RedHat requests Russian partners to suspend projects under U.S. sanctions
translate.google.comAh yes, the well known "topple enemy leaders by restricting their access to Linux tech support" strategy. Gets them every time.
This was a pretty funny comment and I know its ironic, but still it is useful to point out that RedHat has a lot of products, including Middle-ware and cloud solutions that these partners resell for good money. Since Russian business is buying them, it does find them useful and thus sanctions are biting someone.
Food for thought - what are the implications for Russian big-business of being forced out of the global cloud-services infrastructure?
The implications are the same as when Google pulled out of China. That is, native Russian services will overtake US competitors, and with government backing, the US companies will be unable to respond or compete. This policy, while I suspect it will hurt Russia in the short term, will ultimately only benefit domestic Russian corporations while hurting American ones.
We saw this happen with Google/Baidu. Before Google pulled out of China, Baidu didn't stand a chance. Now, it's a global competitor. I wrote a final paper for my "next china" class in college, where my thesis was that the Great Firewall is economically beneficial for China. By inconveniencing Chinese users of foreign (read: American) services, it gives domestic competitors an inherent advantage. I argued that China doesn't actually care so much for the political reasoning behind the GFW, as everyone knows it can be trivially circumvented, but rather continues utilizing it because of the economic advantages it bestows on domestic corporations.
Baidu, Tencent, Alibaba, and other massive Chinese corporations built their businesses by copying the models of their American counterparts. The Chinese government gave them a huge advantage by subsidizing their development and crippling their US competitors. Now, these companies are on their way to controlling markets of the same size as their American competitors. It won't be long before Chinese companies are actually competing with American companies for American customers.
I suspect Russia, which is a country full of engineering talent (see: malware), will follow the same roadmap as China. That is: 1) cripple US internet businesses in Russia, 2) subsidize domestic competitors, 3) watch its own Internet companies take over the domestic market.
This move by the US government will have short term effects detrimental to Russian efficiency, but in the long term, Russia comes out on top in this scenario.
Before Google pulled out of China, Baidu had 64% of the search market, that increased to 70% after Google's pullout.
Baidu had already won in China before Google's pullout. The pullout was just a PR move.
http://online.wsj.com/news/articles/SB1000142405274870399930...
Interesting. I had not seen that stat. Any idea how they were able to grow their market share so quickly? Obviously the government subsidies gave them the requisite funding, but what was making consumers choose Baidu over Google even before China started crippling Google?
Baidu would give you links to illegal downloads in the search results. Thus, everybody would use Baidu instead of Google.
Not only that. They had an entire MP3 search engine!
There were also in the early years language issues, and coverage issues. Internet access in/out of China is absurdly, mind bendingly expensive, due partly to all the DPI hardware they insist sits at the border. This makes crawling China from outside very hard. Conversely it also makes crawling the rest of the internet from inside harder as well, but Chinese users mostly want local content so that's no big deal, necessarily.
China was tipping the playing field in lots of ways back then, there was lots of one-sided enforcement of very vague rules. It was pretty clear which way the winds were blowing there.
> ...my thesis was that the Great Firewall is economically beneficial for China.
Not quite.
While protectionism can help bootstrap a domestic industry, shutting out competition doesn't always build an industry that can compete internationally. Worse yet, your industry might get involved in the political process and entrench its way of business.
Look at the Brazilian auto industry. About 50 years ago, Brazil passed import controls to boost the domestic auto industry. Today Brazil has one of the top 10 auto makers (can't remember which), and they export to...Argentina. Meanwhile Toyota--keeping in mind how big Toyota was 50 years ago--exports everywhere.
Building up the domestic market then moving to exports isn't a proven way to build up an industry. Being export-driven first, then focusing domestically is.
(I'm off topic from sanctions here, but there is a reason tariffs don't work)
For big business? Nil. Big business doesn't need 3rd party cloud services other than as something to sell to offset their own infrastructure investment.
As to who these sanctions are biting. Sanctions always bite someone, but rarely do they hurt leaders. I think often they can help extend a regime's grip because it plays into propaganda.
Also, if sanctions were imposed generally for dicking about in other countries on dubious pretexts, then nobody would be trading with the UK or US right now. Glass houses and all that.
edit - if you want to influence Russia at the moment, either you please Putin, or work out how to get rid of him. Pissing him off won't help. He is a very experienced KGB guy who has oversaw the period of Russia returning from a brink of near dissolution to a state that is at least functioning, and people put up with a lot of crap to have something that functions.
There are parallels with China here in that the insanity of the Mao years can be used to justify putting up with a lack of political freedom today, on the basis that at least the current leaders aren't completely crazy. In Russia, people compare Putin with Yeltsin and think that things could be a lot worse as at least Putin can find his arse with both hands and isn't pissed all the time. Is the political version of New Coke.
