Russia Moves Closer to Absorbing Crimea, Despite Sanctions

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from The Wall Street Journal,

Putin Signs Decree Recognizing Region as an Independent State.

Russian President Vladimir Putin brushed off an initial round of Western sanctions over the Ukraine crisis and defied warnings of stiffer punishment to come by taking another step toward annexing Crimea.

The Obama administration Monday enacted what it called the most comprehensive sanctions to hit Russia since the end of the Cold War. It targeted 11 Russian and Ukrainian officials, including some of Mr. Putin’s top advisers and the ousted former president of Ukraine, Viktor Yanukovych, a close Kremlin ally.

The European Union followed by blacklisting 21 individuals. Unlike the U.S. it steered clear of Mr. Putin’s inner circle, wary of ratcheting up the East-West confrontation. Business ties run deeper between Russia and Europe, although the landscape gets murkier as tensions climb.

The officials blacklisted by Washington and Brussels laughed off the initial wave of sanctions, with many saying they have no overseas assets that could be targeted. Russian financial markets, which have been hit hard during the crisis, also jumped in what traders said reflected relief that the penalties weren’t more sweeping.

“What interests me about the United States are Tupac Shakur, Allen Ginsberg and Jackson Pollock. No visa is needed to access their works. So I’m not missing anything,”

The White House and U.S. sanctions experts, however, said that the measures announced by President Barack Obama gave him the power to launch a much-broader financial war on the Kremlin if he chooses in the coming months.

Undeterred by the mounting pressure, the Kremlin said late Monday that Mr. Putin had signed a decree recognizing Crimea as an independent state—a necessary step before Russia can proceed with annexation, in what would be the most significant land seizure in Europe in decades.

The developments left Russia on the brink of absorbing a portion of another country while the West grasped for leverage to contain Mr. Putin and prevent further Russian incursions into Ukraine or elsewhere.

Mr. Obama’s executive order also allows the White House to sanction any individual or company believed to be providing financial support to the Russian government. This could allow the White House to target broad sectors of Russia’s economy, including energy and mineral companies, arms suppliers and banks, if the conflict intensifies.

U.S. officials and sanctions experts said there were similarities between Monday’s executive order and the initial legal powers the Bush administration sought in 2007 to target Iran for its nuclear program and support of international terrorism.

Even though the sanctions announced are limited, they have been widely noticed in business circles. Ford Motor Co. F +1.33% said it is reassessing a Russian joint venture, and other companies are seeking advice both about a softening Russian economy and increasingly bitter East-West relations.

Mr. Obama continued to hold out an olive branch to Mr. Putin. The two men spoke Sunday but found no common ground.

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