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Tags: Russia | Ukraine | sanctions | Moscow

Russia Mulls Response as US, EU Add Sanctions Over Ukraine

Friday, 12 September 2014 06:30 AM EDT

Russia threatened retaliation against a U.S. and European Union decision to stiffen sanctions against Moscow because of Ukraine and may ban some imports including clothing and used cars.

The EU added 15 companies, including OAO Gazprom Neft, OAO Rosneft and OAO Transneft, and 24 people to the list of those affected by its sanctions against Russia. European companies and taxpayers “will have to pick up the costs” for the penalties, Dmitry Peskov, a spokesman for Russian President Vladimir Putin, told Interfax. The U.S. will “deepen and broaden” its measures against Russia’s financial, energy and defense industries, President Barack Obama said.

The moves raise the level of confrontation and follow reprisals last month, when the Russian leader banned a range of food imports after an earlier round of U.S. and European penalties. Putin denies any involvement in the fighting that broke out after he annexed Crimea in March in what has become the worst crisis between Russia and its former Cold War adversaries since the fall of the Berlin Wall.

“The current political risks, various restrictions and barriers are worsening the situation,” Putin said in Dushanbe, Tajikistan. “They directly harm the global business climate and reduce trust in international trade and the financial system.”

New Penalties

Under the new penalties published in the Official Journal, the EU extended a ban on share or bond sales with a maturity of more than 30 days to the three energy companies and three industrial producers — Oboronprom, Uralvagonzavod and United Aircraft Corp. Nine defense companies are subject to a curb on imports of dual-use technology.

The targeted individuals include Rostec Corp. Chief Executive Officer Sergei Chemezov and Vladimir Zhirinovsky, a lawmaker in Russia’s lower house of parliament, as well as eight members of eastern Ukrainian separatist groups and two Crimean officials.

Russia’s Economy Ministry drafted a list of goods that may be banned, including automobile imports, particularly used cars, as well as textiles and clothing, state-run RIA Novosti reported, citing Kremlin economic aide Andrei Belousov. It was also weighing restrictions on overflights to the Asia-Pacific as a response to sanctions against Aeroflot’s low-cost unit Dobrolet.

Ruble Weakens

Emerging-market stocks headed for the biggest weekly drop since March. The ruble weakened 0.4 percent while the Micex Index rebounded from its steepest decline since Aug. 29 on Thursday.

The fighting in Ukraine has killed more than 3,000 people and driven more than 1 million from their homes, according to the United Nations.

The Sept. 5 cease-fire continued to show signs of strain, with the separatists firing at checkpoints and the Donetsk airport overnight, Ukrainian military spokesman Oleksiy Dmytrashkovskyi said. Overnight shelling also damaged buildings in Donetsk and local pipelines, the city council said on its website.

President Petro Poroshenko said in Kiev that Russian troop withdrawal from Ukraine’s conflict zone has halted and urged for it to continue.

Poroshenko demanded that Russia and the rebels immediately release all prisoners. The rebels are preparing for a next swap of prisoners in two days, Interfax reported, citing Andrei Purgin, an official of the self-proclaimed Donetsk people’s republic.

Peace Needed

Ukraine is “hoping” for special status within NATO and needs peace to restart investments and the economy, Poroshenko said, vowing to regain control of Crimea one day.

“There can be no compromise on territorial integrity and the independence of Ukraine,” he said.

The 28-member EU is offering to ease the restrictions once the Kremlin makes a good-faith effort to end the conflict.

“We have always stressed the reversibility and scalability of our restrictive measures,” EU President Herman Van Rompuy said in a statement from Brussels. A review of the cease-fire in eastern Ukraine by the end of September may lead to EU “proposals to amend, suspend or repeal the set of sanctions in force, in all or in part.”

The EU won’t spell out what it wants to see on the ground to justify an easing or lifting of sanctions, according to an official from the bloc who spoke on condition of anonymity. It also won’t predict exactly when this decision will be made. The review will cover all sanctions now in force.

Peace Plan

“Only if Russia significantly and verifiably implements the peace plan can the sanctions be withdrawn,” German Foreign Minister Frank-Walter Steinmeier said in an interview with Passauer Neue Presse newspaper. “We’ve seen too often in the past months that Moscow promises much, but its actions haven’t contributed to an easing of the situation in eastern Ukraine.”

The latest sanctions and the ones adopted in July run until the end of July 2015, the official said. A unanimous decision by all 28 EU governments will be required to renew them.

EU governments first voted for the sanctions on Sept. 5, laying bare the bloc’s divisions over Russia by putting the curbs on hold as the cease-fire between Ukraine and Russian- backed separatists kicked in. Some countries had argued that rushing ahead with the restrictions would give the Kremlin a pretext to restart the fighting.

“It is certainly a difficult situation because every further set of sanctions can lead to counter reactions that we don’t know today,” Austrian Finance Minister Hans Joerg Schelling said before the meeting of euro-area finance ministers in Milan, Italy.

© Copyright 2023 Bloomberg News. All rights reserved.

Russia threatened retaliation against a U.S. and European Union decision to stiffen sanctions against Moscow because of Ukraine and may ban some imports including clothing and used cars.
Russia, Ukraine, sanctions, Moscow
Friday, 12 September 2014 06:30 AM
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