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Kremlin official not surprised by sanctions

New round of U.S. sanctions reach deeper into Russian energy sector.

By Daniel J. Graeber
U.S. sanctions dig deeper into Russian energy sector as fighting continues in eastern Ukraine, where pro-Kremlin fighters remain active. UPI/Ivan Vakolenko
U.S. sanctions dig deeper into Russian energy sector as fighting continues in eastern Ukraine, where pro-Kremlin fighters remain active. UPI/Ivan Vakolenko | License Photo

MOSCOW, Aug. 3 (UPI) -- U.S. sanctions extending deeper into the Russian energy sector prompted legal threats from Kremlin-backed entities but come as no surprise, an official said.

The U.S. Treasury Department's Office of Foreign Assets Control targeted Ukrainian and Russian business leaders, including Russia gas trader Gennady Timchenko and Boris Rotenberg, a close associate of Russian President Vladimir Putin.

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OFAC Director John Smith said the sanctions are aimed at encouraging Russia to honor peace-keeping commitments signed earlier this year regarding conflict in eastern Ukraine. Sanctions, he said, are part of the Western-backed effort to keep pressure on Russia for violating international laws and "fueling the conflict in eastern Ukraine."

Russia's energy sector, a key source of government revenue, has been the target of Western sanctions since conflict erupted in Ukraine in response to Kiev's pivot in 2013 toward the European Union. The latest wave of sanctions reach to former Ukrainian officials tied to former Ukrainian President Viktor Yanukovych, who fled to Russia last year.

"The sanctions are being expanded in a domino-like way," Alexander Shokhin, the head of the Russian Union of Industrialists and Entrepreneurs, said in an interview published Saturday with state news agency ITAR-Tass. "The ultimate aim is to hit the companies that are being used to sidestep them [sanctions]."

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Russia's currency, the ruble, plummeted in value early in 2015 as the low price of crude oil put pressure on an economy targeted by Western sanctions imposed in response to the Kremlin's position on crises in Ukraine.

Russian oil company Rosneft, which had subsidiaries targeted in the latest round of sanctions, said it would use "all legal means necessary" to protect the interests of its shareholders.

Russian energy company Gazprom blamed heavy losses in 2014 on the appreciation of the U.S. dollar and euro against the ruble. Others, like oil producer Rosneft, were cut off from western markets because of sanctions.

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