West imposes new Russia sanctions, Putin defiant

West imposes new Russia sanctions, Putin defiant

Kiev (AFP) - The United States and European Union hit Russia with tough new sanctions Friday in a coordinated riposte to Moscow's "unacceptable behaviour" in Ukraine despite a fragile truce.

Moscow responded by accusing its foes of seeking to derail the peace push aimed at halting a conflict that has killed more than 2,700 people across Ukraine's industrial heartland.

Late Friday Russian news agencies reported that Russia's border officials had waved through the first 35 vehicles in an aid convoy heading for devastated east Ukraine, after Moscow sent in a first convoy in August without Ukraine's final approval or Red Cross monitors.

While the guns have largely fallen silent after five months of fighting between Ukrainian forces and pro-Russian rebels, the rhetoric in the worst East-West crisis since the Cold War has just grown louder.

In some of the toughest measures yet to punish the Kremlin for allegedly fomenting the insurgency, Washington targeted Russia's top bank Sberbank -- which holds the deposits of nearly half all Russian savers -- and leading energy and technology companies.

"These steps underscore the continued resolve of the international community against Russia?s aggression," said US Treasury Secretary Jacob Lew.

The fresh EU measures were also aimed at major Russian energy, finance and defence companies, including oil giant Rosneft and famed weapons manufacturer Kalashnikov.

The 28-member bloc also imposed asset freezes and visa bans on a host of Russian figures, including allies of President Vladimir Putin, as well as rebels in Ukraine and Crimea, a Ukrainian region that Russia annexed.

The ruble sank to a historic low and Moscow stock markets fell, fearful of the impact on an economy already teetering on the brink of recession.

However, in what was seen as a concession, Brussels agreed to delay implementing a trade deal with Ukraine that is deeply opposed by Russia.

A dismissive Putin said the sanctions would have little effect and accused the West of using them as an "instrument to destabilise international relations".

EU nations finally approved the measures after deep divisions emerged in the wake of the ceasefire, with some worried about the effect on their own economies of any reprisals by Moscow.

Brussels will reconsider the measures after reviewing the truce at the end of September.

Moscow has already threatened to bar EU airlines from its airspace, and has drawn up a list targeting imports of consumer goods and second-hand cars from the West.

- 'Truce insufficient' -

But European Commission head Jose Manuel Barroso, on a visit of solidarity to Kiev just as the sanctions took effect, chided Russia over its "unacceptable behaviour" in its Western neighbour.

In talks with President Petro Poroshenko, he described the ceasefire -- the first backed by both Kiev and Moscow since the conflict erupted in April -- as a positive step.

"However, it is still insufficient to guarantee sustainable peace," he added.

The West remains deeply suspicious over Moscow's territorial ambitions after it seized Crimea in March in the chaotic weeks that followed the ousting of Ukraine's pro-Kremlin president.

Both Kiev and NATO say around 1,000 Russian troops are still in Ukraine in what has been described as an invasion by stealth to bolster the separatist revolt.

Ukrainian authorities say the insurgents now control territory stretching about 300 kilometres (200 miles) along the eastern border to the Sea of Azov after a lightning surge reportedly backed by elite Russian forces just days before the truce.

The sudden shift in fortunes, reversing a series of Ukrainian military successes, prompted suggestions that Kiev had negotiated the deal signed in the Belarussian capital Minsk from a position of weakness.

In a conciliatory gesture this week, Poroshenko announced he would submit a bill to parliament granting parts of the east temporary self-rule, although vowing to keep Ukraine united.

The leaders of the self-declared "people's republics" in the mainly Russian-speaking Donetsk and Lugansk regions say however they have no intention of abandoning the fight for full independence.

- 'Special status' -

But with the West firmly on his side, Poroshenko demonstrated his determination to remove his country further from Russia's orbit by boosting ties with Brussels and Washington.

He announced the Ukrainian and European parliaments would meet Tuesday to jointly ratify a historic association agreement that was scrapped by former pro-Kremlin president Viktor Yanukovych but will now come into effect on November 1.

Yanukovych's decision set off months of pro-Western protests that eventually led to his ouster and triggered the anti-Kiev uprisings in Crimea and the east.

Brussels said Friday it would delay until the end of 2015 implementation of a free trade deal under the pact. This saves Ukraine from facing immediate restrictions from Russia and also placates Moscow, which feared being flooded by cheap EU goods.

Poroshenko also said he hoped to secure a "special status" with the US during a visit to Washington Thursday when he meets President Barack Obama.