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US threatens 'provocative' Russia with further sanctions US significantly escalates sanctions against Russia over Ukraine
(about 2 hours later)
The United States warned on Wednesday that it could expand the scope and target list of its new sanctions against Russia if Moscow continues "provocative" behavior in Ukraine. Barack Obama announced a significant escalation in sanctions against Russia on Wednesday, with measures targeting some of the country’s largest energy corporations and banks as punishment for Moscow’s alleged continued support for Ukrainian separatists.
A senior US administration official told reporters on a conference call that the sanctions were also designed to avoid spillover risk for the global economy. The US president said the intensification of sanctions, which includes the freezing of assets belonging to defence companies and a handful of senior Russian officials, was intended to remind Moscow “that its actions in Ukraine have consequences".
President Obama will make a statement about the sanctions at 5.15pm ET, the White House said. Obama said the measures had been coordinated with European leaders, who late on Wednesday were meeting in Brussels to agree on a separate package of action aimed at nudging Russian president Vladimir Putin toward a new stance in Ukraine. The EU package, which could include restrictions on lending for investments projects in Russia, were not expected to go as far as those announced in Washington.
More soon … “Along with our allies, with whom I’ve been coordinating closely over the last several days and weeks, I’ve repeatedly made it clear that Russia must halt the flow of weapons of fighters across the border into Ukraine, that Russia must urge separatists to release hostages, and support a ceasefire, that Russia needs to pursue internationally mediated talks and agreed to meaningful monitors on the border. I have made this clear to Mr Putin,” Obama said in a televised statement from the White House.
He added: “So far Russia has failed to take any of the steps that I mentioned. In fact Russia’s support for the separatists, and violations of Ukraine’s sovereignty, has continued.”
The sanctions announced by Obama, and explained in more detail to reporters by senior administration officials who spoke on the condition of anonymity, fall short of targeting entire swathes of the Russian economy, an option of last resort that Washington and its EU partners believe should be held in reserve, to be used in the event of more overt military intervention by Moscow.
However the new package of sanctions goes further than the travel bans and asset freezes the administration announced in the wake of pro-Russian militia taking control of Crimea in March, a move widely condemned by the west but followed, weeks later, by pro-Russian separatists moving to control cities in the east of Ukraine.
The conflict has continued unabated since, with sporadic fighting and casualties among both separatists and Ukrainian military forces. The election in May of Ukrainian president Petro Poroshenko had yielded hope of a peace settlement, and the US and its allies have praised the new regime in Kiev’s efforts to seek a negotiated end to the conflict with separatists.
Last month Ukraine signed the EU association agreement – the partnership deal that the country's former president, Viktor Yanukovych, under pressure from Moscow, held back from signing, prompting the violent protests in Kiev that triggered the 2014 conflict.
In recent weeks, US officials have solidified their view that, while making some gestures toward mollifying the conflict, Putin has allowed the ostensibly internal Ukrainian conflict to continue while global attention has switched to the turmoil in the Middle East.
“The fight goes on,” one senior administration official said, pointing to the continued flow of weapons – including convoys of Russian tanks, armoured personnel carriers and rocket launchers – across the border from Russia into eastern Ukraine. “In fact, over the past month, the flow of heavy weapons and support for separatists from Russia has actually increased.”
The official also cited the shooting down of a Ukrainian military jet from an altitude of 21,000 feet, with eight crew on board. “Only very sophisticated weapons systems would be able to reach this height,” the official said. “Not only has Russia not availed itself of the diplomatic openings to de-escalate, but the support for separatists has increased.”
There was no immediate response from the Kremlin to Obama’s announcement, but ever since the conflict began, Russia has denied it is providing logistical or military support to separatists in eastern Ukraine. Independent journalists in the region have said Russia's hand in the conflict is barely-concealed.
Obama described the new sanctions as “significant but also targeted”, insisting they had been designed to limit spillover effects on US companies. However they are likely to have a significant impact on Wall Street, which will be required to grapple with complex requirements that now bar US companies from providing certain types of financing to major Russian corporate entities.
The administration utilised a pre-existing presidential order issued by Obama in March, as the crisis was escalating, that enabled his Treasury Secretary Jack Lew to identify sectors of the Russian economy as subject to sanctions and then target individuals and companies.
Prior to the president’s announcement, Lew imposed sanctions that prohibit US firms from providing financing to two major Russian banks: GazpromBank, the financial arm of gas supplier Gazprom, and Vnesheconombank, or VEB, a state-owned bank. The same sanctions have been applied to two Russia’s largest energy firms: Rosneft, an oil producer, and Novatek, another natural gas supplier.
Another senior administration official said that while the sanctions do not prevent short-term lending to the banks and energy companies – they can issue loans of less than 90-days maturity – the measures will effectively close “medium and long-term sources of US financing” to some of Russia’s largest companies and financial institutions.
The official warned that other banks and entities could be targeted in the coming weeks and months if Russia does not abide by the west’s demands. “We have the capacity in our sanctions program to expand the scope of the sanctions, and the list of entities affected, if the situation warrants.”