Putin signs bill completing annexation of Crimea as sanctions take hold
Russia celebrates Crimea annexation while Ukraine looks to West for support
(about 4 hours later)
MOSCOW — Russian President Vladimir Putin on Friday signed legislation to complete the annexation of Crimea, a defiant step a day after President Obama expanded sanctions against the Russian leader’s top aides and reputed financial associates.
MOSCOW — Deep-booming fireworks rent the sky in Moscow and in Crimea on Friday night to celebrate the territorial expansion of Russia at Ukraine’s expense.
The signing followed the unanimous passage of the legislation in the Federation Council, the upper house of the Russian legislature, and came just hours after the first signs emerged in Russia of the bite from U.S. sanctions.
President Vladimir Putin, defiant in the face of growing Western pressure, signed a treaty of accession moments after it was ratified by the upper house of parliament earlier in the day. The deal gives the Crimean peninsula to Russia — but it has pushed a diminished Ukraine further toward the West.
Two Russian banks said that Visa and MasterCard are no longer handling transactions for their account holders, and Interfax news service reported Friday that two other banks were also affected. Several hundred thousand cardholders will feel the impact, according the Russian central bank.
In Brussels, Ukraine’s leaders signed an agreement committing to closer ties with the European Union and said they had been promised more than $1 billion in additional economic aid. Russia, meanwhile, is now the target of expanded sanctions.
One of the banks, St. Petersburg-based Bank Rossiya, was a target of the new American sanctions. Another, SMP Bank, is owned by Arkady and Boris Rotenberg, brothers who were named on the list issued Thursday by the U.S. Treasury Department.
The E.U., following on the heels of the United States, added a dozen more names Friday to its list of Russian officials subject to visa and financial restrictions. But efforts by eastern members of the E.U. to pursue much tougher measures were rebuffed by leaders of bigger countries worried about the consequences for their own economies.
The banks are not among Russia’s largest, but they serve some of the country’s wealthiest and best-connected customers. Putin, in a gibe at the sanctions, said he would have his salary deposited in Bank Rossiya beginning Monday.
In Moscow, politicians joked about the sanctions. But the measures were beginning to show some bite, and several hundred thousand Russians could be feeling their effect.
Russia on Thursday retaliated against the sanctions by banning nine U.S. lawmakers and officials from entering the country. The list includes Senate Majority Leader Harry M. Reid (D-Nev.), House Speaker John A. Boehner (R-Ohio), Sen. John McCain (R-Ariz.) and three top Obama aides, the Russian Foreign Ministry said.
Mastercard and Visa stopped handling transactions for Bank Rossiya, which was placed on the American sanctions list Thursday by President Obama, and for the much smaller SMP Bank, which is owned by two brothers, Arkady and Boris Rotenberg, who are also on the U.S. list. They are old friends of Putin and have grown rich since he came to power. Several other small banks that rely on the two bigger ones to handle credit card transactions also had their credit card business blocked.
In a slight softening, Putin said Friday that “we should refrain for now” from further action against the United States.
“It will not have a huge effect,” said Anton Soroko, a bank analyst here. Bank Rossiya, the country’s 15th largest bank, has about 470,000 individual clients, most of whom have direct deposit for their salaries and use their cards only to withdraw cash from ATMs — a procedure that is still possible, according to Natalia Romanova, editor of a Web site called banki.ru.
But Putin’s spokesman, Dmitry Peskov, said afterward that Russia will not let further sanctions go unanswered.
It remains unusual, she said, for Russians to use credit cards for point-of-sale purchases or to buy online.
“We will react every time, and we react based on mutuality. We have responded to the first sanctions, and now we will respond to [further sanctions],” he said. “They will not go unnoticed.”
Yet the news of the suspended transactions caught people’s attention. Putin said he would open an account in Bank Rossiya on Monday and have his salary deposited there.
There was no indication that Russia would punish European officials, who late Thursday added 12 people to their sanctions list, up from the 21 named earlier this week.
At a meeting of Russia’s national security council, he joked about not associating too closely with some of his aides who are on the American and E.U. lists. He said Russia, for now, should not retaliate any further, beyond the entry bans for nine American officials it announced Thursday.
The 12, who were publicly named by the Europeans on Friday, include several Putin aides and officials who have already been sanctioned by the United States, notably Dmitry Rogozin, a deputy prime minister. Also on the list is Dmitry Kiselyov, a Russian news anchor identified by the European Union as a senior Kremlin propagandist. Kiselyov responded to American criticism of the Crimean referendum on Sunday by warning that Russia was capable of turning the United States into “radioactive ashes.”
But later in the afternoon, the talk grew more menacing.
