Report

U.S. Slaps Wide-Ranging Sanctions on Moscow—but Stops Short of Killer Blow

The Biden administration takes a novel, broad-brush approach to Russia’s nefarious activity.

By , a national security and intelligence reporter at Foreign Policy.
A view of a ruby star atop one of the Kremlin's towers in downtown Moscow on Dec. 9, 2019.
A view of a ruby star atop one of the Kremlin's towers in downtown Moscow on Dec. 9, 2019. Dimitar Dilkoff/AFP via Getty Images

The Biden administration announced a sweeping package of sanctions on Russia on Thursday, including further restrictions on Moscow’s ability to tap capital markets and fresh designations on companies that support Russian cyberattacks overseas. The new measures, the culmination of a broad review of nefarious Russian activity that U.S. President Joe Biden launched his first day in office, come after Russian Foreign Minister Sergey Lavrov recently warned that relations between Moscow and Washington have “hit the bottom.”

In its review, the administration flagged several areas of Russian malfeasance, including interference in U.S. elections, cyberattacks on U.S. federal agencies and corporate entities, and the poisoning and imprisonment of Alexey Navalny, a leading Russian opposition figure, among others. The new measures include the expulsion of 10 diplomats and intelligence officers from the Russian Embassy in Washington and sanctions on six technology companies that provide support to Russia’s foreign intelligence service, which U.S. cybersecurity agencies said on Thursday was behind last year’s SolarWinds hack, a wide-ranging intrusion of at least nine federal agencies and dozens of private sector companies. 

“This is the start of a new U.S. campaign against Russian malign behavior,” U.S. Treasury Secretary Janet Yellen said in a statement

The Biden administration announced a sweeping package of sanctions on Russia on Thursday, including further restrictions on Moscow’s ability to tap capital markets and fresh designations on companies that support Russian cyberattacks overseas. The new measures, the culmination of a broad review of nefarious Russian activity that U.S. President Joe Biden launched his first day in office, come after Russian Foreign Minister Sergey Lavrov recently warned that relations between Moscow and Washington have “hit the bottom.”

In its review, the administration flagged several areas of Russian malfeasance, including interference in U.S. elections, cyberattacks on U.S. federal agencies and corporate entities, and the poisoning and imprisonment of Alexey Navalny, a leading Russian opposition figure, among others. The new measures include the expulsion of 10 diplomats and intelligence officers from the Russian Embassy in Washington and sanctions on six technology companies that provide support to Russia’s foreign intelligence service, which U.S. cybersecurity agencies said on Thursday was behind last year’s SolarWinds hack, a wide-ranging intrusion of at least nine federal agencies and dozens of private sector companies. 

“This is the start of a new U.S. campaign against Russian malign behavior,” U.S. Treasury Secretary Janet Yellen said in a statement

Russian Foreign Ministry spokesperson Maria Zakharova accused the Biden administration of trying to destroy relations between the two countries at a briefing on Thursday, according to Ria Novosti, and said Russia was preparing its response. The Kremlin has denied allegations that it was behind SolarWinds or has sought to influence U.S. elections.

The new measures, couched in an expansive executive order that lays the legal groundwork for further sanctions on a wide range of Russian activities, are less than what some in the United States had hoped for (and some in Russia feared) but leave the door open to a sharp increase in U.S. pressure. 

The additional steps to choke off Russia’s ability to raise money were seen as particularly timid. The Biden administration did ban U.S. financial institutions and entities from buying ruble-denominated Russian sovereign debt, which is a step more than the Trump administration took. But it stopped short of closing the taps entirely because it will still allow—for now—U.S. banks to trade in Russian debt in the secondary market, which is what they mostly do already. So the new sanctions are hardly a body blow to the finances of Russian President Vladimir Putin.

“The vast majority of all dealing is the buying of bonds off of other people,” said Josh Rudolph, an expert on malign finance at the Alliance for Securing Democracy who worked on Russia sanctions at the National Security Council under both Barack Obama and Donald Trump. As implemented, the new sanctions will have “very little practical impact,” he said. Russian markets slumped in anticipation of the announcement but rallied once it became known that the United States had held back from the “nuclear option” of prohibiting all trade in Russian bonds. 

But Thursday’s actions weren’t all theater—and may pose a longer-term threat to Russia if it continues its behavior, thanks to the more expansive sanctions authorities authorized under Biden’s executive order.

“Issuing this new executive order is a really positive step in the administration’s ability to deter future actions,” said Andrea Kendall-Taylor, who served as the deputy national intelligence officer for Russia and Eurasia at the National Intelligence Council until 2018 and briefly served as senior director for Russia and Central Asia on Biden’s National Security Council. “It allows them to very clearly articulate their priorities for Russia and then expands the tools and capabilities that they have to take future actions.”

The announcement included a particular focus on Russian interference in U.S. elections, including sanctions on 32 individuals and entities suspected of involvement in election interference in the 2020 U.S. presidential election. The Treasury Department also made clear that Konstantin Kilimnik—a known Russian intelligence officer who worked closely with Paul Manafort when the latter was chairman of Trump’s 2016 presidential campaign—had shared sensitive information on polling data and campaign strategy that he received from Manafort with Russian spies. Previous U.S. inquiries, including the investigation by special counsel Robert Mueller, hadn’t explicitly connected those dots.

The new measures also shed further light on Russia’s overseas intelligence activity, including its network of websites and foundations that, according to the Treasury Department, are controlled by Russian security services and are used to spread false information. “It’s like information to fight disinformation,” Rudolph said. Individuals and entities associated with Putin ally Yevgeny Prigozhin, who is reported to have bankrolled Russian election interference and mercenary activity in dozens of countries, were also hit with further sanctions. 

Notably absent from the measures unveiled on Thursday was any concrete response to allegations that Russian intelligence officials paid bounties to militants in Afghanistan to target U.S. forces. On a call with reporters, a senior Biden administration official appeared to walk back the reports, which sparked an outcry when they first emerged last year during the Trump administration. “The United States intelligence community assesses with low to moderate confidence that Russian intelligence officers sought to encourage Taliban attacks on U.S. and coalition personnel in Afghanistan in 2019 and perhaps earlier,” the senior official said.

Thursday’s response also did not include any further sanctions against the Nord Stream 2 gas pipeline between Russia and Germany, which the United States and allies in Eastern Europe fear would give the Kremlin further leverage over European energy supplies. The executive order did lay the groundwork for future penalties if Russia deliberately disrupts energy supplies to Europe, the Caucasus, or Asia. 

Biden told Putin of the coming sanctions in their call on Tuesday, the senior administration official said. According to a readout of the call, Biden and Putin discussed the need to hold further discussions on arms control. Biden proposed the two leaders hold a summit in a third country in coming months and emphasized the United States’ commitment to the sovereignty and territorial integrity of Ukraine, as Russian troops have been massing close to the country’s border. 

The “Biden administration has framed the U.S.-Russia relationship with some skill: leaving room for cooperation and even a meeting with Putin. But on our terms: pushing back rather than reaching for vacuous progress,” said Daniel Fried, a retired career diplomat who previously served as the State Department’s coordinator for sanctions policy. “But Putin isn’t done with his aggression abroad or repression at home. So these sanctions won’t be the last.”

Amy Mackinnon is a national security and intelligence reporter at Foreign Policy. Twitter: @ak_mack

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