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Friday, March 21, 2014

Putin signs bill completing annexation of Crimea

Putin signs bill completing annexation of Crimea as sanctions take hold

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MOSCOW – Russian President Vladimir Putin on Friday signed legislation to complete the annexation of Crimea, a defiant step that came just a day after President Obama expanded sanctions against the Russian leader’s top aides and reputed financial associates.
The signing followed the unanimous passage of the legislation in the Federation Council, Russia’s upper house and came just hours after the first signs emerged in Russia of the bite from American sanctions.
Two Russian banks said that Visa and MasterCard are no longer handling transactions for its account holders, and Interfax news service reported Friday that two other banks were also affected. Several hundred thousand cardholders will be affected, according the Russian central bank.
One of the banks, St. Petersburg-based Bank Rossiya, was a target of the new American sanctions. Another, SMP Bank, is owned by Arkady and Boris Rotenberg, brothers who are themselves on the list.
The banks are not among Russia’s largest, but they do serve some of the country’s wealthiest and best-connected customers. Putin, in a jibe at the sanctions, said he would have his salary deposited in Bank Rossiya beginning Monday.
Russia had on Thursday retaliated against American sanctions by banning nine U.S. lawmakers and officials from entering the country. The list includes Senate Majority Leader Harry M. Reid (D-Nev.), House Speaker John A. Boehner (R-Ohio), Sen. John McCain (R-Ariz.) and three top Obama aides, the Russian Foreign Ministry said.
In a slight softening, Putin on Friday said “we should refrain for now” from further action against the United States.
But Putin’s spokesman, Dmitry Peskov, said afterward that Russia will not let further sanctions go unanswered.
“We will react every time and we react based on mutuality. We have responded to the first sanctions and now we will respond to [further sanctions],” he said. “They will not go unnoticed.”
There was no indication that Russia would punish European officials, who late Thursday added 12 names to their sanctions list, up from the 21 named earlier this week. The new names were not immediately released.
E.U. leaders in Brussels on Friday also signed a deal with Ukraine to draw it closer into Europe’s orbit. The pact was a component of the agreement that Ukraine’s then-government declined to sign four months ago, triggering pro-Europe demonstrations that led to the current crisis.
“We want to be a part of the big European family and this is the first tremendous step in order to achieve for Ukraine its ultimate goal, as a full-fledged member,” said interim Ukrainian prime minister Arseniy Yatsenyuk.
European leaders have struggled to agree on how far they are prepared to go with measures against Russia that are likely to be far more economically damaging to their countries than to the United States.
Obama will travel to Europe next week to meet with the Europeans and other allies in several forums, including the European Union, NATO and the Group of Seven industrialized nations, which has been at least temporarily downsized to exclude Russia. In the current “political circumstances,” German Chancellor Angela Merkel said Thursday, “there is no G-8.”
European leaders have said they will impose tougher measures against Moscow if Russia continues its aggressive actions in Ukraine. Obama had on Thursday laid the groundwork for far broader measures against “key sectors of the Russian economy” if Putin escalates.
The measures potentially include Russia’s financial services, energy, mining, engineering and defense sectors, according to language in what was Obama’s third executive order in two weeks. If implemented, he acknowledged, they would not only significantly affect the Russian economy, “they could also be disruptive to the global economy.”
But “Russia must know that further escalation will only isolate it further from the international community,” Obama said in a brief statement on the White House South Lawn.
For now, the measures target Putin’s inner circle and stop well short of the kind of sanctions that have crippled Iran’s economy. Those would be triggered only by a wider military incursion, and Russian troops remain massed on Ukraine’s eastern and southern borders. And although Putin has said Russia has no further territorial designs on Ukraine, he has proved indifferent to Western threats.
Alexei Pushkov, head of the foreign affairs committee of the Duma, or lower house of parliament, tweeted Friday: “Economic sanctions make sense when their goal is to prevent something. The reunification with Crimea is already a fact. There’s nothing they can prevent. What’s the point?”
The Obama administration said it is reviewing a Ukrainian request for non-lethal military assistance to help deter a Russian incursion. But a senior official, one of several who briefed reporters in a conference call about the new measures, said that “nobody wants the outcome here to be a full-bore military conflict between Russia and Ukraine,” and repeated that the United States is not considering “the introduction of U.S. military forces.”
The officials spoke on the condition of anonymity to focus attention on the president’s public remarks.
The U.S. sanctions announced Thursday added 20 people to a handful of Russians whose U.S. and dollar assets the administration froze this week, along with what a senior administration official described as “a crony bank that handles the funds” for wealthy Russians within and outside the government.
Among those on the list are government and business leaders who have been close to Putin, some for many years. They include some of the richest men in Russia — and one Russian, Gennady Timchenko, who is in the oil-trade business in Switzerland.
Putin interests in the Swiss-based Gunvor Group, of which Timchenko is listed as a co-founder, have been long rumored but never detailed. A Treasury Department statement saying that “President Putin has investments in Gunvor and may have access to Gunvor funds” was immediately disputed by a company statement that said “President Putin has not and never has had any ownership, beneficial or otherwise in Gunvor. . . . Any understanding otherwise is fundamentally misinformed and outrageous.”
In a later statement from its Geneva headquarters, Gunvor said that as of Wednesday, “anticipating potential economic sanctions,” Timchenko had sold all his shares in the company to his partner, Torbjorn Tornqvist, a Swedish citizen.
The sanctions list also includes key officials such as Sergei Naryshkin, speaker of the lower house of parliament, and Sergei Ivanov, head of the presidential administration, as well as influential Russians in the banking and business communities, including several from Putin’s home town, St. Petersburg. Among them is Yuri Kovalchuk, a longtime Putin friend who is known as “Putin’s banker.” Kovalchuk and another person on the list, Putin aide Andrei Fursenko, are owners of Rossiya Bank, the sanctioned bank.
Senior U.S. officials said that Rossiya Bank has $10 billion in assets and that it handled financial transactions for many senior Russian officials.
“We expect that this will have a significant impact on its ability to operate,” one official said. “It will be frozen out of the dollar. All the correspondent accounts that it has with U.S. financial institutions will be terminated.” The United States would work with governments and the private sector around the world to “prevent it from operating to the greatest extent possible,” the official said.
Longtime Putin associates Arkady and Boris Rotenberg, the owners of SMP Bank, also were named. An administration official noted that the St. Petersburg-based brothers were close to the center of power, receiving $7 billion in contracts connected to the Sochi Olympics.
Russian Foreign Minister Sergei Lavrov and Secretary of State John F. Kerry spoke again by phone Thursday about Ukraine. Lavrov, a separate ministry statement said, accused the United States of “condoning” the activities of “ultranationalist and extremist forces” that he said were targeting businessmen, journalists, dissenters, Russian speakers and “our compatriots.”
The Pentagon said that Defense Secretary Chuck Hagel also spoke with his Russian counterpart, Sergei Shoigu, who told him that Russian troops along the Ukrainian border were there only to conduct exercises.
Defying U.S. and European warnings, Russia moved troops several weeks ago into Crimea, a part of Ukraine with an ethnic-Russian majority population. In short order, it organized a referendum in which Crimea voted to become part of Russia and Putin announced this week that Russia would annex the region.
On Thursday, the lower house of the Russian parliament voted 443 to 1 to admit Crimea and the metropolitan region of Sevastopol into the Russian Federation, putting some of the final procedural touches on the takeover.
Englund reported from Moscow and Witte reported from London. Kathy Lally in Moscow and William Branigin in Washington contributed to this report.

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