This week, Chris Bryant, a British politician, floated a once unimaginable idea in parliament: “Is there a moment at which we might have to consider sanctioning Elon Musk [the American billionaire]?” he asked. The reason? He “seems to be playing a double game” in the Ukraine war.
The defence minister brushed it off. But Bryant raised this for two reasons. First, Musk has posted tweets that appear to echo some elements of Vladimir Putin’s ideas about Ukraine (such as Moscow’s claim to Crimea).
Second, a strange tangle has erupted around Starlink, the mobile satellite internet system created by Musk’s SpaceX company. And while this is still partly swathed in the fog of war, investors and policymakers should pay attention, since it has implications that extend well beyond Ukraine.
To understand why, we need some history. When Russia invaded Ukraine, Musk agreed to transfer Starlink terminals into the country, to provide internet to civilians and the military alike. These small devices, which were initially intended for a consumer market, work via a link to SpaceX’s satellites.
Musk deserves praise for this, in my view. As I have written before, one crucial attraction of Starlink is that it creates a “distributed” system — ie one that is spread about. This is much harder to destroy with missiles than something centred on a cell tower.
And with some 25,000 Starlinks now sitting in Ukraine, according to Musk, this network has kept vital civic and humanitarian functions running, ranging from hospitals to banks. Starlinks have also been extensively used by the Ukrainian army to fight its savvy campaign, funded by multiple sources.
But recently events became odd. Last month Musk suddenly tweeted that “Starlink is meant for peaceful use only” (even though American officials tell me that SpaceX is selling thousands to Nato groups at ever-increasing prices). Ian Bremmer, head of the risk consultancy Eurasia Group, alleged in a subscriber note sent on Monday that Musk told him he had declined Ukrainian requests to turn on coverage in Crimea, fearing Russian retaliation. Musk retorted that “nobody should trust Bremmer”. Other officials have corroborated Bremmer’s point.
Then, in late September, Starlink terminals stopped working in parts of eastern and southern Ukraine that Putin claims to have annexed, but which have been recaptured by the Ukrainian army. Kyiv officials say this has created some “catastrophic” situations.
Coincidence? Perhaps. Or possibly a technical glitch or Russian jamming. But well-placed Ukrainian observers wonder whether SpaceX officials were trying to slow Ukraine’s advance. To add to the rumour mill, Vladimir Solovyov, the Russian television personality, said this week that Musk was taking a pro-Russia stance to avoid sparking attacks on his satellites.
I and others have asked Musk’s team about this, without response. (Musk previously tweeted that the coverage issue was “classified”, SpaceX had provided $80mn subsidies for Ukraine and he desired peace). But since the malfunctions were first reported last week, coverage has apparently mostly returned. And when Mykhailo Fedorov, Ukraine’s digital transformation minister, posted praise for Starlinks this week, Musk tweeted in reply that he was “Glad to support Ukraine”.
But while it remains unclear exactly what has (or has not) really happened, the saga raises unsettling questions for western policymakers and investors. To what degree will US politicians permit a capricious billionaire to exert influence in fields ranging from social media to a foreign war? How should investors price the policy risks when private companies supply military agencies, or venture into space? Could the US government invoke the Defense Production Act over SpaceX? Is it acceptable for Musk to talk with the Russian government, as Eurasia suggests he has done?
Then there is a wide lesson about utility dependence — and diversification. Ukraine became dependent on using Starlink to get internet coverage this year since it needed to act fast, and the system was far better than alternatives, and initially quite cheap. As Fedorov notes, it has delivered enormous benefits. But this reliance also creates a potential vulnerability (not dissimilar to Germany’s previous heavy use of Russian gas, or US dependence on Taiwanese computing chips).
I have little doubt that if Ukraine needs to reduce its exposure to a billionaire in the future, it would eventually find a way. But in the meantime, the events will be carefully studied by other small nations — be that Taiwan or Estonia — who fear they might also need to defend themselves one day, and need distributed internet systems.
And, more widely, the saga should be a big wake-up call for any business leader, investor and policymaker. The war in Ukraine underscores in a very extreme form the degree to which we live in a digital world, where platforms are the lifeblood of the economy and much else. The question of who controls them, and whether we trust their reliability, thus matters deeply in these unstable times. Trust when shattered is hard to restore. Diversification matters.
Hopefully, Musk will demonstrate that he is reliable — and Starlink will continue to deliver miracles for Ukraine. But if more strange twists occur, Bryant’s question might not seem quite so crazy. Meanwhile, we should all consider our own digital dependencies.