Business

US imposes new sanctions on Russia

by Mario Trujillo - 07/16/14 5:30 PM ET

The Obama administration on Wednesday widened sanctions against Russia to punish its government for contributing to violence in Ukraine.

The sanctions imposed by the Treasury Department would ban people in the United States from providing new financing to two major Russian banks and two major Russian energy firms, which would in effect limit their access to U.S. capital markets.

“What we are expecting is the Russian leadership will see once again that its actions in Ukraine have consequences,” Obama said in a statement from the White House briefing room shortly after the new sanctions were announced.

{mosads}The banks — GazpromBank and Vneshconom Bank — and the energy firms — Novatek and Rosneft Oil Company — are described as some of the largest in Russian. The energy firms represent the second and third largest natural gas producers in Russia.

An administration official described the steps and a “broad, flexible and potent tool,” and warned that further steps could be taken.

There is still an off ramp for Russia, the White House said. Obama called on Russia to take steps to calm the continued violence in eastern Ukraine specifically by agreeing to a ceasefire and halting the flow of weapons and fighters to Russian separatists in Ukraine. He also called for international mediated talks and monitors allowed on the border.

“So far, Russia has failed to take any of the steps that I mentioned,” Obama said. “In fact Russia’s support for the separatists and violations of Ukraine’s sovereignty has continued.”

Administration officials said the new sanctions are being imposed because Russia is continuing to violate the “sovereignty and territorial integrity” of Ukraine. The White House has accused Russia of providing support to pro-Russia separatists in eastern Ukraine who have battled the Ukrainian government.

An administration official said the new steps would only exacerbate the financial strain on Russia’s economy, noting that the Russian ruble has depreciated nearly 4 percent this year.

“These sanctions are significant but they are also targeted, designed to have the maximum impact on Russia while limiting any spillover effects on American companies or those of our allies,” Obama said.

The administration also imposed sanctions on four Russian officials and blocked the assets of eight Russia state-owned defense technology firms that produce weapons such as small arms, mortar shells, surface-to-air missiles and tanks.

The four Russian officials sanctioned included an aide to President Vladimir Putin, the country’s minister to Crimea, the head of Russia’s Federal Security Service and the deputy chairman of the country’s legislature.

Treasury also blocked the assets of two Russian separatist groups operating in eastern Ukraine and their leader, and restricted any person in the United States from doing business with an oil shipping facility in Crimea, a former region of Ukraine annexed by Russia earlier this year.

Russia’s Deputy Foreign Minister Sergei Ryabkov immediately condemned the sanctions and vowed measures to counter U.S. action, in a statement to the Interfax new agency.

The sanctions came as European Union leaders in Brussels announced a more narrow set of sanctions on Russia. They included restricting the European Investment Bank from signing new deals with Russia and drawing up a list of companies for future sanctions that have supported Russia’s action in Ukraine, according to The Associated Press.

The administration said the sanctions were imposed with coordination with the EU.

Earlier this year, the White House green-lighted sanctions on dozens of Russian officials.

At the time, Obama also signed an executive order that allowed him to impose sanctions on sectors of the Russian economy. It’s this part of that order that was used on Wednesday.

Russia annexed Crimea after people in that region voted to secede from Ukraine amid an increased Russian troop presence there.

Since then, turmoil has brewed in Ukraine as pro-Russian separatists have taken over a number of sections of eastern Ukraine, which has a large population of ethnic Russians.

Obama noted that Ukraine has made a number of reforms since electing a new president earlier this year, saying “Ukrainians deserve the right to forge their own destiny.”

This story was last updated at 6:30 p.m.

Tags Russia Treasury Department Ukraine