Obama gets personal, sanctions Putin's inner circle

WASHINGTON Thu Mar 20, 2014 9:40pm GMT

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WASHINGTON (Reuters) - President Barack Obama targeted sanctions at close allies and aides of Russian President Vladimir Putin over the Ukraine crisis on Thursday and threatened broad penalties against key sectors of Russia's economy if Moscow moves deeper into Ukraine.

Some of Russia's wealthiest men were cited for sanctions as well as a large Russian bank with ties to Putin's inner circle, in the most significant step Obama has taken to punish Russia for its move to annex the Crimea region of southern Ukraine.

All told, Obama imposed sanctions on 20 Russian individuals, raising to 31 the number of people he has targeted for penalties since Russia's military seizure of Crimea.

Obama said he had also signed a new executive order that clears the way for U.S. sanctions against broad sections of the Russian economy should Putin's military make moves beyond Crimea and into southern and eastern Ukraine.

Senior administration officials said many parts of the Russian economy could be targeted, including the financial services sector and the key energy, defence and mining sectors. Russia's oil and gas industry alone accounts for nearly half of the country's annual budget revenues.

"This is not our preferred outcome. These sanctions would not only have a significant impact on the Russian economy, but could also be disruptive to the global economy. However, Russia must know that further escalation will only isolate it further from the international community," Obama said.

The Obama administration has been careful not to flag its future moves and there was no immediate indication whether it was considering adding two of Russia's biggest businessmen, Gazprom head Alexei Miller and Rosneft head Igor Sechin, to the sanctions list.

The penalties collectively add up to a growing divide between the United States and Russia, in their deepest dispute since the end of the Cold War more than two decades ago.

Among the 20 singled out for sanctions, Obama targeted several individuals close to Putin. Any assets they have in the United States will be frozen and they will also be barred from U.S. travel.

"They will be unable to access any U.S. financial services. They will find it difficult to transact in the dollar. And I suspect will find it very difficult to transact in Europe and elsewhere," said a senior U.S. official.

Russia's Bank Rossiya, which with $10 billion in assets is Russia's 17th largest bank, was singled out for U.S. sanctions. A Treasury Department statement said it is the personal bank for senior officials of the Russian government, including Putin's inner circle.

St. Petersburg-based Bank Rossiya is chaired and partly owned by Yuri Kovalchuk, a close adviser to Putin. Kovalchuk, whose association with Putin dates back to the early 1990s, was among the 20 individuals targeted for sanctions.

The bank will be "frozen out of the dollar," a senior Obama administration official said.

The biggest impact for foreign business may come from the designation of Gennady Timchenko, one of the founders of Gunvor, which is one of the world's largest independent commodity trading companies involved in the oil and energy markets.

"Timchenko's activities in the energy sector have been directly linked to Putin," the Treasury Department said. "Putin has investments in Gunvor and may have access to Gunvor funds."

Others identified for sanctions and considered part of Putin's inner circle included Arkady Rotenberg and Boris Rotenberg, who the Treasury Department said have made "billions of dollars in contracts for Gazprom and the Sochi Winter Olympics awarded to them by Putin."

Arkady Rotenberg is a long-time judo sparring partner of Putin and owns Stroygazmontazh, a builder of oil and gas pipeline projects for Russian state firms Gazprom and Rosneft.

Vladimir Yakunin, chairman of the board of Russian state-owned Russian Railways, was sanctioned, as were: Andrei Fursenko, a Putin aide; Alexei Gromov, an official in the Russian presidential office; Sergei Ivanov, Putin's chief of staff, and Igor Sergun, the head of Russia's GRU military intelligence service.

The U.S. Treasury cautioned Americans on Thursday against conducting transactions with a Russian firm that may be controlled by an individual slapped with sanctions, even if that person does not hold a majority stake.

Obama, who has already ruled out a U.S. military excursion into Ukraine, is using sanctions to try to force Russia to accept a negotiated solution, but Putin has so far resisted any serious diplomatic concessions.

One official said Washington was preparing additional sanctions that would sting Moscow while having the smallest impact possible on the United States and its allies.

"Sanctions build over time. They are very powerful. And people may think that they are a mere wrist slap. I can assure them that they are not," the official said.

Obama, who travels to Europe next week, promised unwavering U.S. support to NATO allies, which include Russian neighbours Lithuania, Latvia and Estonia.

(Additional reporting by Susan Heavey, Lesley Wroughton, Doina Chiacu and David Storey in Washington and Tom Miles in Geneva; editing by G Crosse and Ross Colvin)

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