THE European Union is to impose tough new economic sanctions on Russia, targeting oil companies, banks and the arms industry.
The move is designed to increase pressure on Russian president Vladimir Putin to act against pro-Russian separatists fighting in eastern Ukraine who are believed to be responsible for the deaths of 298 people on board the downed Malaysian Airlines Flight MH17.
Last night United States president Barack Obama also announced a new range of economic sanctions by Washington, saying they will make Russia’s “weak economy even weaker”.
He said the actions of the US and European Union working together would “have an even bigger bite” on Russia’s economy.
Mr Obama said: “Today Russia is once again isolating itself from the international community, setting back decades of genuine progress.
“It does not have to be this way. This a choice Russia and President Putin has made.”
The robust measures agreed by the EU, after weeks of hesitation by some of Europe’s leaders, are expected to include an arms embargo, restrictions on the trade of equipment for the oil and defence sectors and “dual use” technology with both defence and civilian purposes.
Russia’s state-run banks would also be barred from raising funds in European capital markets. The measures would be reviewed in three months.
EU ambassadors, frustrated by the apparent ineffectiveness of previous sanctions and outraged by the 298 deaths on Flight MH17, have added eight names to a list of people subject to EU-wide asset freezes and travel bans, including four of president Putin’s closest associates, an official said.
They have also put three more bodies on the list of companies and organisations subject to EU sanctions because of their alleged actions against Ukraine.
US measures will block the exports of specific goods and technologies to the Russian energy sector, expand sanctions to include more Russian banks and defence firms, and formally suspend financing for economic development projects in Russia.
“If Russia continues on this current path, the costs on Russia will continue to grow,” Mr Obama added.
Last night the president of the European Council, Herman Van Rompuy, said the sanctions were a “strong warning” but “reversible”.
The measures were set out at a meeting of ambassadors from the EU’s 28 member countries yesterday and will be published in a statement today.
Europe, which has a much bigger trade relationship with Russia than the US, had lagged behind Washington in its earlier punitive measures, in part out of concern from leaders that the penalties could hurt their own economies.
Signs were emerging that City of London firms were worried about possible consequences for the UK economy of stringent sanctions.
Energy giant BP, which owns a 20 per cent stake in Russian oil firm Roseneft, warned that further international action would have a “material adverse effect” on the company’s business in Russia and its own financial position.
But during a video conference call with Mr Obama, the leaders of Britain, Germany, Italy and France expressed their willingness to adopt new sanctions against Russia in co-ordination with the United States, an official French statement said.
A spokesman for Prime Minister David Cameron, who chaired a meeting of the government’s Cobra emergency committee yesterday, said that the new sanctions need to send a message to Mr Putin that his behaviour in Ukraine is “unacceptable” and that Russia can expect “tough action” from the international community until it changes course.
The Prime Minister, who yesterday met relatives of some of those who died on flight MH17, added: “We want to make it absolutely clear that Russia’s behaviour in destabilising another country – Ukraine – is unacceptable and therefore the European Union, with the United States, will be imposing further sanctions unless that behaviour changes.
“We are united in sending that very tough message. It’s a message that will be backed by tough action.”
The EU discussions on enhanced sanctions came as the US accused Moscow of increasing troop numbers on its border with Ukraine and shipping more heavy weaponry to the pro-Moscow rebels.
Tony Blinken, deputy national security adviser to president Obama, said: “It’s precisely because we’ve not yet seen a strategic turn from Putin that we believe it’s absolutely essential to take additional measures, and that’s what the Europeans and the United States intend to do this week.”