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.
National Journal
Brian Resnick Ben Geman
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.

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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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