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US announces sanctions on Putin's inner circle over Ukraine US announces sanctions on Putin's inner circle over Ukraine
(about 1 hour later)
The US on Monday announced sanctions on officials and companies linked to President Vladimir Putin's "inner circle", accusing Russia of provocative acts and undermining democracy in Ukraine. The US and the European Union stepped up their sanctions on President Vladimir Putin’s inner circle on Monday, accusing Russia of stoking violence and political tension in eastern Ukraine.
The White House announcement included visa bans, asset freezes and export licence denials on a panoply of top Russian officials and firms as reprisal for the continuing destabilisation of eastern Ukraine. In a statement, the White House called Russian involvement in the Ukraine crisis “indisputable.” The White House announced it was adding seven prominent Russians to a blacklist subject to visa bans and asset freezes, including two officials particularly close to the Russian leader: Igor Sechin, the head of Russia’s largest oil company Rosneft, and Vyacheslav Volodin, first deputy chief of staff in the presidency, widely believed to run its internal political strategy.
But senior administration officials said that an immediate change in Russian behaviour was unlikely. They hinted that “sectoral sanctions” would be held in reserve should Russia invade Ukraine outright or otherwise contribute to the violent separatism facing eastern Ukraine – despite conceding that such sanctions may pose a risk to the global economy. “Putin’s decision to move into Crimea is believed to have been based on consultations with his closest advisers, including Volodin,” a US Treasury statement said.
Seven Russian officials and two Putin confidantes will have their assets frozen and be subjected to a US visa ban. Seventeen Russian companies will also be subject to the asset freeze, with 13 of them subject to what the White House called a “presumption of denial” on licenses for export, re-export or transfer of goods or items from the US to them. Accusing Russia of continuing to “fund, co-ordinate, and fuel a heavily armed separatist movement” in eastern Ukraine, the US also imposed asset freezes on 17 Russian companies, which will also be denied trading licences.
Among them are two Putin allies tied to massive state-owned oil firm, Rosneft – Igor Sechin, the president, and Sergei Chemezov, a member of the board who also directs a state-owned holding company. After a meeting of European ambassadors in Brussels, the EU declared it was increasing its own list of targeted sanctions from 33 to 48 top Russians. The 15 new names added to the list are not due to be published until Tuesday.
Like other Russian energy firms, Rosneft has deep ties with American-based counterparts, particularly ExxonMobil, with whom it has a $500 million joint venture for exploration of Arctic oil. Both the US and UK warned that broader sanctions against whole sectors of the Russian economy would be forthcoming in the event of more overt Russian miltary intervention in eastern Ukraine, despite concerns that such measures would pose a risk to the global economy, and have limited support inside the EU.
Sechin is a longtime ally of Putin, and worked under him in the St Petersburg city hall in the early 90s. When Putin left for Moscow, he took Sechin with him. Speaking in Manila, Obama said the goal of the new round of sanctions was to change the Russian calculation in its alleged sponsorship of separatists in Ukraine. “The goal is not to go after Mr Putin personally. The goal is to change his calculus with respect to how the current actions that he's engaging in Ukraine could have an adverse impact on the Russian economy over the long haul,” Obama said.
They become the targets of a process of economic pressure accelerated by President Barack Obama on 20 March, when the oil and gas firms that provide much of Russia’s exports first came under sanctions. The administration said that further sanctions could include targeting sectors of the Russian economy such as financial services and energy, the impact of which would be “far more powerful” than those announced on Monday, officials said.
Jack Lew, the US treasury secretary, said the action was taken in "close co-ordination" with the European Union, which said it would impose visa bans and asset freezes on 15 individuals. The EU did not publish the names of those on its list, which must be approved by national governments. The tier of sanctions announced on Monday had been prepared some weeks ago but had been held back after an 17 April accord in Geneva signed by the US, Russia, EU and Ukraine, intended to defuse the crisis. US officials said Russia had done nothing to implement the measures agreed to, but had instead fuelled the separatist takeover of eastern Ukrainian cities.
Beyond the targeting of individuals and firms, the US Treasury and commerce departments on Monday will restrict their policies on export licence applications for items that could add new high-technology capabilities to the Russian military. A senior administration official pointed to microelectronics as a field for export licence denials. Anger in Washington and Brussels was exacerbated by the continued detention of seven European military monitors by pro-Russian separatists in the town of Slavyansk. A senior US official said that the seven, including four Germans, a Pole, a Dane and a Czech officer, in Ukraine under the mandate of the Organisation for Security and Cooperation in Europe (OSCE), had been “subjected to abuse in capitivity” but that claim could not be confirmed.
