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On what basis does the U.S. government prohibit American companies like VISA, MasterCard, PayPal, et al, from doing business on the Crimean Peninsula?

Crimea is connected with, and backed by, the whole of Russia, which in turn is connected with China, with both being part of BRICS.

The fact that Visa and MasterCard could not be used all across Russia would naturally make Russian banks start transitioning to more friendly payment processors like Sberbank's Pro100 and China's UnionPay. This, in turn, will simply erode the influence that American companies have across the whole of Russia (and also across the globe as more people switch to UnionPay, which is nowadays accepted in a whole lot of places including America), not simply the small area actually subject to the sanctions.

Aren't all of these companies like VISA and MasterCard actually incorporated in the Bahamas, etc., anyways? Why do they comply with the request for sanctions? What would happen if they don't comply? What would they have to do to not be legally required to comply?

See also:

http://www.bloombergview.com/articles/2014-05-06/the-biggest-loser-from-russia-sanctions-visa

The Chinese experience inspires Putin's advisers: UnionPay, whose cards are accepted in 135 countries, is now bigger than Mastercard and second only to Visa in processing volume.

  • You are asking two separate questions. "Why is the US pursuing this policy" is not a question that belongs on this site. Please keep your question to the legal part (why does the US have the power to do this); "wouldn't this erode influence" is either too opinion-based or belongs on Politics. – cpast Jul 2 '15 at 0:23
  • no, this question is purely on why VISA / MC comply; the rest is just a discussion / background. – cnst Jul 2 '15 at 0:27
  • Then please remove the other parts; "why do this, won't it just erode influence?" isn't background, and this site isn't for discussion. – cpast Jul 2 '15 at 0:27
  • @cpast, invalid question removed – cnst Jul 2 '15 at 0:30
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Visa is incorporated in Delaware. So is MasterCard. In addition, both are headquartered in the US, have huge quantities of assets in the US, do lots and lots of business in the US in a highly regulated sector, and their very existence depends on their ability to interact with the US banking system.

The US has the authority to regulate all of these things, under literally any definition of sovereignty. Therefore, they must comply with sanctions.

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    @cnst No. There is no possible basis to conclude it's unconstitutional "to regulate Commerce with foreign Nations." It is a power expressly given to the federal government. Anyone trying to argue otherwise would be laughed out of court. – cpast Jul 2 '15 at 0:29
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    @cnst Please explain how that follows from the fact that the US government may regulate commerce with foreign nations. If a company depends on doing business with a particular country, and the US imposes sanctions on that country, then yes, the company might go bankrupt. Such is the nature of lawmaking: just because a company depends on X being legal, doesn't actually stop the government from making X illegal. – cpast Jul 2 '15 at 0:34
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    I mean, a company could certainly sue the government over sanctions hurting their business. But claiming that sanctions hurt your business and are thus unconstitutional is like claiming that the US Army is unconstitutional because it destroys the market for your private security company. Or, for that matter, that the government is killing your business because your business has to pay taxes and can't compete with foreign ones that don't. – cpast Jul 2 '15 at 0:42
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    @cnst Google is also a Delaware company. What companies do with profits for tax reasons doesn't give them an opt-out from obeying US law, since they a) like to take advantage of US corporate law, and b) even if they didn't care, their actual headquarters is in the US and so they have to obey US law. Tax tricks affect tax bills, but obeying any other kind of law is much less subject to those sorts of clever arrangements. – cpast Jul 2 '15 at 4:03
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    The US has authority to impose (legal) sanctions on any company that is a) a US "citizen" or b) operates in an area under US jurisdiction - which basically means any company in the world that wants to operate in the US. This is not special to the US - all countries have that power - that's what sovereignty means. – Dale M Jul 3 '15 at 4:15
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The U.S. can't make a company "give away" market share.

The U.S. does have the right to prevent a company from doing business in countries X and Y, in line with its foreign policy or other legal (e.g human rights) mandates.

It is then up to the company to design its business plan so that it is not dependent on revenues from countries X and y.

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