Assange on Visa/MasterCard: “When Putin buys a Coke, 30 seconds later the U.S. knows”

[dropcap]I remember[/dropcap] being struck by this point made in Julian Assange’s 2012 book Cypherpunks – a compilation of discussions with NSA-conscious geeks, PDF here – on the incredible spying power Visa/MasterCard provide to the United States government, particularly relevant given the current conflict with Russia.

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ANDY [MÜLLER-MAGUHN]: I do think there is a point that we can agree on, which is that the money system, the economic infrastructure to interchange money, totally sucks at the moment. And even anybody who just has an eBay account will wildly agree with that, because what Paypal is doing, what Visa and MasterCard are doing, is actually putting people in a de facto
monopoly situation. There was this very interesting thing from the WikiLeaks cables also, that said that the Russian government tried to negotiate a way that Visa and MasterCard payments from Russian citizens within Russia would have to be processed in Russia, and Visa and MasterCard actually refused it.

JULIAN [ASSANGE]: Yes the power of the US embassy and Visa combined was enough to prevent even Russia from coming up with its own domestic payment card system within Russia.

ANDY: Meaning that even payments from Russian citizens within Russian-to-Russian shops will be processed through American data centers. So the US government will have jurisdictional control, or at least insight.

JULIAN: Yes, so when Putin goes out to buy a Coke, thirty seconds later it is known in Washington DC.

ANDY: And that, of course, is a very unsatisfying situation, independent of whether I like the US or not. This is just a very dangerous thing to have a central place where all payments are stored, because it invites all kinds of usage of that data.

JACOB [APPELBAUM]: One of the fundamental things the cypherpunks recognized is that the architecture actually defines the political situation, so if you have a centralized architecture, even if the best people in the world are in control of it, it attracts assholes and those assholes do things with their power that the original designers would not do. And it’s important to know that that goes for money. [pp. 89-90]

It will be interesting to see what the medium-term consequences of the current crisis will be for the health and independence of the Russian economy. For example, in the short-term, the development of an indigenous alternative to Visa/MasterCard is likely to increase costs for Russia. But I believe Adam Smith argued that protectionism was OK if dependence on foreign industries presented a national security risk. Obviously many Western Europeans believe however that the concept of “independence” is a discredited, dépassé concept.

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