Russian sanctions: US to punish Putin by stepping up financial sanctions if Russia does not fulfil commitment to Minsk agreement

Critics say that Putin has failed to fulfil the promises he made when he signed up to the Minsk Agreement in February

Vladimir Putin looks on at a news conference after the Shanghai Cooperation Organization (SCO) summit in Ufa, Russia, July 10, 2015 (REUTERS/Sergei Karpukhin)

The United States is preparing to punish Russia by starving off its access to western credit if President Putin does not meet demands for peace in Ukraine, it has been reported.

The Times reports that senior US officials have drawn up proposals to further close off credit in the West for Russia if the country does not end fighting in Eastern Ukraine.

Mr Putin signed the Minsk agreement in February following 16 hours of talks with the Ukrainian President Petro Poroshenko, French President Francois Hollande and German Chancellor Angela Merkel.

The Minsk agreement involved committing to a number of steps including a ceasefire, withdrawal of all foreign militias from Ukraine, heavy weapons withdrawal and Ukrainian control of the border by the end of this year.

President Poroshenko has alleged that Mr Putin has violated this agreement and failed to fulfil promises to move towards ending fighting in the region.

Under current sanctions, Russian companies in the US can only borrow credit for a maximum of 30 days, contrary to typical lending periods which can last years for other nationals. However, The Times reports that sanctions could now be escalated so that Russian companies would only be able to borrow money for a maximum of 7 days. The reduced time frame would be expected to undermine the companies’ ability to do business as their financial security would be weakened significantly.

EU and US sanctions against Russia have included as targets Russian state banks, businesses, military and energy firms. The countries say that the sanctions will put pressure on Mr Putin to adhere to international agreements in relation to Ukraine.

According to the Bloomberg Billionaires Index, the 21 most affluent Russians lost a combined total of $61 billion dollars last year, as part of the sanctions.

Speaking this week whilst on a diplomatic visit to the UK, Ukrainian Prime Minister Arseniy Yatsenyuk said that he feels Russia is trying “to eliminate Ukraine.”

Earlier this week, Mr Putin dismissed calls for a UN tribunal into how flight MH17 came to be shot down over Ukraine. He said the measure would be "premature and counterproductive". 298 people lost their lives when the plane was struck.