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    US Treasury Head Says Russia Sanctions are Working

    U.S. Treasury Secretary Jack Lew said Tuesday that economic sanctions on Russia have caused a "substantial deterioration" in Russia's economy.

    Lew told a U.S. House of Representatives subcommittee that the United States is prepared to take further action if Russia's policies do not change.

    His comments came a day after Washington announced that seven Russian officials and 17 companies with links to President Vladimir Putin's inner circle would be subject to travel bans and asset freezes as punishment for Russia's intervention in Ukraine.

    Earlier Tuesday, Russia accused the European Union of showing a "complete lack of understanding" of Ukraine's domestic politics, after the bloc released the names of 15 new targets of sanctions because of their roles in the Ukraine crisis.

    Russia's foreign ministry said the EU sanctions were a "direct invitation for local Neo-Nazis" to continue "lawless acts" in southeast Ukraine. The Kremlin is promising a "painful" response.



    The EU sanctions list includes Russian Deputy Prime Minister Dmitry Kozak and General Valery Gerasimov, the chief of staff of Russia's armed forces. Those listed by the United States include President Vladimir Putin's envoy to Crimea, the chief of the service protecting the Russian president and the head of Russia's largest state-owned oil producer.

    Ukraine's acting president Oleksandr Turchynov on Tuesday demanded the dismissal of police chiefs in the eastern Ukrainian cities of Donetsk and Luhansk. He said they had proven incapable of fulfilling their duties.

    Earlier in the day, pro-Russian separatists stormed the regional governor's headquarters in Luhansk. Separatists now control Ukrainian government buildings in at least 11 eastern and southern cities. They are demanding referendums on whether to secede from Ukraine and join Russia.

    A similar vote in Crimea last month led to Russia's annexation of that Ukrainian peninsula.

    The Pentagon says Russian Defense Minister Sergei Shoigu assured U.S. Defense Secretary Chuck Hagel on Monday that Russian forces will not invade eastern Ukraine.

    When the two spoke by telephone on Monday, Shoigu told Hagel that Russian troops had returned to barracks after conducting exercises on the Ukrainian border. But a NATO official told reporters Tuesday that NATO has seen no sign that the troops are withdrawing.

    A Pentagon spokesman said Hagel emphasized how dangerous the situation is, and that Ukraine has the right to preserve law and order inside its borders.

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