President Obama Announces New Sanctions on Russia

“We live in a complex world and at a challenging time,” he said Wednesday night.

Ukrainian servicemen stay on line during a minute of silence commemorating their dead friends in headquarters of Ukrainian forces near Izyum, in the Kharkiv region, on July 16, 2014.
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Ben Geman and Brian Resnick
July 16, 2014, 1:51 p.m.

Pres­id­ent Obama has in­creased sanc­tions in­ten­ded to hurt se­lec­ted seg­ments of the Rus­si­an eco­nomy, he an­nounced Wed­nes­day night. The new sanc­tions will pre­vent some Rus­si­an com­pan­ies — in­clud­ing oil and gas pro­du­cers — from ob­tain­ing long-term loans from Amer­ic­an debt mar­kets.

“I’ve re­peatedly made it clear that Rus­sia must halt the flow of weapons and fight­ers across the bor­der in­to Ukraine,” the pres­id­ent said Wed­nes­day in a press state­ment ad­dress­ing his ever-in­creas­ing list of in­ter­na­tion­al con­cerns. “So far, Rus­sia has failed to take any of the steps that I men­tioned.”

The Treas­ury De­part­ment’s full list of sanc­tions on “en­tit­ies with­in the fin­an­cial ser­vices and en­ergy sec­tors of Rus­sia, against arms or re­lated ma­ter­i­el en­tit­ies, and those un­der­min­ing Ukraine’s sov­er­eignty” is here. Ac­cord­ing to the de­part­ment, the U.S. tar­gets in­clude two Rus­si­an fin­an­cial in­sti­tu­tions, two en­ergy firms, and eight de­fense tech­no­logy en­tit­ies. In ad­di­tion, the U.S. is now sanc­tion­ing four new Rus­si­an gov­ern­ment of­fi­cials, in­clud­ing a seni­or Rus­si­an Fed­er­al Se­cur­ity Ser­vice of­fi­cial.

The en­ergy sanc­tions tar­get Rus­si­an state-owned oil gi­ant Ros­neft, as well as OAO Novatek, which ac­cord­ing to the Treas­ury De­part­ment is the coun­try’s third-largest in­de­pend­ent nat­ur­al-gas pro­du­cer.

The en­ergy-re­lated sanc­tions re­strict fin­an­cing from with­in the U.S., lim­it­ing the two com­pan­ies’ abil­ity to tap U.S. cap­it­al mar­kets by bar­ring ac­cess to debt with ma­tur­ity of 90 days or longer.

Treas­ury also didn’t rule out tak­ing more ag­gress­ive steps against Rus­sia’s en­ergy sec­tor in the fu­ture.

“[W]e have not blocked the prop­erty or in­terests in prop­erty of these com­pan­ies, nor pro­hib­ited trans­ac­tions with them bey­ond these spe­cif­ic re­stric­tions. However, the scope of the pro­hib­ited trans­ac­tion types and the num­ber of en­ergy com­pan­ies may be ex­pan­ded … if the Rus­si­an gov­ern­ment does not take steps to de-es­cal­ate the situ­ation in Ukraine,” Treas­ury said.

Eliza­beth Rosen­berg, a former Treas­ury De­part­ment ad­viser who is now with the Cen­ter for a New Amer­ic­an Se­cur­ity, said the newly an­nounced meas­ures are sig­ni­fic­ant.

“What this does, ef­fect­ively, is start to tight­en a noose around Rus­sia,” said Rosen­berg, who dir­ects the think tank’s En­ergy, En­vir­on­ment, and Se­cur­ity Pro­gram. “It will chill the en­vir­on­ment. It will make com­pan­ies wary of do­ing busi­ness with them.”

Ex­xon has ma­jor en­ergy-de­vel­op­ment part­ner­ships with Ros­neft in Rus­sia. Ex­xon did not provide im­me­di­ate com­ment on the ef­fect of the U.S. ac­tion.

The U.S. is co­ordin­at­ing sanc­tions with European al­lies, though Europe has not gone as far in its sanc­tions, only block­ing loans for new Rus­si­an pro­jects. The New York Times re­ports that Ger­man Chan­cel­lor An­gela Merkel and Pres­id­ent Obama spoke Tues­day by phone to syn­chron­ize ac­tion against the Krem­lin. On Ju­ly 3, Obama and Merkel spoke, and, ac­cord­ing to a White House state­ment, “agreed that the United States and Europe should take fur­ther co­ordin­ated meas­ures to im­pose costs on Rus­sia if it does not take steps to­ward de-es­cal­a­tion in short or­der.” That was two weeks ago.

The Obama ad­min­is­tra­tion has already launched a series of sanc­tions against Rus­sia since earli­er this year — mostly against wealthy Rus­si­an in­flu­en­tials — when the crisis in Ukraine that led to Crimea be­ing an­nexed by Rus­sia began.

Dur­ing his state­ment, the pres­id­ent also said that the U.S. will “con­tin­ue to en­cour­age dip­lo­mat­ic ef­forts” to reach a cease-fire in the con­flict in Is­rael. He ad­ded that there are still “sig­ni­fic­ant gaps” with­in the in­ter­na­tion­al com­munity on com­ing to a deal over Ir­an’s nuc­le­ar pro­gram.

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