U.S. Sanctions Russian Oligarchs, Energy Firms

Putin's refusal to cooperate with Geneva agreement prompts U.S. to issue more financial pain.

Russia's President Vladimir Putin attends a MediaForum in St. Petersburg, Russia, on April 24, 2014.

Russian President Vladimir Putin's failure to "follow through" on an accord struck in Geneva necessitates more sanctions for the country, President Barack Obama said Sunday.

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For failing to live up to the commitments he made in Geneva, the U.S. government on Monday announced new sanctions against key advisers to Russian President Vladimir Putin and companies that support the Eastern power’s finances, as well as oil and gas trade.

Seven more Russian oligarchs and political leaders are now included on the U.S. economic hit list, limiting their ability to travel and freezing their international assets. The U.S. Treasury Department included 17 Russian companies and organizations to its growing list of sanctions targets, which as of Monday includes three banks, a gas-line construction company and a freight rail operator that transports oil and oil products.

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More than 10,000 Russian troops remain on the border near Ukraine, which the U.S. claims are there only to intimidate Ukrainians and weaken the planned election this spring that is expected to bring about new, pro-Western economic reforms. Armed militant forces aligned with Russia continue to wreak havoc within eastern Ukraine, holding hostage at least seven observers from the Organization for Security and Co-operation in Europe, which is responsible for overseeing the political transition.

The U.S. will now also restrict exports of high-tech defense products to Russia. Officials within the Department of Commerce will review a growing backlog of trade license applications for equipment such as microelectronics that have been pending since March, when Russia annexed the Crimean peninsula.

Treasury posted full details of the new sanctions on its website early Monday, which President Barack Obama first announced on Sunday. 

“Because Russia has failed to follow through on its side of the accord that had been hammered out in Geneva, it was important for us to take further steps, sending a message to Russia that the kind of destabilizing activities that are taking place in the east and the south of Ukraine had to stop,” Obama said from Malaysia in a joint press conference with Prime Minister Najib Razak.

It is yet unclear how the new sanctions will affect further U.S. trade with Russia. NATO relies heavily on Russia  for transportation in and out of Afghanistan, for example, and uses Russian vendors for 25 percent of all fuel for the war effort.

Pentagon spokesman Mark Wright told U.S. News last week there were no restrictions against purchasing energy from Russian sources, adding that he “would not want to speculate on whether sanctions against the energy sector are forthcoming.”

“We regularly update contingency plans based on a range of risks including sources of supply and have several alternative supply source and route options available for fuel purchases,” he said.

Wright did not respond to follow-up requests for comment in time for this report.

White House and Treasury officials have said the U.S. has even more severe sanctions in reserve to target key sectors of the Russian economy. They plan to impose those with other G-7 partner countries if Russia does not adhere to the commitments it made at the Geneva conference earlier in April.

Critics of the president have said the U.S. should move much more swiftly on these sanctions, and that they should extend beyond simply members of Putin’s inner circles.

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Sen. Bob Corker, R-Tenn., who returned to the U.S. after visiting Ukraine last week, called on the White House on Sunday to move beyond simply targeting senior officials within the Russian government and advance to key sectors of its economy.

“All we’re doing is tweaking folks,” he told CBS’ “Face the Nation.” Limiting sanctions to officials and advisers “is not creating the kind of pain in Russia that would cause Putin to change his behavior.”

“We need to hit him much more toughly,” Corker said.

Despite these new sanctions that now include Russian banks and infrastructure, the White House is doubtful Putin will alter his political course.

A senior administration official said Monday morning said an immediate change to Russian policy is unlikely. The U.S. and its allies plan to steadily increase these sanctions causing further economic pain and great international isolation.

“Russia has much more to lose over time,” the official said, speaking on the condition of anonymity. “We’re going to keep ratcheting up the costs on Russia for continued destabilization and violating international law in Ukraine.”

The European Union is expected to release its own set of sanctions against Russia early this week, though security and economic complications could force them to be slightly different from the sanctions imposed by the U.S.

France, for example, has a multibillion dollar deal to build Mistral-class amphibious warships for the Russian military. French President Francois Hollande said for the first time in March he would reconsider the sale, which would deal a serious blow to the French economy.