On Wednesday, the United States imposed comprehensive sanctions on Russia’s economy including Gazprombank and the Rosneft Oil Co and other major banks, energy and defense companies. As Anna Yukhananov, Steve Holland and Jeff Mason report, US imposes toughest sanctions yet on Russia over Ukraine, Washington has increased its financial sanctions on Russia due to Moscow’s alleged interference in its neighbor Ukraine and annexation of Crimea. Other targeted companies include Russia’s second-largest gas producer, Novatek, Vnesheconombank, or VEB, a state-owned bank that acts as payment agent for the Russian government, and eight arms firms. The U.S. Treasury Department said the measures close medium and long term dollar funding to the two banks and energy companies, however, the sanctions did not freeze these four companies’ assets. The sanctions do not target Russia’s Gazprom, which owns 36 percent of Gazprombank, the world’s largest natural gas producer and provider of most of Europe’s energy supplies. On the same day, the European Union leaders met in Brussels to expand their own sanctions on Russia. The U.S. sanctions now include Feodosiva Enterprises, a shipping facility in Crimea, and senior Russian officials including the deputy head of the State Duma, or parliament, the minister of the Crimea, a commander of the Russian intelligence agency FSB, and a Ukrainian separatist leader. On Wesdnesday, White House spokesman Josh Earnest told reporters, “There are some clear steps that we’ve asked Russia to take that they haven’t taken. And that is what has elevated the risk that Russia faces right now as it relates to additional economic costs that could be imposed by the international community.” In addition, Washington said that 12,000 Russian forces were back on the border with Ukraine and weapons were crossing over to pro-Russian separatists.
Meanwhile, President Vladimir Putin on Thursday stated that the recent addition to U.S. sanctions against Russia will stalemate bilateral relations and hurt Russian and American businesses, Nataliya Vasilyeva reports, Putin Speaks Out Against New U.S. Sanctions. According to Vasilyeva: “Russia’s benchmark MICEX was down 2.9 percent in late afternoon trading Thursday upon news of the sanctions while Russia’s biggest oil company, Rosneft, was nearly 5 percent down and second-largest oil producer was trading 9 percent lower.” Putin’s comments came hours after President Barack Obama announced border sanctions against Russia. The POTUS hopes that the increased pressure will end the insurgency in eastern Ukraine which is believed to be backed by the Kremlin. The U.S. penalties stop short of the most stringent action threatened which is to cut off key sectors of Russia’s oil dependent economy, however, those steps are on the table if Russia fails to agree to the West demands to stop supporting insurgents who have destabilized eastern Ukraine. The fighting in eastern Ukraine has gone on for four months in a conflict the U.N. says has killed over 400 people and displaced tens of thousands. The conflict began shortly after Russia annexed Crimea. Putin warned Washington that the sanctions will backlash against American companies working in Russia including Rosneft and Novatek which are both barred from getting long term loans from U.S. entities. Moscow based investment bank Sberbank-CIB said in a note to investors that Russian companies cannot replace long term loans from the U.S. immediately, while Rosneft’s multimillion dollar deal with ExxonMobil may be in jeopardy. Russia’s foreign minitry dismissed the sanctions as bullying and said it will push back. In addition, Prime Minister Dimtry Medvedev in televised remarks said the sanctions are throwing Russia’s relations with the west back to the 1980s adding that Russia “will have to pay more attention to military and security spending.” Putin did not mention the additional sanctions from the European Union which urge the European Investment Bank to sign no new financing agreements with Moscow and was suspending operations in Russia financed by the European Bank for Reconstruction and Development, according to Vasilyeva. The foreign ministry did lash out at the EU’s new sanctions by accusing Europe of “giving in to the bullying of the U.S. administration.”
While Russia got hit with sanctions from more than one governmental entity, pro-Moscow separatists battle to break through government forces near the border with Russia in eastern Ukraine on Wednesday as steps toward a ceasefire failed. Fighting has intensified since Ukrainian forces pushed rebels out of their stronghold in the town of Slaviansk 10 days ago, Richard Balmforth and Anton Zverev report (As Fighting In East Ukraine Intensifies, Hundreds Of Bodies Of Rebels Found In Shallow Graves). The Ukrainian military said 11 more troops were killed in 24 hours near the frontier. Ukraine has tried to put down a revolt of heavily armed fighters since April, many of them Russian who want independence for two eastern provinces. Russia annexed Ukraine’s Crimea peninsula in March after pro-Russian president was ousted in Kiev. Moscow has denied supporting the separatist fighters, but Kiev says many of them and their leaders came from Russia and brought heavy weapons with them. Ukrainian troops are concentrating their efforts on securing the frontier to prevent more fighters and weapons from coming in.
