I say grant them their wish. Foreign nation state operatives hacking in plain sight in the US, in active war zones? Treat them as the enemy combatants, terrorists even that they want to be recognized as.
NSO Group is an Israeli operation, i.e. working with Mossad, so there is a slim chance of the US treating them as an "enemy combatant".
https://ifamericansknew.org/stat/cost_of_israel.html I've no idea of the reliability of that site, however the author was a former US Foreign Service officer.