Russia hit by new round of US sanctions

After the US Department of the Treasury had updated its list of Russian companies targeted by the sanctions last week, the Department of Commerce followed suit on Wednesday, imposing bans on dozens of Russia-based entities. The Bureau of Industry and Security (BIS) added a total of 81 companies new to its Entity List that had been introduced in 2014 after Russia annexed the Crimean peninsula from Ukraine.

The US authorities noted the banned companies were acting against "the national security or foreign policy interests of the United States."

"BIS is taking this action to ensure the efficacy of existing sanctions on the Russian Federation for violating international law and fueling the conflict in eastern Ukraine," the bureau said in the Federal Register, an official daily journal of the US administration.

Gazprom subsidiaries and Crimea developers hit

Among the companies added to the list are 51 subsidiaries of Russian gas giant Gazprom, including its main exploration assets. Gazprom itself was already hit with sanctions in September 2014.

The measures mean that US suppliers will have to get a license from BIS for equipment to be exported, reexported or transferred in Russia, "if it might be used for exploration for, or production of oil and gas in Russian deepwater or Actic offshore locations or shale formations in Russia," according to a BIS publication.

A license is also required if an exporter cannot rule out that the its goods might be used in such projects. BIS also pointed out that it will review license applications for the 51 Gazprom subsidiaries "with a presumption of denial," which in fact reduced to virtually zero the chance to acquire an export permission.

Washington also placed 18 construction, defense and transportation companies working on the Crimean peninsula on the sanctions list. Among those hit by the measure are Russian firms linked to the construction of the 19-kilometer (11-mile) road-and-rail bridge across the Kerch Strait between mainland Russia and Crimea. These include the lead contractor of the project SGM-Most, sub-contractor Mostotrest, one of Russia's biggest bridge builders, as well as Giprostroimost which was responsible for the engineering design of the bridge.

"The US move indicates that the ability of Western countries to use restrictions on business in and with Russia is not yet exhausted," defense publisher IHS Jane's said in a report. Its analysts believe that the US authorities are likely to expand the list of Crimea-related sanctions in the future by adding companies doing business or acquiring assets in Crimea or involved in the transportation and logistics there.

Consistency of the sanctions policy

Another group of companies slapped with sanctions is Russian shipbuilders, including the leading nuclear submarine shipyard, Zvyozdochka Shipyard. Moreover, the country's leading chipmakers, Angstrem and Mikron, are due to face boycotts. According to the BIS a total of 11 companies from the sector ended up on the sanctions list because "they operate in Russia's arms or related material sector."

Russian analysts interviewed by DW pointed out that the expansion of US sanctions was aimed at ensuring consistency in the country's sanctions policy. "For the United States it is rather a symbolic gesture, highlighting that the political standoff between the US and Russia is still underway", said Dmitry Polevoy, chief economist for Russia and CIS at ING Bank in Moscow.

Russian officials split on reciprocal move

Meanwhile it's unclear if Russia is planning to toughen counter-sanctions against the United States in retaliation. President Vladimir Putin's spokesman Dmitry Peskov told reporters on Wednesday that the Kremlin would analyze the expanded list of sanctions. He warned however that in sanctions-related issues Russia "proceeds from the principle of reciprocity".

At the same time Russia's economy minister Alexey Ulyukaev doesn't appear to think retaliatory measures are necessary. He called the expanded US sanctions list "an unpleasant incident" that might complicate work of some Russian companies. But he also underscored that the US action was unlikely unlikely to have any significant economic impact on Russia.

Analysts at IHS Jane's, however, believe the new measures will increase contractual risks for both the affected companies and the government, especially with regard to their international suppliers or purchasers. They wouldn't rule out that Russia might seek to introduce trade restrictions against the US companies.

"However, it is more likely that Russia would choose to harass US businesses operating in Russia by additional unplanned tax, operational, health and safety or sanitary inspections as was the case in the past two years", IHS Jane's added.