Details: Cozy Bear, Solarwinds, FireEye and the Hack of the US Govt

Cozy Bear (also called APT29, a known unit of Russia’s SVR foreign intelligence service) appears to have been behind the attack, the Wall Street Journal reports. Moscow denies any involvement in the incident. Reuters adds that the Kremlin thinks the Americans should have been more mutual, more cooperative.

FireEye calls the backdoor “Sunburst.” Microsoft’s Security Response Center has a detailed account of how the malware functions. Both FireEye and Microsoft have upgraded their security products to include measures for detecting and protecting against the attack. SolarWinds urges its customers to “upgrade to Orion Platform version 2020.2.1 HF 1 as soon as possible.”

Global cybersecurity firm FireEye hacked by foreign ... source

When FireEye Inc. discovered that it was hacked this month, the cybersecurity firm’s investigators immediately set about trying to figure out how attackers got past its defenses.

It wasn’t just FireEye that got attacked, they quickly found out. Investigators discovered a vunerability in a product made by one of its software providers, Texas-based SolarWinds Corp.

“We looked through 50,000 lines of source code, which we were able to determine there was a backdoor within SolarWinds,” said Charles Carmakal, senior vice president and chief technical officer at Mandiant, FireEye’s incident response arm.

After discovering the backdoor, FireEye contacted SolarWinds and law enforcement, Carmakal said.

In part: Washington — U.S. government agencies were ordered to scour their networks for malware and disconnect potentially compromised servers after authorities learned that the Treasury and Commerce departments had been hacked in a months-long global cyberespionage campaign. The campaign was discovered when a prominent cybersecurity firm learned it had been breached.

In a rare emergency directive issued late Sunday, the Department of Homeland Security’s cybersecurity arm warned of an “unacceptable risk” to the executive branch from a feared large-scale penetration of U.S. government agencies that could date back to mid-year or earlier.

“This can turn into one of the most impactful espionage campaigns on record,” said cybersecurity expert Dmitri Alperovitch.

The apparent conduit for the Treasury and Commerce Department hacks – and the FireEye compromise – is a hugely popular piece of server software called SolarWinds. It’s used by hundreds of thousands of organizations globally, including most Fortune 500 companies and multiple U.S. federal agencies that will now be scrambling to patch up their networks, said Alperovitch, the former chief technical officer of the cybersecurity firm CrowdStrike.

On its website, SolarWinds says it has 300,000 customers worldwide, including all five branches of the U.S. military, the Pentagon, the State Department, NASA, the National Security Agency, the Department of Justice and the White House. It says the 10 leading U.S. telecommunications companies and top five U.S. accounting firms are also among customers.

The DHS directive – only the fifth since such directives were created in 2015 – said U.S. agencies should immediately disconnect or power down any machines running the impacted SolarWinds software.

“We believe that this vulnerability is the result of a highly-sophisticated, targeted and manual supply chain attack by a nation state,” said SolarWinds CEO Kevin Thompson said in a statement. He said it was working with the FBI, FireEye and intelligence community. More here.

***  SolarWinds of Austin posts sharp rise in revenue - Austin ... source

Many more details on consequence –>

It turns out that the attackers also compromised the Department of Homeland Security. SolarWinds revealed to the Securities and Exchange Commission that the breach may affect 18,000 customers.

It appears that, in March 2020, someone managed to modify the SolarWinds Orion software during the build process—that is, the process that translates the human-readable code and merges it into a form that a computer can execute. This timing is based on both the Microsoft and FireEye analyses, as well as the reported versions affected by SolarWinds.

This modification included a sophisticated and stealthy Trojan program, designed to remotely control any computer that installed SolarWinds Orion. When customers installed the latest update, the Trojan program would start running on the victims’ computers. This is considered a software “supply chain attack”: The intended victims received a polluted copy of the Orion software directly or indirectly from SolarWinds.

What Now?

