U.S. President Donald Trump, left, and Vladimir Putin, Russia’s president, prepare to leave following a news conference in Helsinki, Finland, (Photographer: Chris Ratcliffe/Bloomberg)

U.S. Imposes Limited Sanctions on Russia After U.K. Poisoning

(Bloomberg) -- The U.S. announced details of limited new sanctions against Russia over the March poisoning in the U.K. of a former Russian agent and his daughter, the latest sign relations between the former Cold War foes continue to deteriorate.

Restrictions released by the State Department on Friday target remaining sources of foreign assistance and arms sales to Russia, and deny any U.S. credit to Russia, including through the Export-Import Bank. The announcement follows the Trump administration’s decision in March to expel 60 Russian diplomats and shutter a consulate in Seattle.

The latest measures appear far less stringent, though, than proposals being considered in Congress, where lawmakers from both parties have urged the administration to take a tougher stance against Moscow. Friday’s announcement also said that waivers to the new sanctions, which are to take effect upon publication in the Federal Register on Aug. 27, were included for “national security” reasons, including for things such as flight safety, wholly-owned U.S. subsidiaries, and space flight.

The restrictions follow the U.S. conclusion, reached about five months after the U.K. attack, that “the Russian Federation has used chemical weapons in violation of international law,” according to the State Department.

A State Department official said the main impact of the new measures will be on access by Russian state-owned and state-funded enterprises to goods and technology with national security value. The official said the move would hit key parts of Russia’s aviation and oil and gas sectors, among others.

The State Department’s announcement on Aug. 8 that it would impose new penalties on Moscow signaled that additional and more draconian limits, including restrictions on trade and diplomatic ties, could possibly come about 90 days later.

The ruble has dropped to two-year lows in recent weeks amid growing fears of new sanctions. The currency closed up 1.8 percent on Friday to 67.03 per dollar.

Friday’s sanctions highlight the erosion of U.S.-Russian ties even after Presidents Donald Trump and Vladimir Putin held a joint meeting in Helsinki just over a month ago. Even before the latest announcement there was growing bipartisan support in the Senate for separate pieces of legislation to ramp up pressure on Moscow as evidence emerges of fresh Russian interference ahead of the 2018 U.S. midterm elections.

Among the most stringent measures being proposed in Congress are ones that would impose curbs on Russian sovereign debt sales and tougher limits on some of the country’s biggest banks as punishment for election meddling.

John Bolton, Trump’s national security adviser, met with his Russian counterpart in Geneva on Thursday. The meeting, which Russian media outlet Tass said lasted more than five hours, ended with the two sides refusing to issue a joint statement because of U.S. insistence on including a reference to alleged Russian actions in U.S. elections, according to Nikolai Patrushev, secretary of Russia’s Security Council.

On Friday, Bolton told reporters in Kiev that existing U.S. sanctions over Russia’s annexation of Crimea and actions in eastern Ukraine will remain in force “until there is a required change in Russian behavior.”

The Senate held three hearings related to Russia, sanctions and cyber-threats to the U.S. this week. At the same time, Microsoft Corp. said on Aug. 20 that it had detected and seized web domains created by cyber-attackers linked to the Russian military who may be attempting to manipulate and disrupt the upcoming U.S. midterm elections.

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Also this week, the U.S. sanctioned owners of six Russian ships over claims they are helping transfer refined petroleum products to North Korean vessels in violation of international prohibitions.

The Trump administration has used sanctions to address a widening range of foreign policy crises in countries including Turkey, Venezuela, North Korea, Iran and Russia.

Those sanctions are compounding the impact of turmoil in Turkey, Argentina and Brazil, putting the Russian economy on track to grow 1.8 percent in 2018, down from an earlier projection of 1.9 percent, Economy Minister Maxim Oreshkin said Wednesday.

Still, a Russian lawmaker said Friday that the country can adapt to the latest U.S. actions and won’t change its foreign-policy positions as a result.

“They don’t understand that the more they strangle us, the worse the retaliation is,” said Vladimir Dzhabarov, deputy head of the foreign affairs committee of Russia’s upper house of parliament.

©2018 Bloomberg L.P.