U.S. hasn't exhausted toolkit on Russia sanctions: energy envoy
By Nidhi Verma and Douglas Busvine NEW DELHI (Reuters) - The United States could intensify sanctions against Russia if the Kremlin continues to destabilize eastern Ukraine, a senior U.S. government official said. Washington and the European Union imposed sanctions after Russia annexed Crimea last March and supported pro-Moscow separatists in eastern Ukraine. "We haven’t exhausted our toolkit," Washington's special envoy and coordinator for international energy affairs Amos Hochstein said in an interview late on Tuesday. "Everyone wants to be in a place where we don't need more sanctions, but if the actions by Russia in east Ukraine continue, then I expect sanctions will continue as well," he told Reuters while in New Delhi for an energy conference. The Leaders of Ukraine, Russia, Germany and France sealed a deal last week that calls for a ceasefire in south-eastern Ukraine as of Feb. 15. But pro-Russian rebels and government forces have continued to engage in street battles in a town in east Ukraine, scuppering hopes for the European-brokered peace deal. Ukrainian government forces were pulling out of Debaltseve on Wednesday after an assault by Russian-backed separatists who Kiev and Europe said violated a crumbling ceasefire. The West's response centered first on financial and travel restrictions on key individuals but by mid-year it had effectively cut off overseas funding to corporate Russia. "I think what you have seen over the past year, that there has been a careful and calculated escalation of the actions," said Hochstein, a State Department official who has coordinated economic sanctions against Russia and Iran. On Iran, the Obama administration is continuing to work with mainly Asian buyers of Iranian light oil called condensate to limit those purchases, Hochstein said. In addition to the sanctions on Russian individuals, Washington has banned the Russian oil industry from access to services vital to develop deepwater, Arctic offshore and shale energy projects. Washington reckons that these sanctions, if kept in force, could eventually depress output from one of the world's largest oil-producing countries, which relies on Soviet-era fields for the bulk of its output of 10.6 million barrels per day. In Brussels, EU foreign policy chief Federica Mogherini said the actions by the Russia-backed separatists in Debaltseve were a clear violation of the ceasefire. "The EU stands ready to take appropriate action in case the fighting and other negative developments in violation of the Minsk agreements continue," she said, making an apparent threat of further economic sanctions against Moscow. Canada imposed sanctions on Russia on Tuesday, in a move Moscow said would prevent the implementation of the ceasefire. (Reporting by Nidhi Verma and Douglas Busvine; Editing by James Dalgleish)
