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New U.S. sanctions against Russia likely after Geneva meeting

U.S. President Barack Obama (R) and Russia's President Vladimir Putin shake hands during arrivals for the G20 summit at the Konstantin Palac
U.S. President Barack Obama (R) and Russia's President Vladimir Putin shake hands during arrivals for the G20 summit at the Konstantin Palac

By Jeff Mason

WASHINGTON (Reuters) - New U.S. sanctions punishing Russia for its actions in Ukraine are likely to be announced as early as Friday if, as expected, a meeting between top foreign ministers in Geneva fails to produce significant progress.

U.S. officials said they did not foresee a big breakthrough at the talks on Thursday between Russian, Ukrainian, U.S. and EU foreign ministers about the crisis, which was triggered by the February overthrow of Ukraine's pro-Moscow president, Viktor Yanukovich, after weeks of protests.

The officials, speaking to reporters on Wednesday on condition of anonymity, said it was reasonable to assume more sanctions would follow that meeting.

The United States and the European Union so far have imposed only targeted sanctions against a list of Russian and Ukrainian individuals and firms in retaliation for Moscow's seizure and quick annexation of Crimea from Ukraine, completed last month.

The White House and the State Department have made clear that new sanctions were in the works, but officials were eager to show the United States pursuing a diplomatic path, which they hoped President Vladimir Putin of Russia would follow.

"We are actively preparing new sanctions," White House spokesman Jay Carney told reporters traveling with President Barack Obama on Wednesday for an event in Pennsylvania.

"We are also looking at tomorrow's meeting for an indication that Russia will, or intends to, pursue a path of de-escalation rather than escalation," he said.

Russia has amassed thousands of troops near the Ukrainian border and tensions have continued to build in the eastern part of the country, where pro-Russia militiamen have seized control of office buildings despite government threats of a crackdown.

The U.S. officials said they believed Putin wanted to have the option of invading Ukraine, a move that would trigger broad sectoral sanctions that would sting the Russian and, potentially, European economies.

OBAMA WARNS OF FURTHER COSTS

For now, the next round of U.S. sanctions against Russia is likely to target influential people or companies in sectors such as energy, engineering and financial services, as spelled out in an executive order Obama issued last month but is not expected to hit industrial sectors as a whole, diplomats said.

The U.S. government has been in touch with businesses about sanctions but has not specifically asked them not to invest in Russia, officials said. Capital flight from Russia and shaky markets there were a sign that investors were fleeing on their own, the officials said.

Putin and Obama had a tense call on Monday about the issue and the U.S. president warned of further costs to come.

Describing the call on Wednesday, the officials said Putin was unhappy about the sanctions. They said his request for the call was a sign that the Russian leader wanted to show he still had the ability to engage at the international level despite Moscow's increasing political isolation.

The United States believes Putin envisions a federalist Ukraine that would allow Moscow to veto its decisions, they said. Putin mentioned federalism in the call with Obama, one official noted. Obama, meanwhile, underlined the U.S. position that Ukraine should decide its own future.

The White House, as it has done for days, made a point on Wednesday of praising Ukraine for its response to the crisis.

"The Ukrainian government has approached this serious challenge in a measured and responsible way," Carney said.

"It is certainly appropriate for Ukraine to take action to restore law and order, but we believe that they should continue to do so in a measured and responsible way."

(additional reporting by Steve Holland on Air Force One and Mark Felsenthal and Arshad Mohammed in Washington; Editing by Leslie Adler)

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