To that end, any sanctions that do not actually destabilise Russia are probably counter productive and any that do destabilise Russia are just plain dangerous.
The question we really need to answer quickly is what does Putin actually want. If he is a Napoleon in waiting, we should try and depose him rather than pussyfooting around, whereas if he is merely a bit of a despot but not intent on conquest then it would be better to keep him happy and wait.
The Crimea doesn't really tell us much on that as it is where the Black Sea fleet has been kept since Potemkin's time, and so can be argued as a defensive as much as an offensive move. I am somewhat cheered by Putin's apparent lukewarm views towards the separatist movements in eastern Ukraine, though this could be a complete front.
I was convinced that he was going to try and force and hold a land corridor to the Crimea and the fact that this has not been done (yet) might indicate that Putin is not so much intent on expansion but is just keeping the whole thing warm to keep folk busy, much like China does with North Korea. If that is true, then hopefully he has had a bit of an 'Oh Fuck' moment with the airliner going down.
The sanctions are not meant to get rid of Putin, and they could not. The sanctions are meant to put price tag on Putin's most egregious actions. Of course, if you view it as "denying Putin access to Linux tech support", it sounds stupid, but obviously it is much broader than that, RH is just one very tiny piece here. The idea is to make certain actions costly for Russia as a state and for Russia ruling clique, and thus to reduce motivation for actions that cause sanctions. Is it going to work? It depends on the original level of motivation, either it was high enough so Putin decides it is worth the cost, or not. In any case, rising of the price would make it less likely.
Deposing Putin is pretty much out of the question, the US has neither will nor means to do it, and in any case with 80% popular support (even if those figures are inflated the popular support are extremely high) it would do no good to anybody. Management and containment remains only option, and sanctions are how the containment is done.
If we really wanted to affect Putin, we need to be really nice to Turkey, then cut Russia a trade deal.
I am also tremendously curious as to Putin's geopolitical ambitions. He controls a populace that loves him (Putin has very high approval ratings within Russia, I forget the exact numbers), and huge swaths of land and natural resources. He also has effectively unlimited term length, and controls a propaganda machine so powerful it rivals even that of the United States (/snark). All these factors make for a good recipe for going to war.
So why would he want to go to war? Energy. Currently, the Russian oil industry contributes massively to Russian GDP, as it's a net exporter of oil that has always controlled massive swaths of oil-rich land. BUT, in the past couple years, Shale Gas has risen as a viable alternative energy source. The US has so much shale gas that it will be a net energy exporter by 2020, and natural gas prices in the EU are plummeting because of this. Thus, EU energy companies are turning to natural gas sources -- namely, the US -- for their energy, and reducing their dependence on imported Russian oil.
Putin sees the writing on the wall, and he knows that one of Russia's primary income sources is dwindling, as is his stack of bargaining chips along with it. He needs to find a replacement for this income, fast.
According to Wikipedia [1], Ukraine has the 3rd most known Shale deposits of any country. I suspect it's no coincidence that Putin is charging into Ukraine, a country with a promising energy future, at a time when demand for his oil reserves is dwindling.
If I'm correct, and Putin's ultimate motive is the shale gas reserves in Ukraine, this is at least encouraging because it means he will likely stop after taking Ukraine. That may seem bad, but you can't really fault him for that logic, and a lot of Ukrainians seem to support Putin, so it doesn't seem like something the US should put too much effort into stopping.
There are a lot of massive geopolitical shifts happening in the next decade. The US becoming a net energy exporter will have effects on the Middle East, Russia, and other BRICS. Simultaneously, the BRIC countries are opening their own IMF competitor to reduce their dependence on the Petrodollar. And while all this is happening, China is building up its military, Russia is isolating itself, and the US is pumping fodder after fodder into its anti-BRIC propaganda machine.
The next decade looks like one that will be very unstable, and I suspect it will mark the beginning of the next major war. Scary time.
Some things to consider in all this:
In March 2011 solar module cost of production was predicted to hit 50c per watt in 2016. http://blogs.scientificamerican.com/guest-blog/2011/03/16/sm...
Solar module purchase price is now at an average of 36 cents per watt. http://www.webcitation.org/6QcjhW4C9
Oh, and much of that shale seems to be a lot less productive than was claimed. http://www.industrialinfo.com/news/abstract.jsp?newsitemID=2...
And there's those neat sounding Ryden batteries and folk like lightsail waiting in the wings. http://powerjapanplus.com/ http://www.lightsail.com/
Energy politics are going to change, and when they do it will be very fast.
If those Ryden things are anything like as promised, throw all your money at organic cotton and by extension, anything to do with cleaning lots of water. IMHO, the solar is in a race to the bottom, it is the storage that will make the real money.
There might be a world war over oil and gas, but if there is it will be through inertia more than necessity and the longer we manage to hold off, the less likely it becomes.
