U.S. Squeezes International Web Services Provider Hostinger Over Sanctions Against 7 Countries

It is yet another example of U.S. bullying using its international dollar dominance to order around businesses nations outside of its legal jurisdictions.

It is also a further reason why so many countries, led by the BRICS geopolitical and trade community, headed by founding entities Brazil, Russia, India, China, and South Africa, are moving as quickly as possible to international trade and financial exchange systems which completely bypass the U.S. dollar.

The news of the latest victim of this U.S. practice is Hostinger International Ltd. Headquartered in Lithuania, it was founded in 2004 as one of the earliest international web hosting providers in the world. It has grown since that time to provide additional web services such as shared hosting, cloud hosting, VPS, Windows VPS, email, Minecraft hosting, managed WordPress blog hosting, and domain accounts. It is also the parent company of 000webhost, Hosting24, Niagahoster, and Zyro. In 2022, the last year for which full revenue information is available, it reported €69.6 million (U.S. $74.8 million) in revenues. It employs over 1000 people in 54 countries, and services clients all over the world.

On May 6, 2024, the company issued an email to its clients in Venezuela, announcing via email it would be suspending all support for clients it currently has in Venezuela as of June 10, 2024. It also informed the clients that, effective as of the date of the email, its Venezuelan clients would “not be able to renew or upgrade” existing services.

The reason for ceasing support for these clients, the company said in its announcement, is the nations where it is no longer going to be able to offer its services “face comprehensive sanctions or are restricting according to our policy”.

In its email announcing this latest news, Hostinger emphasized that it is committed to operating its business under the highest ethical and legal standards at all times, with the implication it had no choice but to make the changes in its operating client structures.

In addition to sending the email describing the changes, Hostinger also updated its online terms of services and policies. On a page under its “About Hostinger” section entitled, “Are Hostinger Services Available for Purchase in Every Country?”, it now includes the following caveats about where Hostinger can support clients going forward:

“Please note that certain exceptions apply:

• • Due to international regulations, services are not available to the following countries: Belarus, Cuba, Iraq, Iran, DPRK (North Korea), the Russian Federation (including occupied Ukrainian territories), Syria and Venezuela
  • To prevent misuse, some countries may be flagged as high-risk, requiring manual verification for domain registrations or other purchases
  • Additional verification or restrictions may apply to services purchased from specific countries as mandated by international authorities

"We strive to make our services available to as many locations as possible while adhering to international laws.”

The countries where services are not available are all subject to various trade sanctions from the United States.

Though information is not available on the number of accounts Hostinger is shutting down in Venezuela, in Cuba there were a minimum of 63 separate accounts the company was supporting there as of last month, according to independent host tracking information from Built With and other entities. Among those was the well-known Hotel Nacional de Cuba, which handles bookings via its Hostinger-hosted website and will now be scrambling to reestablish it elsewhere.

Though the United States has not publicly acknowledged Hostinger’s decision, it is believed Hostinger was forced to pull back the list of countries it would be supporting based on threats from the U.S. Department of Commerce’s Bureau of Industry and Security (BIS), and its affiliated agency, the Office of Foreign Assets Control (OFAC). BIS and OFAC coordinate sanctions management, which can include restrictions on movement of money through the global U.S. dollar-dominated money management system, along with freezing of assets, restriction of trade, and travel restrictions involving visas.

It is not known if Hostinger was fined by the United States for having supported countries like Venezuela and Cuba in the past despite the sanctions.

Hostinger is far from alone from being subject to international sanctions by the U.S. Treasury’s OFAC organization, despite not committing any crimes in its own country. Another recent example of a major enterprise which exists outside the United States’ official legal jurisdiction, but which was fined and ordered to shut down certain types of transactions with entities the U.S. had sanctioned is EFG International AG.  EFG is a Switzerland-based bank which was fined about $3.7 million for processing 873 securities transactions in violation of U.S. rules regulating Cuban asset controls; the American Kingpin Act, which covers individuals and organizations involved in narcotics trafficking; and Presidential Executive Order 14024, which relates to restrictions on Venezuela.

The only thing EFG appears to have done wrong was to process U.S. dollars in the handling of these transactions. That left it open to be ordered to pay what amounts to a ransom demand from the United States. If EFG had chosen not to pay its fine, the United States would have taken steps to block almost all business the Swiss bank conducts with just about any entity in the world. And it would all be because the United States controls the world’s most dominant currency and the banking systems which connect with it.

The reason the United States can get away with this power overreach is that the U.S. dollar, at least as of 2022, was used in some way or another in over 90% of the world’s financial transactions. The dollar also happens to be globally the most widely held reserve currency, accounting for 59% of all foreign exchange reserves. Every time these dollars are spent or exchanged, either between trading partners using dollars on both sides or when only one side of the transaction is in dollars, that involves the international financial system which the dollar depends on.  And since the U.S. has overarching authority over any dollar-based transaction, that allows the United States to demand compliance with whatever sanctions it chooses to dictate on any business entity or government, almost anywhere in the world.

Because of that power, it has become easy for the U.S. to assert its dollar-based sovereignty on countries like Venezuela, which used to sell its oil in vast quantities to American oil companies like Chevron, as well as countries like Iran, a nation where it has not traded with in any substantial amounts for years, all via sanctions on the countries, corporations, and individuals the U.S. wished to manipulate by freezing assets, blocking dollar transactions, or disallowing visas for travel.

