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U.S. imposes new sanctions on Russia U.S. imposes new sanctions on Russia
(about 4 hours later)
The Obama administration on Monday imposed new asset freezes and visa bans on seven Russian government officials and sanctions on 17 companies linked to President Vladi­mir Putin’s “inner circle,” saying that the measures were a response to Russia’s failure to cease provocative acts in Ukraine. The Obama administration on Monday ratcheted up its punishment of Russia for what it called continuing provocations in Ukraine, even as it acknowledged that a new round of economic sanctions is unlikely to bring an immediate change in Russian behavior.
The sanctions, which President Obama previewed during a visit to the Philippines, include additional restrictions on 13 of the Russian companies, imposing licensing requirements “with a presumption of denial” for the export or transfer of any U.S.-made items to those enterprises. The new measures froze the assets of seven Russian individuals and 17 companies associated with them, and prohibited any U.S. dealings with them. All were identified as closely linked to Russian President Vladimir Putin.
The new sanctions were imposed under executive orders Obama signed last month following Russia’s incursion into the Ukrainian region of Crimea. In a statement, the White House noted that a separate order authorizes the president to sanction “key sectors of the Russian economy” and said he would move to do so “if there is further Russian military intervention in Ukraine.” The administration also announced new restrictions on Russia’s import of U.S. goods deemed to contribute to its “military capabilities.”
“The international community has been unified in its position that Russia must cease its illegal intervention and provocative actions in Ukraine,” the statement said. “The United States, working closely with its partners, remains prepared to impose still greater costs on Russia if the Russian leadership continues these provocations instead of de-escalating the situation.” The European Union said it would expand its sanctions list to include 15 more individuals.
The seven officials sanctioned on Monday are all close friends or key supporters of Putin, including Igor Sechin, president of Rosneft, Russia’s leading state-owned petroleum company. Some U.S. lawmakers and Ukrainian politicians decried the actions as too weak and called for immediate, full-scale sanctions against the Russian banking and energy sectors. Officials in Moscow condemned the announcement but insisted that their economy could weather the restrictions.
U.S. officials have described their strategy as an attempt to pressure key Putin associates into pushing their leader for a more conciliatory Ukraine policy. American officials asserted that Russia is already showing signs of significant economic pain, with capital fleeing, investment falling and its debt downgraded to the brink of junk bonds. The goal is to gradually increase pressure until “Russia sees the dead end that it’s going down in Ukraine,” a senior administration official said.
In addition to Sechin, the other officials cited were either connected to Russia’s effective annexation of Crimea or are otherwise involved in its foreign and security policy. Businessman Sergey Chemezov, who lived in the same East German apartment complex as Putin when Putin was stationed there as a KGB officer in the late 1980s, is the head of state-owned Rostec, a major arms and technology exporter that has long supplied Boeing with titanium for its airplanes. Vyacheslav Volodin, Putin’s first deputy chief of staff, is one of the Russian president’s closest advisers and, the Treasury Department said, is believed to have been involved in Russia’s decision to take over Crimea. “We don’t expect there would be an immediate change in Russian policy,” and there will be “daily fluctuations here and there” in the financial markets, said the official, one of several who briefed reporters in a conference call on the new measures Monday on the condition of anonymity.
Russian officials were defiant after the sanctions were announced on Monday, and brushed off any notion that they might change Russian policies. “What we need to do is to steadily show the Russians that there are going to be much more severe economic pain, much more severe political isolation and, frankly, that Russia stands far more to lose, continuing these actions over time,” than if it stands down in Ukraine.
“The more sanctions come, the stronger the consolidation of the elites will be,” said Andrei Belousov, an economic aide to Putin, the Interfax news agency reported. President Obama made the same case in a news conference in the Philippines, calling the sanctions a “calibrated” response to Russian actions and saying, “We don’t yet know whether it is going to work.” He emphasized that “the next phase — if, in fact, we saw further Russian aggression,” including troop incursions into eastern Ukraine — could be sanctions against broad sectors of the Russian economy.
Deputy Foreign Minister Sergei Ryabkov described the new sanctions as “disgusting.” Several Russian economic analysts agreed with the long-term U.S. assessment, saying the general climate of political unpredictabilty and strained ties with the West was far more costly than specific sanctions.
The U.S. announcement “demonstrates the utter absence of understanding about what is going on in Ukraine,” Ryabkov told Interfax. “It is a distorted mirror of foreign policy, not a responsible approach to the situation.” “For the economic picture, it’s impossible for this to have any good result,” said Evgeny Gontmakher, a former adviser to Prime Minister Dmitry Medvedev who now works at the Institute of Social Development, a liberal policy institute.
Ryabkov said the Russian government would take reciprocal measures. “We have never been concealing that we have capabilities for such a response at our disposal, as well as a set of measures, which is rather large, that will be used,” he said, without elaborating. Russian officials said the Obama administration doesn’t understand the nature of the crisis in Ukraine. “It is a distorted mirror of foreign policy, not a responsible approach to the situation,” said Deputy Foreign Minister Sergei Ryabkov.
Previous rounds of sanctions have already taken a toll on the Russian economy, and Standard & Poor’s last week downgraded the country’s debt to the brink of junk status, citing capital flight. On Monday, however, the ruble immediately rose half a percentage point against the dollar after slumping earlier in the day in the expectation that the latest U.S. measures would be more severe. Ryabkov added that the Russian government will take reciprocal measures. “We have never been concealing that we have capabilities for such a response at our disposal, as well as a set of measures, which is rather large, that will be used,” he told the Interfax news agency, without elaboration.
