Officials say sanctions on Russia’s economy could be delayed amid positive signs from Putin

WASHINGTON – Sanctions aimed at key economic sectors in Russia because of its threatening moves in Ukraine might be delayed because of positive signals from Russian President Vladimir Putin, according to Obama administration officials.

The United States and its European allies were finalizing a package of sanctions with the goal of putting them in place as early as this week, said the officials and others close to the process. Penalizing large swaths of the Russian economy, including its lucrative energy industry, would ratchet up the West’s punishments against Moscow.

The U.S. and Europe have already sanctioned Russian individuals and entities, including some with close ties to Putin, but have so far stayed away from the broader penalties, in part because of concern from European countries that have close economic ties with Russia.

But with the crisis in Ukraine stretching on, a senior U.S. official said the U.S. and Europe are moving forward on “common sanctions options” that would affect several areas of the Russian economy. A Western diplomat said those options included Russia’s energy industry, as well as Moscow’s access to world financial markets.

Seeking to shore up European support for sector sanctions, President Barack Obama called Italian Prime Minister Matteo Renzi on Wednesday, a day after discussing the situation with British Prime Minister David Cameron.

Secretary of State John Kerry told reporters in Brussels Wednesday that Putin must prove himself through “actions, not just words.” And if the Russian leader fails to act, Kerry said the U.S. and European Union are committed to inflicting “greater costs, including tougher economy sanctions.” But no sanctions will be announced Wednesday, Kerry added.

The U.S. and Europe have been eyeing a European Council meeting in Brussels later this week as an opportunity to announce the co-ordinated sanctions. However, the enthusiasm for new sanctions, particularly among European leaders, appears to have waned in recent days as countries evaluate whether Putin plans to follow through on a series of promises that could ease the crisis, officials said.

The Russian leader acted Tuesday to rescind a parliamentary resolution authorizing him to use the Russian military in Ukraine; on Wednesday, the parliament’s upper house cancelled it. Putin also urged the new Ukrainian government to extend a weeklong cease-fire and called for talks between Ukraine and pro-Russian rebels who are widely believed to be backed by the Kremlin.

Putin’s moves came one day after he talked by phone with Obama, their first known conversation in more than two weeks.

The threat of sector sanctions may be driving Putin to try to avoid penalties that could have a devastating impact on the already shaky Russian economy. However, there were no guarantees that Moscow would abide by the West’s requests to pull back its troops from the Ukrainian border, stop arming separatists and negotiate seriously with Kyiv.

Indeed, there were signs Tuesday of just how fragile the situation on the ground remains. Hours after Putin called for the cease-fire to be extended, pro-Moscow separatists shot down a Ukrainian military helicopter, killing nine servicemen.

Vice-President Joe Biden spoke to Ukraine’s new president, Petro Poroshenko, for the third time in as many days and offered his condolences for the deaths. The White House said Biden also underscored the importance of having monitors in place in Ukraine to verify violations of the cease-fire, as well as the need to stop the supply of weapons and militants from flowing across the Russian border.

At the State Department, spokeswoman Marie Harf said the situation entailed “two steps forward, one step back.”

“We do see some positive signs on the ground,” she told reporters. “The cease-fire, some separatists have accepted it, but the same day some other separatists shot down a helicopter. That President Putin says he’ll go to the Duma, that’s good, but then they continue the military buildup.”

Even if the U.S. and European Union decide not to levy sector sanctions this week, they could outline clearer intentions to ultimately take that step. In Europe, the 28 nations that form the EU may at least agree on the details of a package of sanctions so the penalties could be levied quickly, according to the Western diplomat, who like other officials insisted on anonymity because they were not authorized to discuss the internal deliberations by name.

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Associated Press writer Lara Jakes contributed from Brussels.

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