This article is from the source 'nytimes' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.nytimes.com/2014/04/29/world/asia/obama-sanctions-russia.html

The article has changed 13 times. There is an RSS feed of changes available.

Version 10 Version 11
U.S. Announces More Sanctions Against Russia U.S. Expands Sanctions, Adding Holdings of Russians in Putin’s Financial Circle
(about 3 hours later)
WASHINGTON — The United States on Monday imposed additional sanctions against Russian government officials, businessmen and companies deemed close to President Vladimir V. Putin, accusing Moscow of failing to live up to its agreement to defuse the crisis in Ukraine. WASHINGTON — The United States added new sanctions against Russia on Monday, expanding the list of targets but concentrating on the myriad holdings of four billionaires viewed as part of President Vladimir V. Putin’s financial circle.
The Obama administration ordered travel bans and asset freezes for seven Russian individuals, including two said to be in Mr. Putin’s inner circle, and froze assets for 17 companies. Thirteen Russian companies will face additional restrictions as the government will cut off the export or re-export of American-made products to them. Accusing Russia of failing to live up to its agreement to defuse the crisis in Ukraine, the Obama administration took aim at 17 banks, energy companies, investment accounts and other firms controlled by the four men, in what amounted to an attempt to constrain the assets available to Mr. Putin’s close associates and perhaps to the president himself.
Additionally, the State and Commerce Departments announced a new policy to deny export license applications for high-technology items that could contribute to Russia’s military capabilities. The two departments will revoke existing export licenses along those lines, the White House said in a statement. The European Union plans to follow with sanctions on 15 Russians, officials said. Although the measures do not explicitly target Mr. Putin, American officials indicated that the choice of targets was intended to send a message to him that any hidden assets he might have could ultimately be affected.
Among those targeted on Monday was Igor I. Sechin, president of the state-owned Rosneft oil company and a longtime Putin adviser. Although administration officials said over the weekend that they also expected Aleksei B. Miller, the head of the energy giant Gazprom, to be targeted, Mr. Obama ultimately chose a list that did not include him. In addition to the firms, the administration imposed sanctions on seven other prominent Russian figures, including two longtime Putin advisers: Igor I. Sechin, president of the state-owned Rosneft oil company, and Sergei V. Chemezov, the director general of Rostec, the Russian state corporation overseeing high-technology industries. The European Union said it would follow with sanctions on 15 Russians.
Others who face sanctions include Dmitri N. Kozak, a deputy prime minister; Vyacheslav V. Volodin, a deputy chief of staff to Mr. Putin; and Aleksei Pushkov, the chairman of the international affairs committee of the State Duma, the lower house of Parliament. The companies targeted included several banks, including Sobinbank, and energy companies like the Stroytransgaz Group and various related entities. “The goal here is not to go after Mr. Putin personally,” President Obama told reporters in Manila, where he was wrapping up a weeklong trip to Asia. “The goal is to change his calculus” and “to encourage him to actually walk the walk and not just talk the talk when it comes to diplomatically resolving the crisis in Ukraine.”
Stroytransgaz and its related companies form the pipeline construction arm of Gazprom that maintains and expands the Russian domestic natural gas pipeline network, the world’s largest gas pipeline system, and for years the companies have been the focus of suspicion by financial analysts that they are used to siphon money from Gazprom to insiders. Gazprom’s capital expenditures totaled about $24.4 billion in 2013, according to a company statement. The Stroytransgaz companies were initially affiliated with the 1990s-era management of Gazprom, but later shifted to the control of longtime associates of Mr. Putin, including the brothers Arkady and Boris Rotenberg. The sanctions follow several previous rounds of punitive measures that to date have not noticeably changed Mr. Putin’s calculus, and American officials privately expected no different result in the short term.
In imposing sanctions on Mr. Sechin, the administration has targeted a top partner of ExxonMobil, which has multiple joint ventures with Rosneft. It is not known if Mr. Sechin has any assets in the United States to freeze, but he will no longer be permitted into the country to consult with his ExxonMobil partners. ExxonMobil lawyers have been studying the possible ramifications in anticipation of the administration move, but a company spokesman said Monday that it had no comment. “We don’t expect there to be an immediate change in Russian policy,” said one administration official, briefing reporters under ground rules in which he would not be identified. “What we need to do is to steadily show the Russians that there are going to be much more severe economic pain” and isolation.
