U.S. Imposes Stiff New Sanctions on Russia

Following years of wrist slaps under President Donald J. Trump, the new measures are designed to have a noticeable impact on the Russian economy.,

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WASHINGTON — The Biden administration on Thursday announced tough new sanctions on Russia in response to the Kremlin’s interference in American elections and its sprawling hacking operation that breached vital government agencies and private companies.

The United States government said it sanctioned 32 entities and individuals for disinformation efforts and for carrying out the Russian government’s interference in the 2020 presidential election. The country also joined with European partners to sanction eight people and entities associated with Russia’s occupation in Crimea.

In an executive order, President Biden directed the Treasury to prohibit U.S. financial institutions from participation in the primary market for “ruble or non-ruble denominated bonds” issued after June 14, 2021.

The order also designates six Russian companies for providing support to the cyberactivities of the Russian intelligence service.

Widely anticipated, the sanctions come amid a large Russian military buildup on the borders of Ukraine and in Crimea, the peninsula that Moscow annexed in 2014.

They comprise what United States officials described as “seen and unseen” steps in response to the hacking, known as SolarWinds; to the C.I.A.’s assessment that Russia offered bounties to kill American troops in Afghanistan; and to Russia’s longstanding effort to interfere in U.S. elections on behalf of Donald J. Trump.

In the SolarWinds breach, Russian government hackers are believed to have infected network-management software used by thousands of government entities and private firms in what officials believe was an intelligence-gathering mission.

The United States on Thursday officially named the Russian Foreign Intelligence Service and several connected entities as being responsible for the SolarWinds breach, saying that American intelligence agencies have “high confidence in its assessment of attribution” of responsibility to Russia.

In an advisory, the United States detailed for private companies specific details about the software vulnerabilities that the Russian intelligence agencies used to hack into the systems of companies and governments.

The United States said Thursday it will expel 10 Russian diplomats, including members of the Russian intelligence service, from the country’s mission in Washington, D.C., as part of an effort to inflict a noticeable impact on the Russian government, its finances and its president, Vladimir V. Putin.

Previous sanctions against Russia have been more narrowly drawn and have largely affected individuals. As such, the Kremlin has largely appeared to absorb or shrug off the penalties without changing its behavior.

In early trading in Moscow before the announcement, the ruble’s exchange rate to the dollar dropped about 1 percent, reflecting nervousness over how the sanctions would play out. The main stock index, Mosbirzhi, also fell just over 1 percent.

The fallout so far reflects years of Russian government policy to harden its financial defenses against sanctions and low oil prices by running budget surpluses and salting away billions of dollars in sovereign wealth funds.

Balanced budgets have been a core economic policy principle of Mr. Putin, who came to power more than 20 years ago during a post-Soviet debt crisis that he saw as humiliating for Russia and vowed not to repeat.

Still, analysts say strains from the past year of pandemic and the drop in the global price of oil, a major Russian export commodity, have left Russia more vulnerable to sanctions targeting sovereign debt. By the first quarter of this year, however, a recovery in oil prices had helped return the federal budget to surplus.

ImageAn oil refinery in Omsk, Russia. A  drop in global oil prices leaves Russia more vulnerable to sanctions targeting foreign debt.
An oil refinery in Omsk, Russia. A drop in global oil prices leaves Russia more vulnerable to sanctions targeting foreign debt.Credit…Alexey Malgavko/Reuters

Russia’s total debt issued in rubles rose to 14 trillion rubles, or about $190 billion, by the end of the year, around 80 percent of it held by local investors unlikely to dump it in a panic.

In recent debt auctions last month, the Russian Finance Ministry issued five-year bonds with an interest rate just over 7 percent. The relatively high yields made these bonds popular with foreign investors, though they have been selling down portfolios for weeks in anticipation of possible sanctions, RBC, a Russian business newspaper, reported.

Michael D. Shear reported from Washington, Steven Erlanger from Brussels, and Andrew E. Kramer from Moscow.

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