New US sanctions on Putin allies cause few ripples

WASHINGTON (Reuters) – The United States imposed fresh sanctions on Russian firms and government officials yesterday, a move that financial markets largely shrugged off and US Republican lawmakers dismissed as too little to deter Mos-cow from further action in Ukraine.

The reaction underscored the dilemma facing President Barack Obama: how to use sanctions to punish Moscow for its intervention in Ukraine without hurting European countries and foreign companies with deep financial ties to Russia.

Washington slapped sanctions on seven Russian government officials and 17 companies linked to President Vladimir Putin, in response to what the White House said was Moscow’s failure to adhere to an April 17 agreement on ways to resolve the crisis.

Washington also said it would deny export license applications for any high-technology items that could contribute to Russian military capabilities. The Commerce and State Departments will revoke any existing export licenses that meet these conditions, the White House said.

The sanctions, the third round imposed by the United States since the Ukraine crisis began, caused barely a ripple. Global equity markets rose partly on relief that the sanctions were not as severe as they might have been. There had been fears that the White House could target whole sectors of the Russian economy.

“These sanctions did not go to the next level,” said Robert Abad, portfolio manager for Legg Mason Inc ‘s Western Asset Management unit in California, who helps oversee about $53 billion in emerging market debt. “The fact that these sanctions were a continuation of what we’ve already seen brought some relief to markets.”

Obama, ending a weeklong trip to Asia, has made clear that should Russia launch a military move deeper into Ukraine, the United States will impose sanctions on Russian economic areas such as the financial services, energy, metals and mining, engineering and defense sectors.

“We believe that the impact on the Russian economy will only grow,” said a senior Obama administration official.

The European Union also expanded sanctions yesterday, imposing asset freezes and visa bans on 15 more Russians and Ukrainians.

Canada, too, imposed sanctions, targeting two Russian banks and nine individuals.

The seven Russians sanctioned by the United States include two Putin allies: Igor Sechin, head of Russia’s major oil company Rosneft, and Sergei Chemezov, head of Rostec, a Russian state-owned high-tech products company.

Despite having no energy industry background, Sechin, a close lieutenant of Putin for more than two decades, has served for two years as the leader of Rosneft, a state-controlled company that under the Russian president became the world’s biggest publicly listed oil producer.

Around the Web

Comments