US, allies unveil more Russia sanctions but keep big guns in reserve

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The United States (US) and its allies unveiled more sanctions against Russia on Wednesday over its recognition of two separatist areas in eastern Ukraine, while making clear they were keeping tougher measures in reserve in case of a full-scale invasion by Moscow.

European Union sanctions to take effect on Wednesday would add all members of Russia’s lower house of parliament who voted to recognise the separatist regions in Ukraine to a blacklist, freezing their assets and banning travel.

Britain followed the US in announcing new restrictions banning Russia from the issuing of new bonds in its security markets.

US President Joe Biden on Russia and Ukraine tension:

The steps follow measures announced on Tuesday, including freezing the approval of a new Russian gas pipeline by Germany, and imposing new US sanctions on Russian banks.

But none of the measures announced so far directly targets President Vladimir Putin himself, or is expected to have severe medium-term consequences for Moscow, which is sitting on more than $630 billion in international reserves.

Oil prices eased from Tuesday’s seven-year highs as it became clear the first wave of sanctions were unlikely to disrupt oil supplies. Global stocks broke a four-day slide and demand for safe-haven assets waned.

Western countries fear Russia plans a full-blown invasion of Ukraine after Putin announced on Monday he was recognising two small breakaway regions controlled since 2014 by separatists viewed by the West as Moscow’s proxies. Putin also signed a decree allowing Russian forces to be deployed there.

Washington has described Russia’s actions as the start of an “invasion” but because the massed military assault they predicted has not materialised, they have had to calibrate their response.

“There will be even more tough sanctions on key oligarchs, on key organisations in Russia, limiting Russia’s access to the financial markets, if there is a full scale invasion of Ukraine,” British Foreign Secretary Liz Truss said.

She announced plans to bar Russia from issuing new foreign debt in London, a step taken years ago by the United States. Moscow said it would respond by issuing any new debt in roubles at home for now.