by Philip Pilkington
Monday, 7
March 2022
Idea
16:16

Sanctions will push Russia onto the dark web

A major state actor could now legalise internet piracy and hacking
by Philip Pilkington
Credit: Getty

Today gas prices in Europe rose to 800p per therm — an eighteen-fold increase in just one year. Meanwhile, fertiliser prices are set to rise and with them food prices, with wheat prices basically doubling since last year. Financial markets are now openly fretting about stagflation (the combination of soaring inflation and stagnation in the economy). We have not seen it since the 1970s and it is unclear how our now overly financialised economy will respond to it, but my bet is that economies today are far more prone to stagflationary chaos than they were in the 70s.

Although it may be impolitic to say, there is mounting evidence that we are not thinking through the consequences of the sanctions policies we are imposing on Russia. Even ignoring the pressures our policies are putting on prices at home, what about other long-term consequences? In a previous piece I highlighted that banning Russia from SWIFT would only encourage them to use Chinese alternatives, thereby undermining the importance of SWIFT on the global stage. Over the weekend it was announced that Russian banks are moving to China’s UnionPay as Visa and Mastercard cut ties with the country. How exactly does this benefit the West?

Then there is the risk that the sanctions force Russia to normalise ‘dark web’ activity. Newspapers here are already pointing out the fact that Russia is likely to take advantage of emerging Bitcoin technologies to circumvent sanctions. In effect, what this would do is put a major state actor behind an alternative financial system. Who knows where that goes? It could create a global shadow financial system that would harm, amongst other things, the capacity for our governments to levy taxes.

In response to Microsoft stepping in to ban subscriptions to their products, there is good reason to believe that Russia will start to legalise software piracy. These days software is easy to hack and clone. The only thing that protects major Western software companies from losing their capacity to profit from their products are tight laws against software piracy. With a major state actor deploying piracy as a policy, expect most of the developing world to take the vastly cheaper cloned/pirated software than the expensive Western alternative. 

This extends to media products too. Many Western media companies, including Netflix, have stated that they are retracting their products from the Russian market. In response to this, one Russian lawmaker has suggested that the government legalise a website called RUTracker — a site used by people who want to download pirated media content and software. North Korea already does a lot of this sort of piracy, but they have nowhere near the technological capacity or the worldwide economic reach of Russia.

It hardly needs be said, but the internet is a decentralised system. If a state like Russia throws its weights behind media piracy, software hacking and cloning, this will vastly impact the Western internet. The new cheaper/free products will flood the online market and, at least to some extent, drive out licensed and legal alternatives. The media and software companies may find themselves launching yet another war on piracy. But this time, rather than their adversary being a few anarcho-libertarians based in Sweden, they will be facing off against a large state actor. 

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Prashant Kotak
Prashant Kotak
3 months ago

Not agreeing with this analysis at all regarding software. It is easy to copy and clone media, but a lot less easy to pirate the type of commercial software where the vendor has direct licensing hooks into the software they have sold. For example, Microsoft will know pretty much who by and from where every single copy of their software is being used, worldwide, because the software talks back to their servers. If you cut the link, the software will eventually disable itself. As to creating cheaper/free cloned products on a large scale, that requires huge pools of tech expertise, the one thing that there is the biggest shortage of in the world, so not so easy to do for the Russians. Even the Chinese can’t do it easily, so why would the Russians be able to? Open Source illustrates the issue – anyone can download the source level software, the Burkina Faso government can download the source codes, but it does you not one jot of good unless you have the attendent tech ecosystems with deep pools of tech talent – it would be like handing Lewis Hamilton’s F1 car to a village farmer in India, he ain’t gonna win a race, even against his neighbour in a rickshaw.

And this is the point: if you are a Russian tech entrepreneur with the skills to create cloned/cracked software, why would you not come over to the West and make legitimate software which you can sell and make yourself rich in the process? And that in fact points the way to really hurt Russia. The focus has been on opening the West’s doors to the millions of ordinary Ukrainians who are being bombed by Putin. But the way to really hurt Russia would be to open the door completely to all tech capable people in Russia (and there are plenty of pretty ingenious people there) – this would really scupper Russia.

