Tag Archives: Rosneft

Mystery death of ex-KGB chief linked to MI6 spy’s dossier on Donald Trump

An ex-KGB chief suspected of helping the former MI6 spy Christopher Steele to compile his dossier on Donald Trump may have been murdered by the Kremlin and his death covered up. it has been claimed.

Oleg Erovinkin, a former general in the KGB and its successor the FSB, was found dead in the back of his car in Moscow on Boxing Day in mysterious circumstances.

Continue reading Mystery death of ex-KGB chief linked to MI6 spy’s dossier on Donald Trump

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Former Yukos shareholders awarded $50bn in damages against Russia

Former leading shareholders of the Yukos oil company have been awarded $50bn in damages against Russia, by far the biggest compensation award ever made in an arbitration case.

The panel in the Permanent Court of Arbitration in The Hague ruled that Russia had destroyed the oil company once headed by jailed oligarch Mikhail Khodorkovsky and expropriated its assets, for political reasons.

“Yukos was the object of a series of politically motivated attacks by the Russian authorities that eventually led to its destruction,” the three-person panel found.

It added that Moscow had aimed to “bankrupt Yukos, assign its assets to a state-controlled company and incarcerate [Mr Khodorkovsky] who gave signs of becoming a political competitor” to Russian president Vladimir Putin.

Former Yukos assets today form the bulk of state-controlled Rosneft, the world’s biggest quoted oil producer, now subject to US sanctions over Russia’s interference in Ukraine.

The ruling in favour of a handful of Russian shareholders and an employee pension fund is set to exacerbate tensions with the west as the US and EU weigh even tougher sanctions against Moscow over its continuing support for separatist rebels in eastern Ukraine.

It will make it difficult for Moscow to sustain its argument that the authorities’ pursuit of Yukos and Mr Khodorkovsky in the middle of the past decade were legitimate actions against fraud and tax evasion by what was then Russia’s biggest oil company.

Mr Khodorkovsky, who served 10 years in jail on fraud charges before being pardoned by Mr Putin last December, said he had learnt of the ruling “with a feeling of satisfaction”.

“From beginning to end, the Yukos case has been an instance of unabashed plundering of a successful company by a mafia with links to the state,” he said.

*RUSSIA OUT* (FILES) Picture taken 04 April 2003 shows Leonid Nevzlin, a key owner of Russia's largest oil company Yukos as he talks to journalists outside the General Office of Public Prosecutor in Moscow. A Moscow court issued an arrest warrant for of one of the top shareholders in the Yukos oil giant on suspicion of murder, the Interfax news agency reported, dealing a new blow to Russia's largest oil producer. Nevzlin, the second largest shareholder in Yukos, who is currently living in exile in Israel, stands accused of ordering the murder of a married couple in 2002, Interfax reported quoting officials at a Moscow district court. AFP PHOTO / VASSILY SHAPOSHNIKOV / KOMMERSANT (Photo credit should read VASSILY SHAPOSHNIKOV/AFP/Getty Images)
Leonid Nevzlin is the biggest beneficiary

Russian shares and the rouble weakened further on Monday morning, extending recent falls prompted by the expectation of tougher sanctions.

Though there is no formal right of appeal, Russia confirmed on Monday it would appeal against the Dutch courts ruling. If the court’s decision is upheld, and Moscow refuses to pay shareholders have the right to pursue Russian state property in other countries through the courts to satisfy the claim.

Rosneft said it did not believe any claim could be brought against the company in connection with the ruling, which it said would not adversely affect its business or assets.

The company was “neither a party nor a participant in these disputes nor a defendant in any published decision”, it said in a statement. Rosneft said it believed that all its acquisitions of former Yukos assets as well as all its other actions in relation to Yukos were legal.

The biggest single beneficiary is the now Israel-based Leonid Nevzlin, a former Yukos vice-president, who owns 70 per cent of GML, the former Yukos holding company that brought the case. Mr Khodorkovsky signed over his Yukos stake to Mr Nevzlin in 2005 during his trial for fraud and tax evasion.

