News / Economy

US Sanctions Strike Russia's Top Firms

US, EU to Impose New Sanctions on Russia Over Ukrainei
X
July 17, 2014 4:09 AM
Fighting between Ukrainian government forces and pro-Russian separatists in eastern Ukraine has intensified over the past week, with Ukraine and Russia blaming each other for cross-border attacks. The United States and the European Union have accused Moscow of not doing its part to help restore peace in the region, and they are planning to strengthen economic sanctions against Moscow. Zlatica Hoke reports.
Watch related video report from VOA's Zlatica Hoke.
VOA News

The United States and the European Union imposed new sanctions Wednesday, striking at the heart of Vladimir Putin's powerbase by targeting companies closest to him over Moscow's failure to curb violence in Ukraine.

After months of measures that hit only individuals and smaller firms, Washington imposed sanctions on Russia's largest oil producer Rosneft, its second largest gas producer Novatek and its third largest bank Gazprombank.

The sanctions in effect close the firms to medium- and long-term dollar funding.

The firms are run by the Russian president's allies who have become wealthy during his tenure.

Several U.S. senators praised the Obama administration move.

"Timing is everything in foreign policy. Sanctions are part of an overall strategy," Senator Johnny Isakson told the VOA.

"We have to let Russia know that we fully expect them to withdraw from Ukraine, we expect them to be a better partner with the rest of the free world. And, as time goes by, if they do not do that, then sanctions will ratchet up," Isakson added.

Senator Lindsay Graham agreed, saying the sanctions are a 'good step in the right direction. I hope Europe will follow. We need more [sanctions]."

Russian reaction

The Russian foreign ministry reacted to sanctions in a furious statement: "We do not intend to tolerate blackmail and reserve the right to take retaliatory measures" against the U.S.

Moscow denounced what it called primitive revenge for events in Ukraine and pledged to retaliate.

Putin said the U.S. sanctions would hurt U.S. energy companies and warned that sanctions would inflict "very serious damage" on the already tattered U.S-Russia relationship.

Russian Prime Minister Dmitry Medvedev called the sanctions evil, said they would not “bring anyone to their knees.”

Medvedev in televised remarks said the sanctions are throwing Russia's relations with the West “back to the 1980s” and added that Russia “will have to pay more attention to military and security spending.”

Other targets include Vnesheconombank, VEB, which acts as payment agent for the government, four individuals, and eight arms firms, including the producer of the Kalashnikov assault rifle.

However, Washington stopped short of the more stringent actions the West has threatened, such as freezing the companies' assets, closing off the short-term funding they need for day-to-day operations or stopping U.S. firms doing business with them.

U.S. officials said those steps were still on the table if Russia fails to abide by the West's demands to stop its support for the pro-Russia insurgents who have destabilized eastern Ukraine.

However, several Russian companies were quick to say it was business as usual.

Russia's benchmark MICEX was down 2.9 percent in late afternoon trading Thursday upon news of the sanctions while Russia's biggest oil company, Rosneft, was nearly 5 percent down and second-largest oil producer was trading 9 percent lower.

Milder EU sanctions

Moscow gave a milder response to EU sanctions, with the foreign ministry saying it had "submitted to blackmail from the American administration" and should have "its own voice."

The EU urged the European Investment Bank to sign no new financing agreements with Moscow and was suspending operations in Russia financed by the European Bank for Reconstruction and Development.

European nations collectively do 10 times as much trade with Russia as the United States and depend on Moscow for natural gas. They have not imposed as tough sanctions as the United States.

Nevertheless, the European Union also said it was imposing new sanctions and would draw up a list of targets by the end of the month.

The Moscow-based Association of European Businesses voiced “strong disagreement” on Thursday with new U.S. sanctions on Russia over the Ukraine crisis, saying they would hurt economic growth “not only in Russia.”

“These sanctions are more focused on the partners of the European businesses than on the partners of American companies,” the lobby group said in a statement. 

Ukraine hailed the tougher sanctions, with Western-backed President Petro Poroshenko saying he welcomed the EU moves that involve the European Investment Bank and European Bank of Reconstruction and Development halting finance for projects in Russia.

Ukraine's Prime Minister Arseny Yatseniuk said the simultaneous action by Washington and Brussels showed that Western countries were united in their support for Ukraine.

The sanctions show a new willingness to act by Western countries over a crisis that has escalated in recent weeks. Hundreds of people have died in fighting between Ukrainian troops and heavily armed pro-Russian separatists who have declared independent “People's Republics” in two provinces.

Moscow denies supporting the rebellion, but many of the separatist fighters and their main leaders are from Russia. Kyiv says they have been bringing heavy weapons across the border and that Russia shot down one of its planes on Monday.

Putin, who annexed Ukraine's Crimea peninsula in March and has referred to southern and eastern Ukraine as “new Russia”, had appeared keen in recent weeks to tamp down the worst confrontation with the West since the Cold War, pulling back tens of thousands of troops from the frontier.

But in recent days, Washington and Brussels say, he has again sent some 12,000 troops to the frontier, while keeping the border open to allow rebel fighters and arms to cross.

Michael Bowman contributed to this report from Capitol Hill. Some information for this report provided by Retuers, AP and AFP.

