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 The reaction underscored the dilemma facing President Barack Obama:
how to use sanctions to punish Moscow for its intervention in
Ukraine without hurting European countries and foreign companies
with deep financial ties to Russia.
Washington slapped sanctions on seven Russian government officials
and 17 companies linked to President Vladimir Putin, in response to
what the White House said was Moscow's failure to adhere to an April
17 agreement on ways to resolve the crisis.
Washington also said it would deny export license applications for
any high-technology items that could contribute to Russian military
capabilities. The Commerce and State Departments will revoke any
existing export licenses that meet these conditions, the White House
said.
The sanctions, the third round imposed by the United States since
the Ukraine crisis began, caused barely a ripple. Global equity
markets rose partly on relief that the sanctions were not as severe
as they might have been. There had been fears that the White House
could target whole sectors of the Russian economy.
"These sanctions did not go to the next level," said Robert Abad,
portfolio manager for Legg Mason Inc's Western Asset Management unit
in California, who helps oversee about $53 billion in emerging
market debt. "The fact that these sanctions were a continuation of
what we've already seen brought some relief to markets."
Obama, ending a weeklong trip to Asia, has made clear that should
Russia launch a military move deeper into Ukraine, the United States
will impose sanctions on Russian economic areas such as the
financial services, energy, metals and mining, engineering and
defense sectors.
"We believe that the impact on the Russian economy will only grow,"
said a senior Obama administration official.
ASSET FREEZES, VISA BANS
The European Union also expanded sanctions on Monday, imposing asset
freezes and visa bans on 15 more Russians and Ukrainians.
The seven Russians sanctioned by the United States include two Putin
allies: Igor Sechin, head of Russia's major oil company Rosneft, and
Sergei Chemezov, head of Rostec, a Russian state-owned high-tech
products company.
Despite having no energy industry background, Sechin, a close
lieutenant of Putin for more than two decades, has served for two
years as the leader of Rosneft, a state-controlled company that
under the Russian president became the world's biggest publicly
listed oil producer.
Chemezov worked in communist East Germany at the same time as Putin
and sits atop a sprawling conglomerate that has stakes in some of
Russia's largest industries, including weapons, cars and metals.
The other people named were Oleg Belavencev, Putin's presidential
envoy to Crimea, Dmitry Kozak, deputy prime minister of the Russian
Federation, Evgeniy Murov, director of Russia's federal protective
service, Aleksei Pushkov, a state Duma deputy, and Vyacheslav
Volodin, a Putin adviser.
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The list did not include Gazprom chief Alexei Miller, a close ally
of Putin who had been seen as a possible target.
The seven are now subject to a freeze on assets they hold in the
United States and a ban on U.S. travel. The 17 companies will be
subject to an asset freeze.
RUSSIA SAYS SANCTIONS UNCIVILIZED
Russian Deputy Foreign Minister Sergei Ryabkov called the new
sanctions illegitimate and uncivilized and said they were based on
an "absolutely distorted" view of events in Ukraine.
Rosneft shares fell 1.7 percent, but oil traders and global energy
companies played down the repercussions of the sanctions on Sechin.
"So he cannot fly to drink with U.S. energy executives," said one
senior Russian oil trader. "But otherwise business will continue."
Shares of British oil major BP Plc, which owns 19.75 percent of
Rosneft, fell 1 percent. It said it would remain a long-term
investor in Russia. "We are committed to our investment in Rosneft
and we intend to remain a successful, long-term investor in Russia,"
a BP spokesman said.
Mark Mobius, who manages more than $40 billion in emerging-markets
assets at Franklin Resources Inc's Franklin Templeton Investments,
dismissed the impact from the sanctions on his portfolio, which
includes about $200 million in Ukrainian stocks and $500 million in
Russian equities.
"The word we're getting from the companies in which we invested is
'no big deal'," he told Reuters in an interview. "For Russia, prices
have been really depressed, and the valuations are extremely
attractive."
Obama has drawn fire from Republican critics who think he has not
moved aggressively enough in the face of the deepest East-West
crisis since the Cold War.
Tennessee Senator Bob Corker, the top Republican on the Senate
Foreign Relations Committee, called the new sanctions "just a slap
on the wrist.
"Until Putin feels the real pain of sanctions targeting entities
like Gazprom, which the Kremlin uses to coerce Ukraine and other
neighbors, as well as some significant financial institutions, I
don't think diplomacy will change Russian behavior and de-escalate
this crisis," Corker said in a statement.
(Additional reporting by Susan Heavey and Patricia Zengrele in
Washington, Karolin Schaps and Maytaal Angel in London, Luiza Ilie
in Bucharest and Vladimir Soldatkin in Moscow; writing by Jim Loney;
editing by Ross Colvin)
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