Doing Business As An SDN Is Apparently A Giant Headache
You can't exactly do this stuff openly it would appear
Looking at the so-called "pension fund" of the so-called Luhansk and Donetsk People's Republic, on whose behalf Russia is fighting its so-called “special operation” (there's a lot of "so-called" in this area) used to be a puzzle for me.
It didn’t make sense to me, at first, why anyone in their right minds would go to a bunch of trouble just to pay some pensions and social support. Like, you know you can just… I don’t know, fly a plane full of cash out there to do this, right?
It starts to make sense in context of the so-called L/DPR as a “country”.
This creates a unique set of problems that you need to solve.
Think of the mixture of international business and crime that characterizes Russia’s relationships with the so-called Luhansk and Donetsk People’s Republic as a set of fairly unique, basic business problems to solve.
If you’re a sanctioned entity in Russia, which is set up to extract resources from a sanctioned geographical area like the L/DPR, which also happens to be run by sanctioned individuals (the entire thing is sanctioned a dozen ways from Sunday, really) then you have a fairly ferociously complicated situation on your hands.
Every payment you make gets watched intensely. Every account number, phone number or personal identification that you let slip costs you money. A variety of intelligence agencies and financial regulators watch your every move like a hawk. There is a constant, non-trivial risk that you are going to get sold out by your own people if you’re not discovered by the Americans or their partner intelligence agencies and financial regulators.
In this context, operating with multiple layers of isolation starts to make sense - it’s not just separation of concerns, it’s also layering transactions to disguise the point of origin. This makes very basic activities for a business - like making payments to reward employees, or funding a pension system - very, very complicated.
In this context, the relationship between VNESHTORGSERVIS, and South Ossetia, and Russia, starts to make a lot more sense.
What you’re looking at here is a kleptocratic wealth extraction business operating in quasi-sovereign zones with fixed currency exchange rates. It pays its expenses in nearly worthless rubles inside the so-called L/DPR and it extracts the natural resources of the region and sells it for external currency.
It’s grift, on a billion-dollar scale, engineered to evade sanctions.
Think of it as the answer to a fairly stupid question, which is, if I was sanctioned, and I had to pay someone who lived in a place that was sanctioned... how would I go about it?
Aside from, again, something even stupider like "plane full of cash" (because nothing could go wrong with that plan, right?), this is how you'd do it.