U.S., European nations to levy coordinated sanctions on Russia

President Obama and European leaders have agreed on a new, coordinated set of sanctions against Russia in response to Moscow’s continued role in supporting separatist fighters in neighboring Ukraine, a senior administration official said Monday.

The sanctions will target key sectors of the Russian economy, including parts of its banking, energy and defense industries. Previous sanctions applied to specific Russian financiers, government officials and companies.

Obama held a conference call with British Prime Minister David Cameron, French President Francois Hollande, German Chancellor Angela Merkel and Italian Prime Minister Matteo Renzi on Monday and agreed on the new strategy, deputy national security advisor Tony Blinken told reporters.

The Europeans had shown a “determination to act,” Blinken said.

In a statement from his office, Hollande said the five had agreed on a coordinated effort “to adopt new measures toward Russia” and that they regretted that Russia had not “effectively put pressure on the separatists to force them to negotiate.”

European leaders are expected to announce the sanctions Tuesday. The U.S. will follow suit later this week, officials said.

According to U.S. officials, the sanctions will bar any European from investing in or advising on new debt or stocks offered by any Russian bank that is more than 50%-owned by the state. That covers most of Russia’s biggest financial institutions.

The sanctions will also impose a broad embargo on the sale of arms to Russia. They will prohibit European firms from selling “dual-use” goods to Russia that might be put to a military purpose. France, however, will be allowed to sell two Mistral class helicopter attack ships to Russia.

New energy sanctions, though narrowly focused, will set back Russian energy development by barring export of 32 sophisticated technologies used in deep-sea drilling, Arctic exploration and shale oil productions.

The gas industry has been excluded from penalties to avoid Russian retaliation against Europe. The Russians supply about 30% of Europe’s gas.

U.S. officials said the new sanctions represented a notable toughening of Europe’s attitude toward Russia.

Fearing damage to their economies, European leaders for months had resisted U.S. pressure for stronger sanctions against Moscow over its actions in Ukraine. Russia’s defense industry has been a major customer for France, its energy industry is a key supplier for Germany and other European countries, and its banks have a significant presence in London.

But the downing of a Malaysia Airlines passenger jet over Ukraine, killing 298 people, changed the calculus in Europe as public outrage brought pressure on government officials to take stronger action.

U.S. and European leaders have said that Russia bears partial responsibility for the July 17 downing of the plane. U.S. intelligence officials say the jet was destroyed by a surface-to-air missile fired by separatists who received their weapons and training from Russia. The refusal of Russian leaders to accept any responsibility has fueled American diplomatic efforts to increase pressure on Moscow.

In Germany, the head of the nation’s main business organization said Monday that the country would have to accept stronger sanctions on Russia even if doing so caused economic damage domestically.

“As painful as further economic sanctions will be for European business development, for German exports and for individual companies, they cannot and must not be ruled out as a way to apply pressure on the Russian government,” the head of the Federation of German Industries, Ulrich Grillo, wrote in a newspaper column.

In Monday’s call, the leaders agreed on the “importance of coordinated sanctions measures on Russia for its continued transfer of arms, equipment and fighters into eastern Ukraine, including since the [airline] crash, and to press Russia to end its efforts to destabilize the country and instead choose a diplomatic path to resolving the crisis,” Blinken said.

“In turn, and in full coordination with Europe, the United States will implement additional measures itself. Our purpose here again is not to punish Russia but to make clear that it must cease its support for the separatists and stop destabilizing Ukraine,” he said.

In addition to the downing of the Malaysia Airlines jet, the massing of Russian troops along the Ukrainian border and the steady flow of weapons to separatist militias in Ukraine have raised the level of anxiety in the European Union.

In recent days, U.S. officials have released photographs and other intelligence they say show Russian shipments of heavy arms to the separatists as well as artillery strikes against Ukrainian forces fired directly from Russian territory. The strikes appeared aimed at Ukrainian forces that have retaken several cities from the separatists.

“We’ve seen convoys of tanks, multiple-rocket launchers, artillery and armored vehicles,” Blinken said. The evidence indicates that Russia is “preparing to deliver even more powerful multiple-rocket launchers. It is firing from positions inside of Russia into Ukraine, something that we documented this weekend. And we’ve seen a significant re-buildup of Russian forces along the border, potentially positioning Russia for a so-called humanitarian or peacekeeping intervention in Ukraine.”

Those developments, he said, have created a sense of urgency.

As Obama and the European leaders discussed sanctions, Vice President Joe Biden met with Ukrainian Prime Minister Arseniy Yatsenyuk to discuss the Ukrainian government’s progress on promised economic reforms, as well as the separatist conflict and the investigation into the downing of the Malaysia Airlines plane. Biden promised an additional $1 million to help rebuild damaged infrastructure in eastern Ukraine, bringing to nearly $7 million the total in U.S. aid for areas affected by the fighting, according to a statement released by the White House.

Separately, the U.S. accused Russia of violating the terms of the 1987 treaty that bans medium-range cruise missiles. The Russian violation involved testing a ground-launched missile whose range fell under the treaty’s prohibitions.

“This is a very serious matter which we have attempted to address with Russia for some time now,” an administration official said. “We encourage Russia to return to compliance with its obligations under the treaty and to eliminate any prohibited items in a verifiable manner.”

Times staff writer Kathleen Hennessey contributed to this report.