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The toughest measures aim to prevent Russian banks from raising money on Western capital markets.
The European Union has published a law that will curb arms sales to Russia and to cut off financing for five major Russian banks over Moscow's support for rebels in Ukraine.
Russia has denounced the measures, agreed by the 28 EU member states on Tuesday, as "destructive and short-sighted," while fighting has intensified in eastern Ukraine between Kyiv forces and the pro-Russian separatists.
EU officials say the sanctions aim to inflict maximum pain on Russia and minimum pain on the EU. "We will for sure have an effect and a very substantial and concrete effect on Russia," one EU official said, speaking on condition of anonymity.
The toughest measures aim to prevent Russian banks from raising money on Western capital markets, while others limit defence sales and the export of hi-tech equipment for the oil sector.
Published on Thursday in the Official Journal of the European Union, the law takes effect from Friday, Aug. 1.
Marking a fundamental shift in how Europe deals with Russia, the sanctions will mean EU nationals and companies can no longer buy or sell new bonds, equity or other financial instruments with a maturity of more than 90 days issued by major state-owned Russian banks or those acting on their behalf.
The law lists five targeted banks — Russia's largest lender Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB) and Russian Agriculture Bank (Rosselkhozbank).
In addition, there is a ban on any future imports and exports of arms from Russia, and authorisation will be required for member states that want to export energy-related equipment.
Export licences will be denied if products are destined for deepwater oil exploration and production, Arctic oil exploration or production and shale oil projects in Russia.
Europe, which has deep trade links with Russia, was far more reluctant to act than the United States over Moscow's annexation of Crimea from Ukraine in March and its support for the rebels.
However, the mood shifted radically after the downing over eastern Ukraine of a civilian flight from the Netherlands to Malaysia earlier this month. Western countries say a Russian-supplied missile fired from rebel-held territory caused the disaster. Moscow blames the Ukrainian military for the crash, in which 298 people were killed.
Meanwhile, Ukraine's parliament rejected Prime Minister Arseny Yatsenyuk's resignation on Thursday and finally passed legislation he said was needed to finance an army offensive against a separatist rebellion in the east and avert a national default on its debts.
The assembly's about-turn on laws it refused to back a week earlier offers relief to Kyiv's Western backers, who had feared Ukraine was sliding deeper into political chaos and might renege on an international bailout as it heads into an election period.
"There are two pieces of news today. The first is that Argentina has defaulted, and the second is that Ukraine has not defaulted and never will," Yatsenyuk told the chamber, making clear he would stay in office.