Hack Attack Adds to Putin Mystique Even if Russia Faces Pain
Vladimir Putin, President of Russia. (Photographer: Tiffany Hagler-Geard/Bloomberg)

Hack Attack Adds to Putin Mystique Even if Russia Faces Pain

The storm over a cyber attack on U.S. government agencies only helps Russian President Vladimir Putin’s image at home as a strong leader unafraid to confront the former Cold War enemy, even as the Kremlin denies involvement amid fears of a backlash when Joe Biden enters the White House.

“Inside the country it bolsters the authorities’ prestige,” said Andrey Kortunov, head of the Kremlin-founded Russian International Affairs Council. “Outside Russia, it only deepens mistrust and this creates risks” by stoking hostility in Washington and other Western capitals, he said.

Secretary of State Michael Pompeo became the highest ranking U.S. official to link Moscow to the attacks, saying in a radio interview on Friday that Putin “remains a real risk to those of us who love freedom.”

“This was a very significant effort, and I think it’s the case that now we can say pretty clearly that it was the Russians that engaged in this activity,” Pompeo said. President Donald Trump has yet to comment publicly on the hacks.

Those risks became apparent Friday when Russia’s ruble took a hit after rallying for two months, slumping as much as 1.4% amid renewed concerns over sanctions. After years of U.S. and European sanctions, however, Russia’s grown more resistant to pressure and there may be little left for Washington to penalize without disrupting global energy and mineral resources markets where Russia is an important player.

Putin himself brushes off any accusations he’s behind hacking campaigns. When a local rock-star-turned-journalist, Sergey Shnurov, asked tongue-in-cheek at the president’s annual news conference Thursday why Russian hackers couldn’t repeat their 2016 operation to help get Trump re-elected, Putin dismissed the question with a smile as a “provocation.”

‘Revenge’ Campaign

The Kremlin leader also accused U.S. intelligence of involvement in a recent leak about his family’s finances, calling it part of a “revenge” campaign against Russia.

The fallout from the cyber attack on Texas-based SolarWinds Corp., which spread to its customers including the State, Treasury and Commerce departments and many Fortune 500 companies, may well unleash a new round of pressure on Russia, said three people close to the Kremlin who declined to be identified discussing internal matters.

While Russia didn’t expect U.S. policy to soften under Biden, each new accusation weakens prospects for normalization because the president-elect will be unable to start his administration on a fresh page, said one of the people.

Biden is taking office following four years of steadily worsening ties after U.S. intelligence agencies concluded that Russia intervened in the 2016 election campaign to help elect Trump. The Kremlin denies the accusation.

Few in Moscow expected a thaw from the new president, though there was at least an expectation of finding common ground on some issues.

Unlike Trump, Biden has promised to extend the New START treaty that expires in February and is the last remaining nuclear arms agreement between Russia and the U.S.

He has also pledged to return to the 2015 deal limiting Iran’s nuclear program that Trump abandoned, while calling for some changes to the accord.

The SolarWinds scandal “is an effort to inject more negativity and increase anti-Russian rhetoric to sabotage Biden’s few positive initiatives,” said Alexander Dynkin, president of the Institute of World Economy and International Relations, which advises the Kremlin. “These are dangerous games.”

Deter Attacks

Biden hasn’t threatened specific retaliatory measures yet, though he warned Thursday that his administration will move to deter cyber attacks from adversaries by “imposing substantial costs on those responsible.”

The latest allegations aren’t as serious as in 2016, when Russian military intelligence was accused of targeting Democratic candidate Hillary Clinton with a hack-and-leak operation, because they weren’t an attempt to interfere in U.S. politics, said Vladimir Frolov, a former Russian diplomat who’s now a foreign policy analyst in Moscow.

“This is classic espionage. They’re the ones to blame, they should have protected their network better,” Frolov said. “Maybe there’ll be some diplomats expelled, but I doubt much more.”

Putin underlined the rising competition between major powers in the virtual arena at a meeting of his Security Council on Friday, saying it would focus on “neutralizing threats to our country’s national security associated with the development of artificial intelligence technologies for military purposes.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.