IT Essentials: The turn of the screw

Another of Putin's goals is increasingly out of sight

Global sanctions against have been slow to bite, but now they're firmly clamped on the Russian economy.

News hit this week that the EU has launched an 11th round of sanctions against Russia, targeting the digital economy.

How hard that will hit overall GDP is questionable, given the lack of official data. The most up-to-date information we have, from the Russian Association for Electronic Communications, estimates that IT represented about 5.8% of the economy in 2019.

It's a comparatively small amount compared to other sectors - Russian IT tends to be an insular business - but still significant.

The bigger news is what it means for Russia's plans for technological sovereignty.

For years, the Kremlin has aimed to cut all technical ties to the West, scrapping systems like Windows, Salesforce and Oracle in favour of home-grown alternatives.

However, lack of investment - and the government's insistence on security oversight - has stymied that goal.

The German Council on Foreign Relations calls this, "The conflict between the security interests of the Russian state...and the economic freedom required for innovation and modernisation".

On top of that, eleven rounds of Western sanctions are now blocking tech giants from doing business with Russia.

The Kremlin might be happy about the enforced separation, but the private sector companies that relied on Western systems (most of them) are forced to work with out-of-date software, opening them up to bugs, flaws and, ironically, security vulnerabilities.

Simply put, this means Russia cannot reach its goal.

Could companies look outside Russia's borders, perhaps to a closer political ally - say, China - to supply alternative systems? While Putin's government has been keen to promote its ties to Beijing, we think it unlikely.

Even putting aside the massive cost and disruption of switching core-level software, which is hardly a small concern, there are worries about security.

On top of that, the US trade war with China could mean sanctions still hit Russia via a third party.

So, sanctions have not struck Russia with the blitzkrieg speed initially expected (the 11% GDP fall predicted was closer to 2% - though higher if you also take the loss of growth into account). But they are having an effect, as groups like the EU close loopholes and slice through the sanction-busting supply lines.

And as we've seen this week, the effect can't be measured only by the economic impact. While state-backed corruption and paranoia have done their part to kill off Putin's ambition of independence, sanctions could prove the nail in the coffin.