US & EU - Hit Russia with further sanctions

Reuters Article

U.S. hits oil giant Rosneft, other firms with toughest Russia sanctions

By Anna Yukhananov and Steve Holland

WASHINGTON Wed Jul 16, 2014 8:29pm EDT

(Reuters) - President Barack Obama imposed the biggest package of U.S. economic sanctions yet on Russia on Wednesday, hitting Russia's largest oil producer Rosneft (ROSN.MM) and other energy, financial and defense firms, with what he called significant but targeted penalties.

Obama's latest round of sanctions came after close consultations with European leaders, who announced a less-ambitious package. The ultimate impact of the U.S. sanctions likely depends on whether the European Union follows suit.

The extent of the sanctions against key parts of the Russian energy and financial industry, including Gazprombank (GZPRI.RTS), was intended to serve notice to Moscow that its refusal to curb violence in eastern Ukraine has consequences.

The targeted companies also include Russia's second-largest gas producer, Novatek (NVTK.MM), 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 said the measures effectively closed medium- and long-term dollar funding to the two banks and energy companies. But the sanctions did not freeze those four companies' assets, or otherwise prohibit U.S. firms or companies from doing business with them. [WOULD NOT RECOMMEND BUSINESS IN USA ... LOL]

It is the first time the United States has imposed such narrowly targeted measures as it seeks the maximum impact on Russia, a huge energy producer, while avoiding any immediate shock to global oil markets or U.S. and EU companies.

Russian President Vladimir Putin, speaking in Brasilia, said the sanctions would damage U.S. energy companies, and bring relations with Russia to a "dead end."
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POSSIBLE FURTHER SANCTIONS

Obama said the United States could impose further sanctions if Russia did not take concrete steps to ease the conflict.

The United States has already imposed several rounds of sanctions on Russian and Ukrainian senior officials since the start of the violence, including Rosneft's chief executive, Igor Sechin. But the sanctions have had only a limited impact on the Russian energy industry, a cornerstone of the country's $2 trillion economy.

It is not yet clear how large an impact the new measures will have on Rosneft ...

Sechin, who like Putin was speaking in Brasilia, said the sanctions would not affect Rosneft's current project with ExxonMobil (XOM.N), but would damage the shareholders of U.S. companies cooperating with Rosneft.

The new sanctions would not appear to prevent Rosneft from selling its oil, but may raise questions about the company’s more than $15 billion worth of oil-related finance arrangements with companies including BP (BP.L), which now owns almost a fifth of Rosneft, and Glencore.

Morgan Stanley (MS.N), which is selling the majority of its global physical oil trading operations to Rosneft, declined to comment.

The sanctions stopped short of targeting Russia's Gazprom (GAZP.MM), the world's largest natural gas producer and provider of much of Europe's energy supplies. Gazprombank is 36 percent-owned by Gazprom.  [Gazprom, as I understand, only provides about 30% of European energy supplies.]

RUNNING OUT OF PATIENCE
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The new measures were announced on the same day that EU 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.
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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 Putin.

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EXTRACTS ONLY
SOURCE - Reuters - here.

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COMMENT

Whatever happened to free trade and free market prinicples?  LOL

Any Russians with bank accounts in the US, might want to start withdrawing fast.