U.S. sanctions Russia for ‘malign’ acts, Moscow reacts angrily

By Trevor Hunnicutt, Arshad Mohammed and Andrew Osborn

WASHINGTON/MOSCOW (Reuters) -The United States on Thursday imposed a broad array of sanctions on Russia, including curbs to its sovereign debt market, to punish it for interfering in last year’s U.S. election, cyber-hacking, bullying Ukraine and other alleged “malign” actions.

The U.S. government blacklisted Russian companies, expelled Russian diplomats and barred U.S. banks from buying sovereign bonds from Russia’s central bank, national wealth fund and finance ministry. The United States warned Russia that more penalties were possible but said it did not want to escalate.

The Russian foreign ministry reacted angrily, summoning the U.S. ambassador for a diplomatic dressing-down to tell him “a series of retaliatory measures will follow soon.” A ministry spokeswoman also said a possible summit could be imperiled.

Russia denies meddling in U.S. elections, orchestrating a cyber hack that used U.S. tech company SolarWinds Corp to penetrate U.S. government networks and using a nerve agent to poison Kremlin critic Alexei Navalny.

U.S. President Joe Biden on Tuesday spoke to Russian President Vladimir Putin to raise concerns about these issues and the build-up of Russian forces in Crimea and along the border with Ukraine, though a top U.S. general saw only a “low to medium” risk of a Russian invasion in the next few weeks.

Biden, who also proposed a U.S.-Russian summit, is trying to strike a balance between deterring what Washington sees as hostile Russian behavior while avoiding a deeper deterioration in U.S.-Russian ties and preserving some room for cooperation.

“Our objective here is not to escalate. Our objective here is to impose costs for what we feel are unacceptable actions by the Russian government,” said White House spokeswoman Jen Psaki.

Among his moves, Biden signed an executive order authorizing the U.S. government to sanction any area of the Russian economy and used it to restrict Russia’s ability to issue sovereign debt to punish Moscow for interfering in the 2020 U.S. election.

Biden barred U.S. financial institutions from taking part in the primary market for rouble-denominated Russian sovereign bonds from June 14. U.S. banks have been barred from taking part in the primary market for non-rouble sovereign bonds since 2019.

He did not, however, prohibit them from buying such debt in the secondary market, a step likely to have a far more dramatic effect on the Russian bond and currency markets, which fell as news of the sanctions seeped out before recovering some losses.

“The president signed this sweeping new authority to confront Russia’s continued and growing malign activity,” U.S. Treasury Secretary Janet Yellen said in a statement.

The Treasury also blacklisted 32 entities and individuals that it said had carried out Russian government-directed attempts to influence the 2020 U.S. presidential election and other “acts of disinformation and interference.”

ANALYST: RUSSIA TO CONTINUE TESTING U.S.

In concert with the European Union, Britain, Australia and Canada, the Treasury also sanctioned eight individuals associated with Russia’s ongoing occupation and repression in Crimea, which Russia annexed from Ukraine in 2014.

The White House said it was expelling 10 Russian diplomats in Washington D.C., including representatives of the Russian intelligence services and for the first time, formally named the Russian Foreign Intelligence Service (SVR) as the perpetrator of the SolarWinds Corp hack. The agency said the allegations were “nonsense” and “windbaggery.”

The U.S. government plans a new executive order to strengthen its cybersecurity, a U.S. official told reporters, suggesting it could include such elements as encryption and multifactor authentication.

The White House also said it would respond to reports Russia had offered bounties to Taliban-linked militants to kill U.S. soldiers in Afghanistan. However, it said it would not make its response public to protect U.S. forces, saying the matter would be handled via “diplomatic, military and intelligence channels.”

U.S. intelligence agencies have “low to moderate” confidence in their assessment of these reports, in part because they rely on sometimes undependable testimony from detainees, it said.

Russia has long brushed off allegations of putting bounties on U.S. soldiers in Afghanistan.

Andrew Weiss, a Carnegie Endowment for International Peace think tank analyst, was skeptical the U.S. sanctions would change a “largely competitive and adversarial relationship” in the short term or deter Russia in the long term.

