The problem isn’t even where the software is officially based, it can become a problem for individual contributors too.
PGP for example used to be problematic because US exports control on encryption used to forbid exporting systems capable of strong encryption because the US wanted to be able to break it when it’s used by others. Sending the tarball of the PGP software by an american to the soviets at the time would have been considered treason against the US, let alone letting them contribute to it. Heck, sharing 3D printable gun models with a foreign country can probably be considered supplying weapons like they’re real guns. So even if Linux was based in a more neutral country not subject to US sanctions, the sanctions would make it illegal to use or contribute to it anyway.
As much as we’d love to believe in the FOSS utopia that transcends nationality, the reality is we all live in real countries with laws that restrict what we can do. Ultimately the Linux maintainers had to do what’s best for the majority of the community, which mostly lives in NATO countries honoring the sanctions against Russia and China.
I think it is a circular problem.
Another example that comes to mind: the sanctions on Huawei and whether Google would be considered to be supplying software because Android is open-source. At the very least any contributions from Huawei is unlikely to be accepted into AOSP. The EU is also becoming problematic with their whole software origin and quality certifications they’re trying to impose.
This leads to exactly what you said: national forks. In Huawei’s case that’s HarmonyOS.
I think we need to get back to being anonymous online, as if you’re anonymous nobody knows where you’re from and your contributions should be based solely on its merit. The legal framework just isn’t set up for an environment like the Internet that severely blurs the lines between borders and no clear “this company is supplying this company in the enemy country”.
Governments can’t control it, and they really hate it.