Russian economy strained by sanctions: Obama

Washington - President Barack Obama said on Wednesday that US sanctions levied against Russia over its actions in Ukraine are working but that Washington would face a much different set of questions about how to respond if Moscow invaded eastern Ukraine.

Western officials warn that a Russian military build-up on Ukraine's border could herald a major incursion to protect the pro-Moscow separatists fighting Ukrainian forces.

Despite bipartisan pressure from lawmakers to send US military aid to Ukraine, however, the Obama administration thus far has said it doesn't believe US military assistance is needed.

"Keep in mind that the Russian army is a lot bigger than the Ukrainian army", Obama said at a news conference. "So the issue here is not whether the Ukrainian army has some additional weaponry."

The US and the European Union have accused Russia, which annexed Ukraine's Crimean Peninsula in March, of fomenting tensions in eastern Ukraine by supplying arms and expertise to the pro-Moscow insurgency.

"At least up until this point, they've been fighting a group of separatists who have engaged in some terrible violence, but who can't match the Ukrainian army", Obama said. "Now if you start seeing an invasion by Russia, that's obviously a different set of questions. We're not there yet."

Obama was asked about the impact of sanctions on the same day that Russian President Vladimir Putin hit back hard against the US for imposing sanctions against Moscow's moves in Ukraine.

Russian state news agency RIA Novosti quoted a Russian official as saying all agricultural products produced in the US won't be allowed into Russia.

According to USDA's Foreign Agricultural Service, US exporters shipped $1.2bn worth of food and agricultural products to Russia in 2013, which represents less than 1% of all US agricultural exports.

US poultry exports make up the largest portion of the total, with a little more than $300m in exports to Russia last year.

"Sanctions are working as intended in putting enormous pressure and strain on the Russian economy", Obama said.

"That's not my estimation. If you look at the markets and you look at estimates in terms of capital flight, if you look at projections for Russian growth, what you're seeing is that the economy has ground to a halt.

"It has presented the choice to President Putin as to whether he is going to try to resolve the issues in eastern Ukraine through diplomacy and peaceful means, or alternatively continue on the course he's on, in which case he's going to be hurting his economy, and hurting his own people over the long term."