What Is the Cost of the E-Documents Management System in Kyrgyzstan?

The State Committee of Information Technologies and Communications announced that the development and introduction of the paperless document management system will require almost USD $1 million, including USD $400,000 for the document management system and USD $563,000 to ensure the required protection levels.

DR Comments: The introduction of e-document management is a part of the recently announced “Taza Koom” program. Should you have questions on national digitization programs in Eurasia, contact DR Analytica.