Christmas is now officially cancelled for three groups. The first is for the IT staff working for the perhaps 18,000 SolarWinds customers affected by the breach, who are going to have to spend the next weeks rebuilding their networks and going over everything with a fine-toothed comb looking for various backdoors. This is going to be a lot of work to sort out. The only good thing is that most of the customers don’t have secondary backdoors to worry about, because the biggest problem faced by the attacker was simply the target-rich environment. Each effort at exploitation increases the risk of discovery, and in the end, there are only so many people who can conduct these attacks.

The second group is the U.S. intelligence community. This attack started in March with the first exploitation starting in April. Either they didn’t know about it—a failure in the “defend forward” philosophy—or they did know about it, in which case they also failed to defend forward. There are going to be tough questions that the intelligence community will need to answer internally.

The final group is the Russian government. This was an amazingly valuable intelligence feed, capturing U.S. government communication leading up to the transition as well as critical insights into U.S. financial controls. Now the feed has gone dark and Russia has lost a hugely powerful asset. But then again, these are a bunch of Russian spies, so in the immortal words of every sysadmin: “fsck those guys”.

More here.

Sexual Misconduct Shakes FBI’s Senior Ranks

Zero tolerance but avoiding prosecution or consequence is an art it seems at the FBI.

Washington — FBI

WASHINGTON (AP) — An assistant FBI director retired after he was accused of drunkenly groping a female subordinate in a stairwell. Another senior FBI official left after he was found to have sexually harassed eight employees. Yet another high-ranking FBI agent retired after he was accused of blackmailing a young employee into sexual encounters.

An Associated Press investigation has identified at least six sexual misconduct allegations involving senior FBI officials over the past five years, including two new claims brought this week by women who say they were sexually assaulted by ranking agents.

Each of the accused FBI officials appears to have avoided discipline, the AP found, and several were quietly transferred or retired, keeping their full pensions and benefits even when probes substantiated the sexual misconduct claims against them.

Beyond that, federal law enforcement officials are afforded anonymity even after the disciplinary process runs its course, allowing them to land on their feet in the private sector or even remain in law enforcement.

“They’re sweeping it under the rug,” said a former FBI analyst who alleges in a new federal lawsuit that a supervisory special agent licked her face and groped her at a colleague’s farewell party in 2017. She ended up leaving the FBI and has been diagnosed with post-traumatic stress disorder.

“As the premier law enforcement organization that the FBI holds itself out to be, it’s very disheartening when they allow people they know are criminals to retire and pursue careers in law enforcement-related fields,” said the woman, who asked to be identified in this story only by her first name, Becky.

The AP’s count does not include the growing number of high-level FBI supervisors who have failed to report romantic relationships with subordinates in recent years — a pattern that has alarmed investigators with the Office of Inspector General and raised questions about bureau policy.

FBI launches investigation of Jackson County Utility ...

The recurring sexual misconduct has drawn the attention of Congress and advocacy groups, which have called for whistleblower protections for rank-and-file FBI employees and for an outside entity to review the bureau’s disciplinary cases.

“They need a #MeToo moment,” said U.S. Rep. Jackie Speier, a California Democrat who has been critical of the treatment of women in the male-dominated FBI.

“It’s repugnant, and it underscores the fact that the FBI and many of our institutions are still good ol’-boy networks,” Speier said. “It doesn’t surprise me that, in terms of sexual assault and sexual harassment, they are still in the Dark Ages.”

In a statement, the FBI said it “maintains a zero-tolerance policy toward sexual harassment” and that claims against supervisors have resulted in them being removed from their positions while cases are investigated and adjudicated.

It added that severe cases can result in criminal charges and that the FBI’s internal disciplinary process assesses, among other factors, “the credibility of the allegations, the severity of the conduct, and the rank and position of the individuals involved.”

The AP review of court records, Office of Inspector General reports and interviews with federal law enforcement officials identified at least six allegations against senior officials, including an assistant director and special agents in charge of entire field offices, that ranged from unwanted touching and sexual advances to coercion.

