The US Department of the Treasury’s Office of Foreign Assets Control (OFAC) has expanded its sanctions regime against Russia by adding 37 more individuals and entities to the list, it said in a press release on September 1.
While the update is rather fine tuning than a significant escalation of the sanctions package, it underscores that the Russian-Ukrainian conflict is not resolved, and comes shortly before the G20 summit in China, at which Western leaders are expected to pressure Russian President Vladimir Putin to step up efforts to end the conflict.
“Russia continues to provoke instability in eastern Ukraine despite its Minsk commitments,” said Acting OFAC Director John E. Smith. “Treasury stands with our partners in condemning Russia’s violation of international law, and we will continue to sanction those who threaten Ukraine’s peace, security, and sovereignty.”
The further sanctions move from the US can also be seen as a poor evaluation of the progress made during the latest visit of US Secretary of State John Kerry to Moscow.
While Kerry’s visit was in July, the timing of the Treasury’s press release itself sends a message, coming one day before the opening of Russia’s Eastern Economic Forum 2016.
Most notably the sanctions update relates to Russian natural gas giant Gazprom, which had a number of new subsidiaries added to the list, including Gazprom Capital, the energy company’s vehicle for raising domestic debt.
Other additions include officials of the annexed Crimea peninsula and Ukraine's breakaway Donetsk and Lugansk republics, 18 construction, transportation, and military companies working in Crimea and particularly involved in the construction of the Kerchen Bridge to mainland Russia.
The OFAC move also pre-empts the EU's decision on September 15 regarding a further six-month rollover on sanctions on 146 individuals and 37 companies, making it harder for any EU member states to break rank from the US position.
Although economic sanctions against Russia by the US, the EU, and a number of other states have been in place for over two years, the 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 3.7% recession in 2015, while praised by others for deleveraging the foreign debt and propelling import substitution.
Nevertheless the sanctions have limited the ability of the government to raise debt abroad, have slashed the presence of Russian corporate issuers on international capital markets, and have undermined and delayed a number of major long-term hydrocarbon projects by means of technology exports bans.
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