5 ms·

RedHat requests Russian partners to suspend projects under U.S. sanctions

54 points by agrostis 12y ago

sharth 12y ago
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 12y ago
  And if they do, would the US government pay off any current contract obligations IBM had to break?
  - jrockway 12y ago
    In some sense. If you wanted to get the government to enforce the contract, they wouldn't, so there you go, paid off.
    - sleep-less 12y ago
      The Russian government will enforce a contract made in Russia.
      - smsm42 12y ago
        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.
  - SwellJoe 12y ago
    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 12y ago
      A valid contract can't compel one of the parties to engage in illegal activity, can it?
      - SwellJoe 12y ago
        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.
PeterisP 12y ago
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 12y ago
  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.
  - shmerl 12y ago
    US can do it as an economical sanction. In this case it doesn't seem to be effective though.
    - smsm42 12y ago
      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.
  - deleted 12y ago
    [deleted]
  - lambda 12y ago
    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/Documents/ukraine_eo3.pdf 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/Documents/ukraine_eo.pdf http://www.treasury.gov/resource-center/sanctions/Programs/D..., expanded in EO 13661 http://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_eo2.pdf 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_Assurances 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.
mike_hearn 12y ago
Ah yes, the well known "topple enemy leaders by restricting their access to Linux tech support" strategy. Gets them every time.
- dimitar 12y ago
  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?
  - lotsofmangos 12y ago
    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.
chj 12y ago
What if they don't?
- bellerocky 12y ago
  I imagine RedHat would no longer be able to work with those partners then.
- sharth 12y ago
  From the Treasury's Website: http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx#12 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]
wyager 12y ago
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.
- gtirloni 12y ago
  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.
- xenadu02 12y ago
  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 12y ago
    > 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.
- AJ007 12y ago
  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.
- greendata 12y ago
  I'd add being a US citizen is starting is looking like a less and less attractive prospect.
exo762 12y ago
So, where is the letter from Microsoft to it's Russian partners?

54 points by agrostis 12y ago

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 12y ago
And if they do, would the US government pay off any current contract obligations IBM had to break?
- jrockway 12y ago
  In some sense. If you wanted to get the government to enforce the contract, they wouldn't, so there you go, paid off.
  - sleep-less 12y ago
    The Russian government will enforce a contract made in Russia.
    - smsm42 12y ago
      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.
- SwellJoe 12y ago
  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 12y ago
    A valid contract can't compel one of the parties to engage in illegal activity, can it?
    - SwellJoe 12y ago
      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.

PeterisP 12y ago

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 12y ago
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.
- shmerl 12y ago
  US can do it as an economical sanction. In this case it doesn't seem to be effective though.
  - smsm42 12y ago
    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.
- deleted 12y ago
  [deleted]
- lambda 12y ago
  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/Documents/ukraine_eo3.pdf 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/Documents/ukraine_eo.pdf http://www.treasury.gov/resource-center/sanctions/Programs/D..., expanded in EO 13661 http://www.treasury.gov/resource-center/sanctions/Programs/Documents/ukraine_eo2.pdf 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_Assurances 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.

mike_hearn 12y ago

Ah yes, the well known "topple enemy leaders by restricting their access to Linux tech support" strategy. Gets them every time.

dimitar 12y ago
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?
- lotsofmangos 12y ago
  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.

chj 12y ago

What if they don't?

bellerocky 12y ago
I imagine RedHat would no longer be able to work with those partners then.
sharth 12y ago
From the Treasury's Website: http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/answer.aspx#12 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]

wyager 12y ago

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.

gtirloni 12y ago
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.
xenadu02 12y ago
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 12y ago
  > 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.
AJ007 12y ago
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.
greendata 12y ago
I'd add being a US citizen is starting is looking like a less and less attractive prospect.

exo762 12y ago

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