You May Like

Turbulent Transition Imperils Tunisia’s Arab Spring Gains

Critics say new anti-terrorism laws worsen Tunisia's situation while others put faith in country’s vibrant civil organizations, women’s movement More

Burundi’s Political Crisis May Become Humanitarian One

United Nations aid agencies issue warning as deadly violence sends tens of thousands fleeing More

Yemenis Adjust to Life Under Houthi Rule

Locals want warring parties to strike deal to stop bloodletting before deciding how country is governed More

This forum has been closed.
Comment Sorting
Comments
     
by: Gennady from: Russia, Volga Region
July 17, 2014 10:33 AM
It is hard to disagree with President Putin
– that the latest USA’s sanctions against Russia is blackmail in its most evident form,
- that any sanctions from the West in the last 96 years of Russian history, starting from 1917, never ever yielded expected results. Russia proved to be able to exist without the West for decades. In addition, this time, I hope Russia will survive without American popcorn, corn syrup, chewing gum and chicken legs.
– that the sanctions fireback at the West, the USA including. President Obama, announcing the latest round of sanctions, should have thought twice after the statistics that in the first quarter of 2014 the Quartely growth of the real GDP in the USA was catastrophic and plummeted by -2,9%
I expect that the second quarter will bring the same result.

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Seoul Sponsors Korean Unification Fairi
X
Brian Padden
May 29, 2015 1:27 PM
With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Seoul Sponsors Korean Unification Fair

With inter-Korean relations deteriorating over the North’s nuclear program, past military provocations and human rights abuses, many Koreans still hold out hope for eventual peaceful re-unification. VOA’s Brian Padden visited a “unification fair” held this week in Seoul, where border communities promoted the benefits of increased cooperation.
Video

Video Purple Door Coffeeshop: Changing Lives One Cup at a Time

For a quarter of his life, Kevin Persons lived on the street. Today, he is working behind the counter of an espresso bar, serving coffee and working to transition off the streets and into a home. Paul Vargas reports for VOA.
Video

Video Modular Robot Getting Closer to Reality

A robot being developed at Carnegie Mellon University has evolved into a multi-legged modular mechanical snake, able to move over rugged surfaces and explore the surroundings. Scientists say such machines could someday help in search and rescue operations. VOA’s George Putic reports.
Video

Video Shanghai Hosts Big Consumer Electronics Show

Electronic gadgets are a huge success in China, judging by the first Asian Consumer Electronics Show, held this week in Shanghai. Over the course of two days, more than 20,000 visitors watched, tested and played with useful and some less-useful electronic devices exhibited by about 200 manufacturers. VOA’s George Putic has more.
Video

Video Forced to Return Home, Afghan Refugees Face Increased Hardship

Undocumented refugees returning to Afghanistan from Pakistan have no jobs, no support system, and no home return to, and international aid agencies say they and the government are overwhelmed and under-resourced. Ayesha Tanzeem has more from Kabul.
Video

Video Britain Makes Controversial Move to Crack Down on Extremism

Britain is moving to tighten controls on extremist rhetoric, even when it does not incite violence or hatred -- a move that some are concerned might unduly restrict basic freedoms. It is an issue many countries are grappling with as extremist groups gain power in the Middle East, fueled in part by donations and fighters from the West. VOA’s Al Pessin reports from London.
Video

Video 3D Printer Makes Replica of Iconic Sports Car

Cars with parts made by 3D printers are already on the road, but engineers are still learning about this new technology. While testing the possibility of printing an entire car, researchers at the U.S. Department of Energy recently created an electric-powered replica of an iconic sports roadster. VOA’s George Putic has more.
Video

Video Al-Shabab Recruitment Drive Still on In Kenya

The al-Shabab militants that have long battled for control of Somalia also have recruited thousands of young people in Kenya, leaving many families disconsolate. Mohammed Yusuf recently visited the Kenyan town of Isiolo, and met with relatives of those recruited, as well as a many who have helped with the recruiting.
Video

Video A Small Oasis on Kabul's Outskirts Provides Relief From Security Tensions

When people in Kabul want to get away from the city and relax, many choose Qargha Lake, a small resort on the outskirts of Kabul. Ayesha Tanzeem visited and talked with people about the precious oasis.
Video

Video Kenyans Lament Losing Sons to al-Shabab

There is agony, fear and lost hope in the Kenyan town of Isiolo, a key target of a new al-Shabab recruitment drive. VOA's Mohammed Yusuf visits Isiolo to speak with families and at least one man who says he was a recruiter.
Video

Video Scientists Say Plankton More Important Than Previously Thought

Tiny ocean creatures called plankton are mostly thought of as food for whales and other large marine animals, but a four-year global study discovered, among other things, that plankton are a major source of oxygen on our planet. VOA’s George Putic reports.
Video

Video Kenya’s Capital Sees Rise in Shisha Parlors

In Kenya, the smoking of shisha, a type of flavored tobacco, is the latest craze. Patrons are flocking to shisha parlors to smoke and socialize. But the practice can be addictive and harmful, though many dabblers may not realize the dangers, according to a new review. Lenny Ruvaga has more on the story for VOA from Nairobi, Kenya.

VOA Blogs

World Currencies

EUR
USD
0.9205
JPY
USD
123.69
GBP
USD
0.6508
CAD
USD
1.2456
INR
USD
64.051

Rates may not be current.