European Union leaders ordered tougher sanctions against Russia on Wednesday because of its actions in Ukraine, asking the European Investment Bank to sign no new financing agreements with Moscow.
The leaders, meeting in Brussels, also agreed to act together to suspend financing of the new European Bank for Reconstruction and Development operations in Russia.
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European leaders also signalled their willingness for the first time to go after Russian companies "that are materially or financially supporting actions undermining or threatening Ukraine's sovereignty, territorial integrity and independence." They ordered their foreign ministers to draw up a list of such people or entities by the end of July.
In a decision that could affect Russian oligarchs or members of the Kremlin inner circle, the EU leaders also asked the ministers to consider targeting people or companies "who actively provide material or financial support to the Russian decision-makers responsible for the annexation of Crimea or the destabilization of Eastern Ukraine."
Until now, the EU had targeted 72 people in Ukraine and Russia with asset freezes and visa bans, as well as two Crimea-based companies whose assets in EU member countries were ordered frozen.
The ramped-up sanctions indicated European leaders' exasperation over Russia's failure to heed the demands they made at their last summit on June 27 to take specific actions to end the armed pro-Moscow revolt in Ukraine's east.
The leaders also asked the EU's executive arm, the Commission, to consider on a case-by-case basis whether EU-Russian cooperation programs with Russia should be suspended, except those dealing with cross-border cooperation and security. They also requested recommendations on how to restrict investment in Crimea, which the EU accuses Moscow of annexing illegally by force.
Gazprom not targeted
The European sanctions were declared shortly after the U.S. announced the most wide-ranging penalties yet on the Russian economy, targeting key institutions such as Gazprombank and the Rosneft Oil Co, and other major banks and energy and defence companies.
However, U.S. officials say the penalties stop short of fully cutting off sectors of the Russian economy, a step the U.S. is holding in reserve in case Moscow launches a full-scale invasion of Ukraine or takes similarly provocative actions.
'We have to see concrete actions, not just words, that Russia in fact is committed to trying to end this conflict.' - Barack Obama, U.S. president
Washington has steadily escalated its financial sanctions on Russia over what it views as Moscow's interference in its neighbour Ukraine and its annexation of the Crimea region. Obama said the United States could impose further sanctions if Russia did not take concrete steps to ease the conflict.
The targeted companies also include Russia's second-largest gas producer, Novatek, Vnesheconombank, or VEB, a state-owned bank that acts as payment agent for the Russian government, and eight arms firms.
The U.S. Treasury Department, which posted the sanctions on its website, said the measures effectively closed medium- and long-term dollar funding to the two banks and energy companies. But the sanctions did not freeze those four companies' assets.
The sanctions stopped short of targeting Russia's Gazprom, the world's largest natural gas producer and provider of much of Europe's energy supplies. Gazprombank is 36 percent-owned by Gazprom.
Diplomatic solution preferred
"These sanctions are significant, but they are also targeted, designed to have the maximum impact on Russia while limiting any spillover impact on American companies or those of our allies," Obama told reporters.
The new U.S. sanctions also include Feodosiya Enterprises, a shipping facility in Crimea, and senior Russian officials, several of whom had already been targeted by the European Union.
The affected senior officials included the deputy head of the State Duma, or parliament, the minister of the Crimea, a commander of the Russian intelligence agency FSB, and a Ukrainian separatist leader.
"We have emphasized our preference to resolve this issue diplomatically," Obama said. "We have to see concrete actions, not just words, that Russia in fact is committed to trying to end this conflict."
He said Russia had continued to support separatists in east Ukraine, sending fighters and weapons across the border.
Sanctions haven't yet affected Putin's decisions
The U.S. and Europe have levied coordinated sanctions on Russian individuals and companies connected to Moscow's alleged destabilization in Ukraine. Obama administration officials argue that those penalties have had an impact on Russia's economy, citing International Monetary Fund statistics showing a downgrade in Russia's growth this year.
However, officials have acknowledged that the sanctions have not had an impact on Russian President Vladimir Putin's decision-making in Ukraine.
State Department spokesman Jen Psaki said Tuesday that if Putin "cares deeply about his people, about the economy, his own country," the sanctions would shift his calculus.