West readies package of sector sanctions on Russia

Published on NewsOK Modified: June 24, 2014 at 7:46 pm •  Published: June 24, 2014
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WASHINGTON (AP) — The United States and its European allies are finalizing a package of sanctions on Russia's key economic sectors that could be levied as early as this week, though the penalties might be delayed because of positive signals from Russian President Vladimir Putin, administration officials and others close to the decision-making said Tuesday.

Penalizing large swaths of the Russian economy, including its lucrative energy industry, would ratchet up the West's punishments against Moscow over its threatening moves in Ukraine. The U.S. and Europe have already sanctioned Russian individuals and entities, including some with close ties to Putin, but have so far stayed away from the broader penalties, in part because of concern from European countries that have close economic ties with Russia.

But with the crisis in Ukraine stretching on, a senior U.S. official said the U.S. and Europe are moving forward on "common sanctions options" that would affect several areas of the Russian economy. A Western diplomat said those options included Russia's energy industry, as well as Moscow's access to world financial markets.

The U.S. and Europe have been eyeing a European Council meeting in Brussels later this week as an opportunity to announce the coordinated sanctions. However, the enthusiasm for new sanctions, particularly among European leaders, appears to have waned in recent days as countries evaluate whether Putin plans to follow through on a series of promises that could ease the crisis, officials said.

The Russian leader acted Tuesday to rescind a parliamentary resolution authorizing him to use the Russian military in Ukraine. He also urged the new Ukrainian government to extend a weeklong cease-fire and called for talks between Ukraine and pro-Russian rebels that are widely believed to be backed by the Kremlin.

Putin's moves came one day after he talked by phone with President Barack Obama, their first known conversation in more than two weeks.

The threat of sector sanctions may be driving Putin to try to avoid penalties that could have a devastating impact on the already shaky Russian economy. However, there were no guarantees that Moscow would abide by the West's requests to pull back its troops from the Ukrainian border, stop arming separatists and negotiate seriously with Kiev.

Indeed, there were signs Tuesday of just how fragile the situation on the ground remains. Hours after Putin called for the cease-fire to be extended, pro-Moscow separatists shot down a Ukrainian military helicopter, killing nine servicemen.

Vice President Joe Biden spoke to Ukraine's new president, Petro Poroshenko, for the third time in as many days and offered his condolences for the deaths. The White House said Biden also underscored the importance of having monitors in place in Ukraine to verify violations of the cease-fire, as well as the need to stop the supply of weapons and militants from flowing across the Russian border.

At the State Department, spokeswoman Marie Harf described the situation on the ground as "two steps forward, one step back."

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