US imposes toughest sanctions yet on Russia over Ukraine

Obama: New Sanctions Against Russia Are 'Significant' And 'Targeted'

By Anna Yukhananov, Steve Holland and Jeff Mason

WASHINGTON (Reuters) - The United States on Wednesday imposed its most wide-ranging sanctions yet on Russia's economy, including Gazprombank and the Rosneft Oil Co, and other major banks and energy and defense companies.

Washington has steadily escalated its financial sanctions on Russia over what it views as Moscow's interference in its neighbor Ukraine and its annexation of the Crimea region.

The targeted companies also include Russia's second-largest gas producer, Novatek, Vnesheconombank, or VEB, a state-owned bank that acts as payment agent for the Russian government, and eight arms firms.

The U.S. Treasury Department, which posted the sanctions on its website, said the measures effectively closed medium- and long-term dollar funding to the two banks and energy companies. But the sanctions did not freeze these four companies' assets.

The sanctions stopped short of targeting Russia's Gazprom, the world's largest natural gas producer and provider of much of Europe's energy supplies. Gazprombank is 36 percent-owned by Gazprom.

The new measures were announced on the same day that European Union leaders met in Brussels and agreed to expand their own sanctions on Russia.

The new U.S. sanctions also include Feodosiya Enterprises, a shipping facility in Crimea, and senior Russian officials, several of whom had already been targeted by the European Union.

The affected senior officials included the deputy head of the State Duma, or parliament, the minister of the Crimea, a commander of the Russian intelligence agency FSB, and a Ukrainian separatist leader.

"Russia has continued to destabilize Ukraine and provide support for the separatists, despite its statements to the contrary," Treasury Undersecretary for Terrorism and Financial Intelligence David Cohen said in a statement announcing the new sanctions.

RUNNING OUT OF PATIENCE

President Barack Obama in recent weeks has repeatedly threatened new sanctions, and appears to have run out of patience as fighting continued to rage in eastern Ukraine.

"There are some clear steps that we've asked Russia to take that they haven't taken. And that is what has elevated the risk that Russia faces right now as it relates to additional economic costs that could be imposed by the international community," White House spokesman Josh Earnest told reporters earlier on Wednesday.

But the new sanctions were unlikely to please Republican lawmakers, many of whom have been calling for the imposition of sanctions on entire Russian industries, rather than specific companies, as the best way to control Russian President Vladimir Putin.

Washington said on Wednesday up to 12,000 Russian forces were back on the border with Ukraine and that weaponry was crossing over to pro-Russian separatists.

"These are combat forces," Pentagon spokesman Colonel Steve Warren told reporters. The increase in the Russian presence occurred several weeks after Moscow had drawn down its forces in the area to about 1,000 troops.

Rosneft, Russia's state-owned oil company, had no immediate comment. Morgan Stanley, which is selling the majority of its global physical oil trading operations to Rosneft, declined to comment.

For more details on the sanctions, see 1.usa.gov/1tSqqVG.

