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US, EU hit Russia with new sanctions over Ukraine

Tuesday - 4/29/2014, 4:34am  ET

U.S. President Barack Obama looks towards Press Secretary Jay Carney during a joint news conference with Philippines President Benigno Aquino III at Malacanang Palace in Manila, the Philippines, Monday, April 28, 2014. President Obama said a 10-year agreement signed Monday to give the U.S military greater access to Philippine bases will help promote regional security, improve armed forces training and shorten response times to humanitarian crises, including natural disasters. (AP Photo/Charles Dharapak)

LYNN BERRY
Associated Press

WASHINGTON (AP) -- The United States and its European allies hit more than two dozen Russian government officials, executives and companies with new sanctions Monday as punishment for their country's actions in Ukraine, yet the penalties stopped short of targeting Russia's broader economy and it remained unclear if they would work. In Moscow, there was relief that the sanctions were not as far-ranging as feared.

The measures, including asset freezes and visa bans, affect people close to the Kremlin, and Western leaders hope those hurt by the sanctions will pressure Russian President Vladimir Putin to limit his reach in Ukraine and de-escalate the crisis there. However, the Russian leader himself was not among those targeted, and Obama administration officials acknowledged there was no expectation that Putin would quickly change course.

Still, officials in Washington and Brussels said the sanctions, coupled with an initial set imposed following Russia's annexation of the Crimean peninsula last month, would significantly boost the cost to Moscow of ignoring an agreement it signed earlier this month to take concrete steps to ease tensions in Ukraine.

"The goal here is not to go after Mr. Putin personally," President Barack Obama told reporters in the Philippines, where he was wrapping up a four-nation trip to Asia. "The goal is to change his calculus with respect to how the current actions that he's engaging in could have an adverse impact on the Russian economy over the long haul."

Obama said Russia still could resolve the Ukraine crisis diplomatically. But he sounded far from confident about the immediate prospects for the new sanctions packages.

"We don't yet know whether it's going to work," he said.

In addition to the sanctions on the seven individuals and 17 companies, there also are new arms and technology export restrictions on Russia.

Meanwhile, in Brussels, the European Union announced it had added 15 more officials to its Russia sanctions list, bringing to 48 the number of people singled out for "undermining Ukraine's territorial integrity, sovereignty and independence."

They will be banned from traveling to the 28-nation bloc, and their assets will be frozen, the EU said in a statement. The names of the individuals targeted weren't immediately released.

The EU is Russia's biggest trading partner, giving the Europeans greater economic leverage over Moscow than the U.S. has. However, the EU treads more carefully in imposing sanctions since Russia is also one of its biggest oil and gas suppliers -- and the bloc apparently shied away from following Washington's lead in targeting specific Russian companies.

Among the U.S. targets is Igor Sechin, president of the Russian state oil company Rosneft, who has worked for Putin since the early 1990s. Sechin was seen as the mastermind behind the 2003 legal assault on the private oil company Yukos and its founder, Mikhail Khodorkovsky, who at the time was Russia's richest man. The most lucrative parts of Yukos were taken over by Rosneft, making it Russia's largest company. Rosneft has a major partnership deal with ExxonMobil.

Also on the list are Alexei Pushkov, the Kremlin-connected head of the international affairs committee of the Russian parliament's lower house, Russian Deputy Prime Minister Dmitry Kozak, and Sergei Chemezov, another longtime Putin ally. The White House said Putin has known Chemezov, CEO of the state-owned holding company Rostec, since the 1980s, when they both lived in the same apartment building in East Germany.

Most of the 17 firms, all privately held, are controlled by three businessmen with close links to Putin: Gennady Timchenko and brothers Boris and Arkady Rotenberg, all of whom were targeted by the first round of U.S. sanctions imposed in March.

One of the companies Timchenko owns is Stroytransgaz, a construction company that has amassed millions in contracts to build oil pipelines for state-owned Transneft. The company has recently expanded and won major deals to build highways and soccer arenas for the 2018 World Cup in Russia.

In Moscow, the new sanctions were seen as milder than many had feared, largely because they did not affect any public companies or major sectors of the economy. The Russian RTS index jumped 1 percent on the news. Reflecting relief that state banks had not been targeted, Sberbank's stock was up 5 percent. Shares in gas giant Gazprom rose more than 2 percent as its chief executive Alexei Miller was spared sanctions.

Rosneft, was down nearly 2 percent, even though the state oil company itself was not sanctioned. Sanctions could have caused trouble for its partnership with ExxonMobil.

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