U.S., Europe hit Russia with new sanctions
David Jackson and Jim Michaels, USA TODAY 4:16 p.m. EDT
July 29, 2014
President Obama and Vladimir Putin(Photo: Pablo Martinez
Monsivais, AP)
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The United States and the European Union hit Russia with
new sanctions Tuesday, as they escalated a major diplomatic battle with Russian
President Vladimir Putin.
The new penalties are designed to "increase the
pressure on Russia" to stop support of separatist violence in Ukraine,
President Obama said at the White House.
The Treasury Department released a list of Russian banks
that are blocked from transactions with Americans,
including the Bank of Moscow, the Russian Agricultural Bank and VTB Bank, one
of the largest in Russia..
Obama made his announcement shortly after the European
Union unveiled its new sanctions package, one that "will limit access to EU capital markets for Russian
State-owned financial institutions, (and) impose an embargo on trade in
arms," according to a statement.
While previous sanctions have focused on specific
businesses and individuals, the new set is designed to
hit sectors that are foundations of the Russian economy, including oil and gas
supplies and technology, banking and finance, and arms sales. Close associates
of Putin are also targeted.
The EU also said new penalties would "establish an export ban for dual use goods for military
end users, and curtail Russian access to sensitive technologies particularly in
the field of the oil sector."
Previous sanctions had been more symbolic in nature, and "were sort of the bare minimum the EU had to do in order
to pass the laugh test," said Mark Dubowitz, an analyst at the Foundation
for Defense of Democracies. "These start moving into sectors of the
Russian economy."
The new sanctions mark a sharp spike in long-term tension
between the United States and Russia, perhaps the worst since the end of the
Cold War more than two decades ago.
Recent disputes include Russian political
asylum for NSA leaker Edward Snowden, Russia occupation and annexation of
Crimea, ongoing violence by pro-Russia separatists in eastern Ukraine, and the
recent shoot down of a commercial airliner that killed more than 300
passengers.
"Today, Russia is once again isolating itself from
the international community," Obama said at the White House. If Putin does
not accept a diplomatic solution, "the costs on Russia will continue to
grow," Obama said.
Asked about the prospect of a new "Cold War,"
Obama rejected the idea. He said this is a distinct case of the United States
and allies seeking to block one country from seeking to dominate another.
Obama said the United States and allies will continue to
seek access to the remains of the plane, and force a criminal investigation in
order to "make sure justice is done."
The new sanctions also come as the Obama administration
accuse the Russians of violating a 1987 arms control treaty by testing new
long-range missiles.
Nile Gardiner, an analyst at the Heritage Foundation,
said the EU sanctions are a change for officials who had been loath to punish
Russia because of economic ties. "Attitudes toward Moscow have
dramatically hardened following the shooting down of the Malaysian airliner
over Ukraine," he said.
But Putin will need to feel stronger pressure before he
modifies his behavior, Gardiner said. The West will need to take a broader
approach "aimed at isolating Russia internationally," including a
strengthening the NATO alliance and "bolder, stronger American
leadership."
Global financial firms have warned their clients about
the possible financial impacts of new sanctions, which included restrictions on
bond sales and other activities by Russian-owned banks.
In announcing new sanctions, the EU cited what it called
ongoing Russian support for violent separatists in neighboring Ukraine. They
also cited the recent missile strike against the jetliner.
"When the violence created spirals out of control
and leads to the killing of almost 300 innocent civilians in their flight from
the Netherlands to Malaysia, the situation requires urgent and determined
response," said the EU statement.
The sanctions will add to long term pressure on Russia,
but will probably not have any immediate impact on Putin's behavior, analysts
said.
"Sanctions are something that work in the longer
term," said Olga Oliker, an analyst at the Rand Corp. "We don't
really have a lot of tools that work in the near term.
Meanwhile, Obama has written
Putin a letter saying that tests of a new cruise missile violate the terms of
the Intermediate-Range Nuclear Forces treaty.
The INF treaty of 1987 forbids production or testing of a
ground-launched cruise missile with a range of 500 to 5,500 kilometers (about
310 to 3,400 miles).
The INF complaint and the new sanctions are the latest
moves in U.S.-Russian battles that center largely on violence in Ukraine. Obama
and allies say that Russia is improperly aiding pro-Russian separatists
operating in eastern Ukraine.
In recent days, the United States and its allies have
accused Russia of actually firing weapons into Ukraine. They have also called
on Putin to demand that separatists provide access to the remains of the doomed
passenger jet.
The U.S. and European allies began sanctioning Russia
after it seized and annexed the Crimea region of Russia earlier this year.
Those sanctions "have made a weak Russian economy
even weaker," Obama said, and the new sectoral sanctions will make it
worse.
Obama discussed possible sanctions in a Monday video
conference with the leaders of Germany, France, Italy and the United Kingdom.
Analysts said the new sanctions will make it harder for
Russia to raise capital or get credit for European banks. That will add to
borrowing costs for Russian firms. "That will be hard on the Russian
economy," Oliker said.
Jeffrey Mankoff, a fellow with the Washington-based
Center for Strategic and International Studies, said new sanctions could damage
the Russian economy. He also said that Putin and Russia appear to have a vested
interest in a pro-Russian Ukraine.
"I don't know how Putin backs down and admits
defeat," said Mankoff, deputy director of the CSIS Russia and Eurasia
Program. "It's a really dangerous situation."