Mr Khodorkovsky reiterated on Monday that he had no further claim over the stake.

Four other Russians – including Platon Lebedev, who was tried and sentenced alongside Mr Khodorkovsky and also pardoned in January – hold the remaining 30 per cent of GML. GML held 60 per cent of Yukos. An employee pension fund that is also party to the litigation owned 10 per cent.

Mikhail Khodorkovsky's co-defendant Platon Lebedev, left, reacts from a court room glass dock, in Moscow, Russia, Wednesday, Dec. 23, 2009. Russia's Supreme Court has ruled that a lower court's 2003 decision to arrest Mikhail Khodorkovsky's business partner Platon Lebedev was illegal on procedural grounds.The review was done in response to a ruling two years ago in the European Court of Human Rights that found Lebedev's rights had been violated during his arrest and pretrial detention. (AP Photo/Mikhail Metzel)
Platon Lebedev and three others hold 30 per cent of GML, the former Yukos holding company

The ruling does not benefit the 55,000 former minority shareholders of Yukos, though it could set a precedent that would help them bring further arbitration cases against Russia.

The European Court of Human Rights is expected on Thursday to issue a damages ruling in a separate case brought by 2004 by Yukos’s then management on behalf of all shareholders.

Mr Khodorkovsky and associates acquired Yukos for a knockdown price in a controversial round of post-communist privatisations in 1995 and built it into Russia’s biggest oil producer. It was the first to embrace western technology and corporate governance standards.

But the oligarch was arrested on corruption charges in 2003 after he became a political threat to Mr Putin. Yukos was pursued by multibillion-dollar back tax claims and penalties and eventually bankrupted.

The three-person arbitration panel backed the claimants’ expropriation claim, brought under the Energy Charter Treaty, which sets rules for cross-border energy co-operation. Russia signed the treaty in 1994 but never ratified it, and withdrew in 2009.

The panel did conclude that “certain facets of [Yukos’s] tax optimisation scheme” had left the main shareholders “vulnerable” to actions by the Russian authorities. It reduced its total putative damages assessment of $67bn by 25 per cent to reflect that.

“This is a mega-litigation”, said Emmanuel Gaillard, head of Shearman & Sterling’s International Arbitration Group, which represented the claimants. He added that he expected Russia ultimately to pay the damages.

“Russia cares about being a powerful international player, and to be an international player it has to respect the rules of the game,” he said.

Analysts said that with international reserves at $470bn, $175bn of which are government reserves, the Russian government had enough cash in its sovereign funds to pay the damages.

“However, this is a significant amount of money – it is equal to around one-ninth of the annual federal budget and 2.5 per cent of GDP. I am sure the government will do its best to resist paying these damages,” said Vladimir Tikhomirov, chief economist at BCS Prime, the Moscow brokerage.

Europe Takes Over Putin TV

Europe Is Seizing Russian State Assets

Assets from state media seized after Kremlin refuses to pay $50 billion in civil damages.

In what is arguably the most significant move against Russian wealth and influence in Europe, Belgium, France and Austria today all froze various assets belonging Russian state-owned enterprises in connection to civil case the Kremlin lost a year ago and for which it has refused to ante up damages.

The winner of that case, Yukos, once Russia’s largest oil company, was awarded $50 billion in July 2014 after an international arbitration court found that it had had its own assets expropriated by the Russian government over a decade ago.

The freeze affects the state wire service TASS, the state media holding company Rossiya Segodnya, and other state media abroad.

“We are working on this issue within the framework of a common government policy,” TASS said in a press statement, refusing to provide more details.

Gazeta.ru learned that court notices about the freeze were received at TASS editorial bureaus in Belgium and France.

Margarita Simonyan, editor-in-chief of Rossiya Segodyna, which publishesRT.com, told Gazeta.ru the situation with her company was similar. “The arrest was place on our account in France,” she said.

