United States imposes sanctions on Russia over cyber attack, 2020 election interference allegations

The US measures blacklisted Russian companies, expelled Russian diplomats and placed limits on the Russian sovereign debt market.

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Washington: The United States on Thursday imposed a broad array of sanctions on Russia to punish it for alleged interference in the 2020 U.S. election, cyber-hacking, bullying Ukraine and other "malign" acts.

The measures blacklisted Russian companies, expelled Russian diplomats and placed limits on the Russian sovereign debt market. More penalties could come, although Washington did not want to escalate matters, the Biden administration said.

Moscow reacted angrily, saying this dangerously raised the temperature between the two countries. It summoned the U.S. ambassador for what it said would be a tough conversation.

Among the actions, President Joe Biden issue an executive order authorizing the U.S. government to sanction any sector of the Russian economy and used it to restrict Russia`s ability to issue sovereign debt to punish Moscow for interfering in the 2020 U.S. election, an allegation Russia denies.

Biden barred U.S. financial institutions from taking part in the primary market for rouble-denominated Russian sovereign bonds from June 14. U.S. banks have been barred from taking part in the primary market for non-rouble sovereign bonds since 2019.

The U.S. Treasury also blacklisted 32 entities and individuals which it said had carried out Russian government-directed attempts to influence the 2020 U.S. presidential election and other "acts of disinformation and interference".

In concert with the European Union, Britain, Australia and Canada, the Treasury also sanctioned eight individuals associated with Russia`s ongoing occupation and repression in Crimea, which Russia annexed from Ukraine in 2014.

Russia`s foreign ministry spokeswoman said Moscow would respond to the sanctions in the near future.

Russia denies meddling in U.S. elections and orchestrating a cyber hack that used U.S. tech company SolarWinds Corp SWI.N to penetrate U.S. government networks. It also denies using a nerve agent to poison Kremlin critic Alexei Navalny.

It has brushed off allegations that it put bounties on U.S. soldiers in Afghanistan.

"We have repeatedly warned the United States about the consequences of their hostile steps which dangerously raise the temperature of confrontation between our two countries," Foreign Ministry spokeswoman Maria Zakharova told reporters.

She said that although Biden had spoken to President Vladimir Putin about his interest in normalizing relations, his administration`s actions testified to the opposite.

The ministry had summoned the U.S. ambassador, she said, adding: "It`s not going to be a pleasant meeting for him."

The White House said it was expelling 10 Russian diplomats in Washington D.C., including representatives of the Russian intelligence services and for the first time, formally named the Russian Foreign Intelligence Service (SVR) as the perpetrator of the SolarWinds Corp hack.

The U.S. government plans a new executive order to help strengthen its cybersecurity, a U.S. official told reporters, suggesting it could include such elements as encryption and multifactor authentication.

U.S. intelligence agencies have "low to moderate" confidence in their assessment that Russia offered bounties to Taliban-linked militants to kill U.S. soldiers in Afghanistan, a senior U.S. official told reporters in a conference call.

"Given the sensitivity of this matter, which involves the safety and well-being of our forces, it is being handled through diplomatic, military and intelligence channels," the White House said. U.S. officials some of their response to Russian actions would be "unseen," a hint they would involve U.S. spy agencies.

Biden`s national security adviser, Jake Sullivan, described the sanctions as "proportionate measures to defend American interests in response to harmful Russian actions".

"His (Biden`s) goal is to provide a significant and credible response but not to escalate the situation," Sullivan told CNN. 

Senate Intelligence Committee Chairman Mark Warner said the sanctions were a "good first step" to showing that such actions were not acceptable.

"The scale and scope of this hack are beyond any that we’ve seen before, and (the sanctions) should make clear that we will hold Russia and other adversaries accountable for committing this kind of malicious cyber activity against American targets," he said in a statement.

The actions initially sent the Russian rouble down more than 2% against the dollar and to a more than five-month low against the euro before clawing back some losses.

Timothy Ash of Bluebay Asset Management said the rouble looked like it was enjoying a relief rally.

"Market rallying as they are realizing this is pretty soft in reality. No oligarchs. U.S. institutions cannot buy Russian sovereign debt in primary issuance but can get their Russian bank friends to buy it for them in primary, give them a fee, and then buy it in the secondary," he said.