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Putin dismisses new sanctions even as Russian ruble sinks

Moscow (AFP) - Fresh EU and US sanctions on Friday dragged the ruble to a new low, even as Russian President Vladimir Putin brushed them off and accused the West of using Ukraine as a political pawn.

The new punitive measures from Brussels, announced in lockstep with fresh sanctions from Washington, targeted major state firms and Russian officials including one of Putin's closest allies, Sergei Chemezov, head of Russian Technologies.

The ruble slumped to a new record for a second day, retreating to 37.89 against the dollar just before 1500 GMT, and Moscow stock markets fell.

Putin, speaking Friday on the sidelines of a security summit in Tajikistan alongside his Chinese counterpart Xi Jinping, shrugged off the sanctions and said the Ukraine crisis was being used to destabilise global politics.

"I've had a sneaking thought that Ukraine itself does not interest anyone, but is being used as an instrument to destabilise international relations," he said in the Tajik capital Dushanbe in televised remarks.

Putin reacted to the sanctions with a heavy dose of irony, saying they would do "more good than harm" and that he "welcomed" travel bans on Russian officials as they would spend more time at home.

The Russian leader said he was confused by the latest move now that a week-long ceasefire was taking hold in eastern Ukraine.

"I don't even understand these sanctions. Maybe someone does not like that the process is moving along the path of peace?"

A ceasefire signed last Friday between Kiev and separatist rebels in Ukraine's industrial heartland has so far held, despite accusations of violations on both sides.

Putin added that Russia was considering retaliatory measures. His aide Andrei Belousov said on Thursday Russia could ban the import of cars and clothes.

The Russian foreign minister for his part said sanctions harmed the chances of creating lasting peace in war-torn Ukraine.

"We believe that adopting such decisions at the very moment when the peace process in Ukraine is gaining strength... means choosing a path towards undermining the peace process," said Sergei Lavrov.

In Moscow, the speaker of parliament's lower house said the crisis was an excuse for US President Barack Obama to drum up tensions with its Cold War-era foe.

"The sanctions announced by President Obama are already disconnected from reality," State Duma speaker Sergei Naryshkin said in televised remarks.

"For them, the most difficult internal Ukrainian conflict, crisis, confrontation, is just a pretext -- this is obvious.

"If it did not happen they would find another (excuse). This is sad but true," he added.

- 'Russia will not budge' -

Obama said on Thursday that Washington's sanctions would target the defence, finance and energy sectors in response to Russia's "illegal actions" in Ukraine.

The EU and US measures that entered force on Friday focused on major Russian oil firms, defence companies and state-owned banks.

Mikhail Leontyev, vice president of state oil giant Rosneft, one of the firms targeted by sanctions, said the measures were becoming ever more "unjustified and illegal".

"What should we do with these sanctions?" he said on radio station Echo of Moscow. "What does Rosneft have to do with it? What does deep-sea drilling have to do with the ceasefire?"

Sergei Karaganov, a prominent Kremlin-connected foreign policy expert at the Higher School of Economics, said fresh sanctions would do little to convince the Kremlin to change tack.

"It is a dead-end situation and Russia will not budge under pressure," he told AFP.

But Yevgeny Nadorshin, chief economist at the AFK Sistema, said the previous and new sanctions are expected to hurt Russia's economy, which is already close to contraction.

"With sanctions the probability of recession approaches 100 percent, and it could start shortly," he told AFP.

"If sanctions are here to stay for a long time recession will be lengthier and will be felt deeper."