Kremlin Threatens 'Painful' Response to Sanctions - The New Indian Express

Kremlin Threatens 'Painful' Response to Sanctions

Published: 29th April 2014 08:53 AM

Last Updated: 29th April 2014 08:53 AM

The United States launched a tough new round of targeted economic sanctions against the cronies of Vladimir Putin yesterday (Monday) as it attempted "to ratchet up the pressure" on the Russian president and deter him from invading Ukraine.

The Kremlin vowed it would deliver a "painful" response to the sanctions imposed on 17 Russian businesses and seven individuals including Igor Sechin, the boss of the Russian oil giant, Rosneft, which is 20 per cent owned by BP.

As the share price of both companies slipped on the news yesterday, senior Obama administration officials warned that any incursion into Ukraine by Russian forces would trigger potentially devastating sanctions against sectors of Russia's economy.

"We've been very clear that one trigger is a Russian invasion across the border," an official said, noting that the US Treasury had kept plenty of room to escalate sanctions if necessary.

Both sides intensified the rhetoric surrounding the most serious East-West crisis since the end of the Cold War.

Jacob Lew, the US Treasury Secretary, declared Russia's "dangerous and inflammatory" actions in Ukraine to be "illegal and illegitimate".

Sergei Ryabkov, the Russian deputy foreign minister, said Moscow would respond to the US actions. "We are certain that this response will have a painful effect on Washington," he told the Interfax news agency.

Europe is expected to follow the US lead this morning when it announces it will impose asset freezes and travel bans on a further 15 prominent Russians close to the Kremlin, after ambassador-level talks in Brussels yesterday. It is understood that the EU list of officials and individuals held responsible by the EU for "directly" destabilising eastern Ukraine will not go as far as the American measures for legal reasons.

Senior Republicans dismissed the latest sanctions, which follow an earlier round in March, as a "slap on the wrist" for Mr Putin that was insufficient to make him change his calculus in Ukraine.

However, US Treasury officials countered that the cumulative impact of sanctions was now starting to bite in Moscow, where the stock market has fallen 15 per cent this year, the cost of long-term government borrowing has risen sharply, and the rouble has fallen by 9 per cent in value against the dollar.

"Every indicator shows they are feeling the heat from our actions. Russia is suffering," said a senior official, adding that it should be clear to Mr Putin that he stood to lose more than he would gain by escalating the Ukraine conflict.

Officials said that the 17 sanctioned business entities, including three banks, were all connected "in one way or another" with three of Mr Putin's biggest cronies, the oil billionaire Gennady Timchenko and the Russian president's former judo sparring partners, Arkady and Boris Rotenberg.

Among the entities hit was SMP Bank, owned by the Rotenbergs, long-standing connections of Mr Putin's whose companies received more than $7?billion in contracts for the Sochi Winter Olympics.

Also on the list was the Volga Resources Group, a private investment organisation owned by Mr Timchenko, a long-standing confidant of Mr Putin, who is said to have personal funds tied up in Gunvor Group Ltd, a Timchenko-controlled energy trading company.

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