EU slaps new economic sanctions on Russia
6 minute read
The sanctions
will further curb access to European capital markets for Russian banks
and firms, limit exports of certain high-technology goods and target
more officials with travel bans and asset freezes, the EU said in
statement.
The sanctions will
take effect Friday following their publication in the EU's official
journal but will be reversible if the situation in eastern Ukraine
improves. A review of the measures will be carried out in late
September, the EU said.
Russia's stock market and its currency
tumbled on the news. Russia's benchmark MICEX, which was rising Thursday
morning, was down 1.2 percent in the afternoon. The Russian ruble fell
to an all-time low of 37.51 rubles against the U.S. dollar.A summit of EU leaders almost two weeks ago called for the new sanctions, but the measure were twice postponed to assess the impact of a cease-fire in eastern Ukraine. The United States has said it was also considering new sanctions and was expected to follow suit on Friday.
The
cease-fire between the Russian-backed separatists and the Ukrainian
military took effect Friday but has been riddled by violations. On
Thursday, two volleys of Grad rocket fire rang out in the rebel-held
eastern city of Donetsk.
A
spokesman for Ukraine's National Security and Defense Council, Col.
Andriy Lysenko, told journalists that a large swath of Ukraine near the
Sea of Azov had come under full rebel control. While the change likely
happened before the cease-fire, it was an unusual admission by Ukraine
of the scale of a coastal rebel offensive that Kiev and NATO say was
backed by Russian arms and soldiers.
Russia denies the charge.
Ukrainian
President Petro Poroshenko has sought to portray the cease-fire deal —
reached as the rebels waged a major offensive that pushed back Ukraine's
troops — as a victory rather than a defeat, saying Wednesday that about
70 percent of the Russian troops in eastern Ukraine had since
withdrawn.
NATO, however, said
Thursday that its intelligence still shows about 1,000 Russian troops
with sophisticated weaponry like heavy artillery on Ukrainian soil. An
estimated 20,000 other Russian troops are amassed just east of the
border, the alliance said.
The
new sanctions cut the EU's current ban on credits and loans to Russian
entities from a maturity of more than 90 days now to those over 30 days.
Curbing access to western capital markets could weigh down Russia's
already-flagging economic growth.
In
addition to hitting five of Russia's biggest banks, the EU said the
capital market restrictions will now also hit three major Russian
defense firms and three major energy companies. The names of the
targeted entities will be released Friday.
The
export of high-tech items that can be used for both military and
civilian purposes — so-called dual-use goods — will also face further
restrictions. In addition, 24 more individuals, including Russian
decision-makers and oligarchs as well as rebel leaders from eastern
Ukraine, will be banned from traveling to the 28-nation bloc and their
assets will be frozen, the EU said.
That will bring the total number of people subject to EU sanctions to 119.
Overall,
Brussels has been more reluctant than Washington to sanction Russia
because of its broad economic ties. Moscow is an important gas supplier
for many EU nations and it is the bloc's third-largest trading partner
overall. The EU's sanctions, however, have more impact than those
imposed by the U.S. since the EU is by far Russia's largest trading
partner.
Matteo Napolitano, a
director in Fitch Ratings' sovereign division, warned that the
sanctions and the risk of further measures could see international banks
further reduce their exposure to Russia, sparking renewed capital
flight, slamming investment and depleting Moscow's foreign exchange
reserves.
"The sanctions are really having a meaningful impact," he said at a conference in London.
In
retaliation for earlier sanctions, Moscow banned food imports from the
West, closing a market worth 10 billion euros ($13 billion) a year for
European producers.
Russia
has also issued a veiled threat that it could ban Western airlines from
using Russian airspace. That could close an important overland flight
route to Asia for European airlines, leading to higher fuel costs and
delays.
In Ukraine's capital of Kiev on Thursday, people held
posters and laid flowers to commemorate terror victims killed in the
Sept. 11 attacks in the United States and in the July 17 downing of
Malaysia Airlines Flight 17 over eastern Ukraine.Ukraine has accused the separatists of shooting down Flight 17.
___
Nataliya
Vasilyeva in Moscow, Peter Leonard in Donetsk, Laura Mills in Kiev,
Ukraine, Pan Pylas in London and Julie Pace in Washington, D.C.,
contributed reporting.
Source: Yahoo news
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