UPDATE 4-U.S. makes limited exceptions to sanctions on Russian spy agency

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By Joel Schectman and Dustin Volz | WASHINGTON

WASHINGTON The U.S. Treasury Department on
Thursday adjusted sanctions on Russian intelligence agency FSB,
making limited exceptions to the measures put in place by former
President Barack Obama over accusations Moscow tried to
influence the 2016 U.S. presidential election with cyber attacks
on political organizations.

The department said in a statement it would allow U.S.
companies to make limited transactions with FSB that are needed
to gain approval to import information technology products into

At the White House, President Donald Trump responded to a
reporter’s question about whether he was easing sanctions on
Russia, saying, “I’m not easing anything.”

Sanctions experts and former Obama administration officials
stressed the exceptions to the sanctions imposed in December do
not signal a broader shift in Russia policy.

In a conference call with reporters, a senior Treasury
Department official said the exceptions were “a very technical
fix” made in response to “direct complaints” from companies that
were unable to import many consumer technology products without
a permit from the FSB. The action had been in the making for
weeks before Trump took office on Jan. 20, the official said.

Beyond its intelligence function, the FSB also regulates the
importation of software and hardware that contains cryptography.
Companies need FSB approval even to import broadly available
commercial products such as cell phones and printers if they
contain encryption.

Peter Harrell, a sanctions expert and former senior U.S.
State Department official, said Treasury officials likely had
not considered the issue in December.

“I don’t think when they sanctioned FSB they were intending
to complicate the sale of cell phones and tablets,” Harrell

David Mortlock, a former National Security Council advisor
for Obama said that before granting such exceptions, the
administration would ask who a sanction was hurting and who it
was benefiting.

Mortlock, now an attorney, said “here it’s a pretty easy
calculus” because it was clear tech companies were the ones
harmed by not being able to import software into Russia, not the
spy agencies.

U.S. intelligence agencies accused the FSB of involvement in
hacking of Democratic Party organizations during the election to
discredit Democrat Hillary Clinton and help Republican Trump.

The agencies and private cyber security experts concluded
the FSB first broke into the Democratic National Committee’s
computer system in the summer of 2015 and began monitoring email
and chat conversations.

They said FSB was one of two Russian spy agencies involved
in a broad operation approved by top-ranking people in the
Russian government. In December, Obama expelled 35 suspected
Russian spies and sanctioned two spy agencies. He also
sanctioned four Russian intelligence officers and three
companies that he said provided support to the cyber operations. (additional reporting by Yeganeh Torbati and Jason Lange)

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