Tough new EU sanctions took effect against Russia on Friday in a coordinated action with the United States, triggering a furious response from Moscow that the West was trying to derail the peace push in Ukraine.
The Western moves come despite a fragile ceasefire signed by Kiev and pro-Russian separatists a week ago that appears to have largely halted the deadly fighting across eastern Ukraine.
The EU’s latest restrictions target major Russian energy, finance and defence companies including oil giant Rosneft and weapons manufacturer Kalashnikov.
The 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 annexed Crimea.
US President Barack Obama also announced that Washington will intensify punitive measures to further isolate the Kremlin over its “illegal actions” that have threatened to tear apart Ukraine and set off the worst East-West crisis since the Cold War.
The Russian ruble sank to a new historic low against the dollar as the sanctions hit.
“We believe that adopting such decisions at the very moment when the peace process in Ukraine is gaining strength… this means choosing a path towards undermining the peace process,” Russian Foreign Minister Sergei Lavrov said.
In Kiev however, President Petro Poroshenko demonstrated his determination to remove his country further from Russia’s orbit by boosting ties with Brussels and Washington.
The latest punitive measures against Moscow reflect deep suspicions over its territorial ambitions in the former Soviet state after the seizure of Crimea in March in the chaotic weeks that followed the ousting of Ukraine’s pro-Kremlin leader.
Both Kiev and NATO say around 1,000 Russian troops are still in Ukraine after allegedly crossing the border in what has been described as an invasion by stealth to bolster the separatist revolt.
Ukrainian authorities say the insurgents have extended their control over territory on the eastern border to the Sea of Azov after a lightning surge reportedly backed by elite Russian forces just days before the truce deal.
EU nations finally approved the measures after deep divisions about whether they should still be implemented since the ceasefire was declared, with some member states worried about the effect of on their fragile economies of any reprisals by Moscow.
However, European Council President Herman Van Rompuy said the 28-member bloc could “amend, suspend or repeal” them after reviewing the truce at the end of September.
– ‘Special status’ –
Moscow has threatened to retaliate by barring EU airlines from its airspace, and has drawn up a list targeting imports of consumer goods and second-hand cars from the West.
Poroshenko announced meanwhile that 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.
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.
Poroshenko also told an international conference in Kiev he hoped to secure a “special status” for Ukraine with the US during a visit to Washington Thursday when he meets President Barack Obama.
He said Kiev would “fight for the minds” to recover Crimea and restore peace to the east after five months of fighting that has claimed the lives of more than 2,700 people.
Last Friday’s truce — the first backed by both Kiev and Moscow — has so far held, despite accusations of violations on both sides.
“It’s Ukrainian people killing Ukrainian people,” said one old man in the eastern town of Komsomolske.
“In World War II we could tell who the enemy was but now I don’t know who is going to kill me. Without compromise, no resolution is possible.”
People in the war-ravaged east are still struggling without basic supplies , and the World Food Programme announced Friday it had begun distributing aid to stricken regions.
– ‘Frozen conflict’ –
Ukrainian authorities have acknowledged that in the days before the ceasefire the rebels made a dramatic push south from their stronghold in Donetsk, giving them control of the border to the Sea of Azov and potentially a direct land route to Crimea.
The sudden shift in fortunes, reversing a series of Ukrainian military successes, prompted suggestions that Kiev had negotiated the peace deal from a position of weakness.
Poroshenko has announced he is planning to submit a bill parliament granting parts of the east temporary self-rule while keeping Ukraine united.
However leaders of the self-declared “people’s republics” in the mainly Russian-speaking Donetsk and Lugansk regions say they have no intention of abandoning the fight for full independence.
And the Eurasia Group think tank said political tensions on both sides could scupper any longer-term peace deal.
“A resumption of hostilities is likely in the short term, which will lead to a non-negotiated ‘frozen conflict’ over the next six months,” it warned.