CORRECTED-UPDATE 1-U.S. and EU marshal economic means to punish Russia

Tue Mar 4, 2014 5:55am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

(Corrects proportion of Russian gas exports to Europe passing through Ukraine, 30th paragraph)

By Warren Strobel, Arshad Mohammed and Anna Yukhananov

WASHINGTON, March 3 (Reuters) - Washington is weighing an array of economic weapons to penalise Russia for its armed intervention in Ukraine, from asset freezes to expelling Moscow from the G8 group of states, but may find Europe more reluctant to resort quickly to sanctions.

British Prime Minister David Cameron, reflecting the U.S. line, has warned Russia it will pay 'significant costs' unless it changes course. But an official document unwittingly exposed to a photographer's lense suggested London opposed trade sanctions and shutting its financial capital to Russians.

U.S. President Barack Obama, acknowledging the fast developing nature of the situation, needs Europe to join it to make sanctions tough enough to potentially deter Russian President Vladimir Putin. He is focusing first on measures that would not require congressional action and 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.

European Union targeted sanctions have to be agreed unanimously among all 28 member states, however, and with several members, such as Cyprus and Italy, enjoying close business ties to Russia, securing that consensus is difficult.   Continued...