ICL Services
7 March 2022


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Russian software is ready for restrictions

Sanctions imposed against Russia with regard to imports of electronics (primarily, electronic components) and software may be tough but not critical. Russian IT industry will feel the impact of sanctions, but they will also provide an incentive for development. This is the conclusion reached by the participants of the Russian IT market. They are confident in Russia’s readiness for any challenges in terms of substituting foreign software products with local ones.
Andrey Krekhov, Director of Special Programs at ICL Services, believes that, when it comes to possible sanctions against Russian software companies, it all rather hinges on the will and desire of the United States to engage in a severe confrontation with Russia. «Maintaining a technological isolation, like the one imposed on the Soviet Union, is possible in today’s world but, so far, it looks more like verbal intimidation. Yes, they can disable online services and updates, restrict access to marketplaces from Russian IPs, or they can even close physical access to the components. However, the case of Iran showed that, in today’s world, there are alternative ways. The flow of goods to Iran has been redirected and goes through UAE firms. The Iranians have built new connections with the world,» said Andrey Krekhov in an interview with ComNews. «When it comes to a direct ban on software, the United States can also impose severe technical sanctions, which will appear like COCOM, that old system of export restrictions against the Soviet Union. The provision of licenses for various software can be included in the agenda. At the first stage, the blocking may be implemented under the SaaS model, probably by banning the provision of license keys and disabling updates. Initially, the Russian industry will feel the impact of these measures. However, for some time, the Russian companies will be able to operate without software updates and build security on top of the working functional loop of the software or, simply, use a proxy model for purchasing licenses. We have already secured the critical sectors.»

Andrey Krekhov is confident that, in the medium term, this would be a blow made by the United States against its own BigTech, which currently dominates all software sectors. "When you restrict certain geographies, this means that, over time, you will completely lose them, along with the credibility among those who are currently not under the sectoral pressure, but will seek alternatives to existing American dominance. I think that we will yet see the battles reflecting internal U.S. conflicts and interventions of big businesses against such sanctions. There was a great deal of talk and planning about sanctions. But this is not the same as imposing them the next day. It would require to calculate the risks and ensure the support of all stakeholders. Americans are still not sure, whether they will be effective. The sanctions that are imposed quickly and cause a lot of damage are considered to be the most effective. But the sanctions that are stretched over time and have with unclear effects will not go down well even with the U.S. BigTech," said the Director of Special Programs at ICL Services.

He believes that the most likely situation would involve the establishment of a new system similar to COCOM and the search for restrictions acceptable for the U.S. BigTech, as well as Russia and China. "Remember that China is a major player in this market right now. A severe confrontation with Russia in the area of IT means mirroring that issue on China as well. Yes, sanctions can be tough, but they are not critical. In the medium term, the situation will depend rather on how we build our economy in this new environment. 'Getting' high-tech products is not the issue, the question is how and for what to substitute the existing products over time in order to eliminate the dependence on imports," said Andrey Krekhov.

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