By William Mauldin and Laurence Norman
U.S. officials are working closely with the European Union to
keep their Russia sanctions programs aligned in timing and
severity.
On Saturday, European Union leaders agreed to draw up options
within a week for possible new sanctions against Russia, with
action to follow quickly unless Moscow takes clear steps to scale
back its intervention in Ukraine. Reports have emerged that
hundreds of Russian soldiers have entered Ukraine.
European Council President Herman Van Rompuy said the bloc
wouldn't set out specific criteria for triggering fresh sanctions
but said there was "determination" to ensure Russia paid an
appropriate price for heightening tensions.
"I can assure you that everyone is fully aware that we have to
act quickly given the escalation on the ground," he said at the end
of a summit of European leaders.
A State Department official said the U.S. is discussing the next
steps with European and other allies but declined to preview
possible sanctions publicly. Late Saturday, a spokeswoman for the
White House National Security Council said it is discussing
sanctions and other means to "hold Russia accountable for its
illegal actions in Ukraine."
The U.S. sanctions are designed to put pressure on people close
to the Kremlin's decision makers, and President Barack Obama on
Thursday said U.S. intelligence shows the sanctions are having an
effect. Other officials have pointed to weakness in the ruble and
Russian financial markets, which are in part a reflection of the
risk of severe sanctions down the road.
Washington is proceeding carefully with the sanctions in part
because of the size of Russia's economy and its large trading
footprint in Europe. The Obama administration sees plenty of scope
to broaden sanctions against Russia--currently Iran and Syria have
a far bigger sanctions burden, for example--although if the
Ukrainian army suffers further setbacks, future measures may come
too late to affect Moscow's battlefield strategy.
Officials involved in the sanctions work are expected to meet
with the U.S. Chamber of Commerce next week, according to a person
familiar with the plans. Business leaders are concerned more
serious sanctions targeting broad sectors of the Russian economy
would have a long-term effect on the global companies that count on
Russia for a significant part of their future growth.
Russian nationalist politicians are already seizing on U.S. and
European sanctions as an excuse to put pressure on Western
companies doing business in the country, and business groups fear
broad swaths of Russian consumers will become disaffected with
Western brands.
McDonald's Corp., whose first Moscow restaurant is a symbol of
the collapse of the Soviet Union, has faced particular pressure
since the conflict began, with Russia's consumer regulator shutting
down a dozen locations over alleged sanitary violations and
inspecting 100 as of Friday, according to the company.
The closures mark a reversal in Kremlin relations for
McDonald's, which in February helped sponsor the 2014 Winter
Olympic Games in Sochi, an international showcase of President
Vladimir Putin's Russia. The company says providing safe, quality
products is its main priority.
The most recent measures block U.S.-connected companies and
individuals from providing certain types of financing for several
major companies or transferring technology used in Russia's energy
industry. The U.S. has also ordered asset freezes and travel bans
for Russian officials and total bans on doing business with some,
less prominent firms.
On Sunday, several lawmakers questioned the effectiveness of the
sanctions program or called for much tougher measures. The chairman
of the Senate Foreign Relations Committee backed broader "sector"
sanctions aimed at particular industries. "We have to seriously
consider sectoral sanctions," Sen. Robert Menendez (D., N.J.) said
in an interview with CNN while visiting Kiev.
Sen. John McCain (R., Ariz.) said stronger sanctions are needed,
and he backed providing arms to the Ukrainian army.
"If you're looking at it from Vladimir Putin's viewpoint, he's
done pretty well with minimum of penalty; and as long as the
Europeans are dependent on his energy supply, they're not going to
do much," Mr. McCain said on CBS's Face the Nation.
The chairman of the Senate Intelligence Committee, Sen. Dianne
Feinstein (D., Calif.), questioned the effectiveness of sanctions
in Russia, which has endured deep financial crises, as well as the
chaos that followed the breakup of the Soviet Union. "Russians are
very brave and very long suffering, and they will tough out any
economic difficulty," said Ms. Feinstein.
Write to William Mauldin at william.mauldin@wsj.com and Laurence
Norman at laurence.norman@wsj.com