The Obama administration sought to further pinch Russia’s economy Wednesday, bringing its toughest sanctions to date against major Russian banks, energy companies and weapons makers in a bid to convince the Kremlin to end its “provocations” in Ukraine.
Among the entities targeted are two Russian banking giants and Kalashnikov Concern, the company that makes AK-47s _ the standard Soviet and Russia assault rifle – along with the head of Russia’s Federal Security Service. The sanctions target Russia’s oil and gas industry for the first time, limiting access to U.S. capital for new projects.
President Barack Obama announced the new sanctions, saying they are significant but targeted to hit Russia’s economy without affecting Europe or U.S. businesses.
“What we are expecting is that the Russian leadership will see once again that its actions in Ukraine have consequences, including a weakening Russia economy and increasing diplomatic isolation,” Obama said at the White House in remarks that addressed an array of global challenges.
Obama, who met earlier in the day with Secretary of State John Kerry, also suggested the U.S. may be open to extending negotiations with Iran over an agreement not to pursue a nuclear weapon. Obama said the talks, which face a July 20 deadline, have produced “real progress,” though gaps remain. He said the administration would consult with Congress and others as it decides whether to extend negotiations.
Obama also said the U.S. would use all of its diplomatic resources to reach a cease-fire in Gaza and would stress the need to protect civilians.
“We live in a complex world and at a challenging time,” he said as he closed his remarks. “None of these challenges lend themselves to quick or easy solutions, but all of them require American leadership.”
The Ukraine sanctions appear to be “far more serious” than earlier sanctions and could further stall an already “flat-lining” Russian economy, said Steven Pifer, a former U.S. ambassador to Ukraine who leads the Brookings Institution’s Arms Control and Non-Proliferation Initiative in Washington.
Pifer said he expected that by blocking U.S. medium- and long-term lending to the companies, the sanctions could create further uncertainty about the Russian economy and discourage other countries from lending and investing in Russia.
“Earlier sanctions left the Kremlin uneasy. These should grab its attention,” Pifer said. “The question now is will they achieve their political goal, which is to persuade Russia to adopt a different policy on Ukraine. That remains to be seen.”
European Union leaders also ordered tougher sanctions against Russia on Wednesday, asking the European Investment Bank to sign no new financing agreements with Moscow, the Associated Press reported.
Meeting in Brussels, the leaders also agreed to act together to suspend financing of the new European Bank for Reconstruction and Development operations in Russia.
The move comes as new videos have emerged that appear to show multiple rockets being launched into eastern Ukraine from Russian soil, which would represent a serious deepening of the crisis.
Republicans have been pressing Obama for energy and banking sanctions for months, said Sen. Bob Corker, R-Tenn., the ranking member of the Senate Foreign Relations Committee.
Corker called the sanctions “a step in the right direction,” but he said he’d continue to press the administration to ratchet up the pressure if Russian President Vladimir Putin does not back down.
Several senators, however, called for Obama to provide lethal military aid to Ukraine, including Sen. Marco Rubio, R-Fla., who called the sanctions inadequate.
“It is shameful that in the face of continued Russian aggression against Ukraine, the United States and our European allies remain unwilling to take decisive action to impose comprehensive sanctions against Russia’s banking, energy and arms sectors,” he said.
Obama said he has pressed Putin to stop the flow of weapons and fighters across the border and to urge pro-Russian separatists to release hostages and support a cease-fire. He said he’s also urged Putin to pursue internationally mediated talks and agree to monitors on the border.
“We have emphasized our preference to resolve this issue diplomatically, but we have to see concrete actions and not just words,” Obama said.