New US sanctions on Russia target heart of Putin's energy empire (+video)(Read article summary)
New US sanctions on Russia are the strongest yet against Russia. The point of new Russia sanctions on five major energy firms is to 'shut down' Russia's deepwater, shale, and Arctic exploration, according to one senior US official.
The United States hit Russia on Friday with a new round of economic sanctions, levying penalties on Russia's largest bank and expanding financing restrictions on major energy and defense companies.
The new Russia sanctions include five major energy firms and are intended to "shut down" Russia's deepwater, shale, and Arctic exploration, according to one senior US official, as reported by Reuters.
"We will deepen and broaden sanctions in Russia’s financial, energy, and defense sectors," President Obama said in a statement released Thursday, a day ahead of the Russia sanctions rollout. "These measures will increase Russia’s political isolation as well as the economic costs to Russia, especially in areas of importance to President Putin and those close to him."
The sanctions were imposed in coordination with the European Union, which unveiled its own package of penalties hours earlier. Officials said the parallel penalties are aimed at punishing Russia for deepening its provocations in Ukraine, including sending forces and weaponry across the border.
The penalties were levied despite a fragile cease-fire between Ukraine and pro-Russian separatists. However, officials said the sanctions could be rolled back if the separatists and Russia implement the agreement in good faith.
A prime target of the new sanctions is Sberbank of Russia, the country's largest financial institution. The bank accounts for approximately a quarter of Russian banking assets and a third of its banking capital, according to the Obama administration.
Sberbank, along with five other previously sanctioned Russian banks, will now face restrictions if it seeks debt financing of longer than 30 days. The European Union issued similar restrictions Friday, effectively locking the Russian banks out of any long-term debt financing from the West.
The U.S. was also prohibiting U.S. entities from exporting goods services or technology to help Russian energy companies with the exploration of production of potentially lucrative oil projects. The sanctioned Russian companies include Gazprom, the world's largest extractor of natural gas, and Rosneft, an oil company owned by the Russian government.
The penalties could impact major U.S. companies that have partnered with key players in Russia's energy industry.
Also targeted by the U.S. sanctions are five Russian defense companies that produce weapons, ammunition and anti-aircraft systems.
For a complete list of the companies affected by new Russia sanctions, visit the US Treasury Department's website on Ukraine-related sanctions.