U.S. and EU marshal economic tools to punish Russia

Mon Mar 3, 2014 9:08pm EST
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By Warren Strobel, Arshad Mohammed and Anna Yukhananov

WASHINGTON, March 3 (Reuters) - The United States has a number of economic weapons to punish Russia for its military intervention in Ukraine, ranging from asset freezes to kicking Moscow out of the exclusive G8 group of countries, and President Barack Obama is focusing first on measures that would not require congressional action.

But Washington needs Europe to join it to make sanctions tough enough to potentially deter Russian President Vladimir Putin.

Obama is seriously considering an executive order imposing asset freezes and visa bans on Russian officials, a U.S. official said on Monday.

Such an order could be drawn narrowly to focus on Russian officials directly involved in the intervention in Ukraine's Crimea or more broadly to target a wider range of Russian officials, two officials said.

Any moves to slow investment into Russia could also hurt. Russia's economy, which has softened significantly in recent months, is more vulnerable than it was during a previous 2008 crisis over Georgia.

"The Russian economy is extremely weak," said Anders Aslund, a senior fellow at the Peterson Institute for International Economics. The impact of Putin's move into Crimea "will be enormous," he said.

Steep drops on Monday in the value of the ruble and the Russian stock market, including natural gas monopoly Gazprom , would be particularly difficult for Russia's rich.

Longer term the United States could help cut European demand for Russian energy.   Continued...