EU, US strengthen Russia sanctions as Kremlin growls

EU, US strengthen Russia sanctions as Kremlin growls
Kremlin calls strengthened sanctions "seriously discordant".
By bne IntelliNews September 8, 2016

The EU prolonged some sanctions against Russia on September 8, media reports said a day after US authorities added 11 Russian companies to the list of those sanctioned over Moscow’s annexation of Crimea and support for separatists in East Ukraine.

EU asset freezes and entry bans for around 150 private individuals and 37 legal entities linked to events in Ukraine that are due to expire on September 15 were extended by another six months, Reuters said, citing diplomatic sources. The main core of the EU sanctions against Russia expires in January 2017.

The US Commerce Department’s separate sanctioning of companies followed the September 1 publication of an expanded US list of 81 companies. Most of the new additions are based in Russia and include Gazprom subsidiaries and firms constructing a bridge from the Russian mainland across the Kerch Strait to Crimea.

The latest measures are intended to strengthen existing sanctions and shouldn’t be viewed as intensified economic pressure against the Russian government, US State Department deputy spokesman Mark Toner said on September 7. “We are constantly working to close loopholes,” he said, adding the steps are not related to talks between Presidents Barack Obama and Vladimir Putin at the recent G20 summit.

However, Kremlin spokesman Dmitry Peskov expressed regret the sanctions were expanded in the days following the leaders’ meeting. “This is seriously discordant with the themes of possible cooperation in sensitive spheres that were discussed at the meeting of both presidents,” Peskov said, adding that the expanded sanctions don’t support developing relations between the two countries, he added.

The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) on September 1 expanded its sanctions by adding 37 more individuals and entities to the list, citing the situation in Ukraine as the reason. “Russia continues to provoke instability in eastern Ukraine despite its Minsk [peace treaty] commitments,” said Acting OFAC Director John E. Smith.

"There is only one way to lift economic sanctions - the full implementation of the Minsk agreements," EU Commission President Jean-Claude Juncker told the St Petersburg International Economic Forum on June 16, before the extension of the EU sanctions in June. 

Although economic sanctions against Russia by the US, the EU and other countries have been in place for over two years, estimates of their effect still vary. Along with the drop in oil prices and deep structural imbalances they are credited by some with tipping Russia into a 3.7% recession in 2015. Others claim the measures helped deleverage Russia's foreign debt and propelled import substitution efforts, while shielding the country from the immediate after-effects of Britain's Brexit vote to leave the EU in June.

Nevertheless, the sanctions have limited the Russian' government's ability to raise debt abroad, slashed the presence of Russian corporate issuers on international capital markets, and  undermined and delayed a number of major long-term hydrocarbon projects by means of technology exports bans.