US hits Russia with more sanctions amid Ukraine unrest

Published 18.07.2014 01:07
Updated 18.07.2014 11:42
US hits Russia with more sanctions amid Ukraine unrest

U.S. President Barack Obama announced that there will be more sanctions to implement on Russia, accusing Moscow of destabilizing Ukraine and holding Crimea under occupation

The U.S. slapped key Russian entities, four Russian government officials, and breakaway governments in eastern Ukraine with additional sanctions Wednesday. "These sanctions are significant, but they are also targeted and designed to have the maximum impact on Russia while limiting any spillover effects on American companies, or those of our allies," U.S. President Barack Obama told reporters at the White House Wednesday.
Obama said that the actions made on Wednesday were done in close consultation with the U.S.' European allies.

The sanctions affect a variety of entities and people, including key figures in Russia's energy, financial services, and arms and defense sectors, according to the Treasury Department.

They include two Russian financial institutions, Gazprombank OAO, whose 40 Russian branches service 45,000 companies and three million private individuals, and Vnesheconombank (VEB), a Russian state development bank. Also targeted were two Russian energy firms, OAO Novatek and Rosneft, Russia's largest petroleum company.

Both the energy firms and financial institutions have had their access to U.S. capital markets restricted following Wednesday's announcement, according to the Treasury Department.

Eight Russian arms firms, and four Russian government officials, including Sergey Beseda, the head of Russia's Federal Security Service's Fifth Service, were also named in the sanctions list.

Beyond Russia, the Treasury also designated the breakaway Luhansk People's Republic, and the Donetsk People's Republic, including its self-proclaimed Prime Minister Aleksandr Borodai.

Feodosiya Enterprises, a key Crimea-based oil shipping facility, was also sanctioned Wednesday, for what Treasury says is its role in the misappropriation of Ukraine's state assets.

The additional sanctions are in response to what Washington considers to be Russia's continuing efforts to destabilize eastern Ukraine, and its occupation of Crimea. "Russia has continued to destabilize Ukraine and provide support for the separatists, despite its statements to the contrary," the Treasury Department's Under Secretary for Terrorism and Financial Intelligence, David S. Cohen said in a statement released to the press.

President Vladimir Putin on Thursday lamented the latest round of U.S. sanctions against Russia, saying they will stalemate bilateral relations and hurt not only Russian but also American businesses.

Putin's comments came hours after President Barack Obama announced broader sanctions against Russia, targeting two major energy firms including Rosneft, a pair of powerful financial institutions, eight weapons firms and four individuals.

The U.S. penalties, however, stopped short of the most stringent actions the West has threatened, which would fully cut off key sectors of Russia's oil-dependent economy.

But officials said those steps were still on the table if Russia fails to abide by the West's demands to stop its support for the pro-Russia insurgents who have destabilized eastern Ukraine.

The insurgents have been fighting government troops in eastern Ukraine for four months now in a conflict that the U.N. says has killed over 400 people and has displaced tens of thousands. Yesterday, Russia shot down a Ukrainian war plane.

In televised comments Thursday, Putin said the sanctions are "driving into a corner" relations between the two nations as well as the interests of American companies and "the long-term national interests of the U.S. government and people." Putin warned Washington that the sanctions will backlash against American companies working in Russia.

The most noticeable companies on the list are Rosneft and Russia's largest independent gas producer, Novatek. Both are now barred from getting long-term loans from U.S. entities.

Moscow-based investment bank Sberbank-CIB said in a note to investors that Russian companies cannot replace long-term loans from the U.S. immediately. "While Asian and Middle Eastern money can step in to fill the gap, we expect that this will take time," the note said, adding that borrowing will also cost more.

Rosneft has a multibillion-dollar deal with ExxonMobil, which among other things allowed Exxon to develop lucrative oil fields in Russia. "We gave this American company the right to work on the shelf," Putin said in Brazil, referring to Exxon's potential exploration on the Russian Arctic shelf. "So, what, the United States does not want it to work there now?"

Russia's foreign ministry dismissed the sanctions "bullying" and signaled that it was ready to push back. "We consider the new round of American sanctions against Russia as a primitive attempt to take vengeance for the fact that events in Ukraine are not playing out to the tune of the script of Washington," the agency said in a statement.

Prime Minister Dmitry Medvedev in televised remarks said the sanctions are throwing Russia's relations with the West "back to the 1980s" and added that Russia "will have to pay more attention to military and security spending."

Putin made no mention of the additional sanctions levied Wednesday by the 28-nation European Union, which urged the European Investment Bank to sign no new financing agreements with Moscow.

Share on Facebook Share on Twitter