None appears to have been disciplined, but another sexual misconduct allegation identified in the AP review of a rank-and-file agent resulted in him losing his security clearance.

The FBI, with more than 35,000 employees, keeps a notoriously tight lid on such allegations. The last time the Office of Inspector General did an extensive probe of sexual misconduct within the FBI, it tallied 343 “offenses” from fiscal years 2009 to 2012, including three instances of “videotaping undressed women without consent.”

The latest claims come months after a 17th woman joined a federal lawsuit alleging systemic sexual harassment at the FBI’s training academy in Quantico, Virginia. That class-action case claims male FBI instructors made “sexually charged” comments about women needing to “take their birth control to control their moods,” inviting women trainees over to their homes and openly disparaging them.

In one of the new lawsuits filed Wednesday, a former FBI employee identified only as “Jane Doe” alleged a special agent in charge in 2016 retired without discipline and opened a law firm even after he “imprisoned, tortured, harassed, blackmailed, stalked and manipulated” her into having several “non-consensual sexual encounters,” including one in which he forced himself on her in a car. The AP is withholding the name and location of the accused special agent to protect the woman’s identity.

“It is the policy and practice of the FBI and its OIG to allow senior executives accused of sexual assault to quietly retire with full benefits without prosecution,” the woman’s attorney, David J. Shaffer, alleges in the lawsuit.

One such case involved Roger C. Stanton, who before his abrupt retirement served as assistant director of the Insider Threat Office, a division at Washington headquarters tasked with rooting out leakers and safeguarding national security information.

According to an Inspector General’s report concluded this year and obtained by AP through a public records request, Stanton was accused of drunkenly driving a female subordinate home following an after-work happy hour. The woman told investigators that once inside a stairwell of her apartment building, Stanton wrapped his arm around her waist and “moved his hand down onto her bottom” before she was able to get away and hustle up the stairs.

After Stanton left, he called the woman 15 times on her FBI phone and sent her what investigators described as “garbled text” complaining that he could not find his vehicle. The heavily redacted report does not say when the incident happened.

Stanton disputed the woman’s account and told investigators he “did not intend to do anything” and only placed his arm around her because of the “narrowness” of the stairs. But Stanton acknowledged he was “very embarrassed by this event” and “assistant directors should not be putting themselves in these situations.”

Stanton retired in late 2018 after the investigation determined he sexually harassed the woman and sought an improper relationship. He did not respond to requests for comment from AP.

Earlier this year, the Inspector General found that the special agent in charge of the Albany, New York, office, James N. Hendricks, sexually harassed eight subordinates at the FBI.

Hendricks also was not named in the OIG report despite its findings. He was first identified in September by the Albany Times Union. One current and one former colleague of Hendricks confirmed his role in the case to AP.

Hendricks now writes a law enforcement blog in which he touts his FBI accolades but makes no mention of the misconduct allegations. He did not respond to requests for comment.

Becky, the former analyst, told AP she once believed FBI’s “organizational values and mission aligned with how I was raised.” But she was disabused of that notion after reporting to management that Charles Dick, a supervisory special agent at the FBI Training Academy at the time, sexually assaulted her at a farewell party.

Becky told AP her assailant had threatened her at least two times before. “Once while we were waiting for the director he said, ‘I’m going to touch your ass. You know it’s going to happen.’”

“His boorish behavior was well known,” she added. “He was getting away with everything.”

In a federal lawsuit filed Wednesday, Becky accused the former agent of wrapping his arm around her chest while posing for a photograph and “reaching under her and simulating” penetration of her “with his fingers through her jeans.”

Dick denied the charges and was acquitted in state court in Virginia by a judge who ruled it “wholly incredible” that Becky would “stand there and take it and not say anything,” according to a transcript of the proceeding. Dick retired from the FBI months before the Inspector General followed up on Becky’s internal complaint, Becky alleged in her lawsuit, adding she faced retaliation for coming forward.

“It’s much easier to suffer in isolation than it is to go public,” she told AP. “But if I don’t report it, I’m complicit in the cultural and institutionalized cover-up of this sort of behavior.”