Officials said the Obama administration had been ready to move on new sanctions Friday but postponed them to coordinate its actions with the European Union. E.U. foreign ministers meeting Monday in Brussels agreed to add 15 Russian and Ukrainian individuals to their existing list of people subject to asset freezes and travel bans. Some, but not all, overlap with U.S. measures imposed in what are now three rounds of sanctions. The new names are to be listed in the European Union’s official register on Tuesday. Among those identified for sanctions Monday was Igor Sechin, president of Rosneft, Russia’s leading state-owned petroleum company, as well as Dmitry Kozak, a deputy prime minister.
Under the new U.S. measures, effective immediately, new export controls will restrict both military goods and so-called dual-use items or services to Russia or to Crimea. Others are either connected to last month’s annexation by Russia of the Ukrainian region of Crimea or are otherwise involved in its foreign and security policy. Businessman Sergey Chemezov — who lived in the same East German apartment complex as Putin when Putin was stationed there as a KGB officer in the late 1980s — is the head of state-owned Rostec, a major arms and technology exporter that has long supplied Boeing with titanium for its airplanes and has projects with Canadian aircraft-maker Bombardier and Italian tire company Pirelli.
In addition, the department is taking actions to revoke any existing export licenses that meet these conditions. All other pending applications and existing licenses will receive a case-by-case evaluation to determine their contribution to Russia’s military capabilities. Vyacheslav Volodin, Putin’s first deputy chief of staff, is one of the Russian president’s closest advisers. The Treasury Department said he was involved in Russia’s decision to take over Crimea.
Sechin’s Rosneft has major joint oil exploration and project projects with ExxonMobil, and British oil giant BP owns a 19.75 percent stake in the company. Sechin will no longer be able to travel to the United States for business consultations, but he said Monday said that the sanctions would have little effect on Rosneft’s projects or bottom line. Oleg Belavantsev is Putin’s envoy to Crimea; Evegeniy Murov is the director of Russia’s powerful Federal Protective Service, which protects the president. Alexei Pushkov is head of the foreign affairs committee of the lower house of Russia’s parliament.
“I view the latest steps by Washington as a high evaluation of the effectiveness of our work,” he told Interfax. “We assure our shareholders and partners, including Americans, that this effectiveness will not decrease and that our cooperation will not suffer but will develop dynamically.” All of the individuals sanctioned are now banned from receiving U.S. visas. Sechin’s Rosneft has major joint oil-exploration projects with Exxon Mobil, and British oil giant BP owns a 19.75 percent stake in the company. Sechin will no longer be able to travel to the United States for business consultations, but he said Monday that the sanctions would have little effect on Rosneft’s projects or its bottom line.
Putin on Monday did not directly address the announcement, but he said that “Western partners” were targeting Russia’s defense industry with sanctions in an attempt to weaken it and to force it to rely on imports from Ukrainian factories. “I view the latest steps by Washington as a high evaluation of the effectiveness of our work,” he said in a statement. “We assure our shareholders and partners, including Americans, that this effectiveness will not decrease and that our cooperation will not suffer but will develop dynamically.”
“We will achieve our goals regardless,” he told lawmakers in the northwestern city of Petrozavodsk. “It is just a matter of time and money.” BP America said in a statement that it will “comply with all relevant sanctions” but that “we are committed to our investment in Rosneft, and we intend to remain a successful, long term investor in Russia.”
Birnbaum reported from Moscow. The 17 companies listed Monday, from banks to a construction company to a rail freight operator, are all tied to businesspeople and officials close to Putin who had been targeted in earlier rounds of U.S. sanctions. Two firms are controlled by close Putin friends Boris and Arkady Rotenberg, and three by Yuri Kovalchuk, who is described by U.S. officials as Putin’s personal banker.
Eleven are owned or controlled by Gennady Timchenko, a businessman who last month sold a nearly 50 percent stake in the Swiss-based oil-trading firm Gunvor shortly before he was targeted with sanctions.
Putin on Monday did not directly address the new sanctions, but said that “Western partners” were targeting Russia’s defense industry to weaken it and force it to rely on imports from Ukrainian factories. “We will achieve our goals regardless,” he told lawmakers in the northwestern city of Petrozavodsk. “It is just a matter of time and money.”
In a statement, GOP Sens. Bob Corker (Tenn.), ranking Republican on the Foreign Relations Committee, and Kelly Ayotte (N.H.) of the Armed Services Committee said “incremental” sanctions are insufficient and called for full-scale measures against Russia’s financial and energy sectors.
Rep. Eliot L. Engel (N.Y.), ranking Democrat on the House Foreign Affairs Committee, said that the new sanctions are “a step in the right direction” but that “I believe we need to go further.”
In Ukraine, former defense minister and current presidential candidate Anatoliy Gritsenko said the West has not meaningfully helped Ukraine in its time of need.
“The U.S. and [Britain] betrayed Ukraine,” he said. “They encouraged us to give up our nuclear weapons and said they would come to our defense,” he said, referring to agreements reached at the demise of the Soviet Union. “But instead, they’re just ‘deeply concerned.’ ”
Birnbaum reported from Moscow. Griff Witte in Ukraine contributed to this report.