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US, EU impose toughest sanctions yet on Russia over Ukraine

© AFP | The Kremlin reflected in the company plate of the state-controlled Russian oil giant Rosneft.

Text by FRANCE 24

Latest update : 2014-07-17

The US and the EU on Wednesday announced the most wide-ranging sanctions yet on the Russian economy, with Washington targeting key institutions including Gazprombank and flagship oil giant Rosneft, as well as other energy and defence companies.

Washington has steadily escalated its financial sanctions on Russia over what it views as Moscow’s interference in its neighbour Ukraine and its annexation of the Crimea region. US President Barack Obama said the United States could impose further sanctions if Russia did not take concrete steps to ease the conflict.

The companies targeted by the US also include Russia’s second-largest gas producer, Novatek, Vnesheconombank, or VEB, a state-owned bank that acts as payment agent for the Russian government, and eight arms firms.

The US Treasury Department, which posted the sanctions on its website, said the measures effectively closed medium- and long-term dollar funding to the two banks and energy companies.

But the sanctions did not freeze those four companies’ assets. The sanctions stopped short of targeting Russia’s Gazprom, the world’s largest natural gas producer and provider of much of Europe’s energy supplies. Gazprombank is 36 percent-owned by Gazprom.

“These sanctions are significant, but they are also targeted, designed to have the maximum impact on Russia while limiting any spillover impact on American companies or those of our allies,” Obama told reporters.

The new sanctions also include Feodosiya Enterprises, a shipping facility in Crimea, and senior Russian officials, several of whom had already been targeted by the European Union.

The affected senior officials included the deputy head of the State Duma, or parliament, the minister of the Crimea, a commander of the Russian intelligence agency FSB, and a Ukrainian separatist leader.

“We have emphasised our preference to resolve this issue diplomatically,” Obama said. “We have to see concrete actions, not just words, that Russia in fact is committed to trying to end this conflict.”

He said Russia had continued to support separatists in east Ukraine, sending fighters and weapons across the border.

EU adds to pressure

Moments after Obama’s announcement, the European Union declared its own tightening of sanctions.

The measures will target both individuals and firms providing material or financial support to efforts to undermine Ukraine’s sovereignty as well as to those responsible for the annexation of Crimea or the destabilisation of eastern Ukraine.

The EU's 28 leaders, meeting at a summit to discuss the crisis and to fill top EU jobs, also agreed to suspend new investments in Russia by the EU’s European Investment Bank (EIB) and European Bank of Reconstruction and Development (EBRD).

The measures, which fall short of the new US measures that hit Russian energy groups, potentially broaden the scope to companies closely connected to the Kremlin, a move that many member states with strong economic ties to Russia had resisted.

Russian outcry

Russia called new sanctions outrageous and unacceptable, and threatened retaliation.

“The US administration’s new decision to enforce sanctions against a number of Russian legal entities and individuals under a far-fetched, false pretext cannot be called anything other than outrageous and fully unacceptable,” deputy foreign minister Sergei Ryabkov told the Interfax news agency.

He added that Russia would retaliate without providing details.

“We condemn those politicians and officials who are behind such actions and confirm our intention to adopt measures which will be perceived in Washington rather painfully and acutely,” Ryabkov said.

Rosneft Chief Executive Officer Igor Sechin said that sanctions on the Russian state-controlled energy company are illegal because it has no role in the crisis in Ukraine.

Sechin told reporters on Thursday that the sanctions will damage shareholders of US companies and banks cooperating with Rosneft. He said the sanctions do not affect current projects with Exxon Mobil Corp.

(FRANCE 24 with AFP, REUTERS)

 

Date created : 2014-07-17

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