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US, EU stiffen sanctions against Russia over Ukraine

WASHINGTON - The United States and Europe strengthened sanctions on Moscow over Ukraine Wednesday, with President Barack Obama taking his first direct swipes in the finance, military and energy sectors of the Russian economy.

The American package of sanctions packed the most punch and drew an angry threat of serious retaliation from Moscow, further escalating the worst standoff since the Kremlin and the West since the Cold War.

Europe and the United States acted after fighting between the Western-backed Kiev government and pro-Russian separatists took another dangerous turn, with 55 civilians killed since the weekend alone.

"Given its continued provocations in Ukraine... I have approved a new set of sanctions on some of Russia's largest companies and financial institutions," Obama said at the White House.

The president said he had repeatedly told Russian President Vladimir Putin to halt the flow of weapons across the eastern Ukraine border and to agree to genuine border monitoring measures.

"Russia has failed to take any of the steps that I mentioned," Obama said.

"In fact, Russia's support for the separatists and violations of Ukraine's sovereignty have continued."

Putin warned the biting sanctions will boomerang and hit back at US national interests, will inflicting "very serious damage" on an already tattered US-Russia relationship.

"I am convinced that this will harm the national long-term interests of the American state, the American people," Putin told reporters in Brasilia, according to the ITAR TASS state news agency.

Targeted measures

Washington's moves will have the effect of barring from US capital markets two major Russian financial institutions, Gazprombank and VEB, and two giant Russian energy firms, OA Novatek and Rosneft.

The US Treasury also said that eight Russian arms firms that produce small armaments, mortar shells and tanks would also face direct sanctions.

The US list of sanctions included measures against the self-styled breakaway Donetsk People's Republic and the Lugansk People's Republic in eastern Ukraine.

Personal sanctions were imposed against Sergei Besesda, a key figure in the FSB domestic intelligence service, and Oleg Savelyev, Russia's minister responsible for the annexed Ukrainian region of Crimea.

European leaders meeting in Brussels signaled they were bolstering their own sanctions against Russia, following intensive conversations with the United States.

The moves will see the EU's European Investment Bank (EIB) and European Bank of Reconstruction and Development (EBRD), halt finance for projects in Russia, a diplomatic source told AFP.

The EU also agreed to target Russian firms linked to actions undermining Ukraine's sovereignty.

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President Barack Obama enters the briefing room to speak about foreign policy and escalating sanctions against Russia in response to the crisis in Ukraine in the James Brady Press Briefing Room at the White House in Washington, Wednesday, July 16.

(AP)

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