 

Judge Disqualifies Attorney Prosecuting McCloskey

“Ms. Gardner has every right to rebut criticism, but it appears unnecessary to stigmatize defendant—or even mention him—in campaign solicitations, especially when she purports to be responding to others,” Clark wrote in his ruling. “In fact, the case law and Rules of Professional Conduct prohibit it.”

Judge orders Circuit Attorney to comply with search ...

“The campaign emails demonstrate the Circuit Attorney’s personal interest in this case, raise the appearance of impropriety and jeopardize the Defendant’s right to a fair trial,” Judge Thomas Clark wrote in the ruling entered on Thursday. “These email solicitations aim to raise money using the Defendant and the circumstances surrounding the case to rally Ms. Gardner’s political base and fuel contributions.”

Clark’s order only applies to Mark McCloskey’s case. Patricia McCloskey, who has been charged separately, is scheduled to appear before Judge Michael Stelzer in January. Clark’s order only applies to Mark McCloskey’s case. Patricia McCloskey, who has been charged separately, is scheduled to appear before Judge Michael Stelzer in January.

Mark and Patricia McCloskey Charged with Unlawful Use of a ...

Gardner has scheduled an appeal of the ruling for January 7, 2021.

DW: A judge disqualified the Democrat circuit attorney who was prosecuting the gun case against Mark McCloskey from this summer, saying that the attorney’s campaign fundraising activities created the appearance that she prosecuted him for political purposes.

Circuit Judge Thomas Clark II’s order against Circuit Attorney Kimberly M. Gardner and her office cited “two fundraising emails that Gardner’s reelection campaign sent in response to political attacks before and after she charged Mark and Patricia McCloskey with felony gun crimes in July,” the St. Louis Post-Dispatch reported. “The judge’s order deals a political blow to Gardner, whose office has waged numerous legal challenges to defend her practices and reform-minded agenda during her first term.”

The Post-Dispatch noted that Clark’s order only applied to Mark McCloskey and bars her office from prosecuting the case. The order does not apply to Patricia McCloskey, whose case is assigned to Circuit Judge Michael Stelzer. The order states that the a new prosecutor has to be appointed to the case.

“This court does not seek to ‘interfere with the democratic process’ but strongly believes the present ‘circumstances’ justify disqualification,” Clark wrote. “Deference to precedent, acknowledging the will of the voters, and respecting separation of powers are all vital to a representative government, an equitable criminal justice system and the rule of law. Likewise, campaigning without tainting the right to a fair trial is equally compelling and constitutionally sacred.”

“After considering the arguments of counsel, the pleadings coupled with the attachments, the applicable case law and the relevant statute, the court finds the emails raise an appearance of impropriety and warrant disqualification,” Clark continued. “In short, the Circuit Attorney’s conduct raises the appearance that she initiated a criminal prosecution for political purposes. Immediately before and after charging Defendant, she solicited campaign donations to advance her personal interests.”

The Post-Dispatch reported that defense attorney Joel Schwartz indicated that he will file a motion requesting that Stelzer adopt Clark’s ruling in Patricia McCloskey’s case.

“This is what we wanted,” Schwartz said. “We would like a fair-minded prosecutor to take a look at the alleged crimes and reassess the evidence and see what they come up with because we don’t believe any of the evidence supports any of the charges. … As long as that happens, then I think we’ll have the right outcome and that would hopefully be no charges.”

When she first announced that she was prosecuting the McCloskey’s, Gardner said, “It is illegal to wave weapons in a threatening manner at those participating in nonviolent protest, and while we are fortunate this situation did not escalate into deadly force, this type of conduct is unacceptable in St. Louis.”

McCloskey has repeatedly defended his actions as self-defense and lawful protection of private property. “I went inside; I got a rifle … because as soon as I said ‘this is private property,’ those words enraged the crowd,” he said in an interview. “Horde, an absolute horde came through the smashed-down gates, coming right at the house. And then I stood out there, the only thing we said is, ‘This is private property, go back, private property, leave now.’ At that point, everybody got enraged, there were people wearing body armor.”

