US imposes sanctions on Russia over data hack and bid to disrupt election 

The Biden administration imposed a series of sanctions on Russia, including restrictions on buying new sovereign debt, in retaliation for alleged misconduct related to the SolarWinds hack and efforts to disrupt the US election.

The new measures sanction 32 entities and individuals, including government and intelligence officials, and six Russian companies that provide support to the Russian government’s hacking operations. The US is also expelling 10 Russian diplomats working in Washington, including some intelligence officers.

The administration also is barring US financial institutions from participating in the primary market for new debt issued by the Russian central bank, Finance Ministry and sovereign wealth fun.

Russian bonds fell and the ruble dropped the most since December on the news.

“What President Biden is going to announce today, we believe, are proportionate measures to defend American interests in response to harmful Russian actions, including cyber intrusions and election interference,” National Security Advisor Jake Sullivan told CNN early yesterday. “His goal is to provide a significant and credible response but not to escalate the situation.”

The sanctions reflect a bid by the US to balance the desire to punish the Kremlin for past misdeeds but also to limit the further worsening of the relationship, especially as tensions grow over a Russian military buildup near Ukraine.

The latest moves come just two days after President Joe Biden warned Vladimir Putin the US would defend its interests but also offered the possibility of a summit meeting in the coming months, drawing a cautiously positive response from Moscow.

Restrictions blocking US investors from buying ruble-denominated Russian government debt have long been seen as the “nuclear option” in financial markets, where the bonds, known as OFZs, have been a popular investment. Foreigners now hold about a fifth of that debt, worth roughly $37bn (€31bn).

Russia’s 10-year local bonds fell the most since March 2020 in early trading in Moscow, before paring that decline.

Kremlin spokesman Dmitry Peskov said new sanctions “wouldn’t facilitate” the planned summit but stopped short of saying they would derail it. He said Russia would reciprocate for any new limits but declined to comment on whether Mr Biden warned Mr Putin about impending measures in the call Tuesday.

Though they hit the market, debt restrictions aren’t expected to significantly hamper the Russian government’s ability to finance itself, since state banks can take up much of the slack, analysts said.

Still, limits on debt mark a serious escalation from a political standpoint and are likely to abort the planned presidential summit in the immediate future, said Fyodor Lukyanov, head of the Council on Foreign and Defence Policy, which advises the Kremlin.

“There is a desire to meet but the situation has severely deteriorated,” Mr Lukyanov said.

Mr Putin may respond by ratcheting up tensions over Ukraine with continued massing of troops on the border, setting back hopes of an end to the crisis, according to the analyst. “When it will reach an extremely dangerous point, that’s when they will meet to avoid the worst-case scenario,” he said.

In a potentially conciliatory gesture, the US this week dropped plans to send two warships into the Black Sea after Russia warned the move would be “extremely provocative.” Kremlin spokesman Mr Peskov said it would be “premature” to speak of de-escalation of tensions with Ukraine.

The US has been threatening to impose additional restrictions on Russia for months to punish the Kremlin for a litany of transgressions. A US intelligence community assessment concluded that Mr Putin and the Russian government directed an effort to influence the 2020 election. Some of the planned measures are aimed at outlets controlled by Russian intelligence services and blamed for sowing disinformation during the 2020 campaign, according to one of the people.

The sanctions would follow a review ordered by Mr Biden into four key areas concerning Russia: interference in the 2020 election, reports of Russian bounties on US soldiers in Afghanistan, the SolarWinds attack and the poisoning of Russian opposition figure Alexey Navalny
. Russia has repeatedly rejected accusations that it meddles in elections, poisons its critics or offered to pay bounties for the killing of American troops.

Those facing the next round of sanctions include individuals and entities blamed by the US for enabling a Kremlin-linked troll farm that co-ordinated social media posts in an effort to help Donald Trump’s campaign in 2016.

Actions in response to the SolarWinds cyber activity will target entities linked to Russian security services, according to one of the people. The US is also poised to name the Russian Foreign Intelligence Service as the perpetrator of the campaign, the person said.

Hackers compromised software by US-based SolarWinds Corp, breaching nine government agencies before it was discovered.

​​​​​​​

Online Editors