The escalation in recent days raised the prospect that Moscow could intervene in Ukraine directly, as Kiev reports, the numbers of Russian troops have risen at the border area again. In telephone conversations with German Chancellor Angela Merkel and European Council President Herman Van Rompuy, Ukraine’s President Petro Poroshenko provided evidence of fighters crossing into Ukraine from Russia with heavy military equipment. Prime Minister Arseny Yatseniuk in a speech on his website said: “Everything which is happening in Ukraine has been planned by Russia since 2004. Putin has a clear plan and that is to destroy Ukraine and establish his influence over post-Soviet space.” Around 270 Ukrainian servicemen and hundreds of civilians and rebels have been killed since operations began in April to crush the rebels. Lysenko, a Ukrainian military spokesman, said that in Slaviansk, the former rebel stronghold, “hundreds of bodies of…(rebel) fighters” had been found in shallow graves. Some of these graves have been mined by the terrorists. Efforts to forge a truce have failed after a planned video link up with separatists on Tuesday never materialized. Since losing Slaviansk, hundreds of rebel fighters moved to Donetsk vowing to make a stand. The city itself has seen a drop in its pre-conflict population of 1 million as many flee the city fearing a government offensive.
While fighting continued on the ground, a Malyasian Airlines passenger plane carrying 295 people was shot down over eastern Ukraine Thursday, Ukrainian officials said, and both the government and pro-Russia separatists deny any responsibility. As Peter Leonard reports, Ukraine: Malaysia Airlines plane carrying 295 passengers shot down, an Associated Press journalist counted at least 22 bodies at the wreckage site near rebel held Hrabove 40 kilometers from the Russian border. The village has seen severe fighting between the two sides in recent days. A Russian news reports said pro-Russian rebels intend to call a three day ceasefire in order to allow for investigation of the crash site and recovery efforts. The Boeing 777-200ER was traveling from Amsterdam to Kuala Lumpur and appears to have broken up before impact spreading the wreckage over a wide area. Prime Minister Najib Razak told reporters that Malaysia was unable to verify “the cause of this tragedy but we must, and we will, find out precisely what happened to this flight” and added that the plane didn’t make any distress call before it went down. Ukrainian President Petro Poroshenko called the downing an act of terrorism and wants an international investigation into the crash insisting that his forces did not shoot it down. According to Huib Gorter, Malaysian Airlines senior vice president in Europe, at least 154 people on the flight were Dutch citizens, 27 Australians, 23 Malaysians including 15 crew and 11 Indonesians. In addition, other nationalities included six from the United Kingdom, four from Germany, four Belgians, three from the Philippines and one Canadian. Unfortunately, 47 dead passengers are still unidentified. Ukraine’s security services said they intercepted two telephone conversations that showed rebels were responsible. Earlier in the week, rebels claimed responsibility for shooting down two Ukrainian military plans. In a Kremlin statement issued early Friday, Putin said, “This tragedy would not have happened if there were peace on this land, if the military actions had not been renewed in southeast Ukraine. And, certainly, the state over whose territory this occurred bears responsibility for this awful tragedy.” Britain has asked for an emergency meeting of the U.N. Security Council on Ukraine. Within hours of Thursday’s crash, several airlines including Lufthansa, Delta and KLM released statements saying they were avoiding parts of Ukrainian airspace. Poroshenko stated: “We do not exclude that this plane was shot down, and we stress that the Armed Forces of Ukraine did not take action against any airborne targets. We are sure that those who are guilty in this tragedy will be held responsible.” The White confirmed the call made by Putin to inform “the U.S. president of the report from air traffic controllers that the Malaysian plane had crashed on Ukrainian territory.” Separatist leader Andrei Purgin told the Associate Press he was certain that Ukrainian troops shot down the plane and that rebels forces if they owned Buk missile launchers were not capable of operating them. Around the time of the crash, Russian media quoted witnesses saying they saw what they thought was a rocket hit the plane. This is the second time a Malaysian Airlines plane was lost in less than six months. In another article, Ukraine: Pro-Russia rebels downed Malaysian plane, Peter Leonard reports that American intelligence authorities allege a surface to air missile brought down the plane but still don’t know if Russia or Ukraine had fired it. The U.S. has the technology to detect missile launches including the identification of heat from rocket engines.