Scoop: Israelis push U.S. to remove NSO from blacklist

Israeli officials are pushing the Biden administration to remove Israeli cyber spying company NSO from the Department of Commerce blacklist, two Israeli officials and one U.S. official told Axios.

Why it matters: Removing NSO from the U.S. blacklist would be a dramatic reversal by the Biden administration and would likely be criticized by progressives in the Democratic Party and Congress, as well as many in the cybersecurity community.

Driving the news: A U.S. official and the two Israeli officials said the Biden administration is considering the Israeli request.

• But another U.S. official denied the administration is considering it.

Flashback: In November last year, the Commerce Department added Israeli cyber intelligence companies NSO and Candiru to its blacklist of companies it says are engaging in activities contrary to the national security or foreign policy interests of the United States.

• It was the first time the U.S. government targeted Israeli cyber companies, which receive their export licenses from the Israeli Ministry of Defense.

The Commerce Department said its decision was based on evidence that both companies developed and supplied spyware to foreign governments who in turn used it "to maliciously target government officials, journalists, businesspeople, activists, academics, and embassy workers."

• An international consortium of investigative journalists reported last 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.

Behind the scenes: After NSO was sanctioned, there was a debate inside the Israeli government on whether it should lobby the Biden administration on behalf of the company, Israeli officials said.

• Initially, Israeli officials decided against it, but this decision later changed, and the Israeli government started pressing the Biden administration over the issue.

• “We told the U.S. that they can’t destroy NSO and that several bad clients doesn’t mean the company’s products and capabilities are no longer needed," a senior Israeli official told me.
• The Israeli government also told the Biden administration it should have stated clearly in advance what needed to be fixed before sanctioning NSO and given the company an opportunity to make the changes.

NSO hired two U.S. law firms to work on the blacklist issue independently from the Israeli government.

• The lawyers sent a request for an appeal to the Department of Commerce and asked for a hearing, which hasn't taken place. The correspondence continues in writing, an NSO official told me.
• A U.S. official said the White House is not interfering in the regulatory process through which NSO Group is appealing the listing decision.

Go deeper: NSO Group's spyware is everywhere