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Russia reacts to U.S. sanctions
01:18 - Source: CNN

Story highlights

NEW: Vladimir Putin says U.S. sanctions are pushing Russia-U.S. relations into a stalemate

President Barack Obama says Russia failed to take steps to end Ukraine conflict

New sanctions target Russian banks, energy, defense firms, as well as Ukraine separatists

The Pentagon says Russia has increased troops at Ukraine's border

Washington CNN  — 

Russia has failed to take steps to end the Ukraine conflict, President Barack Obama said Wednesday in announcing expanded sanctions targeting two banks, two energy companies, Ukraine separatists and defense companies.

European Union leaders also said they intended to increase sanctions, signaling growing Western concern over Russia’s continued support for separatists battling the Ukrainian military in the country’s eastern region.

“We have to see concrete actions, and not just words that Russia in fact is committed to trying to end this conflict along the Russia-Ukraine border,” Obama told reporters at the White House.

With the new sanctions, “what we are expecting is that the Russian leadership will see once again that its actions in Ukraine have consequences, including a weakening economy, and increasing diplomatic isolation,” the President said.

His Russian counterpart, Vladimir Putin, warned that the sanctions were harming ties between the two nations.

“They generally have a boomerang effect and, without a doubt, in this case, are driving the Russian-U.S. relations into a stalemate and seriously damaging them,” he said, according to a Kremlin transcript of his remarks to reporters on a visit to Brazil.

“I am certain that this is harmful to the U.S. Administration and American people’s long-term strategic national interests.”

He accused the United States of pushing the Ukrainian authorities toward a continued conflict, whereas Russia wants to see an immediate end to hostilities and a negotiated solution involving all sides, he said.

Ukrainian President: Peace depends on Putin’s mood

The latest U.S. sanctions build on earlier steps by targeting two major Russian banks – Gazprom Bank and VEB – and two energy companies – Novotek and Rosneft.

They will not be able to get new medium- and long-term financing in the United States, senior administration officials told reporters in a conference call.

In addition, the new sanctions freeze any U.S. assets and prohibit American business contacts for eight Russian arms companies that make weapons, including small arms, mortars and surface-to-air missiles. One of the eight is the Kalashnikov Concern, maker of the AK-47 and other arms.

Also on the list: Four Russian government officials, including the minister of Crimean affairs, along with the self-styled Luhansk People’s Republic and Donetsk People’s Republic leading the separatist campaign in eastern Ukraine, and Aleksandr Borodai, the self-declared “prime minister” of the Donetsk group.

Targeting the separatist groups that simulate government structures prevents them from seeking financing, the senior administration officials noted.

Earlier this year, the United States and Europe imposed a range of sanctions in response to Russia’s annexation of Crimea this spring and massing of troops along its eastern border with Ukraine. The earlier sanctions included asset freezes and travel bans.

19 Ukrainian troops killed in rocket attack, military says

Russia and Ukraine have since been engaged in a tense standoff, including clashes between pro-Russian separatists and Ukrainian forces in the Donetsk and Luhansk regions.

“I’ve repeatedly made it clear that Russia must halt the flow of weapons and fighters across the border into Ukraine, that Russia must urge separatists to release their hostages and support a cease-fire, that Russia needs to pursue internationally-mediated talks, and agree to meaningful monitors on the border,” Obama said.

Russia has failed to do any of those steps, he added.

Ukraine’s government in Kiev has accused Russia of allowing weapons and military equipment, including tanks, to cross the border illegally into the hands of pro-Russian separatists.

The senior administration officials who briefed reporters also leveled the same accusation.