Ukraine Leader Says Putin Aims to Restore Soviet Union

By Daryna Krasnolutska  

Sept. 12 (Bloomberg) -- Alix Steel reports on additional European Union trade sanctions against “In The Loop.” (Source: Bloomberg)

Ukrainian Prime Minister Arseniy Yatsenyuk said Russian President Vladimir Putin is seeking to restore the Soviet Union, while Kiev’s central bank chief predicted her country’s battle-ravaged economy may shrink as much as 10 percent this year.
The U.S. yesterday expanded sanctions against Russia to include the country’s largest bank, OAO Sberbank (SBER), because of the fighting in eastern Ukraine. The EU added 15 companies, including Gazprom Neft, OAO Rosneft (ROSN) and Transneft, and 24 people to its own list of those affected by its restrictions.
Russia is locked in a standoff with its former Cold War adversaries over the armed conflict that has claimed more than 3,000 lives. Putin has denied supporting pro-Russian rebels in war-torn eastern Ukraine.
“Putin cannot cope with the idea that
Ukraine will be part of the European family,” Yatsenyuk said at a conference in Kiev today. “He wants to restore the Soviet Union.”
Putin’s goal is to “take the entire Ukraine” while Russia poses a threat to the global order, Yatsenyuk told the Yalta European Strategy Annual Meeting.
Central bank chief Valeriya Gontareva said the official support program from the International Monetary Fund envisages a 6.5 percent shrinkage in Ukraine’s gross domestic product this year. She said the “really drastic deterioration of economic conditions” will cause a revision showing an even larger economic contraction.

Photographer: Sasha Mordovets/Getty Images

Russian President Vladimir Putin.

GDP Contraction

“I suppose that it will be minus 9 percent, or even 10 percent,” she told reporters on the sidelines of the conference. The Washington-based IMF has approved a $17 billion bailout loan to help Ukraine stay afloat.
She predicted that trade with Russia will drop 35 percent this year.
“We are ready to listen to Russian concerns but we will not abdicate our principles and values,” European Commission President Jose Barroso said in Kiev yesterday. “We need to send a clear signal to Russia that its behavior has costs.”
President Barack Obama said the U.S. sanctions can be rolled back if Russia “fully implements its commitments” to seek peace in eastern Ukraine.

‘Heavy Price’

Putin, talking to reporters in the Tajik capital of Dushanbe, said Russia will hold off on retaliation for now and has no plans to “close itself off.”
The expanded U.S. sanctions also include Russian energy companies as well as five state-owned defense and technology companies.
“Russia’s economic and diplomatic isolation will continue to grow as long as its actions do not live up to its words,” U.S. Treasury Secretary Jacob J. Lew said in a statement yesterday. “Russia’s economy is already paying a heavy price for its unlawful behavior.”

Photographer: Andrey Rudakov/Bloomberg

The headquarters of OAO Sberbank in Moscow.

The Treasury Department imposed sanctions that prohibit transactions in, provision of financing for, or other dealings in new debt of greater than 90 days maturity issued by OAO Gazprom (OGZD) Neft and OAO Transneft. For banks, the debt financing restriction now covers maturities greater than 30 days, instead of 90 days previously.