Double blow for Putin as EU adopts tough sanctions, Ukraine rebels suffer setbacks

The European Union ramped up pressure on Russian leader Vladimir Putin by adopting tough new economic sanctions against Russia, as pro-Russian rebels in eastern Ukraine suffered their biggest battlefield setback in months.

The measures, which were prepared in coordination with the United States, include an arms embargo, and a ban on the sale of dual use and sensitive technologies, such as advanced energy technology equipment relevant for deep sea and Arctic drilling. Such equipment will now be subject to prior approval by competent national authorities, an EU official said.

Under the financial sanctions, Russian state-owned banks will be banned from selling bonds or equities with a maturity of over 90 days in European capital markets, the sources said, speaking on condition of anonymity because they were not authorized to make public statements.

The ambassadors also added eight names to the list of people subject to EU-wide asset freezes and travel bans, including four people close to Putin, the EU official said. They also put three more entities on the list of companies and organizations subject to EU sanctions because of their alleged actions against Ukraine's sovereignty or territorial integrity, that official said.

The new sanctions come amid reports that the Ukraine army forces had made rapid gains near the site where Malaysia Airlines Flight 17 crashed July 17.

The Wall Street Journal reported Ukrainian forces were apparently trying to split the territory held by the rebels into two parts between the major cities of Donetsk and Luhansk. Officials on both sides of the fighting also told the Journal that the Ukraine army was attempting to cut off supply lines from Russia to the rebels.

Igor Girkin, a Russian citizen who is the top defense official in the separatist Donetsk People's Republic, also said Monday that more than 100 wounded separatist fighters had been evacuated to Russia because "I can't rule out the total siege of Donetsk from all sides."

Meanwhile, the separatist republic's self-proclaimed Prime Minister Alexander Borodai left the rebel-held territory for Moscow on Monday, triggering speculation that the rebels were fleeing the city.

Europe, which has a much bigger trade relationship with Russia than the U.S., had lagged behind Washington in its earlier punitive measures, in part out of concern from leaders that the penalties could hurt their own economies. But on Monday, in a rare videoconference call with President Barack Obama, the leaders of Britain, Germany, Italy and France expressed their willingness to adopt new sanctions against Russia in coordination with the U.S., an official French statement said.

Until now, the trade bloc has only targeted specific individuals, businesses or rebel groups.

"We welcome these early indications that European countries are going to take additional steps today," White House spokesman Josh Earnest said Tuesday, adding that the U.S. expects those penalties will "track pretty closely" with previous sector sanctions announced by the Obama administration.

Earnest said further U.S. penalties would be announced "as soon as today."

The Western nations are demanding Russia halt the alleged supply of arms to Ukrainian separatists and other actions that destabilize the situation in eastern Ukraine.

The EU measures were decided at a meeting of ambassadors from the bloc's 28 member countries. They will be codified in legal language and published Thursday, when they will take immediate effect. The new names to be added to the travel ban and assets freeze list should be known Wednesday.

"The approach will be under constant review and can be adjusted in light of new developments. Normally sanctions are in place for one year," the EU official said.

French President Francois Hollande said in a statement that the Western leaders "regretted Russia has not effectively pressured separatists to bring them to negotiate nor taken expected concrete measures to assure control of the Russian-Ukrainian border."

Neither set of penalties is expected to fully cut off Russian economic sectors from the West, an options U.S. officials have said they're holding in reserve in case Russia launches a full-on military incursion in Ukraine or takes a similarly provocative step.

Russian Foreign Minister Sergei Lavrov said any sanctions imposed by the U.S. and European countries on Russia would not be effective.

"We will overcome any difficulties that may arise in certain areas of the economy, and maybe we will become more independent and more confident in our own strength," he said, according to Reuters.

Click for more from The Wall Street Journal.

The Associated Press contributed to this report.