“As for the other countries, after the situation in France, the company was concerned to take measures not to allow the halt of our radio and online broadcasting work there.”

Simonyan, however, disputed the account of the freeze given by Russian Forbes, which initially claimed that properties were frozen. She confirmed to Forbes.ruwhat Gazeta.ru also reported, that it was RT’s bank account in France that was frozen, not any property.

Simonyan went a long Twitter tirade today against the magazine, demanding it issue a correction or retraction to its claim. In a press statement, she said that “neither RT nor its subsidiaries own buildings in France…

Furthermore, RT is an autonomous non-commercial organization which is not a Russian state institution. they have not made any claims to RT in this case.”

But Forbes.ru has not changed its story, although it currently contains some quotes from Simonyan, which apparently were added after the piece first broke. She claimed that Russia state media had taken precautions earlier to prevent just such blocking of their broadcasting abroad, although she declined to reveal the details.

Meanwhile, Tim Osborne, the head of Group Menatep Ltd, the holding company for Yukos, confirmed the asset seizures to Forbes:

“According to my information, it’s a question of seizure of a building in which the television channel RT (the former Russia Today) is located in Paris, said Osborne. There are also several buildings in Paris which are the property of the Russian Federation, and that is one of them, he explained. Furthermore, in the event that the television channel does not pay damages to the government, it will also be frozen. Regarding the salary of employees, Osborne explained that the freeze would not affect them since they are employees and not property of the state.”

“[I]n the event that the television channel does not pay damages to the government, it will also be frozen.”

Meanwhile, Andrei Kostin, head of state-controlled VTB Bank, said that a week ago, accounts of Russia companies and diplomatic missions were frozen at his bank’s French subsidiary. The accounts of the missions were then unfrozen in keeping with the Vienna Convention but the rest of the properties were seized.

European authorities have cast a wide net with their determination to freeze Russian assets, and some are arguing that it may be too wide.

Aleksandr Mineyev, Novaya Gazeta‘s correspondent in Brussels, said a process-server came to his door this morning and served him notice that he must report any Russian Federation state property or funds in his possession. He explained that Novaya Gazeta, an independent non-state paper, doesn’t have any Russian state assets.

Attached to the notice was a list of all the other persons served, including Aeroflot, the archbishop of the Russian Orthodox Church in Brussels and the Belgian Orthodox church and other non-governmental media. Diplomatic missions were excluded. The document stated that the court notices were from a Belgian arbitration court regarding the Yukos judgment.

Since the Russian government had not responded to the judgement in more than a year, authorities were freezing Russian assets, the notice said.

Mineyev said many in the list were not Russian organizations, but banks or other institutions such as insurance companies or Eurocontrol, which manages air traffic control in Europe, that might have Russian accounts.

The Belgian court cited a decision from the European Court of Human Rights which demanded that the Russian Federation submit a plan to pay all the sums indicated in its decision and to make the payments no later than June 15, 2015.

Yukos was founded by former political prisoner and businessman Mikhail Khodorkovsky who is today a major critic of Vladimir Putin. Khodorkovsky was arrested in 2003 and convicted of theft and tax evasion in 2005. He ultimately served 10 years in jail before being pardoned by Putin over a year ago.

And while he was not a plaintiff or beneficiary in the arbitration case, he nonetheless welcomed the asset freezes today in a tweet reading, “Happy over the arrests of property of our bureaucracy in Belgium. I expect that the funds recovered will go to projects useful for Russian society.”

Yukos, once worth $40 billion, was broken up and nationalized, with most assets handed to Rosneft, headed by Putin crony Igor Sechin. Rosneft has been placed under E.U. and U.S. sanctions for its role in the Ukrainian war, and Sechin has been additionally sanctioned by the U.S.

(Note: This article is adapted from two posts published at The Interpreter, an online translation and analysis journal sponsored by the Institute of Modern Russia, which Mikhail Khodorkovsky’s son heads.)

