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EU imposes more sanctions on Russia over Ukraine crisis

Source: Reuters - Tue, 29 Apr 2014 13:16 GMT
Author: Reuters
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(Adds building stormed)

* EU sanctions seen as less aggressive than U.S. measures

* Russian gas giant Gazprom warns of impact of further sanctions

* Separatists storm building in Luhansk

By John O'Donnell and Steve Gutterman

BRUSSELS/MOSCOW, April 29 (Reuters) - The European Union announced asset freezes and travel bans on 15 Russians and Ukrainians over Moscow's actions in Ukraine, but the measures were seen as less aggressive than sanctions imposed this week by the United States.

In Ukraine's eastern city of Luhansk, hundreds of pro-Russian separatists stormed the regional government headquarters, unopposed by police, and the Ukrainian government said it had information that they also planned to seize the local television centre.

The EU list published on Tuesday included senior Russian politicians but did not extend to companies, several of which were singled out by Washington when it extended its sanctions list on Monday.

Moscow immediately denounced the new EU measures, saying the Europeans were simply doing Washington's bidding and should be ashamed of themselves. A senior Russian politician said Moscow was working on measures to counter the new sanctions.

But while Russian stock markets rallied after the announcement of less stringent EU sanctions than were expected, there were increasing signs that the Ukraine crisis was having an effect on key parts of the Russian economy.

Russian natural gas exporter Gazprom said further sanctions could disrupt gas sales to Europe and hit its business, while a Russian minister said U.S. restrictions on high-tech exports to Russia would be a blow to Russian companies in the sector.

The International Monetary Fund said it was preparing to cut its forecasts for Russian growth for the second time in less than a month. U.S. credit card firm Visa said it would suspend network services to two Russian banks sanctioned on Monday by the United States.

Those targeted by the EU included Russian deputy prime minister Dmitry Kozak, Ludmila Shvetsova, a deputy speaker of the lower house of parliament, Valery Gerasimov, chief of staff of Russia's armed forces, as well as separatist leaders in Ukraine.

But the list did not include the heads of Russian energy giants such as Rosneft's Igor Sechin, who had been included in the latest U.S. sanctions.

TERRITORIAL INTEGRITY

The decision brings to 48 the number of people that the EU has put under sanctions for actions it says have undermined Ukraine's territorial integrity.

Russia annexed the Crimea region after Ukraine's pro-Moscow president was ousted in February by protesters demanding closer links with Europe. Kiev and the West accuse Russia of stirring up a separatist campaign in the east, a charge Moscow denies.

On Monday, the United States imposed sanctions on seven Russians and 17 companies linked to Russian President Vladimir Putin.

The United States has been more aggressive in the penalties it has imposed on Russia than has the European Union, which depends heavily on Russia for energy and has close trading links.

The Russian Foreign Ministry said the EU sanctions would not ease tensions in Ukraine, where the Kiev government is struggling to rein in pro-Russian separatists.

"Instead of forcing the Kiev clique to sit at the table with southeastern Ukraine to negotiate the future structure of the country, our partners are doing Washington's bidding with new unfriendly gestures aimed at Russia," the ministry said.

Despite a Ukrainian military operation to contain them, pro-Russian militants have seized public buildings in about a dozen towns and cities in Russian-speaking eastern and southeastern regions of Ukraine.

The separatists' actions have led to accusations in the West and in Kiev that Russia is planning to annex those areas as it did with the Crimean peninsula.

Russian Deputy Foreign Minister Sergei Ryabkov denied that on Tuesday, telling a Russian news website that Moscow was "not at all inclined to repeat the so-called Crimea scenario in southeastern Ukraine".

Russian has massed tens of thousands of troops near the border with Ukraine. A NATO official said on Tuesday the alliance had seen no sign that they were withdrawing, despite a Russian statement that the troops had returned to their permanent positions.

SANCTIONS EFFECT

Western countries say sanctions are already having an effect on Russia by scaring investors into pulling out capital. The central bank has raised interest rates to support the rouble, and Russian firms are finding it harder to raise funds.

Gazprom, headed by Alexei Miller, an ally of Putin, and its managers have not been hit by U.S. or EU sanctions.

But the company, which meets a sizeable amount of Europe's demand for gas, said a pricing row with the new government in Kiev could potentially lead to a disruption of its gas exports to the rest of Europe through pipelines crossing Ukraine.

"An expansion of the U.S., EU and other sanctions programmes could adversely impact operations and the financial condition of the Gazprom Group," it said in a report following publication of its 2013 financial results.

Long seen as a tool of Russian foreign policy, Gazprom has threatened to cut supplies to Ukraine over an unpaid gas bill it puts at more than $2 billion and warned this could lead to reduced deliveries to clients in Europe.

MILITARY OBSERVERS

In eastern Ukraine, the self-declared mayor of a separatist-held town said he would discuss the release of detained military observers only if the EU dropped sanctions against rebel leaders.

Vyacheslav Ponomaryov, the de facto mayor of Slaviansk, told Interfax news agency the imposition of visa bans and asset freezes against Denis Pushilin, leader of the self-styled People's Republic of Donetsk, and Andrei Purgin, another leader in the eastern region, "was not conducive to dialogue".

The six observers were in Ukraine under the auspices of the Organization for Security and Cooperation in Europe, a democracy watchdog. They were detained last week after separatists said they had found a Ukrainian spy with them.

The mayor of eastern Ukraine's biggest city was in a stable condition on Tuesday in a hospital in Israel, where he was flown after an assassination attempt.

Gennady Kernes, one of Ukraine's most prominent Jewish politicians, was shot in the back on Monday in Kharkiv, and underwent surgery in Ukraine on Monday. Officials had said his injuries were life-threatening. (Additional reporting by Pavel Polityuk in Kiev, Elizabeth Piper, Oksana Kobzeva, Megan Davies, Olesya Astakhova and Vladimir Soldatkin in Moscow, Marc Jones in London and Dan Williams in Israel; Writing by Giles Elgood; Editing by Alastair Macdonald and Will Waterman)

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