U.S, EU to Hit Russian Investments With New Round of Sanctions

(Bloomberg) -- The U.S., European Union and Group of Seven are coordinating on a fresh round of sanctions on Russia, including a U.S. ban on investment in the country and an EU ban on coal imports, following the discovery of civilian murders and other atrocities in Ukrainian towns abandoned by retreating Russian forces.

The governments plan to increase penalties on Russian financial institutions and state-owned enterprises and will sanction unspecified Russian officials and their family members, said White House Press Secretary Jen Psaki.

“You can expect that they will target Russian government officials, their family members, Russian-owned financial institutions, also state-owned enterprises. It's a part of the continuation of our efforts to put consequences in place, hold Russian officials accountable,” Psaki told reporters Tuesday, adding that an announcement would come Wednesday.

The ruble weakened against the dollar on news of the new penalties.

The discovery of atrocities in Bucha, a town outside Kyiv where Russian forces pulled back in recent days under pressure from the Ukrainian military, has horrified the world anew as the Kremlin refocuses its offensive on securing the separatist Donbas and Luhansk regions. Ukrainian authorities, backed by U.S. and European governments, allege Russian forces murdered scores of civilians after they occupied the region, and they have released evidence, including photographs, of men whose wrists appear to have been bound before they were shot.

The Kremlin has denied responsibility, claiming without evidence that the Kyiv government staged the incidents.

Earlier Tuesday, European Commission President Ursula von der Leyen said the EU is proposing to ban most Russian ships and trucks from entering the bloc, as well as Russian coal imports. The EU will also push ahead with a debate on targeting Russian oil, she said -- a sensitive issue in Europe, where many countries are dependent on Russian fuel imports.

The EU also is discussing sanctioning Russian President Vladimir Putin's daughters, according to people familiar with the matter. Putin's daughters are part of a proposed list of sanctions targets that also includes political figures, tycoons and their family members, and several propagandists, the people said.

“These atrocities cannot and will not be left unanswered,” von der Leyen said.

She will travel to Kyiv this week to meet with Ukrainian President Volodymyr Zelenskiy, who continues to press the U.S. and Europe to supply his country with more weaponry to repel the invasion. NATO foreign ministers will meet in Brussels beginning Wednesday to discuss the crisis.

An American official said the U.S. would largely match EU actions on coal, Putin's daughters and some banks.

The EU sanctions proposed Tuesday include expanding export controls on technologies used in the Russian defense sector and other key industries, as well as restrictions on sales of equipment that can be used to liquefy natural gas. They also propose sanctioning more entities, including banks such as VTB Bank PJSC, that have been cut off from the SWIFT global payments messaging system but are not yet fully sanctioned.

The new penalties are intended to degrade key instruments of Russian state power and impose acute and immediate economic harm on Russia, a U.S. official with direct knowledge of the matter said, while holding accountable what the official called a “kleptocracy” that funds and supports the war.

The U.S., Europe, and allied nations in Asia have together already imposed sweeping sanctions on Russia, including on its central bank, in response to the Ukraine invasion. The U.S. official said Russia's economy is forecast to contract by 15% or more in 2022, and that inflation in the country has already soared above 15%.