Notably, Europe did not go after Russian oligarchs or banks, as the United States did on Thursday.
Russia will not let further sanctions go unanswered, said Putin’s spokesman, Dmitry Peskov.
European Union leaders in Brussels also signed a deal Friday with Ukraine to draw it closer into Europe’s orbit. The pact was a component of the agreement that Ukraine’s then-government declined to sign four months ago, triggering pro-Europe demonstrations that led to the current crisis.
“We will react every time, and we react based on mutuality. We have responded to the first sanctions, and now we will respond” to further sanctions, he said. “They will not go unnoticed.”
“We want to be a part of the big European family, and this is the first tremendous step in order to achieve for Ukraine its ultimate goal, as a full-fledged member,” said interim Ukrainian Prime Minister Arseniy Yatsenyuk.
The foreign ministry promised a stiff response to the United States.
European leaders have struggled to agree on how far they are prepared to go with measures against Russia that are likely to be far more economically damaging to their countries than to the United States.
“The U.S. administration decision announced on March 20 to expand the list of sanctions against Russian officials, parliamentarians and businessmen as a punishment for Crimea’s reunification with Russia causes disappointment and regret,” said a statement attributed to Alexander Lukashevich, the ministry’s press secretary. “We are certain to respond toughly as already happened on more than one occasion earlier with respect to earlier sanctions.”
Obama is scheduled to travel to Europe next week to meet with the Europeans and other allies in several forums, including the European Union, NATO and the Group of Seven industrialized nations, which has been at least temporarily downsized to exclude Russia. In the current “political circumstances,” German Chancellor Angela Merkel said Thursday, “there is no G-8.”
European leaders have said they will impose tougher measures against Moscow if Russia continues its aggressive actions in Ukraine. Obama on Thursday laid the groundwork for far broader measures against “key sectors of the Russian economy” if Putin escalates.
The measures potentially include Russia’s financial services, energy, mining, engineering and defense sectors, according to language in Obama’s executive order, his third in two weeks. If implemented, the additional sanctions would not only significantly affect the Russian economy, he acknowledged, but “could also be disruptive to the global economy.”
“Russia must know that further escalation will only isolate it further from the international community,” Obama said in a brief statement on the White House South Lawn.
For now, the measures target Putin’s inner circle and stop well short of the kind of sanctions that have crippled Iran’s economy. Those would be triggered only by a wider military incursion, and Russian troops remain massed on Ukraine’s eastern and southern borders. Although Putin has said Russia has no further territorial designs on Ukraine, he has proved indifferent to Western threats.
Alexei Pushkov, head of the foreign affairs committee of the Duma, or lower house of parliament, tweeted Friday: “Economic sanctions make sense when their goal is to prevent something. The reunification with Crimea is already a fact. There’s nothing they can prevent. What’s the point?”
Alexei Pushkov, head of the foreign affairs committee of the Duma, or lower house of parliament, tweeted Friday: “Economic sanctions make sense when their goal is to prevent something. The reunification with Crimea is already a fact. There’s nothing they can prevent. What’s the point?”
The Obama administration said it is reviewing a Ukrainian request for nonlethal military assistance to help deter a Russian incursion. But a senior U.S. official, one of several who briefed reporters in a conference call about the new measures, said that “nobody wants the outcome here to be a full-bore military conflict between Russia and Ukraine.” The official repeated that the United States is not considering “the introduction of U.S. military forces.”
A sign of things to come?
The officials spoke on the condition of anonymity to focus attention on the president’s public remarks.
Ukraine’s leaders, stung by the loss of Crimea and facing dire problems at home, hope to capitalize on Western support. The interim prime minister, Arseniy Yatsenyuk, signed an agreement at the Brussels E.U. summit that could pave the way for broader cooperation.
The U.S. sanctions announced Thursday added 20 people to the seven Russians and four Ukrainians whose U.S. and dollar assets the administration froze this week, along with what a senior administration official described as “a crony bank that handles the funds” for wealthy Russians within and outside the government.
It came four months to the day after the ousted president of Ukraine, Viktor Yanukovych, spurned a deal with the E.U. in favor of Russia, provoking the long-lasting protest that eventually brought him down.
Among those on the list are government and business leaders who have been close to Putin, some for many years. They include some of the richest men in Russia — and one Russian, Gennady Timchenko, who is in the oil-trade business in Switzerland.
Ukraine is still a significant way from formally joining the 28-nation bloc, and such a move would likely draw a furious response from Moscow. But Yatsenyuk said he believed Friday’s signing of a political association agreement marked a major push in that direction.
