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U.S. Treasury Eases License Sanctions On Russia's FSB

  • Mike Eckel
  • Carl Schreck

The FSB's Headquarters on Lubyanka Square in Moscow (file photo).

The FSB's Headquarters on Lubyanka Square in Moscow (file photo).

WASHINGTON -- The U.S. Treasury Department has eased some financial sanctions imposed on Russia's lead domestic security agency, a move experts said appeared to be aimed at helping U.S. technology companies.

The directive, issued on February 2 by the department's Office of Foreign Assets Control, comes as the agency, the Federal Security Service (FSB), is under close scrutiny for its alleged interference in last year’s U.S. presidential election.

Speaking to reporters the day the directive was published, White House spokesman Sean Spicer denied the order amounted to an easing of sanctions. He said it was a "carve-out," which is common practice for the Treasury Department when clarifying the implementation of sanctions.

It’s a "regular course of action that Treasury does quite often when there are sanctions imposed," Spicer said.

U.S. intelligence agencies concluded in a report last month that Moscow sought to influence the election won by Republican Donald Trump by breaching computer servers and political-party e-mail accounts, as well as through propaganda.

Eight days prior to the report's release, then-President Barack Obama announced new sanctions against the agency, along with Russia's military intelligence agency (GRU) and several related entities, in retaliation for the alleged hacking.

But experts said that Obama's executive order, announced on December 29, was overly broad and hampered the ability of technology companies to do business in Russia because the FSB, in addition to conducting counterespionage and surveillance, also oversees licensing for some technology products that utilize encryption tools, like mobile phones or laptops.

The new Treasury order authorizes IT companies looking to import, distribute, or use certain information technologies in Russia to pay up to $5,000 in a calendar year for licenses that might be issued by the FSB.

'Preventing A De Facto Embargo'

Sam Cutler, a sanctions expert with the New York-based consultancy Horizon Client Access, told RFE/RL the move appeared aimed mainly at aiding U.S. companies.

The FSB's "designation inadvertently caused compliance problems for U.S. companies exporting certain goods to Russia," said Erich Ferrari, a Washington-based lawyer who specializes in Treasury sanctions. "This general license was necessary to prevent a de facto embargo of certain goods reaching non-designated parties in Russia -- which is the majority of Russia."

The directive also explicitly states that it "does not authorize the exportation, re-exportation, or provision of goods or technology to or on behalf" of the FSB.

Adam Smith, who was a senior official with the Office of Foreign Assets Control until August 2015, said there were at least three other examples in the past 18 months of sanctions being rolled out.

"But then the collateral consequences were significant, or even dire potentially, so then they pared them back, and that hopefully allows for greater targeting of nefarious activity," he said.

Still, the decision comes at a time of heightened scrutiny about the FSB, the GRU, and other Russian security agencies and their purported activities in the United States.

The new administration also faces persistent concerns over Trump's past statements that he wants to improve relations with Moscow that were badly strained over the conflicts in Ukraine and Syria.

Kyiv, in particular, fears that a warmer relationship between Trump and the Kremlin will result in the lifting of U.S. sanctions imposed on Russia for its annexation of Ukraine's Crimean Peninsula in 2014.

However, the February 2 order also explicitly stipulates that the exemption does not apply to products being shipped to the "Crimea region of Ukraine."

In Moscow, there was no immediate official response to the announcement, but Nikolai Kovalyov, a lawmaker and former FSB director, said it was an indication that the Trump administration wanted to work more closely with Russia on fighting terrorism and other matters.

"This shows that actual joint work on establishing an antiterrorism coalition is about to begin," Kovalyov was quoted by TASS as saying. "This is the first step on the way leading to cooperation in the war on terror."

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