It is a unique form of power which transcends normal treaties, international alliances, or contract disputes.

Dismantling that uniquely American power to use sanctions to influence behavior at will, is one reason why an organization like BRICS, which now includes Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, is moving rapidly to distance itself from using the dollar.

The other principal driver for escaping the dollar transaction system is that, for every transaction which involves the dollar even in a small way, the U.S. “takes its cut” of the transactions.

Together, the expanded BRICs group accounts for around 30% of the world’s total trade and 40% of its population. The nations within this group, which includes countries like Iran and Russia which are often at odds with the United States, and China, the number two economic powerhouse in the world, have a vested interest in separating themselves from the United States’ sanctions “power” so they can operate freely as governmental institutions and without fear they might one day find their trade put on hold and assets frozen based on the political positions – and sometimes just whims – of the individual currently in the White House.

To that end, just in the last two years almost every single pair of nations in the BRICS community set up financial exchange systems which depend solely on the currencies of the trading partners to settle trade transactions, rather than having to go through the U.S. dollar as an intermediate step. Brazil and China took one of the bigger initial steps to enable this, when they announced a new financial trading solution in early April 2023 which was intended to replace past systems with a new one solely using the Chinese yuan at its core. That was swiftly followed by commitments made later that same month that the BRICS’ own New Development Bank, a multilateral lending institution similar in concept to The World Bank but regulated by the BRICS nations as opposed to heavy influence by the U.S. on the Washington-based World Bank, set a goal to transact 30% of its loans in local currencies rather than ever touching the dollar.

Those were followed soon after by India and oil supply partners from Russia, Saudi Arabia, and the United Arab Emirates which priced and paid for their transactions separate from the dollar financial network.

With those as a model, many of the bigger trade deals between any of the BRICS members or the countries they normally do business with have been handled as much as possible using the same “local currency” approach.

BRICS has in the last several years also held workshops on “de-dollarization” of their economies. There have also been numerous discussions on the possibility of launching a separate common currency to be used by the BRICS members for all financial transactions, but no formal plan to launch that has surfaced yet.

Still, with the United States continuing to abuse its global fiscal power in ways such as with relatively tiny Hostinger and against entire countries like Cuba, just because the U.S. does not agree with their political policies, most economists expect BRICS to move more rapidly in the next few years to distance themselves as completely as possible from the dollar.

It also does not help the U.S. case to see it abusing its unique sanctions power to threaten and intimidate independent entities such as the International Criminal Court (ICC) just in the last two weeks, just to get its way.

After early reports emerged that Israeli Prime Minister Benjamin Netanyahu and others within his administration might soon be charged with crimes against humanity including genocide in its slaughter of the Palestinians in Gaza, and arrest warrants issued for Netanyahu and others in fascist Israel, on 13 Republican members of the U.S. Senate sent an angry letter on April 24 to ICC Chief Prosecutor Karim A. A. Khan demanding he back off. Citing grounds those Senators arrived at on their own that “Such actions are illegitimate and lack a legal basis”, the Senators demanded the chief prosecutor to stand down.

The Senators also argued that, “By issuing warrants, [the prosecutor] would be calling into question the legitimacy of Israel’s laws, legal system, and democratic form of government.”

While it is one thing for a group of Senators to claim their opinions are more reasoned and valued than those of the members of the ICC, more serious in this letter was the threat which followed. The Senators declared that the rumored action of serving Netanyahu and his ministers with arrest warrants for war crimes were “carried out, [those actions] will result in severe sanctions against [Khan] and [his] institution.”

The most chilling part of the letter was its last paragraph:

“The United States will not tolerate politicized attacks by the ICC on our allies. Target Israel and we will target you. If you move forward with the measures indicated in the report, we will move to end all American support for the ICC, sanction your employees and associates, and bar you and your families from the United States. You have been warned.”

The letter was signed by Republican Minority Leader Mitch McConnell, and Republican Senators Tom Cotton, Marsha Blackburn, Katie Boyd Britt, Ted Budd, Kevin Cramer, Ted Cruz, Bill Hagerty, Pete Ricketts, Marco Rubio, Rick Scott, and Tim Scott.

Those sanctions would imperil the fiscal security of everyone associated with the ICC, and paralyze their ability to carry out the important work of the Court.

Puppet Joe Biden’s spokesperson’s issued their own similar warnings for the ICC to stand down or risk sanctions or other consequences.

Khan responded soon after by notifying the group of Senators that threatening the Court was itself a crime. He also asserted that his Court did have jurisdiction and has no intention of being deflected in its mission to investigate the war between Israel and Hamas, and to determine who may be liable for the most severe of war crimes.

Though the interchange may be telling, the issue for the moment is to see how the Senators so easily reached across the Atlantic Ocean to The Hague, in the Netherlands, where the International Criminal Court is located, using sanctions as their weapon of choice.

It is this abuse of power which is causing so many nations to find whatever means possible to avoid using the dollar and weaken its power. They believe that the U.S. abuse of sanctions power such as the Senators threatened against the ICC Chief Prosecutor, and against tiny companies such as Hostinger, which just felt the shockwave of American sanctions threats unless they stopped their legal operations working with seven different countries and hundreds of clients in all, must soon come to an end.