The United States expanded its sanctions against Russia on Monday, targeting members of President Vladimir Putin's "inner circle" and technology that could be useful to Russia's military, in response to Russia's ongoing involvement in Ukraine.
President Barack Obama said the U.S. is holding broader sanctions against Russia's economy, such as its banking or defense industry, "in reserve.”
"The goal here is not to go after Mr. Putin personally," Obama said. "The goal is to change his calculus with respect to how the current actions that he is engaging in in Ukraine could have an adverse effect on the Russian economy over the long haul, and to encourage him to actually walk the walk and not just talk the talk when it comes to diplomatically resolving the crisis in Ukraine."
A White House statement said
: "Since April 17, Russia has done nothing to meet its Geneva commitments and in fact has further escalated the crisis." It also called Moscow's involvement in eastern Ukraine violence "indisputable."
A senior Russian diplomat has expressed "disgust" at the new round of U.S. sanctions, saying it marked a return to "Cold War" practices.
In comments posted on the Foreign Ministry's website, Deputy Foreign Minister Sergei Ryabkov said, "We decisively condemn the series of measures that has been announced in an attempt to put sanctions pressure on Moscow."
And in interviews Monday with Russian media, Rybakov said the latest U.S. measures were based on “completely distorted” ideas of what is happening in Ukraine and vowed that Moscow’s response would be felt “painfully” in Washington.
The Department of the Treasury is imposing sanctions on seven Russian government officials, including two members of Putin’s inner circle. They will be subject to an asset freeze and a U.S. visa ban.
Also, 17 companies linked to Putin’s inner circle will be subject to an asset freeze, the statement said.
The seven include
(see the full list of targeted individuals and companies
, Russian presidential envoy to the Crimean district and a member of the Russian Security Council;
, first deputy chief of the staff of the presidential executive office;
, deputy prime minister of the Russian Federation;
v, director of the Federal Protective Service of the Russian Federation and an army general;
, chairman of the state Duma committee on International Affairs;
, president and chairman of the management board for Rosneft, Russia’s leading petroleum company;
, director general of Rostec, the state corporation for promoting development, manufacturing and export of Russian high-tech industrial products.
The 17 companies targeted in the sanctions (full list here)
include Stroygazmontazh (SGM Group), a gas pipeline construction company, and Transoil, a Russia-based rail freight operator that specializes in the transportation of oil and oil products.
Notably absent from the sanctions list is Gazprom, Russia’s giant natural gas monopoly, and its CEO, Alexei Miller. A number of observers had predicted Gazprom and its head would be targeted.
The Department of Commerce also is imposing additional restrictions on 13 of the 17 companies by issuing a license requirement "with a presumption of denial for the export, re-export or other foreign transfer of U.S.-origin items to the companies."
Commerce and the State Department announced a tightened policy to deny export license applications
for any high-technology items that could contribute to Russia's military capabilities.
Those departments also will revoke any existing export licenses that meet these conditions.
Also on Monday, Canada will impose sanctions on two Russian companies and nine individuals, a government source said.
The source did not provide names but said the list would be released soon.
Meanwhile, the Pentagon says U.S. Defense Secretary Chuck Hagel spoke with Russian Defense Minister Sergei Shoygu by telephone Monday, wanting to know what Russia's intentions are towards Ukraine.
A Pentagon spokesman says Shoygu assured Hagel that Russian forces will not invade.
Andrei Belousov, Putin's top economic adviser, said on Monday the new round of U.S. sanctions will have little effect on the country's economy and will only strengthen the resolve of the Kremlin and its allies.
"The more sanctions there are, the more strongly the elite will consolidate,'' Belousov said.
"There will probably be some consequences [for the economy] ... but it is unlikely that they will have a serious impact on an operational, annual level,'' he said of the sanctions.
Belousov added that, in his view, the new sanctions do not give sufficient grounds to change the country's budget rule, which limits government spending.
Russia's Volga Group, which is on the list of sanctioned companies and controlled by sanctioned owner Gennady Timchenko, claimed on Monday the new U.S. sanctions are not related to events in Ukraine, but are politically motivated.
EU to impose sanctions
The European Union reached a preliminary agreement on Monday to impose asset freezes and visa bans on 15 more people as part of expanded sanctions on Russia over its actions in Ukraine, diplomats said.
The officials held responsible for "undermining Ukraine's territorial integrity, sovereignty and independence" will be banned from traveling to the 28-nation bloc and will see their assets there frozen, the EU said in a statement.
The names of those to be added to the list will not be made public until they are published in the EU's Official Journal on Tuesday.
The decision taken by the EU governments' ambassadors in Brussels brings the total number of Russians or pro-Russian individuals in Ukraine targeted by the EU's sanctions to 48.
