The Obama administration expanded U.S. sanctions against Russia on July 17th targeting the country’s financial, energy and defense industries in response to Russia’s continued support for Ukrainian separatists. Along with the U.S. sanctions, European Union leaders announced more modest measures that will cut European investment in Russia and potentially target more Russian individuals by the end of July.
After months of sanctions solely directed at select individuals and smaller firms, the new measures primarily target two banks – Gazprombank and Vnesheconombank, or VEB – along with two energy companies – Rosneft, Russia’s largest oil producer, and Novatek, Russia’s second largest gas producer. The imposed sanctions will now bar these prominent firms from future loans with more than 90 days maturity from U.S. institutions, effectively preventing them from receiving medium to long-term financing, but stopping short of preventing short-term funding needed for day-to-day business or restricting U.S. businesses from dealings with them.
However, the sanctions do prohibit any U.S. businesses from dealing with eight Russian arms manufacturers, and froze all U.S. assets of these state-owned defense firms. Additional sanctions were also imposed on political entities and individuals in separatist regions of Ukraine.
As the Ukrainian conflict escalates, the Obama administration hopes that the tougher U.S. sanctions will send a clear message to Russia that it must take steps to de-escalate the situation in Ukraine, particularly halting the deployment of new forces to the Ukrainian border and the distribution of weapons to the separatists.
To read full details on the new sanctions, click here.