The Washington Post - USA (2022-04-03)

SUNDAY, APRIL 3 , 2022. THE WASHINGTON POST EZ BD B3

to concessions that it was not willing to make

before the war, especially agreeing to not pur-

sue NATO membership, a goal enshrined in

Ukraine’s constitution. However, there are two

major sticking points. The first is the status of

the contested regions: Crimea and the so-called

Luhansk and Donetsk People’s Republics (LNR

and DNR) in the Donbas. The Ukrainian plan

envisions a 15-year timeline to resolve the

Crimea question. But Kremlin spokesman

Dmitry Peskov pushed back on that idea, say-

ing that Crimea is part of Russia and that the

Russian constitution precludes any further

discussions about its status.

The situation might be different when it

comes to the separatist Donbas regions. A

possible resolution could be a return to the

“borders” established by Russia’s 2014 annexa-

tion of Crimea and invasion of the Donbas, but

without official recognition of Russian control

over those areas. A starting point could be the

now-defunct 2015 Minsk agreements, signed

by Ukraine and Russia, which were meant to

provide a political resolution for the status of

the LNR and DNR. European-led diplomacy to

make progress on the agreements failed largely

because of Russian stalling and the unreason-

able concessions required of Ukraine, such as

allowing the LNR and DNR to have veto power

over national decisions. The agreements would

have to be revised significantly so they aren’t

heavily weighted in Russia’s favor. But Russia

might be willing to consider such compromises

if its war effort continues to fail.

The second problematic issue is how to

arrange security guarantees for Ukraine that

would deter a future Russian attack. This could

break the negotiations, because it is difficult to

imagine an ironclad security guarantee for

Ukraine short of NATO membership. The Bu-

dapest memorandum, which Russia signed in

1994 as part of Ukraine’s surrender of Soviet

the Kremlin to sustain its war effort. The

existing sanctions on Russian companies and

wealthy elites are significant, but they have not

affected Russia’s behavior on the ground, nor

have they pushed the Kremlin-connected oli-

garchs away from Putin. There is still room for

the United States and Europe to further in-

crease pressure on Russian banks, including

imposing full blocking sanctions, which pro-

hibit all transactions without any carveouts,

and cutting off banks from the SWIFT system

that allows for bank-to-bank transfers. So far,

of the five largest Russian banks, only VTB —

the second-largest — has been fully blocked

and cut off from SWIFT. Imposing the same

costs on Sberbank, Russia’s largest bank, as

well as other large commercial banks would

significantly hurt the country’s financial ma-

neuverability. Stepping up enforcement of in-

dividual sanctions would also help.

The West has still not fully hit Russia where

it hurts: energy exports. Though the United

States has stopped Russian oil imports, Europe

is still deeply dependent on Russian gas. Russia

recently insisted on conducting payments for

energy exports in rubles, creating more de-

mand for its currency. Such financial manipu-

lations are working: Already, the ruble, after

plummeting earlier this year, is rebounding. To

reverse this trend, Europe can use its economic

leverage to press Russia into accepting non-ru-

ble payments — or, better yet, suspend Russian

energy imports altogether. Poland has already

announced that it will end Russian coal im-

ports within the next few weeks and phase out

oil and gas imports by the end of the year.

Together, the military support and economic

pressure are the only way to keep up negotia-

tions.

In those negotiations, the aggressor — Rus-

sia — will have to make the bulk of the compro-

mises. But Ukraine has signaled that it’s open

To be clear, the biggest companies in crypto

aren’t making their case to the public through

charitable giving or some other practical use,

said Davies, the philanthropy researcher.

When the public sees a more typical crypto ad,

like the ones that ran during the Super Bowl, he

said, “they are not going ‘Wow, this is amazing,

a new form of money,’ they are going, ‘Wow, this

is an investment opportunity that might go up

massively.’” The argument, in essence, is

FOMO — fear of missing out — as expressed by

Crypto.com’s slogan: “Fortune Favors the

Brave.”

Cryptocurrencies’ controversial reputation

can’t be separated from the huge price increas-

es that are a result of speculation. If bitcoin, for

example, wasn’t so valuable because of specu-

lation, it wouldn’t use so much energy — by

some estimates 91 terawatt-hours of electricity

annually, more than the total consumption of

Finland. The mining process, in essence, is a

computing competition; if bitcoin was worth-

less, no one would pay the electric bill to “earn”

one. But if one bitcoin is worth $40,000, five-

figure energy bills per coin can be rationalized.

