German cabinet member lashes
business attacks on Wikileaks
Germany's interior minister sharply questioned the wisdom of moves by U.S. internet businesses, possibly spurred by the U.S. government, to punish Wikileaks. In an interview with der Spiegel, Karl Ernst Thomas de Maizière characterized Wikileaks as more of an annoyance than a threat.
business attacks on Wikileaks
Germany's interior minister sharply questioned the wisdom of moves by U.S. internet businesses, possibly spurred by the U.S. government, to punish Wikileaks. In an interview with der Spiegel, Karl Ernst Thomas de Maizière characterized Wikileaks as more of an annoyance than a threat.
Though the interior minister made clear that he thought Wikileaks' philosophy is irresponsible, he said a business boycott was not acceptable.
From der Spiegel:
SPIEGEL: Is it acceptable that Amazon, PayPal and others boycott WikiLeaks?
De Maizière: If this occurs under pressure from the US government, I don't think it is acceptable. If a company freely decides to do so, then that is a corporate decision, but it is also politically problematic. I am a big advocate of what is known as net neutrality. This means that providers are compelled to transmit content without political or commercial pre-selection.
SPIEGEL: Then you should now show your solidarity with WikiLeaks because it is precisely this net neutrality that is being violated when the French minister of industry calls for blocking all WikiLeaks content.
De Maizière: Such bans effectively lead us to difficult issues that we will have to deal with for years to come. And, at some point in time, it also has to do with freedom of speech. This debate ranks among the most challenging Internet-related issues that I see on the horizon.
Meanwhile, the Federal Communications Commission moved nearer yesterday to adopting net neutrality rules which would forbid blocking of "lawful" web sites. Of course, this would not stop some in Washington from trying to claim Wikileaks sites aren't "lawful" because they contain illegally leaked information.
The credit card company decision to impede Wikileaks follows disclosure in a leaked cable that the United States was lobbying Russia on behalf of Visa and Mastercard to make sure the American financial services could compete equally under a planned Russian financial law. (Cable below.)
Wicked leak: a couple of weeks ago a top secret tape emerged in which Henry Kissinger is heard telling President Nixon that a second Jewish Holocaust in the Soviet Union "is not an American concern."
The dark world of national security indeed does need light shed within it.
C O N F I D E N T I A L SECTION 01 OF 02 MOSCOW 000228 SIPDIS STATE FOR EUR/RUS, EEB TREASURY FOR TORGERSON/WRIGHT NSC FOR MCFAUL WHITE HOUSE FOR USTR EHAFNER E.O. 12958: DECL: 01/28/2020
TAGS: EINV ETRD RS
SUBJECT: RUSSIAN DRAFT BILL WOULD REQUIRE ON-SHORE CREDIT CARD PROCESSING REF: MOSCOW 00079 Classified By: ECONMINCOUNS Matthias Mitman for Reasons 1.4(b) and (d)
1.(C) SUMMARY: The latest version of the Russian draft law "On the National Payment System" contains several provisions that would disadvantage U.S. businesses. The draft law would set up a National Payment Card System (NPCS) including its own payment card that banks and payment card companies could join voluntarily. Most likely to be a consortium of state-owned banks, the NPCS operator would process the domestic payments for all members and collect processing fees estimated at $4 billion per year. The draft also forbids sending abroad any payment data for domestic transactions. Should international payment card companies such as Visa and MasterCard chose not to join the NPCS they would have to set up the infrastructure to do their Russian payment processing domestically. END SUMMARY.
2.(C) On January 27, the Russian newspaper Kommersant reported that it had received a copy of the "final" version of the draft legislation "On the National Payment System." Visa's Public Relations head XXXX XXXX, who along with MasterCard representatives met Ministry of Finance officials on January 22, told us that MinFin is still seeking consent from the various ministries and agencies involved in the legislation. XXXX reported that Deputy Finance Minister Svyatugin leads MinFin's effort on this legislation, including shepherding the bill through the GOR interagency process. XXXX passed a copy of the latest draft law to econoff.
