WORLD_ UKRAINE_ Obama Widens Sanctions Against Russia in Ukraine Face-Off

Obama Widens Sanctions Against Russia in Ukraine Face-Off

By PETER BAKER 
JULY 16, 2014
The New York Times


WASHINGTON — President Obama escalated sanctions against Russia on Wednesday by targeting a series of large banks and energy and defense firms in what officials described as the most punishing measures to date for Moscow’s intervention in Ukraine.

While the latest moves do not cut off entire sectors of the Russian economy, as threatened in the past, the administration’s actions go significantly further than the financial and travel limits imposed so far on several dozen individuals and their businesses. The new measures will severely restrict access to American debt markets for the targeted companies.

“We have emphasized our preference to resolve this issue diplomatically, but we have to see concrete actions and not just words,” Mr. Obama told reporters on Wednesday evening in remarks in the White House briefing room.

He repeated that Russia needed to halt the flow of fighters and weapons across the border and support peace talks. “So far, Russia has failed to take any of the steps that I have mentioned. In fact, Russia’s support for the separatists and violations of Ukraine’s sovereignty has continued.”

Among the firms targeted were some of the most prominent in Russia, including Rosneft, the state-owned oil company and largest oil producer; Gazprombank, the financial arm of Gazprom, the giant state-controlled natural gas producer; Novatek, another Russian natural gas producer that has been competing with Gazprom; and VEB, the state economic development bank.

The administration also targeted eight state-owned defense firms; four Russian government officials, including an aide to President Vladimir V. Putin and a top official in the Federal Security Service; an oil shipping facility in Crimea, which Moscow annexed; a pro-Russian separatist leader; and the rump rebel organizations in the eastern Ukrainian cities of Donetsk and Luhansk.

Russia quickly denounced the moves and vowed to retaliate. “We condemn those politicians and bureaucrats who are behind such actions,” Sergei A. Ryabkov, the deputy foreign minister, told the Interfax news agency. Mr. Ryabkov said that Moscow would respond with countermeasures that would be “quite painful and serious.”

The moves were coordinated with European leaders, who were meeting in Brussels on Wednesday to consider their own package of penalties against Russia. The Europeans declined to go as far as the United States, instead focusing on a plan to block loans for new projects in Russia by European investment and development banks.

The disparate approaches reflect the deeper divisions between Washington and Brussels over how tough to be with Russia.

But American officials said the fact that Europe was moving ahead with additional actions, even if not as stringent as their own, should be seen as a sign of continuing solidarity in the face of Russian provocation in Ukraine. The synchronized actions were arranged during a Tuesday telephone call between Mr. Obama and Chancellor Angela Merkel of Germany, who has been the most critical player driving the European response to Russia.

“We have said for quite some time that Russia’s failure to take some of the steps that would de-escalate the conflict in Ukraine put them at risk of facing greater isolation and greater economic consequences,” Josh Earnest, the White House press secretary, told reporters at a briefing hours before the new sanctions were announced.

The latest actions reflect a conclusion by American intelligence agencies that Russia has not cut off the flow of fighters and arms across the border to pro-Russian separatists. Ukrainian officials have said they believe Russia was responsible for the downing of a military transport plane in Luhansk, a rebel stronghold in eastern Ukraine.

The White House summoned European Union ambassadors on Monday to a briefing at which they were shown fresh intelligence on Russian involvement in the Ukrainian turmoil and were pressed to take stronger action. Frustrated after waiting for several weeks for the Europeans to follow through on threats of further sanctions, American officials signaled that Mr. Obama was prepared to act unilaterally if necessary.

The new American actions will bar affected Russian companies from the American debt markets for loans over 90 days, meaning that they will still be able to conduct day-in, day-out business with overnight loans but will find it harder to finance medium- and long-term activity, officials said.

European officials were unwilling to take parallel actions, given their far more extensive economic ties with Russia. Trade between Russia and Europe dwarfs that between Russia and the United States, and much of Europe depends on Russian energy.

Additionally, while some European countries, particularly in the eastern region once dominated by the Soviet Union, were more supportive of tougher measures, generating a consensus among all 28 members of the European Union has been problematic.

Mr. Obama’s actions would not bar the targeted Russian banks or energy companies from doing business with Americans or seize their property. But officials pointedly noted that such moves were still possible if Russia did not back down. And they said that in cutting off access to capital markets, the impact could be powerful, both directly against the companies and in further curbing foreign willingness to invest in Russia more broadly.

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