“I’d be surprised if today’s very calibrated announcements by the Biden administration materially shift the relationship in either direction,” he said, saying Russia was willing to cooperate on some issues but there was unlikely ever to be a meeting of the minds on Ukraine or election interference.

“I don’t think it’s realistic to expect the new sanctions will shift Russia’s risk calculus in a fundamental fashion,” he added. “It’s to be expected that the Russians will keep probing and testing our resolve.”

(Reporting By Trevor Hunnicutt, Tim Ahmann, Doina Chiacu, Jeff Mason, Patricia Zengerle in Washington, by Arshad Mohammed in St. Paul, Minn. and by Andrew Osborn, Andrey Ostroukh and Tom Balmforth in Moscow; Writing by Arshad Mohammed, Editing by Angus MacSwan and Cynthia Osterman)

Russia calls U.S. ‘adversary,’ rejects NATO call to end Ukraine build-up

By Robin Emmott and Andrew Osborn

BRUSSELS/MOSCOW (Reuters) -The United States called on Russia to halt a military build-up on Ukraine’s border on Tuesday as Moscow, in words recalling the Cold War, said its “adversary” should keep U.S. warships well away from annexed Crimea.

Moscow seized Crimea from Ukraine in 2014 and fighting has escalated in recent weeks in eastern Ukraine, where government forces have battled Russian-backed separatists in a seven-year conflict that Kyiv says has killed 14,000 people.

Two U.S. warships are due to arrive in the Black Sea this week.

In Brussels for talks with NATO leaders and Ukraine’s foreign minister, U.S. Secretary of State Antony Blinken said Washington stood firmly behind Ukraine.

He also said he would discuss Kyiv’s ambitions to one day join NATO – although France and Germany have long worried that bringing the former Soviet republic into the Western alliance would antagonize Russia.

“The United States is our adversary and does everything it can to undermine Russia’s position on the world stage,” Deputy Foreign Minister Sergei Ryabkov was quoted as saying by Russian news agencies on Tuesday.

Ryabkov’s remarks suggest that the diplomatic niceties which the former Cold War enemies have generally sought to observe in recent decades is fraying, and that Russia would robustly push back against what it regards as unacceptable U.S. interference in its sphere of influence.

“We warn the United States that it will be better for them to stay far away from Crimea and our Black Sea coast. It will be for their own good,” Ryabkov said, calling the U.S. deployment a provocation designed to test Russian nerves.

CALL FOR DE-ESCALATION

Blinken met Ukrainian Foreign Minister Dmytro Kuleba after Group of Seven foreign ministers condemned what they said was the unexplained rise in Russian troop numbers.

Echoing NATO Secretary-General Jens Stoltenberg, who met Kuleba earlier, Blinken said Moscow was massing forces in its biggest build-up since 2014, since Moscow annexed Crimea. He called Russia’s actions “very provocative”.

“In recent weeks Russia has moved thousands of combat-ready troops to Ukraine’s borders, the largest massing of Russian troops since the illegal annexation of Crimea in 2014,” Stoltenberg said.

“Russia must end this military build-up in and around Ukraine, stop its provocations and de-escalate immediately,” Stoltenberg said at a news conference with Kuleba.

Russia has said it moves its forces around as it sees fit, including for defensive purposes. It has regularly accused NATO of destabilizing Europe with its troop reinforcements in the Baltics and Poland since the annexation of Crimea.

Russian Defense Minister Sergei Shoigu said on Tuesday Russia had moved two armies and three paratrooper units to near its western borders in the last three weeks, responding to what it called threatening military action by NATO.

Shoigu, speaking on state television, said NATO was deploying 40,000 troops near Russia’s borders, mainly in the Black Sea and the Baltic regions.

“In total, 40,000 troops and 15,000 weapons and pieces of military equipment are concentrated near our territory, including strategic aircraft,” Shoigu said.

The Western alliance denies any such plans.

SANCTIONS, MILITARY HELP

Kuleba said Kyiv wanted a diplomatic solution.

Kyiv and Moscow have traded blame over the worsening situation in the eastern Donbass region, where Ukrainian troops have battled Russian-backed separatist forces.

Kuleba appealed for further economic sanctions against Moscow and more military help to Kyiv.

“At the operational level, we need measures which will deter Russia and which will contain its aggressive intentions,” Kuleba said after the NATO-Ukraine Commission met at the alliance headquarters.