The firms targeted on Monday were all tied to Russian businessmen who were targeted in previous rounds of sanctions. Eleven of the companies were linked to Gennady N. Timchenko, including the Volga Group, his private investment holding company. Mr. Timchenko is a co-founder of the Gunvor Group, a commodities trading firm in which the Treasury Department has previously said Mr. Putin has personal investments. Gunvor has adamantly denied that Mr. Putin has any financial ties to the company, and Mr. Timchenko has sold his shares in Gunvor. Administration officials, including some in the more hawkish camp, said the new sanctions were a more serious effort than earlier rounds. Some said the “secondary effects” of chilling business with those targeted were becoming more significant, and they expressed optimism that the Europeans were more willing to talk about tougher measures after a team of European military observers was taken captive by pro-Russian forces in eastern Ukraine.
Three other firms targeted on Monday were tied to Arkady and Boris Rotenberg: InvestCapitalBank, SMP Bank and Stroygazmontazh. Three others were subsidiaries of Yuri V. Kovalchuk’s Bank Rossyia: Abros, Zest and Sobinbank. Mr. Obama will host Chancellor Angela Merkel of Germany at the White House later this week to coordinate whatever the next steps will be against Mr. Putin’s government. Ms. Merkel, whose country has extensive economic, cultural and historical ties to Russia, is seen as the linchpin of any coordinated effort, and Mr. Obama has made it his priority to maintain a united front with the Europeans against Russia.
“Today’s targeted sanctions, taken in close coordination with the E.U., will increase the impact we have already begun to see on Russia’s own economy as a result of Russia’s actions in Ukraine and from U.S. and international sanctions,” Jacob J. Lew, the Treasury secretary, said in a statement. “Russian economic growth forecasts have dropped sharply, capital flight has accelerated and higher borrowing costs reflect declining confidence in the market outlook.” Critics called the latest sanctions inadequate. “I expected more from these U.S. sanctions,” said Cliff Kupchan, a Russia analyst at the Eurasia Group, a firm that advises businesses. “To have a shot at changing Putin’s calculus, we’ve got to get serious on economic measures — at least hit a large Russian bank. We missed the target today.”
American officials said that the European sanctions list would diverge from theirs, but that the fact that both sides were moving on the same day signaled important unity. Anders Aslund, a Russia scholar at the Peterson Institute for International Economics, said the sanctions were “a whimper” after the tough talk by Mr. Obama and Secretary of State John Kerry.
“We don’t expect there to be an immediate change in Russian policy,” said a senior administration official, briefing reporters under ground rules that did not permit him to be identified. But he said the latest actions would signal that “much more severe economic pain” could still be imposed if Moscow did not back down. But he added that the intent was clearly to send a message to Mr. Putin about any hidden wealth. “This is going after Putin personally, not the Russian economy,” Mr. Aslund said. “And it’s telling him we know where you have your money. We don’t need to sanction you personally.”
Other individuals subject to the travel ban and asset freeze were Oleg Belavantsev, who was appointed by Mr. Putin last month as presidential envoy overseeing the annexed Crimean Peninsula; Sergei V. Chemezov, the director general of Rostec, the Russian state firm overseeing high-technology industries and a longtime member of Mr. Putin’s circle; and Evgeny Murov, the director of Russia’s Federal Protective Service and an army general. The actions will freeze any assets in the United States and bar Americans from doing business with the individuals and firms listed. The individuals will also be denied visas to enter the United States. Moreover, the United States will cut off the export or re-export of American-made products to 13 of the companies and deny export licenses for high-technology items that could contribute to Russia’s military capabilities.
Mr. Chemezov has had extensive dealings with Boeing through a joint venture part-owned by Rostec that manufactures about half of all titanium parts used in Boeing aircraft, and as a buyer of airplanes for a regional airline affiliated with Rostec The 17 firms targeted were all tied to Russian businessmen who were targeted in previous rounds of sanctions. Eleven of the companies are linked to Gennady N. Timchenko, including the Stroytransgaz Group, the pipeline construction arm of Gazprom, and the Volga Group, his private investment holding company. Mr. Timchenko was a co-founder of the Gunvor Group, a commodities trading firm in which the Treasury Department has previously said Mr. Putin has personal investments. Gunvor has adamantly denied that Mr. Putin has any financial ties to the company, and Mr. Timchenko has sold his shares in Gunvor.
