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More U.S. sanctions on Russia if Ukraine actions continue -Power

Source: Reuters - Sun, 13 Apr 2014 19:13 GMT
Author: Reuters
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(Adds detail on possible sanctions, background)

By Doina Chiacu

WASHINGTON, April 13 (Reuters) - The United States is prepared to step up sanctions against Moscow if pro-Russian military actions in eastern Ukraine continue, the U.S. envoy to the United Nations said on Sunday, but it's unclear how far the measures can go in slowing the Russian-backed separatist revolt.

A new round of U.S. sanctions could target Russian business sectors such as mining, banking and energy.

The sanctions have been the most visible sign of U.S. anger at Russia's annexation of the Crimea region in southern Ukraine last month, reflecting the deepest plunge in U.S.-Russian relations since the Cold War.

Pro-Russian activists seized government buildings on Saturday in the eastern town of Slaviansk, about 150 km (90 miles) from the Russian border. Ukrainian security forces were trying to oust the activists, who set up barricades on the outskirts of the city.

The American ambassador to the U.N., Samantha Power, said on ABC's "This Week" that the latest events in Ukraine bore "the telltale signs of Moscow's involvement."

She said sanctions already imposed by Washington have had an impact: the Russian rouble has fallen to an all-time low, the country's stock market has depreciated by 20 percent and investors are fleeing the country.

"The president has made clear that, depending on Russian behavior, sectoral sanctions in energy, banking, mining could be on the table, and there's a lot in between," Power said.

"I think we've seen that the sanctions can bite, and if actions like the kind we've seen over the last few days continue, you're going to see a ramping up of those sanctions."

But beyond declines in the rouble and Russian share indexes, the impact of the sanctions has been modest. Most of those on the U.S. and EU sanctions list are not known to have business interests.

One of those who does is billionaire oil and gas trader Gennady Timchenko. He told Russian television on Saturday his inclusion on the U.S. sanctions list had caused minor problems, mainly because some European banks had become wary of carrying out transactions with any entities linked to him.

But he said for him personally, being on the list was "quite an honor."

The next round of U.S. sanctions against Russia is likely to target influential people or firms in its business sectors, such as energy, engineering and financial services, as spelled out in President Barack Obama's executive order last month.

The goal is to put more pressure on Russian President Vladimir Putin's closest business allies. At the time, the U.S. Treasury said it would largely focus on sanctioning people and their personal assets, not any businesses they operate.

One concern with broader sanctions on Russia's economy is the collateral damage to U.S. business interests, which would be forced to sever ties with any blacklisted firms.

DESIGNS ON EASTERN UKRAINE?

Ukraine now faces a rash of rebellions in the east that it says are inspired and directed by the Kremlin.

Asked on ABC if Putin wants to seize eastern Ukraine, Power said his actions "give credence to the idea."

Though Russians are insisting that is not what Moscow wants, she said, "Everything they're doing suggests the opposite."

NATO described the appearance in eastern Ukraine of men with specialized Russian weapons and identical uniforms without insignia, as previously worn by Moscow's troops when they seized Crimea, as a "grave development."

Power said the rebellion has "all the telltale signs of what we saw in Crimea: It's professional, it's coordinated, there's nothing grassroots-seeming about it. The forces are doing in each of the six or seven cities that they've been active in exactly the same thing."

Republican Senator John McCain, a frequent critic of U.S. policy on Ukraine, said on CBS the Obama administration's failure to punish Russia over Crimea has only emboldened Putin.

"The question is now, What do we do and what does he do?" McCain said on "Face the Nation." "It's obvious that he is encouraged by the fact that we sanctioned a few people and suspended - didn't even throw him out - of the G8."

McCain repeated his calls for tougher sanctions and for giving Ukrainians light weapons so they can defend themselves.

"They didn't fight in Crimea," he said. "But if he starts moving in further encroachment in this way into eastern Ukraine, they will fight."

The United States on Friday imposed sanctions on a Crimea-based gas company, Chernomorneftegaz, effectively putting it off limits to Russia's state-controlled Gazprom, which was expected to bid for a stake in the company.

The move, along with penalties on six Crimean separatists and a former Ukrainian official, is the third round of U.S. sanctions since the Ukraine crisis erupted. (Reporting by Doina Chiacu; Additional reporting by Sarah N. Lynch, Anna Yukhananov and Christian Lowe; Writing by Doina Chiacu; Editing by Jim Loney, Leslie Adler and Meredith Mazzilli)

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