Treasury imposes new sanctions on Russia

The Obama administration on Friday announced sweeping new sanctions targeting Russia's defense, finance and energy industries, including penalties on the country’s largest bank and many state-owned oil companies.

“Today’s actions demonstrate our determination to increase the costs on Russia as long as it continues to violate Ukraine’s territorial integrity and sovereignty,” said Treasury Undersecretary for Terrorism and Financial Intelligence David S. Cohen in a statement.

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“The United States, in close cooperation with the European Union, will impose ever-increasing sanctions that further Russia’s isolation from the global financial system unless Russia abandons its current path and genuinely works toward a negotiated diplomatic resolution to the crisis,” he added.

U.S. individuals and corporations will now be unable to provide debt financing for more than one month to major Russian banks and corporations.

Those sanctions will hit a number of firms including Rostec, a Russian defense conglomerate, and Sberbank, the country's largest bank. Six other Russian banks will also be subject to the penalties, and five other defense companies will have all of their American assets frozen.

A senior administration official said Friday the moves would increase the borrowing costs for Russian businesses and significantly slow Russia's plan to modernize its military.

Sanctions are "taking a serious toll on the Russian economy," the official said.

"Russia’s economy is already paying a heavy price for its unlawful behavior," said Treasury Secretary Jack LewJacob (Jack) Joseph LewHogan urges Mnuchin to reconsider delay of Harriet Tubman bill Mnuchin says new Harriet Tubman bill delayed until 2028 Overnight Finance: US reaches deal with ZTE | Lawmakers look to block it | Trump blasts Macron, Trudeau ahead of G-7 | Mexico files WTO complaint MORE. "Growth has fallen to near zero, inflation is well above target, and Russian financial markets continue to deteriorate."

The Treasury Department is also prohibiting exports of technology and goods to support energy exploration or production to five major Russian energy companies: Gazprom, Gazprom Neft, Lukoil, Surgutneftegas and Rosneft.

Americans are also now prohibited from offering financing for more than three months to two other Russian oil companies: Gazprom Neft and Transneft.

That could impact major American oil companies like ExxonMobile, which works with Russian oil energy firms. U.S. companies will have just two weeks to wind down existing contracts. Although Lukoil is among the firms facing sanctions, their U.S. operations — including filling stations — are not expected to be impacted.

The European Union is expected to move ahead with corresponding sanctions, which President Obama said Thursday are intended to especially target "areas of importance to President Putin and those close to him."

"These measures will increase Russia’s political isolation as well as the economic costs to Russia," Obama said.

The president said the new penalties were the result of Russia's continued support for separatists operating in eastern Ukraine, including the presence of heavily armed Russian forces in the region.

After meeting with European leaders in Wales last week, the president said news of the ceasefire made him “hopeful” but that he had doubts the separatists and Moscow would abide by the terms.

"Obviously we are hopeful but, based on past experience, also skeptical that in fact the separatists will follow through and the Russians will stop violating Ukraine’s sovereignty and territorial integrity," Obama said. "So it has to be tested."

An administration official said Friday the latest sanctions "can be rolled back and will be rolled back" if Russia implements all 12 points of a recent peace plan brokered with Kiev. Moscow will also have to remove troops and equipment from the border and ensure the release of hostages captured by pro-Russian separatists.

"I encourage President Putin to work with Ukraine and other international partners, within the context of the Minsk agreement and without setting unreasonable conditions, to reach a lasting resolution to the conflict," Obama said Thursday.

This story was updated at 11:02 a.m.