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

UN Fears Rights Violations in China-backed Projects

UNHCHR investigates link between financing development and ignoring safeguards for human rights More

Boko Haram Violence Tests Nigerians’ Faith in Buhari

New president has promised to stem insurgency; he’s scheduled to meet with President Obama at White House July 20 More

Social Media Network Wants Privacy in User’s Hands

Encryption's popularity in messaging is exploding; now it's the foundation of a new social network 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.
Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugeesi
X
Carolyn Weaver
July 06, 2015 6:47 PM
In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Making Music, Fleeing Bombs: New Film on Sudan’s Internal Refugees

In 2012, Sudanese filmmaker Hajooj Kuka went to make a documentary among civil war refugees in Sudan’s Blue Nile and Nuba Mountains region. What he found surprised him: music was helping to save people from bombing raids by their own government. VOA’s Carolyn Weaver has more.
Video

Video Rice Farmers Frustrated As Drought Grips Thailand

A severe drought in Thailand is limiting the growing season of the country’s important rice crop. Farmers are blaming the government for not doing more to protect a key export. Steve Sandford reports from Chiang Mai, Thailand.
Video

Video 'From This Day Forward' Reveals Difficult Journey of Transgender Parent

In her documentary, "From This Day Forward", filmmaker Sharon Shattuck reveals the personal journey of her transgender father, as he told his family that he always felt he was a woman inside and decided to live as one. VOA’s Penelope Poulou has more.
Video

Video Floodwaters Threaten Iconic American Home

The Farnsworth House in the Midwest State of Illinois is one of the most iconic homes in America. Thousands of tourists visit the site every year. Its location near a river inspired the design of the house, but, as VOA’s Kane Farabaugh reports, that very location is now threatening the existence of this National Historic Landmark.
Video

Video Olympics Construction Scars Sacred Korean Mountain

Environmentalists in South Korea are protesting a Winter Olympics construction project to build a ski slope through a 500-year-old protected forest. Brian Padden reports that although there is strong national support for hosting the 2018 Pyeongchang Winter Olympics, there are growing public concerns over the costs and possible ecological damage at the revered mountain.
Video

Video Xenophobia Victims in South Africa Flee Violence, Then Return

Many Malawians fled South Africa early this year after xenophobic attacks on African immigrants. But many quickly found life was no better at home and have returned to South Africa – often illegally and without jobs, and facing the tough task of having to start over. Lameck Masina and Anita Powell file from Johannesburg.
Video

Video Family of American Marine Calls for Release From Iranian Prison

As the crowd of journalists covering the Iran talks swells, so too do the opportunities for media coverage.  Hoping to catch the attention of high-level diplomats, the family of American-Iranian marine Amir Hekmati is in Vienna, pleading for his release from an Iranian prison after nearly 4 years.  VOA’s Heather Murdock reports from Vienna.
Video

Video UK Holds Terror Drill as MPs Mull Tunisia Response

After pledging a tough response to last Friday’s terror attack in Tunisia, which came just days before the 10th anniversary of the bomb attacks on London’s transport network, British security services are shifting their focus to overseas counter-terror operations. VOA's Henry Ridgwell has more.
Video

Video Obama on Cuba: This is What Change Looks Like

President Barack Obama says the United States will soon reopen its embassy in Cuba for the first time since 1961, ending a half-century of isolation. VOA White House correspondent Luis Ramirez reports.
Video

Video Hate Groups Spread Influence Via Internet

Hate groups of various kinds are using the Internet for propaganda and recruitment, and a Jewish human rights organization that monitors these groups, the Simon Wiesenthal Center, says their influence is growing. The messages are different, but the calls to hatred or violence are similar. VOA's Mike O’Sullivan reports.
Video

Video Blind Somali Journalist Defies Odds in Mogadishu

Despite improving security in the last few years, Somalia remains one of the most dangerous countries to be a journalist – even more so for someone who cannot see. Abdulaziz Billow has the story of journalist Abdifatah Hassan Kalgacal, who has been reporting from the Somali capital for the last decade despite being blind.
Video

Video Rabbi Hits Road to Heal Jewish-Muslim Relations in France

France is on high alert after last week's terrorist attack near the city Lyon, just six months after deadly Paris shootings. The attack have added new tensions to relations between French Jews and Muslims. France’s Jewish and Muslim communities also share a common heritage, though, and as far as one French rabbi is concerned, they are destined to be friends. From the Paris suburb of La Courneuve, Lisa Bryant reports about Rabbi Michel Serfaty and his friendship bus.

VOA Blogs

World Currencies

EUR
USD
0.9084
JPY
USD
122.73
GBP
USD
0.6431
CAD
USD
1.2639
INR
USD
63.444

Rates may not be current.