Politically though, keep an eye on Turkey. It is the canary in the coal mine at the moment.
Ukraine has the 3rd most shale gas reserves in Europe, not all of world. There are countries with much more reserves than Ukraine, Russia included. So no, if Putin is trying to start a war it is not because of Ukraine's shale reserves. But if you are adamant that is is Putin who is the one doing most of the instigating here than there are many arguments to be made against that seemingly popular view.
Is tricky, there is massive bullshit on both sides. Ultimately, the Crimea situation is about the Black Sea Fleet. If Putin had lost control of that then he would have been finished. The eastern Ukrainian situation is trickier. Those guys are nuts, but giving them toys must have seemed like an opportunity too good to ignore, until the airliner came down.
Personally I think Putin is addicted to power rather than conquest, but will do conquest if he feels that not doing so endangers his power at home. He is very dangerous, but thankfully he doesn't appear to be an idiot.
Now if Gorbachev had been given proper support when he needed it...
Starting a tech company in the US is looking like a less and less attractive prospect. This is doubly true if the company focuses on security/privacy of its users.
As would be China, Russia, the UK, and Australia. I'm a proponent of splitting a business up in to parts like Sharman/Kazaa did. Getting out of the current DNS system using something like Namecoin would be even better.
Or you know - Russia could stop meddling in Ukrainian affairs, stop shipping arms across the border, etc.
FYI: it isn't right when we do it either.
> Or you know - Russia could stop meddling in Ukrainian affairs
What I said has literally nothing to do with Russia or Ukraine. I'm talking about things the U.S. Government does, even domestically.
I don't understand all the downvotes since the your comment is spot on. The US market is currently very toxic for security/privacy-related enterprises.
I'd add being a US citizen is starting is looking like a less and less attractive prospect.
It's a bit interesting, as it requests a bunch of Russian IT companies to stop their ongoing projects with another bunch (the sanction list) of Russian companies.
It would be obvious that USA companies (and their Russian subsidiaries, if there are any) are limited by the sanctions; however I'm not really seeing what power USA or RedHat should have to restrict those Russian-to-Russian support contracts.
Red Hat partners in very large part re-sell their services:
So, US government can order any private company to suspend working with any list of companies, just like that?
I'm not defending nor attacking anyone here, just honestly inquiring, as I haven't had a reason to think about such issues before.
Yes. The US constitution, Article 1 section 8 http://www.law.cornell.edu/constitution/articlei#section8 states:
"The Congress shall have power...
To regulate commerce with foreign nations, and among the several states, and with the Indian tribes..."
Congress has passed such laws, authorizing the President to impose economic sanctions banning trade with countries which pose "any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States, if the President declares a national emergency with respect to such threat." (50 U.S. Code § 1701, 1702, and so on http://www.law.cornell.edu/uscode/text/50/1701).
The President recently used these powers to restrict trade with certain entities in Russia, to put pressure on Russia to stop providing support for separatists in the Ukraine: http://www.treasury.gov/resource-center/sanctions/Programs/D...
So, it's not quite "just like that". The President must declare a state of national emergency (which he did in Executive Order 13660 in March http://www.treasury.gov/resource-center/sanctions/Programs/D..., expanded in EO 13661 http://www.treasury.gov/resource-center/sanctions/Programs/D..., and expanded further in EO 13662 linked above), and can only impose sanctions directly related to that national emergency.
Ukraine is a country which agreed to disarm itself of nuclear arms when it split apart from the USSR, in exchange for an agreement that nuclear armed nations like the US, Russian Federation, and others would respect the independence and sovereignty of Ukraine and not use force against the Ukraine. http://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security... The invasion of Russian and annexations of Crimea is a direct violation of this agreement, and a very worrying trend for nuclear non-proliferation. Russia's further involvement invading the east of Ukraine (under the guise of simply supporting an "organic" separatist movement) is further seriously troubling.
Hope that helps explain the situation. The President cannot simply order any private company to suspend working with other companies, but can if he declares a national emergency and the sanctions are directly related to that national emergency.
IMHO if your only/main source of news is the western media, you get a very one sided, anti-Russian point of view. Things are really not that black and white, they almost never are in the global politics.
I have read both Western and Russian sources on the conflict.
Let's just say that I find the Western sources on the matter much, much more trustworthy. It's very clear that Russia is running a propaganda campaign, which is apparently reasonably effective within Russia but less convincing when you have access to other sources of information.
The Russian propaganda campaign was even fairly effective at spreading the rumor on Western social media that the Ukrainian opposition movement consisted mostly of fascists, when in reality there was a fascist group that was associated with it but a relatively small percentage overall of the opposition to Yanukovych.