Speaking in Manila, Obama said the goal of the new round of sanctions was to change the Russian calculation in its sponsorship of separatists in Ukraine. “The goal is not to go after Mr Putin personally. The goal is to change his calculus with respect to how the current actions that he's engaging in Ukraine could have an adverse impact on the Russian economy over the long haul,” Obama said. At an emergency meeting of OSCE member states in Vienna, the US delegate, Gary Robbins, said the organisation faced “a hostage crisis”. Robbins said: “We remain disappointed that senior officials in Moscow have not condemned the abduction – nor have they demanded the team’s immediate release.”
The administration said that further sanctions could include targeting sectors of the Russian economy such as financial services and energy, the impact of which would be “far more powerful” than those announced on Monday, officials said. He added: “While the government of Ukraine is working in good faith to fulfill the aspirations of the Geneva joint statement, Russia continues to deceive and destabilise its neighbour. Despite its propaganda attempting to hide the truth, Russia continues to fund, coordinate, and fuel a heavily armed separatist movement in Donetsk.”
An administration official briefing reporters on background said Russia could expect “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 pursuing deescalation”. The OSCE reported that other members of its special monitoring team had been temporarily detained by separatists in two locations near Donetsk on Sunday. Monitors were held in a heavily-barricaded police builidng in the town of Horlivka and were accused of espionage before being allowed to leave.
The US conceded that the list of Russian entities targeted by the EU is likely to diverge from the American one. But the Obama administration insisted it was confident the Europeans were on board with the so-called sectoral sanctions that could target entire areas of Russian economic activity. Speaking in the House of Commons on Monday, the British foreign secretary, William Hague said: “Russia is already paying a serious price for its actions and the longer it breaches the independent sovereignty of Ukraine the heavier the price it will pay."
After a weekend round of phone calls between Obama and European leaders on Ukraine, “we’re also confident that the Europeans are with us in their commitment to impose those sectoral sanctions, should we see, for instance, Russian troops move across that border,” a senior administration official said. “Russia’s actions betray their fear of democracy and the rule of law taking root in their neighbourhood,” the foreign secretary added.
It is unclear what Russian measures in Ukraine short of a full invasion would trigger the sectoral sanctions. Russia has been accused of sponsoring pro-Russian separatists in eastern Ukraine who have seized government buildings, TV stations and wounded and killed politicians, among other destabilising actions. The principal target of Monday's sanctions was Rosneft. Not only was its president, Igor Sechin, singled out in the US blacklist, but also Sergei Chemezov, a member of the board who also directs a state-owned holding company.
The Obama administration indicated it believes it is more likely to influence Russian behaviour through economic pressure than it was through providing additional and potentially lethal military aid, citing the massive discrepancy in Ukrainian and Russian military capabilities. Like other Russian energy firms, Rosneft has deep ties with American-based counterparts, particularly ExxonMobil, with whom it has a $500m joint venture for exploration of Arctic oil. The British oil giant, BP, also owns a nearly 20% stake in Rosneft, but said on Monday it intends to remain a long-term investor in Russia, despite the new sanctions.
Last week, a contingent of US soldiers from the 173rd infantry combat team arrived in a Polish air base, part of a commitment of 600 troops the administration will send to Poland and the Baltic states on a so-called training mission that the White House hopes will have a deterrent value.
Russian officials vowed to take reprisal measures for the American sanctions package. “We are certain that this response will have a painful effect on Washington,” deputy foreign minister Sergei Ryabkov told the Interfax news agency.Russian officials vowed to take reprisal measures for the American sanctions package. “We are certain that this response will have a painful effect on Washington,” deputy foreign minister Sergei Ryabkov told the Interfax news agency.
The Obama administration indicated it believes it is more likely to influence Russian behaviour through economic pressure than providing additional and potentially lethal military aid to Ukraine, citing the massive discrepancy in Ukrainian and Russian military capabilities.
Last week, a contingent of US soldiers from the 173rd infantry combat team arrived in a Polish air base, part of a commitment of 600 troops the administration will send to Poland and the Baltic states on a so-called training mission that the White House hopes will have a deterrent value.
Fraud investigators in Britain also froze $23m of suspected dirty money held in the UK, as they opened an investigation into possible money laundering from Ukraine, mostly by members of the ousted regime of Viktor Yanukovych.
The announcement of a criminal investigation by the Serious Fraud Office comes on the eve of an international conference in London aimed at helping Ukraine’s new government recover stolen assets. The two-day Ukraine Forum on Asset Recovery, organised by the Foreign Office and the US attorney general, brings together investigating organisations to work on recovering millions in stolen assets.
Robert Barrington, executive director of Transparency International in the UK, said the $23m of suspected stolen money the SFO was looking at could be a tiny proportion of the total money embezzled by corrupt officials in Ukraine. “One would hope this would be the first announcement on a very long journey.”
Governments were working much faster to recover stolen assets than after the Arab Spring, he said. But questions persist about the UK’s legal framework for checking on stolen money. “Why was the money here in the first place? If if was corrupt it should never have been here.”
Last month the EU froze assets of former president Yanukovych, and 21 other people held responsible for embezzling state funds.