(Adds comments from Treasury official)
By Roberta Rampton and Arshad Mohammed
WASHINGTON Aug 7 The White House made the case
on Thursday that Western sanctions against Russia for
destabilizing Ukraine have had a significant impact on its
economy and that Russian retaliation by banning many Western
food imports will only boomerang.
Russian President Vladimir Putin ordered his government to
adopt the ban in response to Western economic sanctions on
Russia's defense, oil and financial sectors over Moscow's
support for rebels waging an insurrection in eastern Ukraine.
"Retaliating against Western companies or countries will
deepen Russia's international isolation, causing further damage
to its own economy," Jason Furman, chairman of the White House
Council of Economic Advisers, told reporters in a conference
Furman said the bans would push up Russia's already-high
inflation rate, hurting consumers. Conversely, U.S. sanctions on
Russia have not affected oil prices or U.S. economic growth, he
"Russia's actions in Ukraine and the sanctions we've already
imposed have made a weak Russian economy even weaker," Furman
While Russia's exports to the United States and the European
Union together constituted 13 percent of Russia's gross domestic
product, Furman said U.S. exports to Russia constitute only
1/10th of 1 percent of U.S. GDP and only 8/10ths of 1 percent of
European Union GDP.
The United States is prepared to levy additional sanctions
on Russia if it does not change course in backing separatists in
eastern Ukraine, a top U.S. Treasury Department official said,
adding to the pressure on the Russian economy.
"The sanctions that we have imposed and the market's
understanding that there are more sanctions to come if Russia
does not change course have exacerbated preexisting
vulnerabilities in the Russian economy," Treasury Undersecretary
David Cohen said on the call.
"Some analysts are now predicting an outright contraction in
the Russian economy in the second half of this year," he said.
Cohen also said Washington has warned Russia against a
reported oil-for-goods swap with Iran, and that entities
involved in any such deal would be exposed to U.S. sanctions.
It is still unclear whether Russia and Iran have agreed on
an oil-for-goods swap, Cohen said, noting that such a deal could
affect ongoing talks on Iran's nuclear program.
He declined specific comment on Exxon's oil drilling
project in the Russia Arctic.
"We have engaged very closely with the U.S. business
community to explain what we're doing, to provide guidance, and
to listen to their concerns and get their input as we design
these sanctions programs," Cohen said.
(Additional reporting by Warren Strobel; Editing by James
Dalgleish and Leslie Adler)