A call to Congress: raise the cost of election interference, sanction Russian IT

Photo credits: Open Markets Institute

By Ashley Curtis

WASHINGTON — Russia’s disinformation campaign in the 2016 presidential election was a shock that forced Americans to grapple with the uncomfortable truth of their own vulnerability. Policymakers were caught by surprise. They understood that Russia had a penchant for interfering in its neighbors’ elections — Ukraine and Montenegro are examples — but no one expected the same provocation in Washington.

Congress responded by passing the Countering America’s Adversaries Through Sanctions Act, but intelligence indicates Russia worked to influence the 2018 midterm election as well. On August 2, 2018, the heads of U.S. national security agencies made a joint statement confirming continued Russian attempts to infer in political elections. Clearly, the penalties imposed were not severe enough to deter foreign meddling in America’s democracy. Disinformation campaigns are increasingly employed by a broad range of state actors, including China and Saudi Arabia.

Current U.S. sanctions clearly do not apply sufficient pressure to alter states’ cost-benefit calculus for interference. Therefore, the United States should apply more specific sanctions to critical features of perpetrators’ economies. Targeted sanctions against Russia’s IT sector would effectively undermine the country’s thriving software exports, raise the cost for election meddling and send a strong symbolic statement against the Kremlin’s cyber operations.

Over the last decade, Russia’s software export revenues grew threefold from 2.7 billion USD per year to nearly 8 billion USD, due in part to the emphasis Vladimir Putin’s regime placed on promoting the growth of high-tech industries. The Kremlin capitalized on Russia’s technically-educated population by steering resources to the IT sector to diversify the economy and avoid becoming a “raw material appendage” to Europe and China. Putin’s government considers the IT industry to be intrinsic to economic growth and national security and so, unsurprisingly, Moscow consolidates the industry’s operations under state control. U.S. sanctions on Russian software exports would, therefore, not only strike a blow to state revenues, it would also threaten a vital component of Putin’s plans to restructure Russia’s lackluster economy.

Although Russia also meddled in French and German elections, a U.S.-led international coalition is doubtful because allies view election meddling as an American problem. Unilateral sanctions are the most realistic tool.

It is true that unilateral sanctions struggle to isolate a sector when the target country has markets around the globe, but Russia’s software industry is uniquely suited for them. The United States is the number one customer of Russian IT goods and services. Although Scandinavian and European markets remain easily accessible, if Russia’s penchant for nefarious cyber activity continues, foreign companies will begin to import less Russian software. This would compound the effectiveness of U.S. sanctions.

Moreover, according to a PricewaterhouseCoopers report, American firms dominate the software industry. Due to the existing base of competitive software producers, American consumers would be unlikely to suffer without Russian exports and given time for market adjustment, the U.S. software market would compensate for reduced supply.

Opponents might argue that U.S. sanctions would further stoke anti-Western sentiment in Russia. This is a reasonable concern, but the damage was already done in the wake of America’s 2014 sanctions on Russia. In response to these sanctions, Putin has effectively propagated a narrative of Western culpability for Russia’s general economic downturn, and avoided blame for Russia’s economic mismanagement. Given the United States’s already lackluster reputation in Russia, a further deterioration of Russians’ esteem for America would pale in comparison to the damage caused by continued Russian cyber adventurism.

If the Kremlin and its army of internet trolls fool America once, shame on Moscow. If Putin fools America twice, shame on Washington. Lawmakers on Capitol Hill now understand the danger Russian meddling poses to the integrity of America’s electoral system. Congress and the White House must respond to the threat by sanctioning Russian software imports. Only by inflicting adequate pressure on Russia’s subversive IT sector will the United States send a strong signal to deter future interference from malign state actors.

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