The EU's European Commission is drawing up a list of tougher economic sanctions that could be imposed on Russia, but the EU is split between countries in favor of stronger action, including Britain, France, Poland, Sweden, Denmark, the Czech Republic and the Baltic countries, and those who are reluctant, such as Italy, Greece, Cyprus, Bulgaria, Hungary, Luxembourg, Austria, Spain, Portugal and Malta.
Obama said the measures do not yet include the wider sanctions, such as curbs on the Russian financial and energy sectors, that would do the most serious damage to Russia's economy.
“We are keeping in reserve additional steps that we could take should the situation escalate further,” Obama said, acknowledging that he did not know if the measures he has ordered so far will work.
Many Europeans oppose sanctions that would target the economy, because economic sanctions would hurt European economies as well as that of Russia.
The U.S., being economically tied with Russia to a much lesser degree than Europe, says it would not impose economic sanctions unilaterally.
However, European leaders were giving more consideration to broad sanctions against sectors of the Russian economy after pro-Russian rebels in eastern Ukraine held seven monitors from the Organization for Security and Cooperation in Europe (OSCE), a U.S. official said Monday.
"We have noticed a distinct uptick in the last three days from major European capitals in continuing to look very hard at sectoral [sanctions] in response to the egregious treatment of the ... monitors in Slovyansk,'' a U.S. official said.
The OSCE had sent unarmed monitors to try to encourage compliance with a peace deal. The rebels seized them and have been holding them at a fortified redoubt in the town of Slovyansk.
U.N. Secretary-General Ban Ki-moon on Monday condemned the recent seizure in Ukraine of observers from the Organization for Security and Cooperation in Europe (OSCE) and demanded that pro-Russian rebels release them immediately.
Ban said international missions working in Ukraine must be allowed to perform their duties without interference.
Moscow: Sanctions pointless
Nevertheless, such measures have done nothing so far to deter Putin, who overturned decades of post-Cold War diplomacy last month to seize and annex Ukraine's Crimea peninsula and has since massed tens of thousands of troops on the frontier.
He acted after Ukraine's pro-Russian president was ousted in February by protesters demanding closer links with Europe.
Moscow has in the past shrugged off targeted sanctions like those Obama announced on Monday as pointless.
Washington says armed rebels - who have captured towns and government buildings across eastern Ukraine - are operating under the direction of Kremlin agents.
Russia denies it is involved and says the uprising is a spontaneous response to oppression of Russian speakers by Kyiv.
The rebels took another town on Monday morning, seizing the police headquarters and municipal administration building in Kostyantynivka, an industrial city in the eastern Donetsk region. Separatists in the province have proclaimed an independent “People's Republic of Donetsk.”
A Reuters photographer at the scene saw about 20 gunmen controlling the administration building.
Also on Minday, the mayor of Ukraine's second-largest city, Kharkiv, is in serious condition after being shot by a sniper.
Government officials say Hennady Kernes was bicycling on the outskirts of the eastern Ukrainian city when he was shot in the back by an unidentified gunman.
Kernes opposed the popular protests in Kiyv that led to the ouster of President Viktor Yanukovych. But he has said he does not support pro-Russian separatists who are calling for votes on independence for eastern Ukraine.
Kharkiv officials say Kernes is in the hospital "fighting for his life."
At a meeting of eastern Ukrainian leaders and acting Prime Minister Arseniy Yatsenyuk earlier this month, Kernes insisted he does not support the pro-Russia insurgents and backed a united Ukraine.
Pressure in U.S.
Obama is under pressure from opposition Republicans at home to move faster on sanctions. But in taking what he described as “calibrated steps”, he has emphasized the need to act in concert with European countries, which have more at stake economically and a more cumbersome process for taking decisions.
The EU does more than 10 times as much trade with Russia as the U.S. and buys a quarter of its natural gas from Moscow. Most EU decisions require unanimity among member states.
Western countries say the targeted sanctions are already having an effect on Russia by scaring investors into pulling out capital. The central bank has been forced to raise interest rates to prop up the rouble and Russian firms are finding it more difficult and costly to raise funds.
U.S.Treasury Secretary Jack Lew said in a statement
Monday: "Today's targeted actions, taken in close coordination with the EU, will increase the impact we have already begun to see on Russia's own economy as a result of Russia's actions in Ukraine and from U.S. and international sanctions.
"Russian economic growth forecasts have dropped sharply, capital flight has accelerated and higher borrowing costs reflect declining confidence in the market outlook," the statement continued.
Russian shares dropped on anticipation of the impact of new sanctions. The rouble-denominated MICEX index was down 1.3 percent early on Monday. The cost of insuring Russia's debt against default rose to its highest level since November 2011.
Monday's sanctions build on those imposed over Crimea last month, which were deliberately designed to punish individuals close to Putin without having wider impact on Russia's economy or its trade with the West.
Some information for this report was provided by Reuters.