Biden blocks investment in Ukraine regions recognized as independent by Putin

President Biden signed an executive order on Monday blocking new U.S. investment, trade and financing from flowing into two Russian separatist-held regions in Ukraine, hours after Russian President Vladimir Putin signed a decree recognizing the areas as independent.

The executive order, detailed by the White House shortly after Putin delivered a lengthy address on his decision, also gives Biden the power to “impose sanctions on any person determined to operate in” the so-called Donetsk and Luhansk people’s republics.  

“We have anticipated a move like this from Russia and are ready to respond immediately,” White House press secretary Jen Psaki said in a statement, calling Putin’s action a “blatant violation of Russia’s international commitments.” 

Biden, who was meeting with his national security team to receive updates on the situation on Monday, signed the order later Monday afternoon.

The decision to impose sanctions is a sign of the U.S. acknowledging the window to resolve the current crisis through diplomatic means is closing.  

The administration has been warning for more than a week that a Russian invasion of Ukraine could happen at any moment, and Biden told reporters on Friday he believed Putin had made up his mind on invading Ukraine. The U.S. estimates that Russia has as many as 190,000 troops in and around Ukraine.  

But the administration has still kept the door to diplomacy open, even saying on Sunday that Biden agreed to a meeting with Putin “in principle” as long as Russia does not launch an invasion. It’s unclear whether that meeting could still occur.  

It’s not clear how large an impact the new sanctions will have on the two breakaway republics.

The Biden administration has in coordination with European allies prepared a separate, more severe package of sanctions to impose on Russia in the event of a military invasion of Ukraine.  

“To be clear: these measures are separate from and would be in addition to the swift and severe economic measures we have been preparing in coordination with Allies and partners should Russia further invade Ukraine,” Psaki said.

“We are continuing to closely consult with Allies and partners, including Ukraine, on next steps and on Russia’s ongoing escalation along the border with Ukraine,” she said. 

Speaking to reporters later Monday, a senior Biden administration official suggested there would be further action taken as soon as Tuesday without providing any details.

Secretary of State Antony Blinken issued a statement condemning Putin’s decision, saying it represents a rejection of Russian commitments under the Minsk agreements and a “clear attack on Ukraine’s sovereignty and territorial integrity.” 

Blinken said the new executive order is “designed to prevent Russia from profiting off of this blatant violation of international law.”  

“It is not directed at the people of Ukraine or the Ukrainian government and will allow humanitarian and other related activity to continue in these regions,” he said. “Our support for Ukraine’s sovereignty and territorial integrity as well as for the government and people of Ukraine is unwavering.”  

As the White House announced the plans, the European Union also said it would impose sanctions on those involved in the recognition of Donetsk and Luhansk, which are part of Ukraine’s Donbas region, as independent.  

“The Union reiterates its unwavering support to Ukraine’s independence, sovereignty and territorial integrity within its internationally recognized borders,” European Commission President Ursula von der Leyen and European Council President Charles Michel said in a statement.  

Putin delivered a lengthy and ominous address to Russia on Monday during which he claimed that Ukraine was historically a part of Russia and appeared to lay the groundwork for a Russian invasion of Ukraine, though he did not explicitly order such an invasion.  

The Russian leader signed a decree declaring Donetsk and Luhansk independent and also said he ratified an agreement of “friendship” and mutual assistance.  

“Those who seize the power and keep the power in Kyiv, we demand to stop hostilities immediately, otherwise, all the responsibility for the possible continuation of the bloodbath will be on the consciousness of the regime that is ruling in Kyiv. By declaring these decisions, I’m confident that I will have support of all the patriotic forces of Russia,” Putin said.

Later, Putin ordered troops into the breakaway regions to conduct “peacekeeping operations,” further amplifying tensions and fears about imminent conflict.  

As Putin delivered his address, Biden spoke by phone with Ukrainian President Volodymyr Zelensky and later held a call with French President Emmanuel Macron and German Chancellor Olaf Scholz.

—Updated at 6:02 p.m.