This could be direct support aimed at strengthening Ukraine’s defense capabilities.

Separately, two diplomats said Stoltenberg would chair a video conference with allied defense and foreign ministers on Wednesday. Blinken and U.S. Defense Secretary Lloyd Austin were expected to be present at NATO headquarters in Brussels to brief the other 29 allies on Ukraine, as well as on Afghanistan, the diplomats said.

Austin, on a visit to Berlin, said the United States would ramp up its forces in Germany in light of the friction with Moscow, abandoning former President Donald Trump’s plans to withdraw about round 12,000 of the 36,000 troops from there.

Kyiv has welcomed the show of Western support, but it falls short of Ukraine’s desire for full membership of NATO.

(Additional reporting by Alexander Marrow in Moscow, Editing by Mark Heinrich and Angus MacSwan)

India approves Russia’s Sputnik V COVID-19 vaccine

By Nigam Prusty and Krishna N. Das

NEW DELHI/MOSCOW (Reuters) -India has approved the use of Russian Sputnik V COVID-19 vaccine, the Russian Direct Investment Fund (RDIF) said on Monday, confirming earlier reports of its imminent endorsement.

India overtook Brazil to become the nation with the second highest number of infections worldwide after the United States, as it battles a second wave, having given about 105 million doses among a population of 1.4 billion.

The RDIF, which is responsible for marketing the vaccine abroad, said the Drug Controller General of India (DCGI) had approved the use of Sputnik V.

“India, the world’s 2nd most populous nation, became the 60th country to register #SputnikV after positive results of local Phase 3 clinical study. Sputnik V is now authorized in 60 countries with population of over 3 bln people,” a post on the Sputnik V official Twitter account said.

Earlier on Monday, two people familiar with the matter said the panel of the Central Drugs Standard Control Organization (CDSCO) had recommended the authorization.

The RDIF has signed deals to produce more than 750 million doses of Sputnik V in India with six domestic firms.

India has so far used two vaccines, one developed by AstraZeneca and Oxford University, and the other by domestic firm Bharat Biotech.

Sputnik V, developed by Moscow’s Gamaleya Institute, has proved 91.6% effective against COVID-19 and has been approved for use in more than 50 countries.

The Indian drugs regulator did not respond to a request for comment on the expert panel’s approval of the Russian vaccine.

Indian pharmaceutical firm Dr. Reddy’s, which is marketing the vaccine in India, said it was awaiting formal word from the authorities.

“Dr. Reddy’s and RDIF are working diligently with the Indian regulatory authorities to obtain the approval for Sputnik V. We are fully committed to playing our part in India’s fight against COVID,” the company said.

Shares of Dr. Reddy’s ended up 5% after the Economic Times newspaper first reported the news.

The firm has helped run a small domestic trial to test the vaccine’s safety and ability to generate an immune response.

(Additional reporting by Rama Venkat and Shivani Singh in Bengaluru, Polina Ivanova and Vladimir Soldatkin in Moscow; Writing by Sachin Ravikumar; Editing by William Maclean and Angus MacSwan)

Russia’s COVID-19 death toll as of February crosses 225,000 – stats service

MOSCOW (Reuters) – Russia has recorded over 225,000 deaths related to COVID-19 since the start of the pandemic in April, the Rosstat statistics service said on Friday, a figure that is more than double the death toll cited by the government coronavirus task force.

The statistics, which are reported on a monthly basis and with a lag, covering the period from April 2020 to February 2021, suggest that Russia has the third highest death toll in the world.

At 225,572, the total coronavirus-related death toll places Russia third after the United States, which has reported over 553,000 deaths, and Brazil, with over 325,000, according to data from Johns Hopkins University.

The figure is also more than double the widely-reported rolling death toll provided by the Russian government’s coronavirus task force on a daily basis.

That figure is currently at 99,633 deaths.

The authorities have said in the past that Rosstat’s figures are more complete, including data from autopsy reports not available for the daily tally.

Rosstat also provided monthly data, saying that 29,493 more people died in February this year than during the same month last year.

This marks an increase of 20.6% compared with February 2020, the last month to see no cases of coronavirus reported in Russia.

