Barack Obama matches tough EU sanctions on Russia but denies 'new Cold War'

President Barack Obama escalated US economic sanctions against Russia on Tuesday for its aggression against Ukraine but dismissed suggestions the growing chill in US-Russian relations marked the start of a new Cold War.

The United States and the European Union, in a carefully coordinated action, announced targeted new sanctions against Russian banks, energy and defense firms.

It was the West's most serious response yet to what it calls Russian instigation of and continuing support for the separatist uprising in the east and the shootdown of a Malaysian passenger jet on July 17 over eastern Ukraine.

^{Barack Obama signs a condolence book for the lives lost in the Malaysia Airlines flight MH17 crash, July 22, 2014}

Mr Obama, speaking at the White House, said the sanctions would have a "greater impact on the Russian economy than we've seen so far" in a drive to force Moscow to stop backing the separatists.

Until now, Europe had stopped short of tougher steps against Russia for fear of retaliation. Mr Obama said the new sanctions were a sign of "the waning patience Europe has with nice words from President [Vladimir] Putin that are not matched by actions."

Senior US officials voiced growing alarm about a Russian troop buildup on the border with eastern Ukraine and a continued supply of heavy weaponry to the separatists.

These are signs that, so far at least, the sanctions are not forcing Putin to back down despite the damage the sanctions are doing to the Russian economy.

"It's not a new Cold War," Mr Obama told reporters. "What it is, is a very specific issue related to Russia's unwillingness to recognise that Ukraine can chart its own path."

Still, Mr Obama did not seem inclined to provide lethal military aid to Ukraine, saying the Ukraine military was "better armed than the separatists" and the issue at hand was "how to prevent bloodshed in eastern Ukraine."

But Republican Senator Marco Rubio, while applauding the new sanctions, voiced hope that Obama, along with European allies, "will also significantly increase our assistance, including military support, to the Ukrainian government."

"Russia's continued aggression against Ukraine cannot go unanswered, and we need to do much more to make clear that we and the rest of the free world stand with the people of Ukraine at this important moment," Mr Rubio said in a statement.

The new targets for sanctions included VTB, the Bank of Moscow, the Russian Agriculture Bank and the United Shipbuilding Corp., the Treasury Department said.

The sanctions on the three banks prohibit US citizens or companies from dealing with debt carrying maturities longer than 90 days, or with new equity.

Five of the six largest state-owned banks in Russia are now under US sanctions.

Also targeted was United Shipbuilding Corp, a shipbuilding company based on St. Petersburg, in a move that freezes any assets it may hold in the United States and prohibits all US transactions with it.

The Commerce Department classified United Shipbuilding Corp as a defense technology company.

The new sanctions block the exports of specific goods and technologies to the Russian energy sector. The Commerce Department said it will deny any export, re-export or foreign transfer of items for use in Russia's energy sector that may be used for exploration or production of deepwater, Arctic offshore or shale projects that have the potential to produce oil.

Mr Obama also formally suspended credit that encourages exports to Russia and financing for economic development projects in Russia. He warned there would be additional costs to Russia should Moscow not back down.

"Obviously, we can't, in the end, make President Putin see more clearly," Mr Obama said. "Ultimately, that's something President Putin has to do on his own."

The Ukraine crisis has set back US relations with Russia to near-Cold War levels. Ties were further strained this week by US charges that Russia had violated the 1988 Cold War-era Intermediate-Range Nuclear Forces Treaty designed to eliminate ground-launched cruise missiles.

White House officials refused to divulge details of the allegations but demanded immediate talks with Moscow, whose response thus far has been "wholly unsatisfactory," said White House spokesman Josh Earnest.

The new US sanctions were announced during a visit to Washington by Ukraine Foreign Minister Pavlo Klimkin, who discussed prospects for resolving the conflict with Secretary of State John Kerry.

Both Mr Kerry and Mr Klimkin told reporters further pressure on Russia was essential to halt the flow of men, money and weapons into eastern Ukraine, but said the United States and Ukraine were examining possible political steps that could be taken inside Ukraine to address Russian concerns.

Ukraine's foreign minister also pledged that Kiev would not attack cities now controlled by pro-Russian separatists in its drive to re-establish control over its territory.

Pavlo Klimkin, in an interview with Reuters, supported the convening of a new international conference to end months of violence in eastern Ukraine and said he had discussed the idea with US Secretary of State John Kerry earlier in the day.

Speaking at Ukraine's Washington embassy, he said ultimately only a political solution would end the conflict, in which pro-Russian forces hold a large swathe of territory near the border, including the cities of Donetsk and Luhansk.

"We will not attack such cities," he said, because it would trigger human losses. The Ukrainian authorities, he said, would regain control of the cities "through the political process, not by attacking those cities".

Intense fighting on Tuesday between Ukrainian government forces and rebels killed dozens of civilians, soldiers and rebels as Kiev pressed on with its offensive to defeat the Moscow-backed revolt.

Shells hit the center of Donetsk, a city with a pre-war population of nearly a million. Residents fear they will be trapped between the fighting forces after Ukrainian troops pushed rebel units back toward the city.

Mr Klimkin, who had two days of talks in Washington, including a meeting with vice president Joe Biden, said he was returning to Kiev on Tuesday night "with a clear message that both the US and the EU simply speak with one voice supporting Ukraine."

He said it would have been "practically unimaginable" three or four months ago that the European Union would have agreed sectoral sanctions on its major trading partner Russia.

"The key point for me here is commitment to Ukraine, commitment to a united, democratic and European Ukraine."

Asked about political steps Ukraine could make, he said: "We are ready to give far more freedom but also far more responsibility [to the regions], political, economic power to communities. But it is up to Russia now to influence the terrorists." Kiev refers to the separatists as terrorists.

"It is up to Russia to take back the key leaders of the terrorists, who are all Russian citizens and have a clear connection with the Russian security services," he said.

Reporting by Reuters earlier this month established that the most prominent leaders of the separatist groups are Russian citizens.

Ukraine finalised an association agreement with the European Union last month, but Klimkin played down any suggestion that Kiev would eventually seek to join NATO, a move viewed as unacceptable by Russia. He said public opinion in Ukraine remained divided on the issue.

"Well, it's not on the agenda, and there is no political consensus and no consensus in Ukrainian society on that," he said.

He said Ukraine needed "intense interaction, intense cooperation" with the Western alliance. He added: "It's important in the sense of security and it's important in the sense of reform for our defense and security sector."