(Adds Rubio comment, paragraphs 10-11)
By Steve Holland and Anna Yukhananov
WASHINGTON, July 29 President Barack Obama
escalated U.S. economic sanctions against Russia on Tuesday for
its aggression against Ukraine but dismissed suggestions the
growing chill in U.S.-Russian relations marked the start of a
new Cold War.
The United States and the European Union, in a carefully
coordinated action, announced targeted new sanctions against
Russian banks, energy and defense firms.
It was the West's most serious response yet to what it calls
Russian instigation of and continuing support for the separatist
uprising in the east and the shootdown of a Malaysian passenger
jet on July 17 over eastern Ukraine.
Obama, speaking at the White House, said the sanctions would
have a "greater impact on the Russian economy than we've seen so
far" in a drive to force Moscow to stop backing the separatists.
Until now, Europe had stopped short of tougher steps against
Russia for fear of retaliation. Obama said the new sanctions
were a sign of "the waning patience Europe has with nice words
from President (Vladimir) Putin that are not matched by
Senior U.S. officials voiced growing alarm about a Russian
troop buildup on the border with eastern Ukraine and a continued
supply of heavy weaponry to the separatists.
These are signs that, so far at least, the sanctions are not
forcing Putin to back down despite the damage the sanctions are
doing to the Russian economy.
"It's not a new Cold War," Obama told reporters. "What it
is, is a very specific issue related to Russia's unwillingness
to recognize that Ukraine can chart its own path."
Still, Obama did not seem inclined to provide lethal
military aid to Ukraine, saying the Ukraine military was "better
armed than the separatists" and the issue at hand was "how to
prevent bloodshed in eastern Ukraine."
But Republican Senator Marco Rubio, while applauding the new
sanctions, voiced hope that Obama, along with European allies,
"will also significantly increase our assistance, including
military support, to the Ukrainian government."
"Russia's continued aggression against Ukraine cannot go
unanswered, and we need to do much more to make clear that we
and the rest of the free world stand with the people of Ukraine
at this important moment," Rubio said in a statement.
FIVE BANKS NOW UNDER U.S. SANCTIONS
The new targets for sanctions included VTB, the Bank of
Moscow, the Russian Agriculture Bank and the United Shipbuilding
Corp., the Treasury Department said.
The sanctions on the three banks prohibit U.S. citizens or
companies from dealing with debt carrying maturities longer than
90 days, or with new equity.
Five of the six largest state-owned banks in Russia are now
under U.S. sanctions.
Also targeted was 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 defense 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.
"Obviously, we can't, in the end, make President Putin see
more clearly," Obama said. "Ultimately, that's something
President Putin has to do on his own."
The Ukraine crisis has set back U.S. relations with Russia
to near-Cold War levels. Ties were further strained this week by
U.S. charges that Russia had violated the 1988 Cold War-era
Intermediate-Range Nuclear Forces Treaty designed to eliminate
ground-launched cruise missiles.
White House officials refused to divulge details of the
allegations but demanded immediate talks with Moscow, whose
response thus far has been "wholly unsatisfactory," said White
House spokesman Josh Earnest.
The new U.S. sanctions were announced during a visit to
Washington by Ukraine Foreign Minister Pavlo Klimkin, who
discussed prospects for resolving the conflict with Secretary of
State John Kerry.
Both Kerry and Klimkin told reporters further pressure on
Russia was essential to halt the flow of men, money and weapons
into eastern Ukraine, but said the United States and Ukraine
were examining possible political steps that could be
taken inside Ukraine to address Russian concerns.
(Additional reporting by Eric Beech, Will Dunham, David Storey
and Patricia Zengerle; Editing by Sandra Maler, Tom Brown and