Last edited 3 months ago by Prashant Kotak
Rasmus Fogh
Rasmus Fogh
3 months ago

All these risks are real. But on the other hand it does not help you much having all those ‘levers of power’ if you are too afraid to ever use them. If we act, we risk making Russia into an openly lawless state, which will hurt. If we do not act we will be enabling Russia while it fearlessly (what is there to risk?) gobbles up its neighbours, which will also hurt. Basically we do not want to be where we are – but we are there nevertheless.

Ian Stewart
Ian Stewart
3 months ago
Reply to  Rasmus Fogh

Yeah the writer defeats his own argument – do nothing and let the lawbreaker do what he wants? That should work out well long term.

R Wright
R Wright
3 months ago

An entire nation on TOR. It will be fascinating to see where this leads.

J Bryant
J Bryant
3 months ago

The world is splintering between the old liberal West and the authoritarian Sino-Russian sphere. Much of the developing world will have to get off the fence and take sides, especially as China’s influence grows. Already scholars of the internet are talking about the splinternet because countries are increasingly imposing their own laws on what information can be shown within their borders.
I have no doubt that, for the next few years, the West can place a great deal of economic pressure on Russia, perhaps enough to topple Putin. Maybe he’ll be able to circumvent sanctions in the ways suggested by the author. On the other hand, I read an article in Politico discussing whether the Chinese equivalent of SWIFT is sufficiently developed to fully support Russian business, and also questioning the extent to which Chinese banks are backing the Russians.
Over time this situation will stabilize and, I suspect, we’ll be in a world (perhaps one where Russia is no longer run by Putin) where the West no longer controls most levers of power. It will be a multipolar world somewhat reminiscent of the old Cold War but with China much more powerful than the former USSR.

Justin Clark
Justin Clark
3 months ago
Reply to  J Bryant

There is a global elite layer above sovereign countries and they are playing a deadly long game…

Terence Fitch
Terence Fitch
3 months ago
Reply to  Justin Clark

Give one shred of evidence for actual planned collusion of a global elite beyond the fact that a few thousand people have become billionaires on paper. One of the Kardashian bimbettes is in on this then?

Graham Stull
Graham Stull
3 months ago
Reply to  Terence Fitch

Would you accept, as evidence, Klaus Schwab talking about stacking the cabinets of Western governments with ‘our people’, meaning graduates of his WEF programmes?

James Watson
James Watson
3 months ago
Reply to  Graham Stull

Graham, you claimed in an earlier post to be a good researcher. You should research the WEF program you reference. The people being referred to are not “graduates”. They are young politicians WEF thinks might become influencers. WEF then sends them a certificate declaring them anointed.

Graham Stull
Graham Stull
3 months ago
Reply to  James Watson

In what sense is the sending of a certificate not the same as ‘graduating’? The dictionary defines ‘to graduate’ as the receiving of a degree or diploma. And the WEF website refers to them as ‘a class’ and to former members as ‘alumni’.
Are we playing silly semantic games? Or do you really believe these informal networks do not work to homogenise interests and coordinate the exercise of soft power? This is, after all, their stated aim.

Terence Fitch
Terence Fitch
3 months ago

Some worthwhile points but it’s only one possible future. The net and tech have always been an ambiguous double edged sword. It’s also true that it’s led to a widespread desire to lead a western lifestyle- getting a western education, consumer goods and a house and car etc. Easy to scorn all that but many millions of Russians live in huge crumbling crappy 1960s soviet blocks of flats . IKEA, for example, was a way of getting a bit of domestic joy. They might just might start to question all this more. In one future they could all be a lot better off than a median $12500 a year? Or keep in that Orthodox Serf mentality where suffering is worth it for your soul.

Bernard Hill
Bernard Hill
3 months ago

It could create a global shadow financial system that would harm, amongst other things, the capacity for our governments to levy taxes”……………..
I’m tempted to just say, bring it on. But actually, an alternative cryptocurrency based financial system wouldn’t affect normal taxation as such, but it would eventually penalize governments ‘taxing’ the people via fiat currency expansion. And that would affect Russia just as much as the West in terms of governments not having ready means to finance warmongering.