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US imposes toughest sanctions yet on Russia over Ukraine
Ukrainian First Deputy Prime Minister Vitaliy Yarema (R) and Interior Minister Arsen Avakov examine a map prior to a National Security and Defence Council sitting in Kiev on June 16, 2014. Ukrainian President Petro Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian Prime Minister Arseniy Yatsenyuk (L) and Defence Minister Mykhaylo Koval arrive for a National Security and Defence Council sitting in Kiev on June 16, 2014. Ukrainian President Petro Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian Prime Minister Arseniy Yatsenyuk (L) and Defence Minister Mykhaylo Koval arrive for a National Security and Defence Council sitting in Kiev on June 16, 2014. Ukrainian President Petro Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian President Petro Poroshenko arrives for a National Security and Defence Council sitting in Kiev on June 16, 2014. Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian President Petro Poroshenko speaks during a National Security and Defence Council sitting in Kiev on June 16, 2014. Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian President Petro Poroshenko speaks during a National Security and Defence Council sitting in Kiev on June 16, 2014. Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Ukrainian President Petro Poroshenko (2nd L) speaks during a National Security and Defence Council sitting in Kiev on June 16, 2014, flanked by Ukrainian Prime Minister Arseniy Yatsenyuk (3rd L) and speaker of the Ukrainian parliament Oleksandr Turchynov (L). Poroshenko said during the opening of the sitting that a ceasefire was the beginning of his peace plan for resolving the conflict in eastern Ukraine. AFP PHOTO/ SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Pro-Russian militants look through the debris of an IL-76 Ukrainian military transporter which was taken down by pro-Russian rebels early on June 14, on the outskirts of Lugansk June 14, 2014. Ukraine's new Western-backed President Petro Poroshenko vowed Saturday to deliver an 'adequate response' to pro-Russian rebels who downed a military transport plane, killing 49 troops. AFP PHOTO / DANIEL MIHAILESCU (Photo credit should read DANIEL MIHAILESCU/AFP/Getty Images)
A boy sits on a barricade to be demolished next to Ukranian police forces (R) outside the headquarters of separatist militias of the self-proclaimed 'Donetsk People's Republic' in the Ukrainian city of Mariupol on June 13, 2014. Ukrainian forces said they had hoisted the national flag over the strategic rebel-held port of Mariupol on June 13 in their biggest advance since Petro Poroshenko's election as the insurgency-wrecked country's pro-Western president. AFP PHOTO / DANIEL MIHAILESCU (Photo credit should read DANIEL MIHAILESCU/AFP/Getty Images)
SLAVYANSK, UKRAINE - JUNE 9: Several buildings were damaged by a mortar attack of Ukrainian government troops in Slovyansk, eastern Ukraine on June 9, 2014. Buildings have been damaged by shelling in Slavyansk, controlling by pro-Russian separatists as Ukraines newly sworn-in President Petro Poroshenko and Russian and European officials have discussed proposals to end the conflict in eastern Ukraine. (Photo by Alexander Ermochenko/Anadolu Agency/Getty Images)
KIEV, UKRAINE - JUNE 07: (CHINA OUT, SOUTH KOREA OUT) Ukraine's new president, Petro Poroshenko (C), takes part in inaugural festivities at St. Sophia Square on June 7, 2014 in Kiev, Ukraine. Poroshenko was elected on May 25 with a majority in the country's first round of presidential voting. (Photo by The Asahi Shimbun via Getty Images)
A masked man, soldier of the volunteer Ukrainian army 'Donbass' battalion, takes part in a rally by Maidan activists at Independence Square in Kiev, calling upon the Ukrainian President to abandon the cease-fire with armed pro-Russia separatists in the east of the country, on June 29, 2014. A spokesman for the Ukraine army's eastern military campaign stated five Ukrainian troops were killed and at least 17 wounded over the past 24 hours in the eastern regions of the country. German Chancellor Angela Merkel and French President Francois Hollande will join Ukraine's new leader on a call today to Russia's Vladimir Putin before Kiev's shaky truce with pro-Kremlin separatists expires. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
A man holds a sign reading 'We chat - they kill !' as he and other people take part in a rally by Maidan activists at Independence Square in Kiev, calling upon the Ukrainian President to abandon the cease-fire with armed pro-Russia separatists in the east of the country, on June 29, 2014. A spokesman for the Ukraine army's eastern military campaign stated five Ukrainian troops were killed and at least 17 wounded over the past 24 hours in the eastern regions of the country. German Chancellor Angela Merkel and French President Francois Hollande will join Ukraine's new leader on a call today to Russia's Vladimir Putin before Kiev's shaky truce with pro-Kremlin separatists expires. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
People shouts slogans as they take part in a rally by Maidan activists at Independence Square in Kiev, calling upon the Ukrainian President to abandon the cease-fire with armed pro-Russia separatists in the east of the country, on June 29, 2014. A spokesman for the Ukraine army's eastern military campaign stated five Ukrainian troops were killed and at least 17 wounded over the past 24 hours in the eastern regions of the country. German Chancellor Angela Merkel and French President Francois Hollande will join Ukraine's new leader on a call today to Russia's Vladimir Putin before Kiev's shaky truce with pro-Kremlin separatists expires. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
Women hold signs reading 'The cease-fire is killing !', ' The traitors are in power again' and 'Down with parliament' as they take part in a rally by Maidan activists at Independence Square in Kiev, calling upon the Ukrainian President to abandon the cease-fire with armed pro-Russia separatists in the east of the country, on June 29, 2014. A spokesman for the Ukraine army's eastern military campaign stated five Ukrainian troops were killed and at least 17 wounded over the past 24 hours in the eastern regions of the country. German Chancellor Angela Merkel and French President Francois Hollande will join Ukraine's new leader on a call today to Russia's Vladimir Putin before Kiev's shaky truce with pro-Kremlin separatists expires. AFP PHOTO / SERGEI SUPINSKY (Photo credit should read SERGEI SUPINSKY/AFP/Getty Images)
An elderly resident walks past a house destroyed by shelling in the besieged city of Slaviansk on June 24, 2014. Separatists of the self-proclaimed 'Donetsk People's Republic' in Slavyansk are surrounded by Ukrainian forces and have been enduring daily shelling for over two months. Ukraine's new Western-backed leader sought urgent talks with Russian President Vladimir Putin on June 25, 2014 after rebels shot down an army helicopter despite ceasefire orders from their own commander to observe a fragile truce. The death of nine servicemen outside the pro-Russian stronghold city of Slavyansk and loss of two other soldiers in attacks by separatist gunmen prompted Ukrainian President Petro Poroshenko to threaten to unleash a powerful new military campaign in the industrial east. AFP PHOTO / JOHN MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
Residents walk outside a house wrecked by shelling in the besieged city of Slaviansk on June 24, 2014. Separatists of the self-proclaimed 'Donetsk People's Republic' in Slavyansk are surrounded by Ukrainian forces and have been enduring daily shelling for over two months. Ukraine's new Western-backed leader sought urgent talks with Russian President Vladimir Putin on June 25, 2014 after rebels shot down an army helicopter despite ceasefire orders from their own commander to observe a fragile truce. The death of nine servicemen outside the pro-Russian stronghold city of Slavyansk and loss of two other soldiers in attacks by separatist gunmen prompted Ukrainian President Petro Poroshenko to threaten to unleash a powerful new military campaign in the industrial east. AFP PHOTO / JOHN MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
A soldier of the self-proclaimed 'Donetsk People's Republic' shows shrapnel from a shell in a heavily shelled neighbourhood in the besieged city of Slaviansk on June 24, 2014. Separatists of the self-proclaimed 'Donetsk People's Republic' in Slavyansk are surrounded by Ukrainian forces and have been enduring daily shelling for over two months. Ukraine's new Western-backed leader sought urgent talks with Russian President Vladimir Putin on June 25, 2014 after rebels shot down an army helicopter despite ceasefire orders from their own commander to observe a fragile truce. The death of nine servicemen outside the pro-Russian stronghold city of Slavyansk and loss of two other soldiers in attacks by separatist gunmen prompted Ukrainian President Petro Poroshenko to threaten to unleash a powerful new military campaign in the industrial east. AFP PHOTO / JOHN MACDOUGALL (Photo credit should read JOHN MACDOUGALL/AFP/Getty Images)
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