U.S. weighs sanctioning Russia as well as China in cyber attacks

Washington (By Arshad Mohammed, Matt Spetalnick and Mark Hosenball, Reuters) — The United States is considering sanctions against both Russian and Chinese individuals and companies for cyber attacks against U.S. commercial targets, several U.S. officials said on Monday.

The officials, who spoke on condition of anonymity, said no final decision had been made on imposing sanctions, which could strain relations with Russia further and, if they came soon, cast a pall over a state visit by Chinese President Xi Jinping in September.

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The Washington Post first reported the Obama administration was considering sanctioning Chinese targets, possibly within the next few weeks, and said that individuals and firms from other nations could also be targeted. It did not mention Russia.

A move against Chinese entities or individuals before Xi’s trip, the officials said, is possible but unlikely because of the strain it could put on the top-level diplomatic visit, which will include a black-tie state dinner at the White House hosted by President Barack Obama.

“The Chinese government staunchly upholds cyber security, firmly opposes and combats all forms of cyber attacks in accordance with law,” Chinese Embassy spokesman Zhu Haiquan said in a statement.

He said China wants enhanced dialogue and cooperation with  the United States and that “groundless speculation, hyping up or accusation is not helpful to solve the problem.”

The  Russian Embassy did not respond to Reuters requests for comment.

The U.S. government has suffered a series of embarrassing cyber attacks in recent months, including one on the White House Office of Personnel Management (OPM) that potentially provided a treasure trove of data about government employees to foreign spies.

U.S. officials suspect that attack was linked to China, which has denied any involvement in hacking U.S. databases and says it too has been a victim of cyber attacks.

The sanctions Washington is currently considering would not target suspected hackers of government data, but rather foreign citizens and firms believed responsible for cyber attacks on commercial enterprises, one official said.

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If taken, the action would be the administration’s  first use of an executive order signed by Obama in April to crack down on foreign hackers accused of penetrating U.S. computer systems.

The officials declined to name any potential targets, concerned that advance warning would allow them to hide assets.

One U.S. official said that sanctions imposed on individuals or companies would effectively cut them off from using the U.S. financial system, which could be a death-sentence for a serious business venture.

The official also said that entities or individuals from countries other than Russia or China could face sanctions.

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Another U.S. official suggested that a decision on targeting Chinese entities could depend partly on whether diplomatic efforts, such as last week’s visit by White House national security adviser Susan Rice to Beijing last week, produce positive results going forward.

Assistant Secretary of State Daniel Russel visits China next weekend for further talks ahead of Xi’s U.S. trip in the second half of September.

STRAINED U.S.-RUSSIAN RELATIONS

U.S.-Russian relations have been deeply strained in recent years, notably by Russia’s March 2014 annexation of Crimea from Ukraine as well as its continued support for pro-Russian rebels fighting government forces in eastern Ukraine.

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Cyber security was a major issue between China and the United States during the June Strategic and Economic Dialogue that gathers some of the top financial and foreign policy officials in the two governments.

“The United States, as we all know, has sharp disagreements with China over its actions in cyber space,” State Department spokesman Mark Toner told reporters on Monday.

“We have remained deeply concerned about Chinese government-sponsored cyber-enabled theft of confidential business information and proprietary technology from U.S. companies,” he added at his daily briefing.

White House spokesman Josh Earnest declined to confirm the United States was weighing sanctions against Chinese entities, though he said U.S. cyber security concerns were “not a surprise” to Beijing.

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“It would be strategically unwise for us to discuss potential sanctions targets because that would only give the potential targets of sanctions the opportunity to take steps that would allow them to evade those sanctions,” he told reporters aboard Air Force One.

He said an executive order signed by Obama in April provided “an additional tool in the toolbox to confront this particular challenge.”

(Aditional reporting by Julia Edwards and Yeganeh Torbati in Washington.; Writing By Arshad Mohammed; Editing by Sue Horton)