Russians sidestepping sanctions via cyberspace

Economic sanctions are meant to be a powerful tool against nasty despots, and of course they do work. A bit. However, the economic tools of the last century may not work so well in this one.

Sanctions may have hurt in the era of fax machines, dial-up modems and far-from-smart phones. However, today’s world is far more sophisticated; there is a whole electronic universe out there, and those who are tech-savvy may be immune to economic pressures that might once have worked.

Sanctions made many people feel noble and involved when they could shun an apartheid-tinged apple or Cape wine, or when oil exporters were prevented by law from trading with this country. This time, Russian cats have been banned from participating in international competitions, a famous tree has been excluded from participating in a European competition for trees, and some classical radio stations are taking a brave stance by shunning the music of long-deceased Russian composers.

The payment systems on the Moscow underground were sabotaged from afar. Certainly inconvenient, but hardly a crippling blow to Vladimir Putin, whose own tube trips are probably infrequent. What is the point of imposing sanctions against entities that have no notion of politics or war?

As we know, anti-apartheid sanctions were often honoured more in the breach than in the observance. Many people made vast fortunes through sanctions-busting. 

Of course, it is damaging to Russia’s banks and its corporate sector that the country is now locked out of the SWIFT transfer system. This and other economic measures affect Russia’s currency, and trade restrictions hurt too — for both exporters and importers. 

However, morality, even the posturing of impotent Western world leaders, comes at a price. Many ordinary Russians are as worried about their leader as the rest of us. Unlike many commentators, they also know that it took two sides to get this far, that the media worship of the handsome and charismatic Ukrainian leader, with his hot wife and angelic children, may be a bit over the top. 

Putin is being portrayed in the West as another Hitler, and his aggression is terrifying, but he does have some legitimate grievances against Ukraine. There are people in some eastern sectors of Ukraine who are in the majority in their communities and who do not want to be governed by Kyiv as they feel more attuned to Russia.

That is no excuse for the death and destruction being rained down on Ukraine, but if we fail to understand Putin’s position, how can we solve it? Back to the safer and more comforting cyberworld, finance has fast moved from safes and bank branches to apps and cyber-money. Take bitcoin: it’s the tip of an iceberg, one that is robust enough to withstand any Titanic assault from Western economic sanctions.

How do we know this? Having friends inside Russia — real working people, not many of whom are avid Putin disciples — we know that when the 20th-century banking framework inside Russia receives a battering from the West (SA is not dipping its toe in that water, thank you very much!) the cyber world lights up. 

Not that it isn’t already whirring and ticking 24/7. By using bitcoin as a stable method of payment that is immune to the sanctions that would have worked so much better when Joe Biden and Putin were kids, tech-savvy Russians can keep going, keep transacting.

Unlike the rouble, bitcoin is becoming a good store of value and is officially recognised in a handful of countries around the world. The sanctioning governments have launched their feelers into cyberspace and have asked the geeks to behave better, to join in the Putin bashing. But it isn’t working.

Unplugging cyberspace to bash Putin would also punish ordinary Russians, including many of the brave and reckless souls who have taken to the streets across Russia to protest against the invasion.

To understand the gaps in the effectiveness of sanctions, you do not have to be an expert in the geopolitical tensions within the legacy states of the Soviet empire, or a bitcoin miner, a coder, or one of those embarrassingly young and astute designers who have built Biden-proof protection for their wealth.     

One Russian revolution opened the floodgates to communism, and there was another when the old and decrepit Soviet empire crumbled. This latest one — the cyber revolution — has happened faster than the spread of the Covid-19 virus, and just as invisibly.

• MacDonald is a software designer and consultant, and Fraser a writer and journalist.