Obama Administration Threatens Sanctions Against State-Owned Enterprises Tied to Cyber-Attacks and Espionage

In what will likely prove to be a new source of tension with China and Russia, President Obama yesterday announced the first-ever sanctions program designed to penalize overseas hackers who engage in cyber-attacks and espionage, including state-owned enterprises (SOEs) that knowingly benefit from such activities.  The President stated, ‘‘‘Cyber threats pose one of the most serious economic and national security challenges to the United States.‘

The Administration will now have the authority to sanction individuals and companies engaged in malicious cyber activities aimed at harming critical infrastructure, damaging computer systems, and stealing commercial secrets and other proprietary intellectual property.  Concerning SOEs, the White House fact sheet listed ‘‘‘a corporation that knowingly profits from stolen trade secrets.‘

This new initiative could create real difficulties for China in particular, as it is becoming increasingly clear to some in the U.S. security community that the People‘s Liberation Army has often been commissioned and paid by certain Chinese SOEs to electronically acquire negotiating positions, sensitive executive email exchanges, financing terms and strategies, and other relevant data from American, Japanese and other Western firms they view as competitors.  Russia is also a major source of cyber-espionage against the U.S. and Europe.