Of the total number of excess deaths in February, 24,369 were considered linked to the coronavirus, Rosstat said.

Russia recorded its first COVID-19 infection in early March 2020. The total number of cases since then recently crossed the 4.5 million mark.

(Reporting by Gleb Stolyarov; Writing by Polina Ivanova; Editing by Andrew Heavens and Marguerita Choy)

Italy arrests navy captain for spying, expels Russian diplomats

By Crispian Balmer and Angelo Amante

ROME (Reuters) – Italy expelled two Russian diplomats on Wednesday after police said they had caught an Italian navy captain passing secret documents to a Russian military official in return for money.

The Italian captain and the Russian embassy staff member were arrested in a car park in Rome and accused of “serious crimes tied to spying and state security” after their meeting on Tuesday night, Italian Carabinieri police said.

The suspects were not officially identified. A police source said the captain was called Walter Biot and had accepted 5,000 euros ($5,900) in return for the information.

It was not immediately possible to contact Biot, who was in custody, and the name of his lawyer was not disclosed.

Ansa news agency said NATO documents were among the files that the Italian had handed over, raising potential security worries for other members of the Western military alliance.

Italy immediately summoned the Russian ambassador Sergey Razov and expelled two Russian officials believed to be involved in what Foreign Minister Luigi Di Maio called an “extremely grave matter”.

Biot, 54, had the rank of a frigate captain but was working at the defense ministry department tasked with developing national security policy and managing part of the relations with Italy’s allies, a ministry source told Reuters.

Previously, he had worked at the ministry’s external relations unit. His name and picture appear in the book of contacts for Italy’s 2014 European Union presidency.

“The accusation of espionage against Italian and Russian officers shows that we must continue to work closely with Europe and our allies to constantly improve our means of protecting the safety and well-being of our citizens,” Di Maio said.

Russian news agencies, citing the Russian embassy in Italy, said the pair who were expelled worked in the military attaché’s office. Officials did not say whether the Russian army official who had met the captain was one of those ordered to leave.

Russia’s Interfax news agency quoted a Russian lawmaker as saying Moscow would reciprocate for the expulsions, standard practice in such cases.

However, statements from Moscow suggested Russia was keen to play down the incident. The Russian foreign ministry was quoted as saying that it regretted the expulsions, but that they did not threaten bilateral relations.

Earlier, the Kremlin said it did not have information about the circumstances of the case but hoped the two countries would maintain positive and constructive ties.

The incident was the latest in a series of spying accusations in recent months against Russians in European countries. Bulgaria expelled Russian officials on suspicion of spying in March, and the Netherlands did so in December.

Tuesday’s arrests were ordered by prosecutors following a long investigation carried out by the Italian intelligence with the support of the military, the police said.

($1 = 0.8524 euros)

U.S.’s Blinken warned Germany’s Maas about Nord Stream 2 sanctions

By Robin Emmott

BRUSSELS (Reuters) – U.S. Secretary of State Antony Blinken said on Wednesday he had told his German counterpart that sanctions against the Nord Stream 2 natural gas pipeline were a real possibility and there was “no ambiguity” in American opposition to its construction.

Berlin has so far been betting the new U.S. administration of President Joe Biden will take a pragmatic approach to the project to ship Russian gas to Europe because it is almost completed, officials and diplomats have told Reuters.

Reiterating Biden’s concerns about the pipeline from Russia to Germany, Blinken said he told German Foreign Minister Heiko Maas on Tuesday in a private meeting that companies involved in the project risked sanctions, particularly at a point when construction might finish.

“I made clear that firms engaged in pipeline construction risk U.S. sanctions. The pipeline divides Europe, it exposes Ukraine and central Europe to Russian manipulation and coercion, it goes against Europe’s own stated energy goals,” Blinken told a news conference.

The Kremlin says Nord Stream 2, a $11 billion venture led by Russian state energy company Gazprom, is a commercial project, but several U.S. administrations have opposed the project and Europe has vowed to reduce its reliance on Russian energy.

The United States and eastern European Union countries such as Poland say Nord Stream 2 is part of Russian economic and political measures to manipulate European countries and undermine transatlantic ties.

