Ukraine conflict: US and EU widen sanctions on Russia

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media captionPresident Obama: "If Russia continues on its current path, the cost on Russia will continue to grow"

US President Barack Obama has announced new economic sanctions against Russia.

They include banning people in the US from banking with three Russian banks. The EU earlier expanded its sanctions, targeting the oil sector, defence equipment and sensitive technologies.

But Australia's priority is to get access to the crash site of the downed MH17 flight in east Ukraine.

International experts cannot reach the site because of heavy fighting between Ukraine's army and pro-Russia rebels.

Growing cost

Russia has come under increased pressure to end its support for the rebels, who Western governments believe were behind the downing of the Malaysia Airlines jet that killed 298 people in eastern Ukraine.

Moscow has also been accused by the EU and US of supplying heavy weapons to the rebels - a charge it denies.

image copyrightReuters
image captionPresident Putin has urged the Russian defence sector to rely less on foreign components

Mr Obama said the US was widening its sanctions to target the key sectors of the Russian economy - energy, arms and finance.

"If Russia continues on this current path, the costs on Russia will continue to grow," Mr Obama said.

The US Treasury said the banks being targeting in this round of sanctions were VTB, the Bank of Moscow, and the Russian Agriculture Bank (Rosselkhozbank).

Sanctions are having significant costs on Russia, with its central bank spending tens of billions of dollars in order to defend the rouble, a senior state department official has told the BBC.

Analysis by Rajini Vaidyanathan, BBC News, Washington

This latest wave of US sanctions comes as no great surprise.

For the past few weeks, the US been threatening further action against Russia. It's also been calling for the EU to impose stiffer penalties.

The administration said the tragic events surrounding MH17 should serve as a "wake-up call" to reticent EU countries that something had to be done to curb the actions of Russian-controlled separatists.

President Obama hopes these new measures will apply pressure on President Putin to change his course, something previous sanctions have failed to do so far.

When asked by a reporter if this was the start of a new cold war, Mr Obama said it wasn't. The US-Russia relationship is, in the words of one US official, "complicated".

As well as disagreements, there is co-operation - the two nations are working together on Iran nuclear disarmament, and reducing Syria's chemical weapon stockpile.

Full details of the new EU sanctions are expected on Wednesday, when the EU is also set to name more Russian officials facing asset freezes and travel bans in Europe.

German Chancellor Angela Merkel described the latest measures as "unavoidable".

Vladimir Chizhov, Russia's ambassador to the EU, told the BBC: "I am disappointed because the EU is slipping along the tracks that lead nowhere."

He said that he believed Ukraine should be subject to sanctions for its role in the conflict in the country's east.

But Australia's Tony Abbott said on Wednesday his government was focusing on retrieving Australian victims from the MH17 wreckage: "At the moment our focus is not on sanctions, our focus is on bringing home our dead as quickly as we humanly can."

media captionJonathan Beale on the outskirts of Donetsk says there is sustained artillery fire towards one of the last strongholds of pro-Russian separatists

Western governments believe the pro-Russian separatists shot the plane down on 17 July with a Russian missile, believing it to be a Ukrainian military flight. The rebels and Moscow deny that, instead blaming the Ukrainian military.

Kerry plea to Russia

Speaking in Washington, US Secretary of State John Kerry urged Russia and the rebels to give Western investigators full access to the crash site.

media captionUS Secretary of State John Kerry: "President Putin can make a huge difference here, if he chooses too"

"They still can't even ensure that all of the victims' remains have been removed, and that is an unsupportable burden for any family to have to bear, and it is an unacceptable standard for behaviour, period," he said.

Ukrainian troops are continuing an offensive aimed at encircling the rebels in Donetsk region. In the latest developments:

  • Several shells are said to have struck buildings in the separatist stronghold of Donetsk city
  • Ukraine says its troops have entered the towns of Shakhtarsk and Torez in Donetsk region, and Lutuhyne in Luhansk region
  • Ten Ukrainian soldiers and at least 22 civilians have reportedly been killed in the last 24 hours
  • The dead civilians are said to include three children and five people at a home for the elderly
  • A group of hackers sympathetic to the rebels says it has disabled the website of the Ukrainian president.

Analysis by BBC Europe editor Gavin Hewitt

Europe's leaders did not want to move to economic sanctions but they were moved by two considerations: the outrage at the way investigators have been blocked from access to the crash site of the downed plane and, secondly, the fact that Russia, since the incident, has been allowing heavy weapons across the border into Ukraine.

The calculation in Europe is that it had to act for its own credibility and that it may have to go further to ensure that President Vladimir Putin and his inner circle understand that their actions carry consequences.

How will Russia respond? Hard to say, although Foreign Minister Sergei Lavrov said Russia would not retaliate or "fall into hysterics".

Last weekend, the EU subjected a further 15 Russian individuals and 18 entities to asset freezes and visa bans for their alleged involvement in the Ukraine conflict.

The list of 87 targets of EU sanctions now includes the heads of the Federal Security Service (FSB) and foreign intelligence, the president of Chechnya, as well as two Crimean energy firms.

However, UK company BP, which owns nearly 20% of Russian state oil giant Rosneft, has warned that further sanctions against Russia could "adversely impact" its performance.