Ukraine crisis: US announces fresh sanctions on Russia, promising its energy sectors are next


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The United States has unveiled a new round of punitive sanctions against Moscow for its appropriation of Crimea, targeting several close associates of President Vladimir Putin, including his chief of staff and his personal banker, and served notice that Russia’s key oil and energy sectors would be targeted next if it goes any further into Ukraine.

The move by President Barack Obama came as talks among European officials in Brussels were expected to go well into the night. Around a dozen Russian names will likely to be added to the 21 Ukrainian and Russian officials put under travel bans and assets freezes by EU foreign ministers on Monday.

Outlined by Mr Obama in a sober appearance on the White House South Lawn, the new measures were meant to demonstrate he was serious when he said at the start of the crisis that “costs” would be imposed on Russia for its actions.

Even as the new US measures will penetrate further than ever into Mr Putin’s inner circle of associates and advisors, potentially far more impactful was the authority also signed by Mr Obama yesterday for the US government to impose additional sanctions against vital areas of the Russian economy if Moscow attempts any further incursions into Ukraine territory. They could span the financial services sector and the energy, defence and mining sectors.

“This is not our preferred outcome,” Mr Obama said in a brief statement. “These sanctions would not only have a significant impact on the Russian economy, but could also be disruptive to the global economy. However, Russia must know that further escalation will only isolate it further from the international community.”

Earlier this week, the US froze the US-based assets of 11 Russian and Ukrainian figures and barred them from all dollar transactions. Mr Obama added 20 more to the list yesterday, many of them senior figures either close to or inside the Kremlin. They included Sergei Ivanov, Mr Putin’s chief of staff, as well as Arkady Rotenberg and Gennady Timchenko, both lifelong Putin friends who have earned fortunes through government contracts.

But also on the list was St Petersburg-based Bank Rossiya, which, according to US officials has served as the first bank of choice to man top Kremlin officials. It is owned by Yuri Kovalchuck, also a friend of President Putin and sometimes described as his personal banker. The bank will be “frozen out of the dollar”, one US official stated.

Moscow swiftly struck back last night announcing entry bans into Russia on 9 senior US figures, including John Boehner, the speaker of the House, and some top foreign policy aides to Mr Obama. On Capitol Hill, the office of the speaker said he was “proud to be included on a list of those willing to stand against Putin's aggression”.

While the White House is under no illusions about ever setting Crimea free of Russia, it is adamant that the steps it has taken and might take will cause Moscow pain. “Sanctions build over time. They are very powerful. And people may think that they are a mere wrist slap. I can assure them that they are not,” the official said.

It is particularly alarmed at a build-up of Russian troops that could spell further aggression against Ukraine. “The world is watching with grave concern as Russia has positioned its military in a way that could lead to further incursions into southern and eastern Ukraine,” said Mr Obama. Next week will travel to The Hague to preside over specially convened meeting of the Group of Seven leading industrial nations, with the usual eighth chair at the table for Russia taken away.

European leaders were struggling to find common ground between the more hawkish states that want to hit Russia with the most punishing economic sanctions available, and those who fear the fallout for Europe's struggling economies.

Poland and the Baltic states, wary of their proximity to Russia and with memories of their own Soviet pasts, want to hit Russia as hard as possible with measures such as an arms embargo and bans on gas imports. Nations like Germany, France and Spain with closer business and trade ties are more wary, as are many Eastern European nations which rely on Russia for their energy supplies.

A British official said the aim was “to deter any further Russian action to destabilise Ukraine”, and said they hoped the outcome would include a strong political signal to Russia, possible trade restrictions on goods from Crimea, and an expansion of assets freezes and travel bans. The EU is not, however, expected to go as far as the US and include oligarchs on its list, leaving it open to accusations of weakness.

The Russian opposition politician Alexei Navalny, currently under house arrest, wrote in a New York Times opinion piece that the timidity of the first round of sanctions “is mocked by Russia and even seen as tacit encouragement to Mr Putin and his entourage”. He urged the West to go after powerful oligarchs including the head of state energy firms Gazprom and Rosneft, and Premier League football club owners Roman Abramovich and Alisher Usmanov. This, he said, would deliver “a serious blow to the luxurious lifestyles enjoyed by the Kremlin’s cronies”.

Such moves for now appear a step too far for the EU, as are more serious economic sanctions, although there may be language in the final conclusions again spelling out they remain on the table should Russia make any further moves on Ukrainian territory.

The EU has pulled out what was to have been a G8 summit in Sochi in June. "So long as there aren't the political circumstances, like now, for an important format like the G8, then there is no G8,” the German Chancellor Angela Merkel said.