* Russia threatens Europe with higher gas prices
* Says sanctions to affect cooperation with Washington
(Adds quotes, details)
By Thomas Grove
MOSCOW, July 30 Russia criticised new sanctions
as "destructive and short-sighted" on Wednesday, saying they
would aggravate Moscow's ties with the West already at their
lowest point since the end of the Cold War over the Ukraine
Russia warned that sanctions, the most robust yet against
Russia's state-owned banks and energy firms, could lead to
higher energy prices in Europe and hit Moscow's cooperation with
Washington on global issues where it wields considerable clout.
"Such decisions by Washington can do nothing but further
aggravate U.S.-Russian relations and create an utterly
unfavourable environment in international affairs, where
cooperation between our states often plays a decisive role,"
Russia's Foreign Ministry said in a statement.
"The de-facto losses from this destructive and short-sighted
policy will be quite tangible for Washington."
The sanctions, announced in coordination between Washington
and Brussels, mark a new phase in the confrontation between
Russia and the West, which was deepened by the downing of
Malaysia Airlines flight MH17, killing all 298 people on board.
U.S. President Barack Obama said the sanctions would have a
"greater impact on the Russian economy than we've seen so far"
The targets of new U.S. sanctions include VTB, Bank of
Moscow and Russian Agriculture Bank, the U.S. Treasury said. The
measures prohibit U.S. citizens or companies from dealing with
debt carrying maturities longer than 90 days, or new equity.
Five of the six largest Russian state-owned banks are now
under U.S. sanctions.
Russian Foreign Minister Sergei Lavrov said Russia, which
holds a veto-wielding permanent seat on the U.N. Security
Council, would take the sanctions into account in its future
ties with Washington but would not take tit-for-tat measures.
"We feel no joy, but we do not intend to act as though
nothing is happening. We will make our conclusions, but we will
not try to answer offence with offence," he said speaking at a
news conference in Tajikistan.
While Moscow and Washington have been at loggerheads on
international issues, the White House has benefited from
Moscow's influence, particularly in Syria where Russia persuaded
Damascus to give up its chemical weapons.
HIGHER GAS PRICES
Europe, which counts on Russia for a quarter of its natural
gas supplies, was hesitant to boost sanctions until the MH17
disaster, which the West says was almost certainly caused by
Moscow-backed rebels with a Russian-supplied surface-to-air
On Tuesday, European diplomats said ambassadors from the
28-member European bloc agreed to restrictions on trade of
equipment for the oil and defence sectors, and "dual use"
technology with both defence and civilian purposes.
Russia's state run banks would be barred from raising funds
in European capital markets.
"By going on a sanctions spree, Brussels, by its own will,
is creating barriers for further cooperation with Russia in such
a key sphere as energy," Russia's Foreign Ministry said in a
"It will inevitably lead to an increase in prices on the
European market," the statement said.
The sanctions reflect the West's anger over what it calls
Moscow's instigation of the Ukraine conflict including Russia's
annexation of Ukraine's Crimea territory and the fanning of
violence in the east with fighters and weapons.
But Russia said U.S. sanctions were Washington's attempt at
deflecting responsibility for its role in Ukraine where former
Moscow-backed president Viktor Yanukovich was ousted and
replaced with a pro-Western government.
"It is not Russia but the Kiev regime and its overseas
patrons are guilty for the growing number of civilian casualties
in the eastern regions," the foreign ministry statement said,
referring to reports of civilian casualties in the violence.
U.S. sanctions also targeted United Shipbuilding Corp, a
shipbuilding company based on St. Petersburg, in a move that
freezes any assets it may hold in the United States and
prohibits all U.S. transactions with it.
The Commerce Department classified United Shipbuilding Corp
as a defence technology company.
The new sanctions block the exports of specific goods and
technologies to the Russian energy sector. The Commerce
Department said it will deny any export, re-export or foreign
transfer of items for use in Russia's energy sector that may be
used for exploration or production of deepwater, Arctic offshore
or shale projects that have the potential to produce oil.
Obama also formally suspended credit that encourages exports
to Russia and financing for economic development projects in
Russia. He warned there would be additional costs to Russia
should Moscow not back down.
(editing by Peter Millership)