Britain may broadcast Putin’s financial secrets to Russia

putin
Russian President Vladimir Putin attends a meeting with members of the government at the Kremlin in Moscow, March 4, 2015.

Britain may broadcast the financial secrets of Russia’s ruling elite as part of the information war against the Putin regime, the Foreign Secretary has indicated.

Philip Hammond said he was interested by the idea of publicising the wealth of the Russian president’s inner circle in order to embarrass them in front of their people, as part of the response to the ongoing incursion into eastern Ukraine.

The Foreign Secretary warned that Putin is rapidly modernising his armed forces, and warned Russia’s bid to destabilise eastern Europe poses “the greatest single threat” to British national security.

Mr Hammond said that Britain must now “accept” that efforts to offer Russia its “rightful place” in the post-Cold War order had been “rebuffed”.

View image on Twitter

It marks a change in tone from the British government: David Cameron has repeated said that the door is open to Russia to normalise relations if it ended the assault on Ukraine.

He warned that Russia’s rapid rearmament is a “significant cause for concern,” and confirmed that British intelligence agencies are now recruiting Russian speakers.

British diplomats in Russia and Ukraine have regularly released photographs of Russian-supplied heavy weaponry as part of an information war, highlighting the Kremlin’s role in the conflict.

View image on Twitter

The EU has applied asset freezes and visa bans to 151 Russian and Ukrainian people and 37 companies regarded as complicit in the seizure of Crimea and the invasion of east Ukraine.

The wealth of Putin’s court is opaque, but undoubtedly runs into tens of billions of dollars held in offshore accounts and property in London and New York. Many of his closest associates made their fortunes during the chaotic mass privatisations of state assets during the 1990s. Official statements of Putin’s wealth – a £96,000 a year salary, a flat and three cars – are frequently met with derision.

Asked if there was a case for the “interesting” financial arrangements of members of Putin’s inner circle to be published by the British government, Mr Hammond replied: “There might be.”

View image on Twitter

“When we talk about having further steps that we can take, increasing the pressure on Russia, one the headings that we regularly review is strategic communication: how can we message the Russian people and to people that Russia is seeking to influence about what is really going on?

“It is an interesting thought and I will make sure the Strat Comms people are thinking precisely about that.”

Mr Cameron has suggested the BBC budget should be increased to help its Russian and Ukrainian language services counter Russian television propaganda.

Mr Hammond said the “generous” attempts to integrate Russia into the post-Cold War world had failed.

Putin feels the collapse of the USSR was a humiliation, and accuses the West of seeking to neuter Russia and encroach upon its borders – provoking the incursion into Ukraine.

Mr Hammond told the Royal United Services Institute: “In the case of Russia, for two decades since the end of the Cold War, we and our allies sought to draw our old adversary into the rules-based international system. We worked in a spirit of openness, generosity and partnership, to help Russia take its rightful place, as we saw it, as a major power contributing to global stability and order. We now have to accept that those efforts have been rebuffed.

“We are now faced with a Russian leader bent not on joining the international rules-based system which which keeps the peace between nations, but on subverting it,” he said.

“President Putin’s actions – illegally annexing Crimea and now using Russian troops to destabilise eastern Ukraine – fundamentally undermine the security of sovereign nations of Eastern Europe.”

“The rapid pace with which Russia is seeking to modernise her military forces and weapons combined with the increasingly aggressive stance of the Russian military including Russian aircraft around the sovereign airspace of Nato states are all significant causes of concern.

“So we are in familiar territory for anyone over the age of about 50, with Russia’s behaviour a stark reminder that it has the potential to pose the single greatest threat to our security.”

“Continuing to gather intelligence on their capabilities and intentions will remain a vital part of our intelligence effort for the foreseeable future. It is no coincidence that all the agencies are recruiting Russian speakers again.”

