Biden administration to impose tough economic sanctions on Russia over cyber spying, efforts to influence presidential election

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The Biden administration will announce Thursday the first significant sanctions targeting the Russian economy in several years in order to punish the Kremlin for a cyberespionage campaign against the United States and efforts to influence the presidential election, according to senior U.S. officials.

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The administration will also sanction six Russian companies that support Russian spy services’ cyberhacking operations and expel 10 intelligence officers working under diplomatic cover in the United States.

The measures are an effort to make good on President Biden’s vow to hold Moscow accountable for a series of operations, including the hacking operation commonly known as SolarWinds, which compromised nine federal agencies and about 100 private firms.

“Our view is that no single action that we will take or could take in and of itself could directly alter Russia’s malign behavior,” principal deputy national security adviser Jonathan Finer said. “But this is going to be a process that is going to take place over time, and it will involve a mix of significant pressure and finding ways to work together.”

The announcement of a U.S. response had been repeatedly pushed back, in part because Biden has wanted his team to develop more effective measures, said senior administration officials, who spoke on the condition of anonymity to discuss a sensitive matter.

Biden told Russian President Vladimir Putin in a call on Tuesday that Washington would be taking actions “in the coming days” to defend U.S. national interests, without specifying the exact timing or measures, a senior administration official said. Biden also raised the possibility of a summit with Putin.

As president-elect, Biden had told Putin in January that his administration would be “compelled to respond” to these activities, the official said. “So it should not come as a surprise to the government of Russia that we’re taking these actions.”

[Biden administration planning to sanction Russia for SolarWinds hacks]

The package includes sanctions on all debt Russia issues after June 14, barring U.S. financial institutions from buying government bonds directly from the Russian Central Bank, Russian National Wealth Fund and the Ministry of Finance. The action, experts said, will complicate Moscow’s ability to raise money in the international capital markets.

Under a new order signed by Biden, the administration is reserving the right to broaden the scope of the sovereign debt sanctions if Moscow’s malign activities persist, officials said.

“This action signals that the Biden administration is not going to hold back,” said Edward Fishman, a nonresident senior fellow at the Atlantic Council. “They’re taking significant actions against the Russian economy and putting global markets on notice that Russian sanctions will increase if Russia’s aggressive behavior continues.”

Many commentators have observed that sanctions to date have not materially affected the Kremlin’s risk calculus, and they say that more sanctions are unlikely to do so.

Kremlin spokesman Dmitry Peskov said Thursday that Russia viewed any U.S. sanctions as illegal and would retaliate in kind.

Peskov said sanctions would not be helpful in the lead-up to a proposed summit between Biden and Putin.

“We condemn any sanction aspirations. We believe they are illegal. In any case, the principle of reciprocity applies in this case. Reciprocity will meet our interests in the best possible way,” Peskov said.

European allies and NATO are expected to issue statements of support following the White House’s announcement, though they are not planning to impose fresh sanctions of their own, officials said.

The measures will be accompanied by what the White House hopes will be a strong message to Moscow to convey U.S. displeasure, but without cutting off diplomacy, said a second official. The message, the official said, is: “We are willing to talk about certain things, but we can’t have a strong relationship while you continue to take these malign steps.”

One action that will not be tied to the sanctions is Russia’s reported effort to put bounties on the heads of U.S. troops in Afghanistan in 2019, officials said. U.S. intelligence agencies had low to moderate confidence that officers with the Russian military spy agency, the GRU, sought to encourage Taliban attacks against U.S. and coalition personnel — not strong enough to justify the imposition of sanctions, officials said.

“But we do believe that this information puts the burden on the Russian government to explain its action and takes steps to address this disturbing pattern of behavior,” the senior administration official said. “We expressed those concerns directly to the government of Russia.”

The new executive order will be focused on Russian activities outside its borders and “is intended to signal to the Russian government that its destabilizing behavior is unacceptable and that the United States will impose economically impactful costs if it continues or escalates,” the senior official said.

[On Ukraine’s doorstep, Russia boosts military and sends message of regional clout to Biden]

It will include a range of actions that can be sanctioned, including cyberattacks, election interference and foreign corruption.

“It’s good to clearly message our priorities to Russia,” said Andrea Kendall-Taylor, a senior fellow at the Center for a New American Security. “By packaging a response to several things at once, the administration can get off the back foot and move on its agenda. What we don’t want is to always be in response mode to Russia.”

The sanctions and expulsions come four months after revelations that Russian cyberspies had compromised major federal agencies, including the Treasury and State departments and a number of private-sector companies. The hacks were enabled by corrupted software updates from the Texas-based company SolarWinds. The Washington Post first reported that the Russian foreign intelligence service SVR was believed to be behind the intrusions. The SolarWinds link was first disclosed by a private cyber firm, FireEye.

The White House officially named the SVR, also known by the moniker Cozy Bear, as the perpetrator behind the spy campaign. The intelligence community has high confidence in that assessment, officials said.

Biden’s repeated vows to punish the party responsible raised expectations the administration would take action — despite the fact that the intrusions apparently fell into the category of political espionage. All countries engage in such espionage.

But senior administration officials have said that Russia’s presence in federal networks could give it a toehold to undertake more disruptive actions. And some policy experts have said that should be grounds for punishment. Others disagreed, saying the operation did not reach disruptive levels.

The six cyber firms to be sanctioned have facilitated Russian government hacking in some way, from providing expertise to developing tools that allow the spy agencies to gain access to targeted networks, the officials said. Some, but not all, are linked to the SolarWinds campaign, they said.

Part of the response, too, will be a fuller description of the spy agency and firms that carried out the campaign, said a second administration official. “The goal overall is to degrade the Russian intelligence services’ cyber programs” in part through disclosing their tradecraft, the official said.

The U.S. intelligence community last month issued a report concluding that Putin sought to sway the 2020 election in President Donald Trump’s favor by spreading misleading information about Biden.

In response, the Treasury Department is sanctioning a total of 32 entities and individuals involved in the influence campaign as well as other acts of disinformation, the White House said.

Russian spies have been expelled from the United States before. The Obama administration sent home 35 intelligence operatives in December 2016 in retaliation for Kremlin interference in that year’s presidential election. The Trump administration in 2018 ordered out 60 Russian officers, including a dozen identified as spies, in response to the poisoning of former Russian spy Sergei Skripal in Britain. That action was taken in coordination with European allies.

The Kremlin has traditionally responded in kind.

The United States first imposed significant economic sanctions on Russia in 2014 in response to Moscow’s annexation of Crimea and its military support of separatists in eastern Ukraine. The Obama administration placed sanctions on Russian banks and energy firms, which were strengthened over the years.

Though those sanctions and plunging oil prices squeezed the Russian economy for a while, Moscow has been able to adapt by cutting public spending, replacing imports with domestic goods, and relying on gas and oil proceeds. As it became clear the Trump administration would not impose any meaningful new economic sanctions, foreign investors were emboldened to reenter the Russian market, experts say.

The new sovereign debt sanctions, affecting ruble and non-ruble bonds, are noteworthy, analysts said. “Russia will know it is shut out for the future from the international debt market,” said Anders Aslund, an Atlantic Council senior fellow.

To underscore the importance of working with foreign partners, the administration will be inviting Britain, France, Denmark and Estonia to join an annual Pentagon cyber exercise. It will also launch a training program for foreign policymakers to learn how to publicly attribute cyber intrusions, officials said.

Robyn Dixon in Moscow contributed to this report.

© Natalia Kolesnikova/AFP/Getty Images The Biden administration is imposing fresh sanctions on Russia in response to a cyber espionage campaign and attempts to influence the presidential election.

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