“What I said (to Maas) was that we will continue to monitor activity to complete or certify the pipeline and if that activity takes place, we will make a determination on the applicability of sanctions,” Blinken said.

He said it was important to carry the message directly to Maas, “just to make clear our position and to make sure there is no ambiguity.”

Reuters reported on Feb. 24 that 18 companies recently quit work on the pipeline to avoid sanctions.

Asked about a possible compromise in which Germany’s energy grid regulator could be empowered to stop gas flowing if Russia crossed a line, Blinken declined to comment.

Last month, a former German ambassador to the United States floated the idea of a compromise between Washington and Berlin that would have given the completed pipeline a use as political leverage.

Triggers for what the former envoy, Wolfgang Ischinger, called an “emergency brake” might include a flare-up in violence between Ukraine and Russia, which annexed Ukraine’s Crimea peninsula in 2014, or if Moscow sought to undermine Kyiv’s existing gas transit infrastructure.

(Reporting by Robin Emmott; Editing by Andrew Heavens and Edmund Blair)

Blinken warns entities involved in Nord Stream 2 pipeline to immediately quit

WASHINGTON (Reuters) – The U.S. State Department is tracking efforts to complete Russia’s Nord Stream 2 natural gas pipeline and evaluating information on entities that appear to be involved, U.S. Secretary of State Antony Blinken said on Thursday.

“Any entity involved in the Nord Stream 2 pipeline risks U.S. sanctions and should immediately abandon work on the pipeline,” Blinken said in a statement, adding the Biden administration is committed to complying with 2019 and 2020 legislation with regards to the pipeline and sanctions.

Shortly after Blinken’s statement, Senator Ted Cruz, a Republican and an opponent of the pipeline, lifted a hold he had placed on two of President Joe Biden’s nominees, including William Burns for director of the Central Intelligence Agency.

Nord Stream 2, led by Russia state energy company Gazprom with its Western partners, would double the capacity of an existing link to take Russian gas to Germany under the Baltic Sea. Biden believes the project is a “bad deal” for Ukraine and Central and Eastern European allies, Blinken said.

The pipeline would bypass Ukraine, likely depriving it of lucrative transit revenues and potentially undermine its efforts against Russian aggression.

Sanctions law that went into effect this year require the State Department to sanction companies that help Nord Stream 2 lay pipeline or provide insurance or certification of its construction. Nearly 20 companies, mostly insurance firms, recently quit the project after Washington warned them in recent months that they could be sanctioned.

Cruz said he would maintain a hold on Wendy Sherman, who Biden has nominated to be the No. 2 official at the State Department until the administration imposes full sanctions on ships and companies involved in the project. Sherman easily passed through the Senate Foreign Relations Committee last week and a hold would only likely delay a full Senate vote on her nomination.

(Reporting by Daphne Psaledakis and Timothy Gardner; Editing by Chris Reese)

Kremlin dismisses U.S. call to destroy chemical weapons, says it has none

MOSCOW (Reuters) – The Kremlin on Thursday dismissed as baseless and illogical U.S. calls for Russia to destroy its chemical weapons, saying that Moscow had destroyed them long ago in line with the Chemical Weapons Convention.

The U.S. State Department called on Moscow at a news briefing on Tuesday “to comply with its obligations under the Chemical Weapons Convention and to declare and destroy its chemical weapons program under international verification”.

Washington announced sanctions that day on senior Russian government officials and Russian entities in response to what U.S. officials said was Moscow’s attempt to kill Navalny with a nerve agent.

Kremlin spokesman Dmitry Peskov dismissed the State Department comment regarding chemical weapons.

“Such statements are devoid of logic and grounds and are nothing more than an attempt to unsuccessfully camouflage their policy to further contain Russia,” he said.

“Russia announced many years ago and verified the destruction of all the chemical weapons on its territory… Russia has no chemical weapons,” he told reporters on a call.

He said that the United States should also fulfil its obligations under the convention.

(Reporting by Dmitry Antonov in Moscow and Daphne Psaledakis in Washington; writing by Tom Balmforth; editing by Andrew Osborn and Hugh Lawson)

Oil jumps almost 4% as output slow to recover from Texas storms

By Laila Kearney

NEW YORK (Reuters) – Oil prices rose nearly 4% on Monday, boosted by the expected slow return of U.S. crude output after last week’s deep freeze in Texas shut in production.

