U.S. takes aim at Putin with sanctions on inner circle

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A U.S.-led strategy to tighten sanctions on a ring of Russian oligarchs close to President Vladimir Putin takes aim at the leader's business network and could target his personal wealth.

Washington, the European Union and Canada all announced a new round of sanctions banning business dealings with more Russian individuals and entities on Monday, as tensions over Ukraine continue to mount. The move is meant to send a message to the Russian leader about his aggression in Ukraine, without taking the undiplomatic step of openly targeting him personally.

The U.S. Treasury Department released a new list on Monday that imposes new sanctions on several Putin associates, including Igor Sechin, the chief executive officer of Russian oil giant Rosneft. Mr. Sechin is a former deputy prime minister of Russia and Mr. Putin's former chief of staff. The company itself, which two years ago launched a joint venture with Exxon in Alberta's oil sands through a Canadian subsidiary, is not named. Canada added two banks and nine individuals to its list, which already counts more than 60 Russian and Ukrainian entities or people.

Some say the growing list of sanctions on businessmen close to Mr. Putin is meant to send a signal that Washington is ready to go after the Russian President's personal wealth through a ring of his reputed business associates. What Mr. Putin owns, and where it is, is the subject of much speculation. Some observers allege that he has amassed a secret fortune worth billions, something the Russian president has repeatedly denied.

Kathryn Stoner, a Russian political expert at Stanford University, said Mr. Putin views politics through a personal lens and will understand the impact of asset freezes and travel bans on his allies. She said the expansion of the sanctions to Mr. Sechin is particularly important move given his profile in Russia.

"These are pinpricks, but if you stick a thousand pins in someone, it hurts," she said. "And the pins are getting bigger. This [Sechin sanction] is a bit of a nail."

Toronto lawyer John Boscariol of McCarthy Tétrault LLP, who advises companies on how to deal with economic sanctions, said the strategy of narrowly targeting individuals associated with a leader or a regime has only emerged in the last decade. In the past, sanctions were broader and aimed at particular industries, he said.

"I think both the U.S. and Canada and the EU have figured out ways to be quite surgical," Mr. Boscariol said. "And in this case, if you look at the list of names the U.S. has added they're really targeting Putin's inner circle."

Russian officials called the moves "disgusting" and warned they would only strengthen Russian resolve. The U.S. maintains it is not targeting the Russian president.

"The goal is not to go after Mr. Putin personally," U.S. President Barack Obama said during a trip to the Philippines, insisting the goal is to convince him his actions "could have an adverse impact on the Russian economy over the long haul."

But in U.S. Treasury Department documents detailing the sanctions, it seems clear that the list is all about links to Mr. Putin.

In a statement Monday, the Treasury Department said Mr. Sechin, the Rosneft CEO, "has shown utter loyalty to Vladimir Putin – a key component to his current standing."

Rosneft board director and businessman Sergei Chemezov was also added to the list Monday. The Treasury Department calls him a "trusted ally" of Mr. Putin, noting that the men lived in the same East German apartment complex in 1980s, when Mr. Putin was a KGB agent.

Last month, the U.S. announced sanctions on several Russian businessmen with close ties to Mr. Putin, and on Monday it added a list of companies the men control. Among the men is Yuri Kovalchuk, who the Treasury Department alleges is a close adviser and "personal banker" for Mr. Putin, sometimes referred to as his "cashier."

Also named last month was businessman Gennady Timchenko, a founder of commodity trading giant Gunvor, which the U.S. government says has been "directly linked" to Mr. Putin. The Treasury Department says Mr. Putin has "investments in Gunvor and may have access to Gunvor funds."

But Gunvor officials, however, have strenuously denied these claims since the sanctions document was published.

Seva Gunitsky, an assistant professor and Russian expert at the Munk School of Global Affairs at the University of Toronto, said sanctions such as freezes on bank assets may not be highly effective if the money has already been shifted out of Western banks.

"Are these sanctions going to get Russia out of Crimea? No," Prof. Gunitsky said. "But are these sanctions going to make Russian officials sit down and calculate next time whether they want to escalate the situation? Yes. So it may work at the margins."