WASHINGTON (Reuters) - The Obama administration is working on new sanctions that would be imposed on Russia if it dramatically ramped up aggression against Ukraine, such as preventing elections from taking place in much of the country or recognising another separatist referendum, U.S. officials said on Tuesday.
"What we're doing this week ... is trying to develop this strong sectoral package on both sides of the Atlantic so that the Russians can see it, understand it, and understand its impact if they take further action to prevent these elections from happening," Assistant Secretary of State Victoria Nuland told a Senate Foreign Relations Committee hearing.
But both Obama's fellow Democrats and Republican lawmakers pushed the administration to do more, unilaterally and with Europe to discourage Russian aggression in Ukraine, rather than waiting to respond after more action.
Democratic New Jersey Senator Robert Menendez, the panel's chairman, said Russians are "doing everything they can" to disrupt Ukraine's May 25 elections. "It seems to me there needs to be a consequence for that up front so that disruption doesn't continue to take place," he said.
More than 20 Republican senators - including committee members - co-sponsored legislation seeking to impose tougher sanctions on Russia, including sanctions on major banks and energy companies. Although that measure is expected to go nowhere in the Democratic-controlled Senate, its backers still hope for Democratic support.
'PRACTICE SOUNDING TOUGH'
The hearing turned angry, as lawmakers accused the administration officials of dodging their questions. Some scoffed at contentions that sanctions imposed so far are hurting Russia's economy. Others said the administration should provide more military aid to Ukraine's army.
"Sometimes I think the only strategy the administration has is getting people who talk about Ukraine to look in the mirror to make sure they practice sounding tough," said Tennessee Senator Bob Corker, the committee's top Republican.
Evelyn Farkas, the Deputy Assistant Secretary of Defense for Ukraine, said Washington is sending $18 million of non-lethal military aid, including packaged meals and uniforms. Ukraine has asked for more, but the Pentagon had not decided how much additional Ukraine funding it would seek, she said.
Washington also wants to punish Moscow by refusing to negotiate over a tax agreement that, if not approved by July 1, could mean steep penalties for Russian banks. Talks were suspended last month over an agreement to help Russian financial institutions comply with 2010's U.S. Foreign Account Tax Compliance Act (FATCA).
Assistant Treasury Secretary Daniel Glaser assured lawmakers there were no plans now to resume those negotiations.
Glaser was also asked if Washington would consider enacting sanctions to bar two U.S. companies that control much of Russia's credit card market - Visa Inc and Mastercard Inc - from doing business there.
"We have a number of tricks up our sleeve," he responded. "The credit card idea that you're articulating is certainly one of the levers that we have with respect to Russia," he said.
(Reporting by Patricia Zengerle; Editing by Bernard Orr)