That the sanctions covered no large publicly listed Russian companies came as a relief to traders in Moscow. Around midday, Russia’s benchmark Micex index recovered an initial loss after Mr. Obama said the list would not extend to the banking sector, and it closed with a modest gain of 1.5 percent. “It looked to be on the light side” of what the markets expected, said one banker in Moscow, speaking on the condition of anonymity. “This was more of a reminder that a new phase of sanctions is possible.” Three other firms targeted on Monday were tied to Arkady and Boris Rotenberg: InvestCapitalBank, SMP Bank and Stroygazmontazh. Three others were subsidiaries of Yuri V. Kovalchuk’s Bank Rossyia: Abros, Zest and Sobinbank. The Treasury Department has referred to Mr. Kovalchuk as the personal cashier for Mr. Putin.
The actions came shortly after President Obama, traveling here in Asia, declared that Russia was continuing to bully and threaten Ukraine and would pay a price. The fact that the announcement was made on the last stop of his weeklong Asia trip underscored the sense of urgency about fears that Russia was destabilizing eastern Ukraine. Others targeted Monday were Dmitri N. Kozak, a deputy prime minister; Vyacheslav V. Volodin, a deputy chief of staff to Mr. Putin; Aleksei Pushkov, chairman of the international affairs committee of the State Duma, the lower house of Parliament; Oleg Belavantsev, appointed by Mr. Putin last month as presidential envoy overseeing the annexed Crimean Peninsula; and Evgeny Murov, director of Russia’s Federal Protective Service.
“These sanctions represent the next stage in a calibrated effort to change Russia’s behavior,” Mr. Obama said at a news conference with President Benigno S. Aquino III of the Philippines. Although administration officials said over the weekend that they also expected Aleksei B. Miller, the head of the energy giant Gazprom, to be targeted, he was not on Monday’s list, but he may be added later.
But Mr. Obama acknowledged, “We don’t yet know whether it is going to work,” and he left the door open to more sweeping sanctions against Russian industries like banking and defense. “Today’s targeted sanctions, taken in close coordination with the E.U., will increase the impact we have already begun to see on Russia’s own economy as a result of Russia’s actions in Ukraine and from U.S. and international sanctions,” Jacob J. Lew, the Treasury secretary, said in a statement.
“The goal is not to go after Mr. Putin personally; the goal is to change his calculus, to encourage him to walk the walk, not just talk the talk” when it comes to diplomatic efforts to resolve the crisis, Mr. Obama said. In imposing sanctions on Mr. Sechin, the administration has targeted a top partner of Exxon Mobil, which has multiple joint ventures with Rosneft. It is not known if Mr. Sechin has any assets in the United States to freeze, but he will no longer be permitted into the country to consult with his ExxonMobil partners. Exxon Mobil had no comment on Monday.
Mr. Obama said the sanctions would affect high-tech military exports to Russia, because they are not “appropriate to be transferred in the current environment.” That the sanctions covered no large publicly listed Russian companies came as a relief to traders in Moscow. Russia’s benchmark Micex index closed with a modest gain of 1.5 percent. “It looked to be on the light side” of what the markets expected, said one banker in Moscow, speaking on the condition of anonymity. “This was more of a reminder that a new phase of sanctions is possible.”
In remarks on Monday in Russia, Mr. Putin did not address the announcement from Mr. Obama directly. But he did say that the West wanted to try to target Russian military industries with sanctions primarily to undermine Moscow’s attempts to replace critical military components that have long been produced in Ukraine.
Russia would be able to replace all the imports within 18 months to two and a half years, Mr. Putin told lawmakers in the northwestern town of Petrozavodsk, in remarks broadcast live on television. Substitutions would “not require a review of the defense budget,” he said.
Imports from Ukraine have slowed, but not stopped, Mr. Putin said, adding that he hoped they would continue. If not, the specialists working in defense plants are welcome to immigrate, he said.