After months of hesitation, the EU and US agreed to impose economic sanctions against Russia on Wednesday, hoping this “strong warning” would make it change course in Ukraine as fighting intensified around cities held by pro-Russian rebels.
President Barack Obama declared that the United States will join the European Union in slapping new sanctions on Russia’s energy sector, arms industry and financial institutions.
“The major sanctions we’re announcing today will continue to ratchet up the pressure on Russia, including the cronies and companies supporting Russia’s illegal activities in the Ukraine,” he said.
The new measures impose restrictions on the finance, defence and energy sectors so as to increase the cost to Russia of its continued intervention in Ukraine.
Notably, Russian state-owned banks will find access to European financial markets limited, meaning their costs could rise, with a knock-on effect on Russia’s struggling economy.
The measures are “a strong warning (that the) illegal annexation of (Crimea) and deliberate destabilisation of a neighbouring sovereign country cannot be accepted in 21st century Europe,” said Herman Van Rompuy, President of the European Council.
If Russia does not change direction, “it will find itself increasingly isolated by its own actions,” Van Rompuy said in a statement.
Broader economic measures will hurt Moscow’s ability to secure dollar financing for its banks, in the toughest attack yet on its economy since it became embroiled in the conflict in Ukraine.
Obama denied the West was being drawn into a new Cold War with its former-Soviet foe, but warned that the United States and Europe are running out of patience Vladimir Putin’s government.
The EU however “remains ready to reverse its decisions and re-engage with Russia when it starts contributing actively and without ambiguities to finding a solution,” Rompuy said.
“The decision today was inevitable,” German Chancellor Angela Merkel said in a statement that also urged the Russian leadership to “pursue the path of de-escalation and cooperation” in the Ukraine conflict, warning of further steps if it does not.