Obama Announces The Most Punishing Sanctions Yet On Russia -- Says They Will Have A 'Bigger Bite'

Obama putinREUTERS/Kevin LamarqueRed light reflected from the carpet illuminates Russian President Vladimir Putin as he passes U.S. President Barack Obama at a group photo for the 70th anniversary of the D-Day landings in Benouville June 6, 2014.

US President Barack Obama on Tuesday announced a new round of what he called “major,” punishing sanctions on Russia and President Vladimir Putin for the country’s continued involvement in destabilizing the crisis in Ukraine and supporting pro-Russian separatists in the country’s eastern regions.

“Today is a reminder that the United States means what it says,” Obama said during a press conference from the South Lawn of the White House.

Right before Obama spoke, the Treasury Department unveiled the new sanctions. They target Russia’s energy, arms, and finance sectors. Obama said the sanctions will have an “even bigger bite” than anything previously unveiled, and they come in coordination with the European Union.

Taken together, they constitute the most extensive sanctions by the U.S. and E.U. on Russia since the end of the Cold War — though Obama said during his press conference that the West and Russia have not entered into “a new Cold War.”

Among the targets of the new measures include the Bank of Moscow, the fifth-largest bank in Russia; the Russian Agricultural Bank, the fourth-largest; and VTB Bank, the second-largest. The sanctions prohibit U.S. citizens or companies from providing new financing to the three major Russian financial institutions, thereby cutting off their access to U.S. capital markets.

The sanctions also hit United Shipbuilding Corporation, the Russian-state owned defence technology firm. The U.S. government is also prohibiting exports of energy-related parts to Russia. The Commerce Department said it would deny export licenses “if products are destined for deep water oil exploration and production” or Arctic oil.

“This is a choice that Russia, and President Putin in particular, has made,” Obama said, adding that it “didn’t have to be this way.”

“Today, Russia is once again isolating itself from the international community, setting back decades of genuine process.”

Obama’s statement came hours after the European Union agreed to impose broad economic sanctions on Russia for the first time — measures that include targeting Russian oil companies, banks and defence firms.

The White House had announced on Monday that Obama and five European leaders had agreed on the need to impose a fresh round of sanctions, as Russia continues to escalate its involvement in Ukraine.

Tensions between the West and Russia have reached their most feverish point since the Cold War. Tensions heightened in the aftermath of the shooting down of Malaysia Airlines Flight 17 over rebel-held territory on July 17 by what Western countries say was a Russian-supplied missile. The crash killed all 298 passengers and crew on board.

The White House on Monday emphasised the coordination among the leaders, something that has been a sticking point between the U.S. and E.U. throughout the Ukrainian crisis. The E.U. has been more reluctant to impose sanctions because of there’s a better chance of a “boomerang effect” on their economies.

The U.S. and its allies have charged Russia with continuing to support the separatists by flowing weapons across the border, including rocket launchers, artillery pieces, tanks, and armoured vehicles. Russia has continued to deny it is supporting the rebels.

But in a somewhat extraordinary public rebuff, U.S. Secretary of State John Kerry on Sunday told Russian Foreign Minister Sergei Lavrov he didn’t accept his denial that weapons from Russia were helping to fuel the conflict.

These will be the first sanctions leveled on Russia since July 16, the day before the downing of MH17. Those U.S. sanctions targeted targeted a series of large banks and energy and defence firms.

The U.S. has also accused Russia of violating a key nuclear-missile treaty. Late Monday night, U.S. officials said violated the Intermediate Range Nuclear Forces (INF) treaty by testing a prohibited ground-launched cruise missile.

They said Obama sent Putin a letter urging immediate bilateral talks on the issue.

This post has been continuously updated.

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