The Obama administration on Monday ratcheted up its punishment of Russia for what it called continuing provocations in Ukraine, even as it acknowledged that a new round of economic sanctions is unlikely to bring an immediate change in Russian behavior.
The new measures froze the assets of seven Russian individuals and 17 companies associated with them, and prohibited any U.S. dealings with them. All were identified as closely linked to Russian President Vladimir Putin.
The administration also announced new restrictions on Russia’s import of U.S. goods deemed to contribute to its “military capabilities.”
The European Union said it would expand its sanctions list to include 15 more individuals.
Some U.S. lawmakers and Ukrainian politicians decried the actions as too weak and called for immediate, full-scale sanctions against the Russian banking and energy sectors. Officials in Moscow condemned the announcement but insisted that their economy could weather the restrictions.
American officials asserted that Russia is already showing signs of significant economic pain, with capital fleeing, investment falling and its debt downgraded to the brink of junk bonds. The goal is to gradually increase pressure until “Russia sees the dead end that it’s going down in Ukraine,” a senior administration official said.
“We don’t expect there would be an immediate change in Russian policy,” and there will be “daily fluctuations here and there” in the financial markets, said the official, one of several who briefed reporters in a conference call on the new measures Monday on the condition of anonymity.
“What we need to do is to steadily show the Russians that there are going to be much more severe economic pain, much more severe political isolation and, frankly, that Russia stands far more to lose, continuing these actions over time,” than if it stands down in Ukraine.
President Obama made the same case in a news conference in the Philippines, calling the sanctions a “calibrated” response to Russian actions and saying, “We don’t yet know whether it is going to work.” He emphasized that “the next phase — if, in fact, we saw further Russian aggression,” including troop incursions into eastern Ukraine — could be sanctions against broad sectors of the Russian economy.
Several Russian economic analysts agreed with the long-term U.S. assessment, saying the general climate of political unpredictabilty and strained ties with the West was far more costly than specific sanctions.
“For the economic picture, it’s impossible for this to have any good result,” said Evgeny Gontmakher, a former adviser to Prime Minister Dmitry Medvedev who now works at the Institute of Social Development, a liberal policy institute.
Russian officials said the Obama administration doesn’t understand the nature of the crisis in Ukraine. “It is a distorted mirror of foreign policy, not a responsible approach to the situation,” said Deputy Foreign Minister Sergei Ryabkov.
Ryabkov added that the Russian government will take reciprocal measures. “We have never been concealing that we have capabilities for such a response at our disposal, as well as a set of measures, which is rather large, that will be used,” he told the Interfax news agency, without elaboration.
Among those identified for sanctions Monday was Igor Sechin, president of Rosneft, Russia’s leading state-owned petroleum company, as well as Dmitry Kozak, a deputy prime minister.
Others are either connected to last month’s annexation by Russia of the Ukrainian region of Crimea or are otherwise involved in its foreign and security policy. Businessman Sergey Chemezov — who lived in the same East German apartment complex as Putin when Putin was stationed there as a KGB officer in the late 1980s — is the head of state-owned Rostec, a major arms and technology exporter that has long supplied Boeing with titanium for its airplanes and has projects with Canadian aircraft-maker Bombardier and Italian tire company Pirelli.
Vyacheslav Volodin, Putin’s first deputy chief of staff, is one of the Russian president’s closest advisers. The Treasury Department said he was involved in Russia’s decision to take over Crimea.
Oleg Belavantsev is Putin’s envoy to Crimea; Evegeniy Murov is the director of Russia’s powerful Federal Protective Service, which protects the president. Alexei Pushkov is head of the foreign affairs committee of the lower house of Russia’s parliament.
All of the individuals sanctioned are now banned from receiving U.S. visas. Sechin’s Rosneft has major joint oil-exploration projects with Exxon Mobil, and British oil giant BP owns a 19.75 percent stake in the company. Sechin will no longer be able to travel to the United States for business consultations, but he said Monday that the sanctions would have little effect on Rosneft’s projects or its bottom line.
“I view the latest steps by Washington as a high evaluation of the effectiveness of our work,” he said in a statement. “We assure our shareholders and partners, including Americans, that this effectiveness will not decrease and that our cooperation will not suffer but will develop dynamically.”
BP America said in a statement that it will “comply with all relevant sanctions” but that “we are committed to our investment in Rosneft, and we intend to remain a successful, long term investor in Russia.”
The 17 companies listed Monday, from banks to a construction company to a rail freight operator, are all tied to businesspeople and officials close to Putin who had been targeted in earlier rounds of U.S. sanctions. Two firms are controlled by close Putin friends Boris and Arkady Rotenberg, and three by Yuri Kovalchuk, who is described by U.S. officials as Putin’s personal banker.
Eleven are owned or controlled by Gennady Timchenko, a businessman who last month sold a nearly 50 percent stake in the Swiss-based oil-trading firm Gunvor shortly before he was targeted with sanctions.
Putin on Monday did not directly address the new sanctions, but said that “Western partners” were targeting Russia’s defense industry to weaken it and force it to rely on imports from Ukrainian factories. “We will achieve our goals regardless,” he told lawmakers in the northwestern city of Petrozavodsk. “It is just a matter of time and money.”
In a statement, GOP Sens. Bob Corker (Tenn.), ranking Republican on the Foreign Relations Committee, and Kelly Ayotte (N.H.) of the Armed Services Committee said “incremental” sanctions are insufficient and called for full-scale measures against Russia’s financial and energy sectors.
Rep. Eliot L. Engel (N.Y.), ranking Democrat on the House Foreign Affairs Committee, said that the new sanctions are “a step in the right direction” but that “I believe we need to go further.”
In Ukraine, former defense minister and current presidential candidate Anatoliy Gritsenko said the West has not meaningfully helped Ukraine in its time of need.
“The U.S. and [Britain] betrayed Ukraine,” he said. “They encouraged us to give up our nuclear weapons and said they would come to our defense,” he said, referring to agreements reached at the demise of the Soviet Union. “But instead, they’re just ‘deeply concerned.’ ”
Birnbaum reported from Moscow. Griff Witte in Ukraine contributed to this report.