Putin’s money men

The wealth of Putin’s inner circle runs to tens of billions of pounds.

Vladimir Yakunin

Vladimir Yakunin

Head of Russian Railways, the country’s biggest employer, since 2005. He has been part of Putin’s St Petersburg circle since the 1990s, and is dogged by claims from opposition activists over his wealth. He accompanies Mr Putin on overseas visit, and was in charge of construction during the Sochi Winter Olympics. He has been hit with US sanctions. His network is unknown but his official salary is $15 million.

Gennady Timchenko

Gennady Timchenko

Founder of Gunvor, the Swiss-based oil trader, he sold his stake just before being hit by US sanctions. His net worth is reckoned to be $14.5 billion, according to Forbes. Putin is said by the US to have “investments in Gunvor and may have access to Gunvor funds”. The company strongly denies that claim, and has not been subject to foreign sanctions.

Yuri Kovalchuk

Yuri Kovalchuk

Once dubbed one of Putin’s “cashiers”. He is the largest shareholder of Bank Rossiya, called by the US the “personal bank for senior officials” of Russia. He is a member of the Ozero Dacha, a community of lakeside homes of Putin and his allies. His wealth is estimated to be $1.4 billion. He is hit by US and EU sanctions.

Arkady and Boris Rotenburg

Arkady is Putin’s old judo partner, and is subject to EU sanctions.. The brothers have interests in pipelines, road construction and banking, and are presidents of Dinamo Moscow hockey and football clubs respectively. They received billions of dollars of contracts for the Sochi games. Their personal wealth is said to be $2.5 billion.

Igor Sechin
Igor Sechin

President of Rosneft, the state oil company, and the former deputy prime minister. His salary was $50 million last year. He is one of the most powerful figures in the administration, and is said to “economic interests” with Putin.

Infowars

Tweets issued by the British embassy in Ukraine highlight how heavy weaponry used by separatists in the east of the country are Russian-supplied – and have highlighted the impact of sanctions on the Russian economy.

West considers penalty against Putin

From left: Brazil's President Dilma Rousseff, FIFA President Sepp Blatter and Russia's President Vladimir Putin at the official hand over ceremony for the 2018 World Cup

Could boycotting the 2018 World Cup be more effective at persuading Russian president Vladimir Putin than an increasingly long list of economic sanctions? For the first time since the Ukraine crisis began nine months ago, EU diplomats are actively considering the idea.

According to an options paper circulated in European capitals on Tuesday, the EU is considering whether to recommend suspending Russia from “high-profile international cultural, economic or sporting events” including Formula One races, European football competitions and the next World Cup, awarded to Russia in 2010.

Diplomats said a boycott of the World Cup would not be among the new sanctions to be agreed by the end of the week. But during a meeting of EU ambassadors on Monday, several delegations – particularly Estonia and Lithuania – showed great enthusiasm for the idea, and the options paper suggests once new sanctions are decided, “thought could also be given to taking co-ordinated action” on a sporting ban.

“This kind of discussion is timely, as we do not see good will from Russian side,” said a Latvian diplomat, who said the debate so far had been “conceptual”.

After the 1979 Soviet invasion of Afghanistan, the US led a boycott of the 1980 Olympic Games in Moscow, setting a precedent for using international sporting events as a proxy for geopolitical brinkmanship. Four years later, the Soviets retaliated, leading an Eastern bloc boycott of the 1984 Games in Los Angeles.

“Boycotting a prestigious international sports event has a distinctively Cold War feel to it,” said Mujtaba Rahman, head of European analysis at the Eurasia Group risk consultancy. “This will sting the Russians far more than anything the EU will do on finance this round.”

The recommended economic sanctions, to be debated by the European Commission on Wednesday before being sent to national capitals for approval by the end of the week, will broaden EU measures approved in July.

Most significantly, they would expand the ban on Russian companies accessing European capital markets, currently limited to Russia’s large state-owned banks, to the country’s defence and government-owned energy groups.