“One person pulled out [some] loaded pistol magazines and he clicked them together and he said, ‘You’re next,’” McCloskey continued. “We were threatened with our lives, threatened with the house being burned down, my office building being burned down, even our dog’s life being threatened. It was about as bad as it can get. You know, I really thought it was the storming of Bastille, that we would be dead and the house would be burned and there was nothing we could do about it. It was a huge and frightening crowd and they broke in the gate and they were coming at us.”

As The Daily Wire reported, multiple Republicans have expressed support for the McCloskeys:

Republicans have stood up for the McCloskeys as Sen. Josh Hawley (R-MO) sent a letter to United States Attorney General William Barr urging him to action against Gardner. Twelve Republican members of the House of Representatives sent a letter to Barr, in which they specifically named the McCloskeys, demanding that he take “decisive action” to protect Americans from “mob rule.” Missouri Republican Governor Mike Parsons signaled last week that he would likely pardon the McCloskeys if they were charged.

Sen. Tom Cotton (R-AR) responded to the charges by writing on Twitter, “St. Louis’s Soros-funded prosecutor let dozens of violent rioters go free, she sued her own police department, and murder has skyrocketed under her watch. Yet despite refusing to arrest violent criminals, she targets a family with a felony for guarding their home.”

Hunter Says U.S. Attorney is Investigating his Tax Affairs

Source: Federal prosecutors are investigating Hunter Biden over his tax affairs, the president-elect’s son said in a statement on Wednesday, marking another troubled chapter for the lawyer and investment adviser a little more than a month before his father is to take office.

In the statement, Hunter Biden said the U.S. Attorney’s Office in Delaware advised his legal counsel about the matter on Tuesday and that he is confident he handled his tax affairs “legally and appropriately.”

“I take this matter very seriously but I am confident that a professional and objective review of these matters will demonstrate that I handled my affairs legally and appropriately, including with the benefit of professional tax advisors,” Hunter Biden said.

The statement was sent out via President-elect Joe Biden’s transition team.

Hunter Biden did not divulge further information about the probe, including its scope. Kim Reeves, a spokeswoman for the U.S. attorney’s office, declined to comment.

The younger Biden has been the subject of intense scrutiny related to his business dealings overseas, particularly for a Ukrainian energy company. The president-elect’s son was a target of Republicans, and attempts made by allies of President Donald Trump to dig up dirt on Hunter Biden ultimately resulted in Trump’s impeachment.

One of Trump’s closest allies in Congress has been pressing Attorney General William Barr to appoint a special counsel to oversee the investigation of Hunter Biden’s business dealings.

“We request that the Department of Justice immediately appoint an independent, unbiased special counsel to investigate the issues that we have raised,” said Rep. Andy Biggs (R-Ariz.), chair of the House Freedom Caucus, in a letter signed by 10 Republican colleagues on Oct. 19.

On the same day the House Republicans sent the letter, Barr quietly appointed a special counsel to oversee the origins of the investigation into the 2016 Trump campaign’s ties to Russia, a move that ensured it would likely carry over into the Biden administration. Barr only revealed the existence of the probe earlier this month.

The saga has also entangled other members of the president-elect’s inner circle. Biden’s nominee for secretary of State, Tony Blinken, was interviewed by congressional Republicans as part of a probe into Hunter’s business activities. That investigation failed to establish that Hunter Biden’s work influenced his father’s actions as vice president or U.S. policy toward Ukraine.

The Biden transition team included a statement of support on Wednesday for the president-elect’s son: “President-elect Biden is deeply proud of his son, who has fought through difficult challenges, including the vicious personal attacks of recent months, only to emerge stronger.”

In part CNBC reports:

CNN later reported Wednesday that it had contacted Hunter Biden’s lawyer and his father’s presidential campaign last week seeking comment on the investigation, which CNN reported is “examining multiple financial issues, including whether Hunter Biden and associates violated tax and money laundering laws in business dealings in foreign countries, principally China.”

