Microsoft's Russian hacking revelations spur US lawmakers' ire

Microsoft’s declaration that it found and seized bogus web domains created by Russian hackers amplified calls by US lawmakers to pass legislation imposing more sanctions on Vladimir Putin’s government and his associates.

“This is not something that is in the rear-view mirror,” Senator Mark Warner of Virginia, the top Democrat on the Intelligence Committee, said Tuesday at a hearing on sanctions aimed in part at deterring Russian efforts to interfere in US elections.

The Senate Banking and Foreign Relations Committees held simultaneous hearings where lawmakers of both parties expressed frustration with actions by the Treasury Department and comments by President Donald Trump, who has dismissed Special Counsel Robert Mueller’s probe into Russian meddling in the 2016 campaign as a “witch hunt".

“Our commander in chief continues to undermine” efforts to counter Russia through his comments, Foreign Relations Chairman Bob Corker of Tennessee told administration officials.

New urgency

The previously scheduled hearings took on new urgency after Microsoft’s finding late Monday that a shadowy group with links to Russian military intelligence created domains that mimicked organisations such as the International Republican Institute and Hudson Institute. The intention was to make victims believe they were receiving emails or visiting real sites, according to the technology company.

The groups are conservative bastions but have been at odds at times with Russia or Trump. Russia rejected the accusation that it’s attempting to influence this year’s US midterm elections.

Several senators pushed administration witnesses on whether they would embrace tough new sanctions legislation.

Democratic Senator Bob Menendez of New Jersey told Treasury’s Under Secretary for Terrorism and Financial Intelligence Sigal Mandelker that legislation is moving.

“Congress is going to act. You might as well know that,” he said. Menendez has proposed stiff sanctions along with Senator Lindsey Graham of South Carolina, including on sovereign debt and energy.

Despite Menendez’s prediction that congressional action is a sure thing, it’s not clear yet that lawmakers will act in time to affect the November elections. Senate Majority Leader Mitch McConnell told reporters Tuesday that he’s personally interested in passing new sanctions legislation but that the odds of that happening on the Senate floor in September are slim because of the packed schedule.

A number of bills have been proposed, with the leading one sponsored by Democratic Senator Chris Van Hollen of Maryland and Republican Senator Marco Rubio of Florida. Their measure would impose stiff sanctions if Director of National Intelligence Dan Coats finds Russia is continuing to meddle in US elections.

“It’s pretty clear that Putin hasn’t gotten the message,” Van Hollen said Tuesday. “We just had the Microsoft story today, the Facebook story a few weeks ago. Clearly Russians and Putin think that they can interfere with impunity.”

Menendez and Graham’s bill would impose stiff sanctions on Russia’s energy and financial sectors - including on its sovereign debt - and the penalties wouldn’t be contingent on a finding of additional meddling.

‘Global consequences’

The US Treasury has previously warned about the spillover effects globally of sanctions on sovereign debt, and Mandelker testified Tuesday that there must be an awareness of "what the global consequences would be".

Republican Senator David Perdue of Georgia echoed that warning, saying “if we put sanctions on Russia, there’s a trading partner that gets hit by that as well.”

Menendez and other lawmakers of both parties expressed frustration with Mandelker and Treasury.

Instead of saying what Congress can’t do, “why don’t you tell us what in fact we can do to turn up the pressure on Moscow that we are not,” Menendez said.

Republican Senator John Kennedy of Louisiana, who travelled to Moscow last month with a GOP delegation, also wanted tougher options, asking how Russia’s economy can be “brought to its knees".

“I think Putin owns assets in the US, and I think Treasury knows what they are. I want a discussion on the ramifications of seizing those assets,” he said.

Under questioning, Mandelker said, “I am not aware of any title or deed that would have Putin’s name on it.”

Administration officials defended the sanctions they have put in place, saying they have dented the ruble and badly damaged the value of companies on the sanctions list. Wess Mitchell, the assistant secretary of state for European and Eurasian Affairs, said the administration needed flexibility on any new sanctions, pushing back on bills that would impose automatic penalties on Moscow.

“The pain is starting to have an effect,” Mitchell said, suggesting additional sanctions are on the way from the administration. “We’re willing to take the steps necessary to further penalize Russia’s behavior.”

Russian analysts scoffed at the US clamor for sanctions, including new penalties that Treasury announced Tuesday on the owners of Russian ships alleged to have helped transfer refined petroleum in North Korean vessels in violation of international prohibitions.

“A constant supply of fresh #sanctions has become the new business as usual in US-Russia relations,” Dmitri Trenin, director of the Carnegie Moscow Center, wrote on Twitter. “A small portion has arrived today; more is expected tomorrow. Sanctions will not change the Kremlin’s behaviour or ruin the Russian economy, but they fuel and seal the US-RUS adversity.”

Republican Senator Rand Paul of Kentucky, who has embraced Trump’s argument that it’s best to seek improved relations with Russia, said carrots - such as an agreement that Ukraine and Georgia won’t be brought into NATO - may be a better course. “If we wait for Russia to leave Crimea” before lifting any sanctions, Paul said, we might be waiting “until the end of time".

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