Under the proposal, all Russian defence and state-controlled oil companies would be barred from raising funds in European markets. Diplomats said the ban would hit Rosneft, Russia’s largest oil producer which is 20 per cent owned by BP, and Gazprom Neft, the oil arm of Russian gas giant Gazprom.

Russia would also be denied use of European oil services companies for conducting deep-sea drilling, Arctic exploration and shale oil production. Companies that could be affected include France’s Technip, Italy’s Saipem and Britain’s Petrofac. The sanctions would not touch the sensitive gas sector, however.

Russia’s largest banks are already covered by a similar financing ban, though the new proposals would prevent Russian state-owned lenders from using any financial instrument with maturity of longer than 30 days, less than the 90 days stipulated in July’s sanctions. Russia’s targeted banks would also be banned from raising funds through European syndicated loans.

The EU would also extend the blacklist of banned “dual-use” technologies – products that have both civilian and military purposes – to include more general machinery and computers that the military could use.

Football’s world governing body Fifa has already come out against moving the 2018 World Cup, arguing shortly after the shooting down of Malaysia Airlines flight MH17 that “boycotting sport events . . . are not the most effective ways to solve problems”.

 

The Russian Currency Collapse Just Wiped Out Nearly $3 Billion Of Rosneft’s Profits

Igor Sechin

Rosneft, Russia’s biggest oil producer, reported a net profit of just 1 billion rubles ($23 million) in the third quarter, down from 172 billion rubles ($3 billion) in the previous quarter.

The company, which is headed by close Putin ally Igor Sechin, has been hammered by a combination of international sanctions and a huge rise in the value of its foreign currency debt. Its net debt position reached a staggering 1.77 trillion rubles.

As a testament to its recent struggles, Rosneft had earlier seen a request for 2 trillion rubles from the state National Wealth Fund to help it weather current market turmoil turned down. Last week Russia’s Finance Minister Anton Siluanov said the scale of the request was impossible to meet without putting huge strain on the country’s reserves.

He said:

The overall volume of the Fund is a little more than 3 trillion rubles and there is not enough unused, inactive capital to meet the request. Therefore, undoubtedly, the offer [from the government] will differ significantly from the request.

Rosneft’s woes show just how damaging sharp falls in the ruble can be for the Russia’s vital commodities sector. The central bank now faces the difficult decision of whether to raise rates in an effort to stem capital outflows at the risk of damaging the country’s fragile economy.

The bank’s board is due to meet Friday, when it will attempt to balance the demands of an economy that is seeing 8% inflation and flagging growth. The board’s decision could mean the difference between the country falling into a recession or avoiding an even worse slump.

U.S. Says Russian Artillery Firing Across Border Into Ukraine

Washington Raises Pressure on Moscow, More Closely Examines Russian Activities in Ukraine

WASHINGTON—U.S. defense and diplomatic officials said Thursday that Russia is firing artillery across its border at Ukrainian military positions, an assertion that Moscow now is directly engaging in hostilities against Ukrainian government forces.

The accusation represents a harsh new U.S. stance against the Kremlin in the aftermath of the crash of Malaysia Airlines Flight 17, downed last Thursday by an antiaircraft missile.

 

The U.S. has been accusing Russian President Vladimir Putin of supporting armed pro-Russia separatists in eastern Ukraine, but the newest allegation suggests the conflict is coming to more closely resemble a war between the two countries

The latest finding, based on U.S. intelligence that officials would not detail, comes as European Union diplomats appeared Thursday to be overcoming some of the political divides that have tempered their response to the Ukrainian crisis, moving to place sanctions on Russian access to European capital markets, energy technology and sensitive military goods.

Also Thursday, the Organization for Security and Cooperation in Europe reported that “shrapnel-like, almost machine-gun-like holes” were found in two separate pieces of Flight 17’s fuselage, evidence consistent with the use of a sophisticated antiaircraft missile.

