Why cutting off Russian customers is a bad idea

Lately, many companies have stopped working with their Russian customers in hopes of helping Ukraine. While this is a noble cause, these actions will often not have their intended result, and may sometimes even have the opposite effect. In this post, I will explain why this is and how businesses can help instead. I will primarily focus on the perspective of non-Russian SMEs providing online services, hosting, and internet services as these are the industries I have most experience in. The facts will differ for companies in certain industries, such as certain providers of financial services, and companies with a presence in Russia.

You might be helping the Russian government

If you are a foreign company with no presence in Russia, you are not paying Russian taxes. By selling services to Russians, you are likely competing with local companies and taking away some of their revenue, which would have been taxed in Russia. Many of these companies are also directly or indirectly owned by the Russian government, meaning their revenue directly supports the war. Your customers will likely no longer be able to pay companies outside of Russia, so they will need to go to local companies and you are now essentially redirecting part of your revenue to the Russian government.

Russia is not a real democracy

You may be thinking that by sanctioning Russian citizens, you can get them to turn on their government. In reality, many Russians are already against the invasion of Ukraine, and others are unaware about the situation due to Russian propaganda. Unfortunately, there isn't much the Russian people can do. Protesters who tried speaking up against the invasion are being arrested, and Russian elections are highly influenced. Instead of punishing your customers for their government's actions, it is wiser to make them aware of the reality of the current situation.

Sanctions

Of course, you don't want to support anyone who is actually responsible for or willingly involved in the war. The sanctions that have been imposed on certain Russian politicians, organizations, and oligarchs are meant to prevent this. If you want to be extra sure, you can stop dealing with listed persons entirely, even if the transaction is not covered. This way you are directly impacting the people who can actually influence the Russian government's decisions.

Internet providers: Stopping independent news

Russian news sources no longer report independently, and are now spreading propaganda. Western news sources are leaving Russia and are becoming increasingly difficult for Russians to access. The Russian people having access to the internet is now increasingly important, and by jeopardizing this you may be contributing to the spread and prevalence of state propaganda inside Russia. Keep in mind: The Russian government, military, and intelligence agencies will always have ways to communicate and access the internet, even if the normal means for this are cut off.

Hosting providers: Cutting off information flow

The personal websites and blogs of Russian citizens opposed to their government can also be a valuable source of information and communication, both to like-minded Russians and outsiders. By refusing to host their websites and domains, you may be preventing this kind of communication and information flow, and, as mentioned before, you may even be forcing them to indirectly give money to the government they oppose. While this is more effort than a blanket ban on Russian websites, instead making sure the websites you are hosting are not spreading Russian state propaganda is a much better measure to take.