Back when the coins were much less valu-

able, charities found it easier to remain disen-

gaged. In 2011, the Electronic Frontier Founda-

tion, a San Francisco-based organization de-

fending the rights of Internet users, was among

the first to accept bitcoin donations. At the

time, it acquired 3,500 coins, worth barely

$5,000, and began to wonder if holding the

asset made sense. In an announcement that

June, the EFF said there was too little legal

clarity about bitcoin for the organization to feel

comfortable exchanging them for dollars. At

the time, “we couldn’t treat them as usual

assets,” said Kurt Opsahl, the general counsel.

Even disposing of them was hard to manage, he

said: “We could have potentially crashed the

market” in its early days, when there weren’t

that many coins and limited interest. Instead,

the money was gradually released through

something called a bitcoin faucet.

Today, Opsahl notes ruefully, those coins

would be worth around $100 million on ex-

changes. In the interim, the EFF reversed itself

on crypto-donations, noting newly established

legal clarity and more reliable ways of immedi-

ately converting the tokens into cash. When

the Pineapple Fund made its donations, the

EFF was on the list, receiving a $1 million gift.

This time, the group cashed it out.

exchange the coins for dollars and create an

account with a marketplace or a service like the

Giving Block. Additionally, charities will want

to spread the word among their supporters

that crypto-donations are welcome. It is this

process that makes charities invested, so to

speak, in the ecosystem — and where pushback

can come quickly.

Rhodri Davies, a researcher in the history of

philanthropy at the University of Kent, in

England, said that many donors are acting in “a

kind of enlightened self-interest” since crypto-

currency “only really has value for everybody if

a collective delusion — or belief — continues.”

Teasing out motives can be hard, Davies con-

ceded: “I don’t know if it is as simple as people

saying they are deciding to do philanthropy as

a Machiavellian scheme to make their own

holdings worth more; it’s probably that a lot of

people genuinely have an ideological belief in

cryptocurrency.”

Pat Duffy, who left the nonprofit world to

co-found the Giving Block, said in an interview

that charitable giving is likely to be the way

crypto becomes integrated into the traditional

economy. “You’re not going to get a whole lot of

pizzas getting bought with bitcoin,” he said.

The immediate potential for crypto-charity, by

contrast, is enormous. “If people just behaved

rationally and gave the amount to offset their

tax burdens, there would be tens of billions of

dollars, one of the biggest charitable-giving

sectors,” he said. “Every major brand would be

on crypto.”

Proving Duffy’s point, the Giving Block was

just bought by the payments company Shift4 in

a deal worth $54 million. In announcing the

acquisition, Shift4’s chief executive, Jared

Isaacman, said: “Cryptocurrency is quickly

moving beyond early adoption and becoming

increasingly mainstream as more people want

to invest, transact and donate in crypto. We

intend to be at the forefront of this movement

and leverage The Giving Block technology

across the entire Shift4 enterprise.”

Crypto.com, a cryptocurrency exchange

based in Singapore, ran an advertisement dur-

ing last weekend’s Oscars ceremony to encour-

age donations to help the Red Cross/Red Cres-

cent in Ukraine via cryptocurrency, promising

to match up to $1 million. A donor needs a

Crypto.com account to make the contribution,

which, the company said, would be immedi-

ately converted into a stable, dollar-based coin

“to avoid fluctuation risks in the value of the

donated cryptocurrency.” At the end of the

campaign, the currency will be converted to

euros and given to the Red Cross. Other ex-

changes have also been encouraging crypto

donations directed to Ukrainian aid.

Back in 2019, Greenpeace was among the

first organizations to reject such donations as

antithetical to its mission. This January, the

Mozilla Foundation, which supports the open-

source Firefox Web browser, announced that it

was pausing crypto-donations while it re-

viewed their “impact on our climate change

commitments.” The foundation acted after an

innocuous tweet from an official Mozilla ac-

count encouraging crypto-donations received

a profanity-laced reply from Jamie Zawinski, a

Mozilla founder. Zawinski’s tweet, which was

liked more than 20,000 times, did not mince

words: “Everyone involved in the project

should be witheringly ashamed of this decision

to partner with planet-incinerating Ponzi grift-

ers.” In an email, he elaborated briefly: “Any

organization that purports to be about long

term thinking, the open web, or that has any

kind of climate-related goals cannot, un-hypo-

critically, have *anything* to do with crypto-

currencies.”

