
RedHat requests Russian partners to suspend projects under U.S. sanctions - agrostis
http://translate.google.com/translate?sl=ru&tl=en&u=http%3A//pda.cnews.ru/news/index.shtml%3Ftop/2014/07/25/580767
======
mike_hearn
Ah yes, the well known "topple enemy leaders by restricting their access to
Linux tech support" strategy. Gets them every time.

~~~
dimitar
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?

~~~
chatmasta
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.

~~~
jordanb
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...](http://online.wsj.com/news/articles/SB10001424052748703999304575399162122796630?KEYWORDS=baidu&mg=reno64-wsj&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB10001424052748703999304575399162122796630.html%3FKEYWORDS%3Dbaidu)

~~~
chatmasta
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?

~~~
bsder
Baidu would give you links to illegal downloads in the search results. Thus,
everybody would use Baidu instead of Google.

~~~
mike_hearn
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.

------
wyager
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.

~~~
xenadu02
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.

~~~
wyager
> 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.

------
PeterisP
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.

~~~
listic
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.

~~~
lambda
Yes. The US constitution, Article 1 section 8
[http://www.law.cornell.edu/constitution/articlei#section8](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](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...](http://www.treasury.gov/resource-
center/sanctions/Programs/Documents/ukraine_eo3.pdf)

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...](http://www.treasury.gov/resource-
center/sanctions/Programs/Documents/ukraine_eo.pdf), expanded in EO 13661
[http://www.treasury.gov/resource-
center/sanctions/Programs/D...](http://www.treasury.gov/resource-
center/sanctions/Programs/Documents/ukraine_eo2.pdf), 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...](http://en.wikipedia.org/wiki/Budapest_Memorandum_on_Security_Assurances)
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.

~~~
sleep-less
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.

~~~
lambda
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?

~~~
mendort
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.

~~~
adamnemecek
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.

------
exo762
So, where is the letter from Microsoft to it's Russian partners?

------
sharth
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.

~~~
sleep-less
And if they do, would the US government pay off any current contract
obligations IBM had to break?

~~~
SwellJoe
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.

~~~
commandar
A valid contract can't compel one of the parties to engage in illegal
activity, can it?

~~~
SwellJoe
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.

------
chj
What if they don't?

~~~
sharth
From the Treasury's Website: [http://www.treasury.gov/resource-
center/faqs/Sanctions/Pages...](http://www.treasury.gov/resource-
center/faqs/Sanctions/Pages/answer.aspx#12)

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]

