March 8, 2022
The Russian invasion of Ukraine has put global interconnection to the test as never before. Every media outlet is now talking about “Splinternet.” The ruptures extend beyond the internet and web to include many forms of cooperation and trade, especially in financial systems. This Narrative briefly comments on some of the more notable developments and tries to weave it into a coherent picture.
While the underlying infrastructure of technical compatibility is holding up well, we see the free flow of news, opinion and online services dramatically affected by the incident. The West is cutting itself off from Russian users and markets, while Russian authorities cut off their own population from exposure to foreign news and opinion sources. This may be the most divisive and long-lasting aspect of the conflict.
The dichotomy between a “fragmented” or “unified” Internet has never made sense. As argued in the book Will the Internet Fragment? the Internet is neither fragmented nor unified, it is unifragged, which means that millions of networks and services speak the same language but can freely block external users or other systems as they please. The overall level of connectivity is never uniform but is actively managed by tens of thousands of different entities. The big difference now is that the invasion of Ukraine has catalyzed collective action in this distributed system, fostering a coordinated response reflecting geopolitical divisions. These decisions manifest in different governance structures.
Critical Internet resource governance: Intact
As we reported earlier, ICANN was asked by the Ukrainian GAC representative to remove .RU. SU and .рф from the root zone of the DNS. This would disable the resolution of these domains for most users in the world. On March 2, ICANN’s CEO responded with a strongly-worded letter that refused the request: ICANN cannot disable country-code TLDs (ccTLDs) “based on requests from one territory or country concerning internal operations within another territory or country. Such a change in the process would have devastating and permanent effects on the trust and utility of this global system.” RIPE-NCC, the IP address registry for Europe, received a similar request and also declined for the same reasons. The global Internet community and its organic institutions has held firm to its principles of facilitating compatibility and connectivity irrespective of politics.
Networked cooperation: Under pressure
A level up from CIRs are various forms of networked governance, where actors come together voluntarily to address shared issues. The Eurasian Network Operators Group (ENOG) was literally destroyed by the conflict. ENOG was formed by RIPE to support the development of Internet connectivity in the Ukrainian, Russian, Belarusian, Armenian, Azerbaijanian, and other primarily post-Soviet regional communities. “In view of the recent events…the ‘ENOG community’ does not exist anymore,” ENOG’s Programme Committee Chair said. In a largely symbolic move, the trade association of European ccTLD operators, CENTR, suspended the membership of the Coordination Center for TLD RU/РФ. This act will have no operational consequences. Other forced withdrawals could have longer term implications.
We wrote about the sanctions leveled at seven Russian banks and enforced through the private SWIFT financial messaging network. There has been subsequent growth in participation in one alternative network, China’s CIPS, but for various reasons we are nowhere close to a tipping point. Nonetheless, how these cooperative networks adjust and recover from pressure is a concern. More fundamentally, the Bank for International Settlements announced that it would not facilitate circumvention of Western sanctions by largely freezing the Russian government’s currency reserves. An 2020 IMF report said that a systemic shock could accelerate a transition to a new landscape of reserve currencies.
Could the Ukraine war presage a large-scale shift to cryptocurrency? A New York Times article asserted that Russians might be able to use cryptocurrency to evade sanctions, but more informed analyses pointed out that “digital currencies are simply not a good way for Russian oligarchs and sanctions-evading institutions to move money” because of the transparency of the blockchain. Crypto transactions from Russia are being monitored but not necessarily suspended. This might change soon with Biden’s upcoming executive order on cryptocurrency, but the compliance will depend on where these firms are located and registered. Cryptocurrencies are also being used in Ukraine. The government of Ukraine is accepting crypto for donations and the people are using it as an alternative to relying on the unstable financial institutions to transfer their assets and savings. People have found creative ways of using other digital platforms to raise and transfer funds to Ukraine, such as Airbnb and Patreon. The use of digital currencies by both the countries raises several interesting implications for its future.
Digital goods and services markets: Polarization
Finally, there are the markets for various digital goods and services. Here, private service providers (both online and offline) have deserted Russia in droves for compliance, risk evaluation, and moral reasons. Apple halted all product sales in Russia and blocked state media outlets from the App Store. Microsoft stopped all new product sales. Cisco shuttered its Russia and Belarus operations. Disney, Netflix, Spotify have limited some or all products. Payment services including Paypal, Mastercard, and Visa have withdrawn. An opportunity for Chinese firms to fill the gap has been noted, but logistical snarls, payment issues and the possibility of running afoul of U.S. export controls is limiting that possibility.
Cogent Communications apparently told its Russian customers on Friday it would disconnect its backbone internet service, claiming fallout from the sanctions. It appears to have disconnected state-owned operator Transtelecom. In what appears to be a fluid FAQ, Lumen (Level 3) initially announced terminating “an agreement to provide services to an existing Russian financial institution and we have withdrawn our name from consideration for new business with another Russian financial institution” then updating the cause as “increased security risk inside Russia”. On the other hand, some service providers remain in Russia, operating with precautions to maintain compliance, security and communications.
The implications of sanctions is a long debated topic. A WSJ editorial spoke of a stream of refugees from Russia itself who “are victims of Western sanctions and Russian counter-sanctions. It was this 20% to 25% of Russians, not Mr. Putin’s ‘silent majority’, who watched Netflix, dressed in Zara, bought furniture at Ikea, and traveled abroad. They had hopes of changing Russia.” The strongest impact would come from oil exports, and cutting those off would have harmful impacts on Europe and (to a lesser extent) U.S. consumers, and has not happened yet, though there are calls for it.
On the unifragged Internet, there is a clear distinction between ICANN/IANA and any of the private service operators. A private actor can cut off customers based on their ToS. Some of these service cutoffs are more damaging than others, but no matter how big or dominant, none of the private service providers provide a single, coordinated resource system like the DNS root or IP address registries, for which there is no substitute.