Inspired by Mozilla’s pause, editors of Wiki-

pedia have been debating a proposal recom-

mending that its parent foundation reject

crypto-donations. The Wikimedia Foundation,

which received $130,100.94 in crypto-dona-

tions in its last fiscal year (less than 1 percent of

its total revenue), said it was taking these

concerns seriously. And in February, the Brit-

ish branch of the World Wildlife Federation

canceled its plan to raise money through NFTs

(non-fungible tokens) — another attempt to

assign value through digital means — after its

members objected. Greenpeace in Europe, in

an apparent nod to the controversy, dryly

defended NFTs — by which it meant “natural

forest trees.”

What’s clear is that these donations are seen

by all sides as high stakes — a chance to render

a judgment on the worthiness of cryptocurren-

cy. The donor to Wharton went so far as to

insist that the University of Pennsylvania hold

on to some bitcoin. The university agreed and

still owns cryptocurrency, on the condition

that the donor ensure that Wharton will end up

with $5 million no matter where the price of

bitcoin settles. “We feel comfortable holding a

small amount as the original gift amount is

guaranteed,” John Zeller, the senior vice presi-

dent of development and alumni relations at

the university, wrote in an email.

In most cases, charities immediately turn

digital coins into dollars to avoid the volatility

of holding crypto, but even a swift conversion

requires engagement with the crypto ecosys-

tem. Presumably, a lawyer has surveyed any

legal issues and recommended how long a

charity should hold the coins before selling;

the charity also needs to choose a method to

A

fter years of building up a fringe project

that large segments of the population

don’t truly understand, investors hold-

ing cryptocurrency like bitcoin and Ethereum

see a path to mainstream acceptance through

charitable giving. These investors, in many

cases, are sitting on windfalls as large as 1,000

times what they put in — which can lead to

charitable thoughts, whether from gratitude or

guilt or the benefits of using such donations to

defray the tax costs of enormous capital gains.

And while the acceptance of cryptocurrency

donations doesn’t make the idea of blockchain-

based money any more understandable, it does

require that charities join the cryptocurrency

world.

Crypto-donations began in earnest in 2017,

when one anonymous donor used 5,104 bitcoin

to create the Pineapple Fund. The fund dis-

bursed bitcoin valued at more than $55 million

to 60 charities. Those coins, worth more than

$200 million at today’s exchange rates, went to

a range of causes: international aid, local envi-

ronmental protection, libertarian legal argu-

ments and life-extension research. Last May,

the University of Pennsylvania received an

anonymous $5 million donation in bitcoin for

its Center for Innovation in Finance at the

Wharton School. The Giving Block, a company

that provides back-end support to more than

1,000 charities accepting crypto-donations, re-

ported donations last year with an exchange

value of nearly $70 million, up from $4.2 mil-

lion in 2020, a rate of growth much higher than

the increase in price of the currency itself. (The

average donation last year, it said, was more

than $10,000.)

Crypto-donations may not rival the billions

donated through financial instruments like

stocks and bonds; still, their sudden emer-

gence is striking. And it follows an arc familiar

in disruptive innovation, whether that’s been

oil drilling, leveraged buyouts or pharmaceuti-

cal drugmaking — but sped up for the digital

age: First they ignore you, then they laugh at

you, then they hope you’ll build a hospital

wing.

Yet as fast as crypto-donations have come on

the scene, a determined resistance has

emerged within some charities. The resisters

see digital currencies as a predatory scheme in

which newer investors’ money is used to enrich

earlier, wealthier investors; additionally, they

point to crypto’s reliance on tremendous

amounts of computing power and electricity to

verify transactions, contributing to global

warming. Accepting a crypto gift, from this

perspective, means endorsing a new financial

system even more unjust and destructive than

the old one.

Why some charities are rethinking cryptocurrency donations

Twitter: @noamcohen

Noam Cohen, the author of “The Know-It-Alls: The

Rise of Silicon Valley as a Political Powerhouse and

Social Wrecking Ball,” writes about how digital

technologies are changing society.

Accepting a

bitcoin gift

might get you

that new

hospital wing,

but resisters

worry about a

predatory,

planet-killing

scheme, says

journalist

Noam Cohen

nuclear weapons based there, sought to pro-

vide such assurances to avoid precisely what’s

happening today — and Moscow ran tanks over

it. Without a strongly stated commitment from

countries like the United States, Germany and

other NATO members on par with Article 5, no

guarantee will truly ensure Ukraine’s sover-

eignty.

