U.S. President Barack Obama imposed sanctions on some of Russia's biggest firms for the first time, striking at the heart of Vladimir Putin's power base by targeting companies closest to him over Moscow's failure to curb violence in Ukraine.
In the latest escalation of the conflict on the Ukrainian-Russian frontier, Kiev said a Russian jet had shot down one of its warplanes, its strongest accusation yet of direct Russian military involvement in the war. A Ukrainian military spokesman said the pilot of the SU-25 fighter ejected to safety.
After months of measures that hit only individuals and smaller firms, Washington imposed sanctions on Russia's largest oil producer Rosneft , its second largest gas producer Novatek and its third largest bank Gazprombank. The firms are run by Putin allies who have become wealthy during his tenure.
Moscow denounced what it called primitive revenge for events in Ukraine and pledged to retaliate. Putin said the U.S. sanctions would hurt U.S. energy companies and bring relations to "a dead end". His prime minister, Dmitry Medvedev, called the sanctions evil, said they would not "bring anyone to their knees" and that Russia would pay attention to defence spending.
The sanctions in effect close the firms to medium- and long-term dollar funding. Other targets include Vnesheconombank, VEB, which acts as payment agent for the government, and eight arms firms, including the producer of the Kalashnikov assault rifle.
However, Washington stopped short of freezing the companies' assets, closing off the short-term funding they need for day-to-day operations or stopping U.S. firms doing business with them. Several were quick to say it was business as usual.
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