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NDP foreign affairs critic Paul Dewar said the Harper government shouldn’t be pulling its punches when it comes to sanctions.Sean Kilpatrick/The Canadian Press

The sanctions Canada slapped on Russian state-owned energy giant Rosneft this week are well short of a blanket ban on business with the Moscow firm, amounting to what experts call "relaxed measures" that bar only transactions such as longer-term lending by Canadians.

The Conservative government is touting the measure as part of the "toughest sanctions regime" against Vladimir Putin's continuing aggression in Ukraine. Ottawa announced more sanctions and travel bans Tuesday evening, with Rosneft being the biggest target on the list.

But the leeway granted to Canadians to continue doing business with Rosneft speaks to the challenges of punishing a company that has interests in Canada.

Rosneft owns 30 per cent of Exxon Mobil's oil project in the Cardium Formation in the foothills of southern Alberta.

Canadians will still be allowed to buy stock in Rosneft or its subsidiaries, sell goods and services to Rosneft or buy products from the company. And Canadian banks will still be allowed to provide financial services to the firm as long as it's not lending in excess of 90 days.

NDP foreign affairs critic Paul Dewar said the Harper government shouldn't be pulling its punches when it comes to sanctions.

"We may have a loud voice but we also need to have a very big stick."

Canada, which has levied sanctions on 270 individuals, entities and companies in Russia and Ukraine, had until this week resisted even adding Rosneft to the sanction list even though the United States added it last July and the European Union last September.

John Boscariol, a Toronto lawyer with McCarthy Tétrault, said the sanctions on Rosneft forbids only certain debt financing transactions with the firm, with the biggest impact being a ban on lending money to the firm for 90 days or more. "Given Rosneft has an investment here, I can see why [Ottawa] wouldn't do the full ban."

Most of the Ukraine-related sanctions that Canada has levied on companies over the past 11 months go much further.

They forbid Canadians both inside this country and abroad from engaging in any dealings with those targeted, including selling goods and providing financial services to them.

The Department of Foreign Affairs, Trade and Development declined to explain, when asked, why Ottawa didn't impose a blanket ban on business dealings with Russia's biggest petroleum company.

It instead released a statement that talked up Canada's record on the Ukraine file.

"Canada has the toughest sanction regime in the world, which has been co-ordinated with our allies to target key individuals and entities and to isolate Russia politically and economically," Foreign Affairs spokesman John Babcock said.

"The sanctions imposed in co-ordination with our partners and allies are without a doubt having an effect on the Russian economy."

Mr. Dewar says another blind spot for Canada is the lack of action on Rosneft president and former Russian deputy prime minister Igor Sechin, a close ally of Mr. Putin. Both the U.S. and the European Union have blacklisted Mr. Sechin over Russian aggression in Ukraine.

"Sechin is really important. This is a guy who was just meeting with Putin last week. He's his former deputy prime minister and confidant and they can't muster up the courage to put him on the sanction list when others have," the NDP critic said.

Rosneft was still irked Wednesday by the restrictions on behaviour in Canada. A Rosneft spokesman, speaking to the Russian News Service, was quoted in the Moscow Times disparaging the Canadian oil industry and blaming Ottawa's policies on the Ukrainian lobby in Canada.

"In Canada the [oil] industry is in a near-death condition. This was sanctions against the departed, and I don't mean Rosneft, I mean Canadian oil production," Rosneft spokesperson Mikhail Leontiev said.

Follow Steven Chase on Twitter: @stevenchaseOpens in a new window

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