Israeli firm NSO pushed its government to ask U.S. counterparts about lifting sanctions

Israeli cyber intelligence company NSO asked the Israeli government for assistance in trying to lift sanctions imposed by the U.S. Department of Commerce, according to a letter obtained by Axios.

Why it matters: The department's decision last week to black list NSO for engaging in activities contrary to the national security or foreign policy interests of the United States was the first time the U.S. government has targeted Israeli cyber companies, which receive their export licenses from the Israeli Ministry of Defense.

• The designation will limit the activities of the company in the United States. Every American entity that wants to deal with NSO will have to get a license from the Commerce Department.

Driving the news: NSO’s CEO Shalev Hulio last Tuesday sent a letter to Prime Minister Naftali Bennett with copies to Foreign Minister Yair Lapid, Defense Minister Benny Gantz and Finance Minister Avigdor Lieberman. Hulio classified the letter as “Secret.”

• He wrote that NSO was surprised by the U.S. decision and claimed it was a result of an orchestrated campaign by anti-Israeli organizations who want to harm Israeli companies for political reasons.
• Hulio added that the move could cause hundreds of the company's Israeli employees to lose their jobs and stressed that formal backing by the Israeli government “is a basic condition” for the efforts to lift the U.S. sanctions.

The backstory: An international consortium of investigative journalists reported in July that NSO's Pegasus software — designed to track terrorists and criminals — had become a valuable tool for governments to spy on journalists and critics.

• Hungary, India, Mexico, Morocco and Saudi Arabia are among the countries listed in the report as NSO clients.
• The Commerce Department said its decision was based on evidence that both companies developed and supplied spyware to foreign governments that in turn used it "to maliciously target government officials, journalists, businesspeople, activists, academics, and embassy workers."
• The Palestinian Foreign Ministry on Thursday announced that NSO spwyare had been discovered on phones belonging to three senior officials, the Associated Press reported. Spyware from NSO was found on the cellphones of six Palestinian human rights activists, Front Line Defenders, an Ireland-based rights groups, said in a report Monday.

Behind the scenes: Senior Israeli officials told me that after the U.S. announcement last week, Israeli government officials held consultations and considered protesting to the Biden administration and demanding it to reverse the decision, but these options were ultimately dropped.

• Nevertheless, senior officials in the Israeli foreign ministry did protest to their State Department counterparts about the fact that the Biden administration notified Israel of the decision only an hour in advance of the public announcement.

What they are saying: Three senior Israeli officials denied a New York Times report that claimed the Israeli government is going to lobby the Biden administration to remove the NSO off the black list.

What’s next: The Israeli Defense and Foreign ministries want to start a dialogue with the Biden administration on the broader issue of exports of cyber spying software, Israeli officials said.

• “We want to talk to the U.S. first in order to make sure that the NSO affair didn’t damage our bilateral relations. We would also want to hear from the U.S. if they have any information we need to know about NSO, ”a senior Israeli official told Axios.