CNN reported that the investigation had been “largely dormant in recent months” due to Justice Department rules that bar taking legal actions in a cases that could affect an election.

The New York Post reported in October that the FBI seized both a computer and a hard drive believed to be Hunter Biden’s in December 2019, after the owner of a computer repair shop in Wilmington, Delaware, notified federal authorities he had possession of those items.

The store owner also gave a copy of the hard driver to a lawyer for Rudy Giuliani, the personal attorney for President Donald Trump, The Post reported. Giuliani then gave a copy of the hard drive to the newspaper.

In a statement Wednesday, the transition team of Joe Biden and Vice President-elect Kamala Harris said, “President-elect Biden is deeply proud of his son, who has fought through difficult challenges, including the vicious personal attacks of recent months, only to emerge stronger.”

The White House and the U.S. Department of Justice, which oversees U.S. attorneys’ offices, declined to comment.

Hunter Biden has long struggled with drug addiction.

During the presidential election, Trump and his allies made Hunter Biden a focal point of political attacks, particularly in connection with his business dealings in Ukraine and China.

Hunter Biden and his father have denied any wrongdoing in relation to his business overseas, which Joe Biden says that he played no role in.

Trump last year was impeached by the House of Representatives for witholding congressionally appropriated military aid for Ukraine as he pressured that nation’s new president to investigate the Bidens. Trump was acquitted by the Senate after a trial.

Could Crimea Soon be Free of Russian Occupation/Annexation?

Just a few days ago…

Crimea | History, Map, Geography, & People | Britannica

France24: The UN General Assembly on Monday adopted a resolution urging Russia to end its “temporary occupation” of Crimea, which Moscow took over in 2014, “without delay.”

The resolution on the militarization of the peninsula of Crimea, the port of Sevastopol and parts of the Black Sea and the Sea of Azov was adopted by 63 countries, with 17 voting against and 62 abstaining.

The resolution is non-binding but has political significance. It was put forward by 40 countries, including Britain, France, Germany and the Baltic states, as well the United States, Australia, Canada and Turkey.

The resolution “urges the Russian Federation, as the occupying Power, immediately, completely and unconditionally to withdraw its military forces from Crimea and end its temporary occupation of the territory of Ukraine without delay.”

Facing the “continuing destabilization of Crimea owing to transfers by the Russian Federation of advanced weapon systems, including nuclear-capable aircraft and missiles, weapons, ammunition and military personnel to the territory of Ukraine,” the resolution called on Russia to stop all such transfers “without delay.”

Fighting between Ukrainian troops and forces backed by Russia has left more than 13,000 dead since 2014, when Russia annexed Crimea and pro-Russian forces in the east of Ukraine rebelled against Kiev.

At the UN Security Council, tensions between Russia and western countries over the conflict remain in sharp focus, as was shown by an informal meeting last week by Moscow on the 2015 Minsk accords between Ukraine and Russia, which were sponsored by France and Germany.

Berlin and Paris sparked Russian fury by boycotting the meeting, described by European countries as an international platform offered to the Donbass separatists, several of whom had been invited to speak by Moscow.

*** Analysis: Why Russia's Crimea move fails legal test - BBC News  source

Is Crimea Now Costing Russia More Than It Is Worth?

Paul Goble
In the euphoria that surrounded Vladimir Putin’s annexation of Ukraine’s Crimea six years ago, most Russians were more than willing to spend money to integrate that region into the Russian Federation. But at that time, they had little idea just how much that process would cost. Not only did that aggressive breach of international law trigger Western sanctions against Russia, but the authorities in Moscow also never gave the public an honest estimate of just how much money would need to be spent, nor for how long, even after the Kremlin proclaimed the peninsula’s absorption an accomplished fact. Were the Russian economy doing well, that might not matter; but it is not (see EDM, May 6, 12, 18, November 30), and the subsidies going to Crimea are, of course, unavailable to support the domestic needs of the increasingly hard-pressed Russian people in Russia proper. That contradiction could, therefore, encourage Putin to try to launch a new military advance to cover these losses.