Putin interests in the Swiss-based Gunvor Group, of which Timchenko is listed as a co-founder, have been long rumored but never detailed. A Treasury Department statement saying that “President Putin has investments in Gunvor and may have access to Gunvor funds” was immediately disputed by the company. It said in a statement: “President Putin has not and never has had any ownership, beneficial or otherwise in Gunvor. . . . Any understanding otherwise is fundamentally misinformed and outrageous.”
“We want to be a part of the big European family, and this is the first tremendous step in order to achieve for Ukraine its ultimate goal, as a full-fledged member,” he said.
In a later statement from its Geneva headquarters, Gunvor said that as of Wednesday, “anticipating potential economic sanctions,” Timchenko had sold all his shares in the company to his partner, Torbjorn Tornqvist, a Swedish citizen.
The signing of the deal with Ukraine overshadowed, for a day, Europe’s continuing struggles over how to penalize Moscow for its annexation of Crimea.
The sanctions list also includes key officials such as Sergei Naryshkin, speaker of the lower house of parliament, and Sergei Ivanov, head of the presidential administration, as well as influential Russians in the banking and business communities, including several from Putin’s home town, St. Petersburg. Among them is Yuri Kovalchuk, a longtime Putin friend who is known as “Putin’s banker.” Kovalchuk and another person on the list, Putin aide Andrei Fursenko, are owners of Rossiya Bank, the sanctioned bank.
Some members, particularly those in Eastern Europe, have pushed for tough sanctions, fearing that without a stern response from the West, Russia will be emboldened to reach for more territory. But other European nations, including E.U. heavyweights like Germany, have deep economic ties with Russia and are reluctant to push too hard. About a third of Europe’s gas comes from Russian sources.
Senior U.S. officials said that Rossiya Bank has $10 billion in assets and that it handled financial transactions for many senior Russian officials.
Without unanimous support for broad financial sanctions, the E.U. focused on more modest steps.
“We expect that this will have a significant impact on its ability to operate,” one official said. “It will be frozen out of the dollar. All the correspondent accounts that it has with U.S. financial institutions will be terminated.” The United States would work with governments and the private sector around the world to “prevent it from operating to the greatest extent possible,” the official said.
On Friday it announced the names of 12 individuals to add to its sanctions list, which began with 21 names earlier in the week. The new names appeared to be part of an effort to coordinate strategy with the United States and included several Putin aides and officials who have already been sanctioned by Washington. Among them were Dmitry Rogozin, a deputy prime minister.
An administration official noted that the St. Petersburg-based Rotenberg brothers, owners of SMP Bank, are longtime Putin associates close to the center of power, receiving $7 billion in contracts connected to the Sochi Olympics.
The list also included Dmitry Kiselyov, a Russian news anchor who was recently named to head the Kremlin’s new information agency, Russia Today. Kiselyov responded to American criticism of the Crimean referendum on Sunday by warning that Russia was capable of turning the United States into “radioactive ashes.”
Russian Foreign Minister Sergei Lavrov and Secretary of State John F. Kerry spoke again by phone Thursday about Ukraine. Lavrov, a separate ministry statement said, accused the United States of “condoning” the activities of “ultranationalist and extremist forces” that he said were targeting businessmen, journalists, dissenters, Russian speakers and “our compatriots.”
Notably, Europe did not go after Russian oligarchs or banks, as the United States did on Thursday. But European leaders said they have prepared additional penalties that would be triggered if Putin makes a play for other parts of Ukraine.
The Pentagon said that Defense Secretary Chuck Hagel also spoke with his Russian counterpart, Sergei Shoigu, who told him that Russian troops along the Ukrainian border were there only to conduct exercises.
“If there’s further destabilization in Ukraine, then there should be further, wide-ranging measures taken,” said British Prime Minister David Cameron, who did not give specifics.
Defying U.S. and European warnings, Russia moved troops several weeks ago into Crimea, a part of Ukraine with an ethnic-Russian majority population. In short order, it organized a referendum in which Crimea voted to become part of Russia and Putin announced this week that Russia would annex the region.
Cameron said the best rebuke to Russia would be a strong Ukraine, a sentiment that other European leaders echoed. The E.U. on Friday also sought to bolster other potentially vulnerable nations in Russia’s shadow, signaling that the bloc would sign deals to tighten its relations with both Georgia and Moldova.
On Thursday, the lower house of the Russian parliament voted 443 to 1 to admit Crimea and the metropolitan region of Sevastopol into the Russian Federation, putting some of the final procedural touches on the takeover.
Witte reported from London. Kathy Lally contributed to this report from Kiev, Ukraine.
Englund reported from Moscow. Witte reported from London. Kathy Lally in Moscow and William Branigin in Washington contributed to this report.