After Russia snuck unmarked Russian soldiers into Crimea, which comes dangerously close to counting as perfidy, it was pretty clear that Russia and Russian sources could not be trusted on this matter.
Now, are you trying to claim that Russia did not send troops onto Ukrainian soil to annex Crimea, and is not supporting the separatists in the east with at least arms and training? Or are you trying to claim that doing so is somehow justified, and if so, under what justification?
The Russians just need a little Lebensraum. The West has continued its policy of containment even after the fall of the Soviet Union. This can be seen in the aggressive expansion of the EU and of NATO. It is necessary that Russia have scope to influence its neighbors and build partnerships in order for it to be a free and prosperous nation.
I can't tell if you are being sarcastic or not. I'm guessing yes but the only thing that gave it aways was the use of the word Lebensraum.
Here's to hoping that history is only rhyming.
I do get the feeling that Putin is a bit smarter and a bit less insane, but I would be hesitant to bet on it. The apparent concentration of power in one individual makes Russia scary as hell at the same time as being very brittle.
Oh yes, the US, the exporter of freedom and democracy.
Hmm. Is there actually any doubt that Russia is tacitly providing support to Novorossiya?
There actually is, if by Russia you mean Russian government. Support to "Novorossiya" simply can't achieve anything, perhaps only help it last a little bit longer. When Russia wanted to change the status quo it had legal excuses and it acted openly and forcibly. Half-measures take you nowhere.
lambda's already replied about the relative trustworthiness of different media sources. However, lambda's earlier post was limited to why a US company can interfere with the contracts of non-US companies. The problem, of course, is that Red Hat can get into legal trouble if it does business, directly or indirectly, with the targeted companies, but Red Hat's independent partners are under a different legal system, and may well get into trouble by breaching their contracts at Red Hat's insistence.
Most contract law systems include the notion of force majeure, which significantly limits the liability for breach of contract in such circumstances. Government sanctions is a common example of force majeure.
Out of curiosity, besides the Russian government-owned media and various crackpot conspiracy theory sites claiming, among other things, that the Jews did it, what news sources are presenting a pro-Russian point of view of this calamity?
US can do it as an economical sanction. In this case it doesn't seem to be effective though.
Given how much time has passed since introduction of the sanctions, it is impossible to say now if they are effective or not. Sanctions do not work overnight.
So, where is the letter from Microsoft to it's Russian partners?
I'm not sure what's particularly interesting about this. If IBM has a support contract with any of these companies, they would have to discontinue it as well.
And if they do, would the US government pay off any current contract obligations IBM had to break?
Most contracts have "through no fault of the undersigned" waivers in them. i.e. acts of god or government are often covered in some way within the contract language, making parties not liable for hurricanes and changes in law that cause contracts to become null. There's probably some kind of responsibility in these kinds of cases, but it's not going to fall under the usual termination of contract terms. And, whatever responsibilities that exist can be difficult to enforce without the state backing up the wronged party.
Edit: Which is why investors often choose not to invest in companies based in countries that have a history of economic or political instability. It can be difficult to hold someone to their obligations after investing if the state itself isn't going to consistently side with the rule of law. Russian and Chinese investors, for example, were they not already dealing with an even more unpredictable state, would possibly choose not to invest in the US because of unpredictable relations. But, most international investors consider US law to be predictable and stable and safe for investors.
A valid contract can't compel one of the parties to engage in illegal activity, can it?
In international contracts, the activity might be legal under one state but illegal under another. Which law applies? Without some reasonable language to cover it, I guess one could end up with one party to the contract between a rock and a hard place. Their legal entity in one nation bound by a contract in that nation, with their legal entity in the other nation bound by the laws of the land. I don't know the intricacies of all of this, but I suspect things could get ugly without some defined behavior built into the contract in such instances.
In some sense. If you wanted to get the government to enforce the contract, they wouldn't, so there you go, paid off.
The Russian government will enforce a contract made in Russia.
Only if Russian law would somehow exclude the notion of force majeure (which it does not) or Russian courts would decide to make political decisions (which they definitely could and routinely do). In the latter case, American companies would have to seriously think if the profitability of the business in Russia is enough to warrant the enforcement risks due to political courts.
What if they don't?
From the Treasury's Website: http://www.treasury.gov/resource-center/faqs/Sanctions/Pages...
The fines for violations can be substantial. Depending on the program, criminal penalties for willful violations can include fines ranging up to $20 million and imprisonment of up to 30 years. Civil penalties for violations of the Trading With the Enemy Act can range up to $65,000 for each violation. Civil penalties for violations of the International Emergency Economic Powers Act can range up to $250,000 or twice the amount of the underlying transaction for each violation. Civil penalties for violations of the Foreign Narcotics Kingpin Designation Act can range up to $1,075,000 for each violation. [10-08-13]
I imagine RedHat would no longer be able to work with those partners then.