Reports of Russian artillery fire into Ukraine also were picked up by social media, said a U.S. official, but were confirmed with a “high level of confidence” by U.S. intelligence agencies. U.S. officials said the information on the Russian attacks was declassified Thursday.

“If true, this represents a serious escalation on Putin’s part,” said Michael McFaul, the former U.S. ambassador to Russia and White House adviser. “Instead of using last week’s tragedy as a pretext for ending this war, he seems to be doing the opposite, doubling down.”

A spokesman for the Russian embassy in Washington disputed the allegations. “Unfortunately, it is not for the first time that we hear unproven allegations,” the spokesman said. “In fact, it is the Russian territory that is being shelled from the Ukraine.”

The spokesman said Russian territory came under fire from Ukraine nine times in June and July, killing one Russian citizen.

State Department spokeswoman Marie Harf said the U.S. has evidence that Russia intends to deliver powerful rocket systems to pro-Russia rebels in Ukraine, but declined to provide details about the systems or about how that conclusion. was reached.

“We have new evidence that the Russians intend to deliver heavier and more powerful multiple rocket launchers to the separatist forces in Ukraine and have evidence that Russia is firing artillery from within Russia to attack Ukrainian military positions,” Ms. Harf told reporters at a news briefing.

Moscow denounced as fantasy previous charges by Kiev that missiles fired from Russia brought down two Ukrainian military planes on Wednesday.

Defense officials said the U.S. still hasn’t determined what brought down the two Ukrainian fighter planes. Rebels have claimed to have downed the planes with portable, shoulder-fired missiles, known as Manpads, and U.S. officials have said that is possible.

Russia has been firing across the border into Ukraine for “several days,” according to a senior U.S. defense official. The U.S. has confirmed these strikes only within the last two days.

“This is clearly a military escalation,” said Col. Steve Warren, a Pentagon spokesman.

The senior defense official said the U.S. doesn’t have complete battle damage assessments, but said the strikes for the most part appear intended to disrupt Ukrainian operations.

The official said the attacks show Russia’s intent to provide broader support to the separatists. “It demonstrates direct Russian involvement in Ukraine,” said the official. “It does up the ante.”

Another defense official said the artillery fire began “about the same time” the Malaysian airliner was shot down. So far, the fire has all come from tube artillery.

The U.S. doesn’t have conclusive intelligence that Russia has fired antiaircraft rockets into Ukraine, although officials earlier this week said there was evidence a Ukrainian cargo plane was downed July 14 by a missile fired from Russia.

Even if used mainly to stymie Ukrainian forces, U.S. officials remain worried that a sustained artillery barrage by Russian forces eventually could counter recent Ukrainian advances.

“Historically, artillery has been the biggest killer on the battlefield,” said the second defense official. “If used effectively, artillery can have a noticeable impact.”

U.S. officials say the escalation by Russia is a risk and represents a sign that Moscow is worried about the Ukrainian government’s counteroffensive against the separatists. Moscow, U.S. officials say, is worried that if the separatists don’t turn back the Ukrainian government’s advances, the separatist cause could be severely damaged or even lost.

The strikes, officials said, also are a sign that Mr. Putin isn’t going to back down in his support for the separatists, even in the wake of the shootdown of the Malaysian airliner.

Russia has between 15,000 and 18,000 troops on the Ukrainian border, but officials said there hasn’t been a significant buildup of firepower since the downing of Flight 17.Russian motorized infantry units all have artillery and rocket launchers assigned to them.

Last week, the U.S. imposed a new type of sanctions targeting the financing activities of some of Russia’s biggest companies, including Kremlin-controlled oil giant OAO Rosneft. ROSN.MZ +0.75%

Canada also boosted its sanctions against Moscow, acting Thursday to target several of the same Russian companies named by the U.S. a week ago, including the country’s second-biggest natural-gas producer and Kalashnikov, the iconic maker of automatic weapons.

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