Russian regional affairs analyst Anton Chablin points out that the recently released budget figures for 2021 show enormous spending on Crimea is set to continue. Moscow plans to channel no less than 102 billion rubles ($1.5 billion) to support 68 percent of the budget of Crimea. That figure is larger than the subsidies going to Dagestan and Chechnya: 96.7 billion rubles ($1.4 billion) and 78.8 billion rubles ($1.1 billion), respectively. When the Russian economy was somewhat healthier, Russians generally ignored those costs as the generous outlays to the country’s newest imperial possession were not considered a serious problem. But now, the situation has changed; and the numbers Chablin cites will likely lead an increasing number of Russians to ask whether Crimea is worth it. Although such a mental shift may not push Moscow to return Crimea to Ukraine, it could certainly further undermine Russian support for Putin and make it more likely he will launch some new offensive to rebuild “patriotic” fervor around himself (Akcent.site, December 7).

The first signs of popular unhappiness about this spending are likely to emerge as the State Duma (lower chamber of parliament) considers the budget, Chablin writes. Deputies almost certainly will focus on three things: 1) the growth in Moscow’s subsidies rather than the declines the Kremlin had promised in earlier years; 2) the overly optimistic predictions about tax collection made by the Russian regime in Crimea that are unlikely to be met and that will force Moscow to pay out even more than it is budgeting; and, especially offensive to many in the current environment, 3) the fact that the administration on the peninsula continues to spend ever more money on itself rather than on things like vacation resorts that might benefit average Russians (Akcent.site, December 7).

From the beginning of the annexation, independent Russian observers did point out that the direct costs associated with integrating Crimea would be far larger than and last longer than the Kremlin promised. Historian Arkady Popov, for example, said that the Kremlin’s pledge to end subsidies amounting to a trillion rubles ($160 billion) after only five or six years was absurd. Not only was that amount, in fact, more than Moscow could possibly afford—it exceeded the projected subsidies to the North Caucasus and the Russian Far East over the same period—but it was actually far less than would be needed given the collapse of the economy in Crimea since Russia occupied it (Ej.ru, September 28, 2015). And even then, there were Russians complaining that Moscow had “billions” for Crimea but no money to refurbish their decaying housing
(Forum-msk.org, March 26, 2014).

In the intervening years, various experts have attempted to put a price on Moscow’s assistance to Crimea; however, the Russian government has done what it can to obscure what it has been spending. Perhaps the best estimate came last year. It was prepared by economist Sergei Aleksashenko, who, in a book-length study, asserts that Crimea had by then cost Russia 1.5 trillion rubles ($23.5 billion). That figure, he points out in the piece, equals approximately 10,000 rubles ($160) for every man, woman and child in the Russian Federation. Or put another way, Aleksashenko continues, Moscow is now spending on Crimea 357 times the amount it is spending on the Russian Academy of Sciences, even though he concedes that a majority of Russians, as of 2019, did not think that the annexation was having a negative impact on their lives (Forbes.ru, March 24, 2019).

That passive acceptance may now be changing. For one thing, these budget figures are coming to light at a time of pandemic-induced suffering. And for another, Russians are increasingly aware of the collateral financial costs associated with Crimea that are not being counted in those base subsidy amounts. Among the largest of these associated costs, which has attracted significant attention recently, is what Moscow may be forced to spend in the coming months to ensure that the peninsula has enough drinking water (see EDM, February 26, August 12). Those estimated expenses are sufficiently great that Putin might decide on an alternative solution: launching a new military campaign against Ukraine to gain control of water supplies that Crimea lost access to when Russia occupied it (see EDM, May 21). If that were to happen, what may seem like a minor budgetary dispute could reignite the military conflict between Moscow and Kyiv, with all the far-reaching consequences that would involve.