U.S. producers shut anywhere from 2 million to 4 million barrels per day of oil output due to cold weather in Texas and other oil producing states, and the unusually cold conditions may have damaged installations that could keep output offline longer than expected.

Brent crude settled at $65.24 a barrel, rising $2.33, or 3.7%, while U.S. oil settled at $61.49 a barrel, jumping $2.25, or 3.8%. The U.S. benchmark crude contract for March delivery expires on Monday, and the more widely-traded April contract was up $2.44, or 4.1%, at 61.70 a barrel.

Shale oil producers in the region could take at least two weeks to fully restart normal output, sources said, as damage assessments and power disruptions slow their recovery.

“The significant loss of both crude and gasoline production suggests more upside and likelihood of new highs possibly within a one-week time frame,” said Jim Ritterbusch of consultancy Ritterbusch and Associates. But he cautioned that with limited refining capacity, price could under pressure if refiners take weeks to return to normal.

“The market is behaving as if the refiners are going to come online quicker than the headlines would lead you to believe,” said Yawger. Gasoline crackspreads, an indicator of refiners’ margins have dropped by 5%.

For the first time since November, U.S. drilling companies cut the number of oil rigs operating due to the cold and snow enveloping Texas, New Mexico and other energy-producing centers, signaling even tighter supplies ahead.

OPEC+ oil producers are set to meet on March 4, with sources saying the group is likely to ease curbs on supply after April given a recovery in prices, although any increase in output will likely be modest given lingering uncertainty over the pandemic.

“Saudi Arabia is eager to pursue yet higher prices in order to cover its social break-even expenses at around $80 a barrel while Russia is strongly focused on unwinding current cuts and getting back to normal production,” said SEB chief commodity analyst Bjarne Schieldrop.

(Additional reporting by Noah Browning and Aaron Sheldrick in London and Jessica Resnick-Ault in New York; Editing by Jason Neely and Emelia Sithole-Matarise, David Gregorio and Jane Merriman)

U.S. lawmakers ask Blinken for briefing on Nord Stream 2 natgas pipeline

By Timothy Gardner

WASHINGTON (Reuters) – Several U.S. Representatives on Wednesday raised pressure on the State Department to share plans on potential sanctions on the Nord Stream 2 natural gas pipeline Russia is racing to finish to take fuel to Europe.

“If completed, Nord Stream 2 would enable the Putin regime to further weaponize Russia’s energy resources to exert political pressure throughout Europe,” two Republicans including Michael McCaul, and two Democrats including Marcy Kaptur, wrote in a letter to Secretary of State Antony Blinken.

U.S. representatives and senators have said that the Biden administration has missed a deadline of Feb. 16 to issue Congress a report required by recently passed law on companies helping Russia’s state energy company Gazprom lay pipeline, insure vessels, and certify construction work.

Several companies, including Zurich Insurance Group have already left fearing sanctions and companies listed in report could drop out of the project, making completion difficult.

Nord Stream 2 is more than 90% complete but requires additional tricky work in deep waters of the Baltic Sea off Denmark. The pipeline would bypass Ukraine, through which Russia has sent gas to Europe for decades, depriving it of lucrative transit fees and potentially undermining its struggle against Russian aggression.

The representatives asked Blinken for a briefing with State Department officials to inform them of the status of the report and their assessment of possible sanctionable activity of vessels believed to be helping to finish the project.

President Joe Biden believes the $11 billion pipeline, which would double the existing capacity of the Nord Stream system to take gas undersea to Germany, is a “bad deal for Europe” according to his press secretary Jen Psaki.

State Department spokesman Ned Price told reporters last week that “sanctions are only one” of many tools and that the department will work closely with allies and partners to reinforce European energy security and to safeguard against “predatory behavior”. The department did not immediately respond to a request about the requested briefing.

The representatives said the briefing should include details on “any proposals offered to the Biden administration on the future of the pipeline that aim to persuade the administration to forego or weaken the mandatory sanctions,” apparently referring to any talks between Washington and Germany for a deal on the project.

Gazprom insists the project will be completed in 2021.

(Reporting by Timothy Gardner; Editing by Marguerita Choy)