President Barack Obama said additional sanctions on Russia would inevitably also hit the economies of the U.S. and Europe.
The U.S. and its allies are looking at Russia’s military, energy and finance industries as possible targets if it moves deeper in Ukraine, he said today in Rome. Work is under way to craft sanctions would be most effective.
“None of them, to have a powerful impact on Russia, are going to have zero impact on us because Russia is part of the world economy,” Obama said at a news conference with Italian Prime Minister Matteo Renzi. “Everybody owns a piece of everything.”
The U.S. and European Union already have imposed asset freezes and travel bans on individual Russians and Ukrainians, including businessmen associated with Russian President Vladimir Putin. One Russian bank also has been sanctioned by the U.S. Obama has authorized, though not put into effect, additional U.S. sanctions targeting the Russian economy.
European governments, faced with youth unemployment rates above 50 percent in some southern-tier countries, are debating the costs of more sanctions. Banking curbs would hurt Britain, an arms embargo would bar France from selling Mistral-class helicopter carriers to the Kremlin, and cutbacks in purchases of Russian gas would harm a swath of EU countries, starting with Germany.
Obama said he wants to design any sanctions to have minimal impact on U.S. and European companies. “Even better, hopefully we don’t have to use them” because Russia de-escalates the conflict, he said.
Among the companies that might be affected, British oil company BP Plc holds the single biggest foreign investment in Russia -- a 20 percent stake in OAO Rosneft it acquired last year. Rosneft has exploration projects with other international oil producers, including a venture with Exxon Mobil Corp. to drill a multibillion-barrel prospect in Russia’s Arctic Ocean.
Another is Caterpillar Inc., the largest maker of construction and mining equipment, which has more than 1,000 workers in Russia a manufacturing plant in Tosno near St. Petersburg and an office in Moscow.
Concern that Russia’s economy would suffer from an extended standoff over Ukraine with the U.S. and other nations in the North Atlantic Treaty Organization helped push the benchmark Micex Index down 1.3 percent by the close in Moscow. The gauge is down 11 percent this quarter.
Economists have reduced their expectations for Russia’s economic growth this year, projecting expansion of 1.2 percent, down from 2.2 percent last month, according to the median of 37 forecasts in a Bloomberg survey.
Obama today again urged European nations to step up their defense commitments, even as growth is slow and the unemployment rate remains high.
He indirectly prodded Germany to do more in the euro zone, saying countries with surpluses should do more to stimulate growth. Obama called the argument over growth versus austerity a “sterile debate.”