US, EU hit Russia with new sanctions over Ukraine

WASHINGTON — The United States and its European allies hit more than two dozen Russian government officials, executives and companies with sanctions Monday as punishment for their country’s actions in Ukraine, yet the penalties stopped short of targeting Russia’s economy more broadly. In Moscow, there was relief that the sanctions were not as far-ranging as feared.

The measures, including asset freezes and visa bans, affect people close to the Kremlin and are designed to pressure Russian President Vladimir Putin to de-escalate the Ukraine crisis. However, the Russian leader himself was not among those targeted, and Obama administration officials acknowledged there was no expectation that Putin would quickly change course.

Still, officials in Washington and Brussels said the sanctions, coupled with those imposed following Russia’s annexation of the Crimean peninsula last month, would significantly boost the cost to Moscow of ignoring an agreement it signed earlier this month to take concrete steps to ease tensions in Ukraine.

“The goal here is not to go after Mr. Putin personally,” President Barack Obama told reporters in the Philippines, where he was wrapping up a four-nation trip to Asia. “The goal is to change his calculus with respect to how the current actions that he’s engaging in could have an adverse impact on the Russian economy over the long haul.”

Obama said Russia still could resolve the Ukraine crisis through a diplomatic path. But he sounded far from confident about the immediate prospects for the new sanctions packages being enough to change Putin’s approach.

“We don’t yet know whether it’s going to work,” he said.

In Ukraine, meanwhile, the mayor of Kharkiv, the country’s second-largest city, was shot and badly wounded on Monday, and hundreds of men attacked a pro-Ukraine rally in the eastern city of Donetsk, wounding dozens.

Insurgents tacitly backed by Moscow are seeking more autonomy in eastern Ukraine — and possibly independence or annexation with Russia.

In Washington, the White House and the Treasury, State and Commerce departments issued statements detailing the seven Russian individuals and 17 companies affected by the new U.S sanctions. There also are new arms and technology export restrictions on Russia.

Meanwhile, in Brussels, the European Union announced it had added 15 more officials to its Russia sanctions list, bringing to 48 the number of Russians singled out for “undermining Ukraine’s territorial integrity, sovereignty and independence.”

They will be banned from traveling to the 28-nation bloc and will see their assets there frozen, the EU said in a statement. The names of the individuals targeted weren’t immediately released but are to be included in the official publication of the move in the bloc’s legal journal early Tuesday.

The EU is Russia’s biggest trading partner, giving the Europeans greater economic leverage over Moscow than the U.S. has. However, the EU treads more carefully in imposing sanctions since Russia is also one of its biggest oil and gas suppliers — and the bloc apparently shied away from following Washington’s lead in targeting specific Russian companies.

Among the U.S. targets is Igor Sechin, president of the Russian state oil company Rosneft, who has worked for Putin since the early 1990s. Sechin was seen as the mastermind behind the 2003 legal assault on the private oil company Yukos and its founder, Mikhail Khodorkovsky, who at the time was Russia’s richest man. The most lucrative parts of Yukos were taken over by Rosneft, making it Russia’s largest company. Rosneft has a major partnership deal with ExxonMobil.

Also on the list are Alexei Pushkov, the Kremlin-connected head of the international affairs committee of the Russian parliament’s lower house, Russian Deputy Prime Minister Dmitry Kozak, and Sergei Chemezov, another longtime Putin ally. The White House said Putin has known Chemezov, CEO of the state-owned holding company Rostec, since the 1980s, when they both lived in the same apartment building in East Germany.

Most of the 17 firms, all privately held, are controlled by three businessmen with close links to Putin: Gennady Timchenko and brothers Boris and Arkady Rotenberg, all of whom were targeted by the first round of U.S. sanctions imposed in March.

One of the companies Timchenko owns is Stroytransgaz, a construction company that has amassed millions in contracts to build oil pipelines for state-owned Transneft. The company has recently expanded and won major deals to build highways and soccer arenas for the 2018 World Cup in Russia.

In Moscow, the new sanctions were seen as milder than many had feared, largely because they did not affect any public companies or major sectors of the economy. The Russian RTS index jumped 1 percent on the news. Reflecting relief that state banks had not been targeted, Sberbank’s stock was up 5 percent. Shares in gas giant Gazprom rose more than 2 percent as its chief executive Alexei Miller was spared sanctions.

Rosneft, was down nearly 2 percent, even though the state oil company itself was not sanctioned. Sanctions could have caused trouble for its partnership with ExxonMobil.

Sechin, the company president, appeared relieved that Rosneft had been spared.

“I consider Washington’s latest steps as a high assessment of the effectiveness of our work, and we assure our shareholders and partners, including the Americans, that our effectiveness will not decline and our partnership will not suffer and will develop dynamically,” he said, the Interfax news agency reported.

White House officials say they decided last week to impose additional penalties after determining that Russia was not following through on the de-escalation accord but held off on implementation in order to coordinate with the European Union.

The failed diplomatic agreement reached in Geneva just over a week ago called on the Kremlin to get pro-Russian insurgents to leave the government buildings they have occupied in eastern Ukraine.

Those forces have not only remained but have stepped up their provocations, including capturing European military observers who were paraded before the media Sunday. On Monday, U.N. Secretary-General Ban Ki-moon strongly condemned the capture and demanded their immediate release “unconditionally and unharmed.”

The U.N. chief said that those who “continue unlawful acts will be held accountable for their actions.”

U.S. officials warned that any Russian military move into Ukraine will result in more sweeping sanctions that target broad swaths of Russia’s economy, including its banking, defense and energy sectors. EU officials said such sanctions are possible but not yet being considered.

Obama said they were keeping those measures “in reserve” in case the situation worsens.

White House aides sought to highlight the impact the sanctions already imposed have had thus far.

Some $60 billion in capital flight so far this year exceeds last year’s total; the Russian ruble has depreciated nearly 9 percent against the U.S. dollar since the beginning of the year; investors are demanding higher risk premiums to hold Russia’s debt; the credit agency Standard &Poor’s cut Russia’s credit rating Friday for the first time in more than five years, and the Russian central bank recently downgraded the country’s 2014 growth projection to less than 1 percent, according to the officials.

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