One additional complicating factor is that

Ukrainian President Volodymyr Zelensky has

stated that any agreement proclaiming

Ukraine’s neutrality would need to be approved

by a nationwide referendum, added as an

amendment to the country’s constitution, and

ratified in the parliaments of Ukraine and the

guarantor states. Zelensky probably wants to

go through this formal process to ensure that

the Ukrainian people support this decision —

and prevent any uprisings that could lead to his

ouster. But with war still raging and millions of

Ukrainians — about 10 percent of the popula-

tion — now outside the country, it’s hard to

imagine how such a referendum could be held.

A stop to the fighting should be in everyone’s

immediate interest — including Russia’s. In the

long term, ensuring stability in Ukraine is the

only way to ensure security in Europe, and the

only way to achieve that is returning to Ukraine

full sovereignty over its territory. Anything less

would be an unstable, short-term arrange-

ment. But in light of the devastation Russia has

unleashed on Ukraine and itself, any glimmer

of hope is worth pursuing seriously.

Twitter: @apolyakova

@SashaNStone

Alina Polyakova is president and chief executive

of the Center for European Policy Analysis and an

adjunct professor of European studies at the Johns

Hopkins School of Advanced International Studies.

Sasha Stone is a senior program officer at the

Center for European Policy Analysis.

HEIDI LEVINE FOR THE WASHINGTON POST

Ukrainian territory, including a NATO-type

collective defense agreement between Ukraine

and potential guarantor countries such as Brit-

ain, China, Russia and the United States.

The negotiations are still far from producing

a real path forward, and much remains to be

hammered out, including the status of Crimea

and the Donbas, which Russian Foreign Minis-

ter Sergei Lavrov said was “settled for good”

(it’s not). There is more reason for skepticism

than optimism: With Russia’s long track record

of saying one thing and doing another, the

negotiations could well be a smokescreen for

its military forces to regroup and begin a

renewed offensive. Indeed, in the days after the

talks, Russian bombardment of Ukraine’s

northern cities continued, despite Moscow’s

promise to pull back, and civilians from the

most affected areas still did not have access to

secure humanitarian corridors. If there is a

diplomatic solution in sight, Russia will have to

show — rather than say — that it’s serious by

stopping its brutal assaults.

But Russia’s recent willingness to come to

the negotiating table is a reminder for the

United States and its European allies that their

adversary is open to diplomacy only when it’s

on the back foot militarily. This means now is

the time to ramp up, rather than wind back,

economic and military pressure — to clear the

path for a resolution that Russia will respect

and abide by. And while much can go wrong in

any diplomatic process, both sides are now

probably more willing than before to make

compromises toward at least a medium-term

solution.

T

he more Russia loses on the battlefield,

the better the chances for diplomacy to

succeed. This means Ukraine’s military

must continue to make gains. Russia reneged

on its stated objective of the “denazification” of

Ukraine only after its military operation stalled,

in part because of poor battlefield performance

— the result of low morale, inadequate training

and badly maintained equipment — as well as

the courage of Ukrainian fighters and military

assistance from the West. But if Russia regains

the upper hand militarily, it will have no need to

continue to engage in diplomacy.

That means the best strategy for the West is to

sharply increase military assistance to Ukraine.

It may seem counterintuitive to send more

weapons as the talks get going, but Putin has

demonstrated time and again that he respects

only hard power. The United States has already

provided more than $2 billion in security aid to

Ukraine, including Stinger antiaircraft systems,

Javelin antitank missiles, tactical drones, and

anti-armor weapons and systems. Many Euro-

pean countries, including Poland, Estonia, Swe-

den and Germany, have sent similar weapons as

well as supplies and other equipment. For its

part, the European Union agreed to deliver a

nearly $1 billion package, approving the ship-

ment of lethal weapons to a country that isn’t

part of the E.U. for the first time in its history.

The assistance is making a difference, but

Ukraine needs much more, especially air de-

fense systems and fighter jets, to keep up its

defense and launch counteroffensives.

If the allies also ratchet up economic sanc-

tions on Russia even more, it will be harder for

NEGOTIATIONS FROM B1

This is the time to step

up pressure on Russia

A military trench in

the village of

Moshchun,

Ukraine, that was

taken over by

Russian soldiers

and then

recaptured by

Ukrainian troops.

Russia has been

losing ground on

the battlefield in

Ukraine.