Ukraine: Russia defiant as EU imposes sanctions

NEW sanctions against Russia were due to come into effect last night despite warnings from the Kremlin of retaliation.

Ukraines Petro Poroshenko: We wont hand over land to anyone. Picture: Getty

The European Union said the sanctions would be “reversible”, depending on the situation in Ukraine.

Western allies claim Moscow has troops on the ground in Ukraine and has been shipping weapons to separatists, something Vladimir Putin’s government denies.

Ukraine and pro-Russian rebels in the east, who are seeking to break away from Kiev, have been observing a fragile truce in recent days, with isolated instances of gunfire and explosions.

President Petro Poroshenko arrived in the port city of Mariupol yesterday, which the rebels have been attempting to capture to create a coastal corridor linking areas under their control to Russian-annexed 
Crimea. He said: “We won’t hand over this Ukrainian land to 
anyone.”

Separatists have made significant gains in eastern Ukraine but a ceasefire agreed on Friday appears to be holding.

On the EU sanctions list is the major state-owned oil firm Rosneft, which has already been hit by the United States’ own sanctions programme, and Trans-neft. Some 90 per cent of the crude oil used in EU countries is imported, with Russia being the largest single supplier.

However, there are no gas firms on the list, and while Gazprom’s oil division is on the list, its gas unit is not.

The sanctions restrict companies’ access to the financial markets and therefore their ability to raise funds for projects.

Rosneft had to ask the Russian government for a $42 billion (£25.2bn) loan last month.

Sanctions will also see the expansion of visa bans for individual businessmen and regime figures which would prevent their travel to Europe. Some face seeing their assets in the EU frozen.

A European Commission spokeswoman said new sanctions would target Russian firms and individuals, with the procedures coming into effect late yesterday.

Prime minister Dmitry Medvedev yesterday said his government would continue to support firms hit by sanctions. “This is the government’s responsibility – to protect 
Russian business if it is facing unfair and unlawful actions by foreign states or foreign companies,” Mr Medvedev told Novatek chief executive and co-owner Leonid Mikhelson.

Novatek is Russia’s biggest gas producer and has been hit by US sanctions.

Novatek leads the Yamal-LNG project to build Russia’s second liquefied natural gas plant, at an estimated cost of $27bn.

Earlier, Mr Medvedev warned that Moscow would respond “asymmetrically” to further sanctions.

He told the business newspaper Vedomosti that a ban on airlines flying over its airspace “could drive many struggling airlines into bankruptcy”.

“If there are sanctions related to the energy sector, or further restrictions on Russia’s financial sector, we will have to respond asymmetrically,” he said. “For example, restrictions in the transport sector.

“We work on the basis of friendly relations with our partners, and that’s why Russia’s skies are open to flights. But if we are restricted then we’ll have to respond.”

An airspace ban over Russia would force airlines to pay for far more fuel to fly around the country, for example over the Middle East, potentially leading to more stops and longer flights.