To Join or Not To Join -----------------------
3.(C) According to Visa's XXXX, the latest version follows the "China model" of payment card systems. The law would set up a National Payment Card System (NPCS), which XXXX reported would likely be run by a consortium of state banks as either a non-profit entity or a joint stock, profit-making company. Banks and credit card companies would have the option of joining the NPCS. If they joined, banks in Russia would issue cards under the NPCS brand, with its own logo. Payment processing for these cards would be done on-shore by the NPCS entity. According to the Kommersant article, the fees for these services are estimated at Rb 120 billion ($4 billion) annually. As XXXX pointed out, the vast majority of Visa's business in Russia is done with cards issued and used in Russia; with earnings from processing going to NPCS, Visa would no longer profit from these transactions.
4.(C) While joining the NPCS would be optional for both banks and international payment card companies, membership has its privileges. If Visa and MasterCard choose to join the NPCS, they would not have any role in domestic transaction processing, but the bank-issued NPCS cards could be "co-branded" with Visa or MasterCard. When the cardholder used his card abroad, the transaction theoretically would go through the normal Visa or MasterCard processing that takes place outside of Russia. While XXXX said such a deal is a possibility, it would require negotiations to specify this approach in the draft law.
ON-SHORE PAYMENT PROCESSING REQUIRED ------------------------------------
5.(C) In the proposed draft of the law, if international payment card companies choose not to join the NPCS, they will have to set up on-shore processing centers. But neither Visa nor MasterCard representatives, which together have 85% of the Russian payment card market, are willing to say whether they would be willing to do so. MasterCard's Head in Russia, XXXX XXXX, said MasterCard would have to "build and assess the business model of setting up on-shore processing" before it could reach a decision. The draft law stipulates that international payment card companies will have one year to establish processing centers inside of Russia. (Note: Currently no international companies have processing centers in Russia.) A ban on sending abroad payment data for purely domestic transactions will become effective two years after the law enters into force.
6.(C) According to XXXX, MinFin understands that this MOSCOW 00000228 002 OF 002 would entail so much expense and difficulty for Visa and MasterCard that the two companies might quit the Russian domestic market. XXXX believes that, at least at the Deputy Minister level, MinFin's hands are tied. Implying that Russian security services were behind this decision, XXXX said, "There is some se-cret (government) order that no one has seen, but everyone has to abide by it." As described reftel, credit card company and bank representatives have told us that GOR officials apparently assume that US payment systems routinely share data associated with payment transactions by Russian cardholders with intelligence services in the US and elsewhere.
STATE EMPLOYEES ALL GET NPCS CARDS ----------------------------------
7.(C) The current draft of the law would require all stated-owned enterprises and all state employees to be issued NPCS cards and to receive their salaries via electronic deposit into NPCS member-banks. (Note: Eighty percent of payment card holders have what are called "salary cards," a type of debit card negotiated between the employer and a bank. Historically, employees have used their salary cards almost exclusively to withdraw their salaries at the beginning of each month, though they can also use them as debit cards.) One positive aspect of the latest version of the law is that vendors are not required to accept NPCS cards, as was required in earlier versions.
COMMENT -------
8.(C) This draft law continues to disadvantage U.S. payment card market leaders Visa and MasterCard, whether they join the National Payment Card System or not. If they join, the NPCS operator will collect the fees, leaving them to collect processing fees only when card-holders travel abroad -- a tiny section of the market. If they do not join but choose to compete with NPCS cards, they will have to set up payment processing centers in Russia, a very large investment in itself, and compete against a system likely backed by the largest Russian state banks. While the draft legislation has yet to be submitted to the Duma and can still be amended, post will continue to raise our concerns with senior GOR officials. We recommend that senior USG officials also take advantage of meetings with their Russian counterparts, including through the Bilateral Presidential Commission, to press the GOR to change the draft text to ensure U.S. payment companies are not adversely affected. END COMMENT. Beyrle
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