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Russia vows 'painful' response to new U.S. sanctions over Ukraine

By Josh Levs and Elise Labott, CNN
May 7, 2014 -- Updated 1438 GMT (2238 HKT)
STORY HIGHLIGHTS
  • NEW: Russian official: Response will be "painful" in Washington
  • The sanctions include 2 members of Putin's inner circle, White House says
  • The new round of sanctions comes as tensions remain high in Ukraine
  • Russia's economic growth forecasts have dropped sharply, U.S. treasury secretary says

(CNN) -- The United States expanded its sanctions against Russia on Monday, targeting members of President Vladimir Putin's "inner circle" and technology that could be useful to Russia's military.

President Barack Obama said the "targeted" sanctions are in response to Russia's actions in Ukraine.

"The United States has taken further action today in response to Russia's continued illegal intervention in Ukraine and provocative acts that undermine Ukraine's democracy and threaten its peace, security, stability, sovereignty, and territorial integrity," the White House said in a statement. Since a meeting in Geneva, Switzerland, on April 17, Russia "has done nothing" to meet its commitments "and in fact has further escalated the crisis," the White House said in a statement.

"The Department of the Treasury is imposing sanctions on seven Russian government officials, including two members of President Putin's inner circle, who will be subject to an asset freeze and a U.S. visa ban, and 17 companies linked to Putin's inner circle, which will be subject to an asset freeze.

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"In addition, the Department of Commerce has imposed additional restrictions on 13 of those companies by imposing a license requirement with a presumption of denial for the export, re-export or other foreign transfer of U.S.-origin items to the companies."

Also, the departments of Commerce and State are tightening their "policy to deny export license applications for any high-technology items that could contribute to Russia's military capabilities. Those Departments also will revoke any existing export licenses that meet these conditions," the White House said.

Russia: The U.S. won't 'impress its cronies'

Sergey Ryabkov, Russia's deputy minister for foreign relations, called the sanctions "meaningless, shameful, and disgusting."

"It will only intensify all the processes in Ukraine which it intends to change or stop," Ryabkov told CNN, speaking English. "It is yet another sign of a reckless behavior of the U.S. administration. No lessons are learned from the past. The U.S. does literally nothing to impress its cronies and clients in Kiev on whom there is full responsibility for constant deterioration of the situation in Ukraine. This is what needs to be changed and not the policy of Russia.

"A response of Moscow will follow, and it will be painfully felt in Washington D.C."

A senior Ukrainian government official called the new sanctions "a very good step, but we hope it's not the final step. Sector sanctions would be the really painful measure."

The sanctioned include a Putin 'trusted ally'

The seven officials named are:

-- Oleg Belavantsev, Russia's envoy to Crimea.

-- Sergei Chemezov, who oversees Russia's high-tech sector as head of state-owned corporation Rostec and is "a trusted ally of Putin," according to the White House.

-- Dmitry Kozak, deputy prime minister.

A man looks at a bullet shell next to a destroyed car after a gunfight between pro-Russian militiamen and Ukrainian forces in Karlivka, Ukraine, on Friday, May 23. Much of Ukraine's unrest has been centered in the Donetsk and Luhansk regions, where separatists have claimed independence from the government in Kiev. A man looks at a bullet shell next to a destroyed car after a gunfight between pro-Russian militiamen and Ukrainian forces in Karlivka, Ukraine, on Friday, May 23. Much of Ukraine's unrest has been centered in the Donetsk and Luhansk regions, where separatists have claimed independence from the government in Kiev.
Crisis in Ukraine
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-- Evgeniy Murov, director of Russia's Federal Protective Service.

-- Aleksei Pushkov, deputy of the State Duma.

-- Igor Sechin, president of Russia's leading petroleum company, Rosneft.

-- Vyacheslav Volodin, Putin's first deputy chief of staff, one of the advisers who encouraged Putin to move into Crimea, according to the White House.

Obama: This isn't personal

Earlier, speaking to reporters in Manila, Philippines, Obama praised the Ukrainian government for abiding by its agreements made in Geneva and operating "in good faith."

The goal of the new sanctions, he said, is not to go after Putin personally, but "to change his calculus with respect to how the current actions that he's engaging in in Ukraine could have an adverse impact on the Russian economy over the long haul -- and to encourage him to actually walk the walk and not just talk the talk when it comes to diplomatically resolving the crisis."

"There are specific steps that Russia can take. And if it takes those steps, then you can see an election taking place in Ukraine; you can see the rights of all people inside of Ukraine respected."

If the latest round of sanctions don't work, the next phase could target sectors such as banking, Obama said.

EU sanctions coming

The European Union also is expected to impose sanctions Monday on about 15 Russian officials who are believed to be undermining democracy and creating chaos in Ukraine, according to Western diplomats.

The sanctions will include asset freezes and travel bans.

The EU is not expected to impose sanctions on Putin associates in part because the European judiciary system has a much higher bar in terms of applying the law, the diplomats said.

Judges are not able to look at intelligence to sign off on the sanctions, they said. One Western diplomat said there was also some division within the EU as to whether sanctions against Putin's cronies should be imposed.

Several European countries are also concerned that their economic interests would be greatly affected by such sanctions. Additionally, some countries feel more space should be given to diplomacy before such measures are considered, the diplomat said.

Neither the United States nor EU is ready to impose sanctions on Russian industries, like the energy sector, both U.S. officials and Western diplomats said.

"Today's targeted actions, taken in close coordination with the EU, will increase the impact we have already begun to see on Russia's own economy as a result of Russia's actions in Ukraine and from U.S. and international sanctions," U.S.Treasury Secretary Jack Lew said in a statement. "Russian economic growth forecasts have dropped sharply, capital flight has accelerated and higher borrowing costs reflect declining confidence in the market outlook."

READ: How will the Ukraine crisis end? Five possible scenarios

READ: Opinion: Why Geneva accord on Ukraine is tactical victory for Russia

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