July 23 (Bloomberg) -- The U.S. is debating a new round of sanctions on Russia and pressing the European Union to follow up with its own penalties, Deputy National Security Adviser Ben Rhodes said.
Russian President Vladimir Putin’s government is increasingly isolated for his support of the separatists in Ukraine, Rhodes told reporters at the White House today.
“It has badly backfired on them because it’s earning him complete international isolation and condemnation,” Rhodes said. He gave no timetable for U.S. action.
Since the downing of a Malaysian Airlines passenger jet over rebel-held territory in eastern Ukraine a week ago, the U.S. has signaled it was reviewing additional sanctions to further squeeze the Russian economy.
The EU yesterday threatened to widen its sanctions against Russia unless Putin clears the way for an investigation of the airliner disaster and ends support for rebels in Ukraine.
President Barack Obama last week called the downing of the aircraft a “wake-up call for Europe.”
The European Commission, the EU’s executive arm, will put forward its proposals to a committee of the 28 EU member governments in Brussels. The bloc’s foreign ministers this week called for plans for measures that could hit “access to capital markets, defense, dual-use goods, and sensitive technologies, including in the energy sector.”
That would follow steps by the U.S. last week that prevent some Russian companies from accessing U.S. equity or debt markets for new financing with a maturity beyond 90 days.
With Europe’s economy recovery still struggling to gain momentum, governments there have moved slowly to more severely penalize Russia, a major trading partner and energy supplier
Rhodes said the Europeans are “more mobilized,” as are countries such as Australia, whose citizens were among the 298 people on board the Malaysian jet. All were killed.
“It’s not as if they’re gaining any influence in Ukraine,” Rhodes said of the Russians. “If anything, Ukrainians are even more resolved to chart their own course.”
The U.S. has said evidence shows the airliner was shot down by a Russian-made surface-to-air missile fired from an area controlled by pro-Russian separatists.
Separatists shot down two Ukrainian fighter jets in the same eastern region today, the government in Kiev said. If verified, it raises the question of whether Putin’s military is still giving the rebels access to weapons capable of downing aircraft.
The attacks bring the number of Ukrainian aircraft destroyed by rebels to at least 16 during the conflict, according to a count earlier this week by Deputy Prime Minister Volodymyr Hroisman.
The U.S. and its allies have the capability to further pressure Russia through punitive measures such as sanctions against entire sectors of its economy, though they want to leave open a course for Putin to back down, officials have said.
The Obama administration imposed sanctions on large Russian banks, energy companies and defense firms last week, targeting companies including OAO Rosneft, Russia’s largest oil company, natural gas producer OAO Novatek and OAO Gazprombank, the country’s third-largest lender.
Russia’s Micex fell as much as 0.7 percent before closing little changed at 1,406.58 in Moscow. About $47 billion was erased from the Micex’s market value last week, the most in four months, after the U.S. announced the latest round of sanctions, according to data compiled by Bloomberg.
The price to protect Russian bonds against default, already the highest among the world’s four largest emerging markets, has surged since the July 17 plane crash in eastern Ukraine.
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