Skip to main content

What can be the economic impacts of sanctions on Russia


The EU's potential sanctions list is thought to include more than 100 people.
At the moment, just politicians and officials have been targeted.
Any extension of sanctions could penalise rich Russian businessmen and others deemed to have significant interests located within the EU and US.
line break

Hasn't the UK suspended military co-operation with Russia?
Yes, although this is probably not as big a blow as it sounds - to either side
The UK has halted military export licences to Russia, currently said to be worth about £86.3m. The UK does not supply anything considered militarily sensitive anyway.
On the suspended list is cloth for uniforms, which accounts for 60% of the exports. The list also includes alloy wheels, nuts and bolts for armoured vehicles, handheld radios, and visors for pilots' helmets.
The UK, along with France and the US, has suspended joint naval exercises, which would have included a Royal Navy ship visit to St Petersburg.
line break
Could more sanctions be imposed?
The EU and US could seek to isolate Russia by severing diplomatic links.
Another option might be to attempt to remove Russia from international bodies such as the World Trade Organization, International Monetary Fund or World Bank.
Also, President Vladimir Putin has been very keen to bolster co-operation on investment, research and education.
Marginalising him on the international stage could be a blow to Moscow's prestige, although it is unlikely to do much damage economically.
That said, the EU and US will not want to cut off dialogue with Russia.
line break
Could this dispute develop into a full-blown trade war?
Chart: Russia's top trading partners
That would certainly ratchet up the pressure on Moscow. As seen in the graph above, the EU is by far Russia's biggest trading partner.
Imports to the EU from Russia are dominated by crude oil and gas. According to the Energy Information Administration, European countries import 84% of Russia's oil exports, and about 76% of its natural gas.
Germany is the single biggest importer of Russian oil and gas, while the UK buys about 6% of Russia's gas.
line break
What specific action might be taken?
The introduction of direct economic sanctions would probably mean import/export bans.
If specific firms were targeted, then the state-owned energy giant Gazprom would probably be high on the list.
For instance, Gazprom could be banned from winning more contracts within the EU.
The US and Europe might also restrict Russian banks and corporations from access to finance.
It was revealed this month that the UK had considered closing London's financial centre to Russians as one possible sanction.
line break
Won't a trade war also hurt the West?
EU trade with Russia - chart showing imports and exports
Quite possibly. Banking, for example, is a two-way process. Nina Schick, of Open Europe, estimates that Russian companies have $653bn of foreign debt.
Any financial shocks in Russia will impact on the banking systems in Europe and the US.
Targeting Russian energy companies also has its consequences, especially for Europe. What happens to the gas price if, say, Gazprom retaliates by limiting supplies.
Another Russian energy giant, Rosneft, has close ties to BP.
Neither the UK company nor the UK government would want BP's interests undermined.
line break
So, the EU and US room for manoeuvre is limited?
It's certainly complicated, and not without negative implications for Western governments.
Some further sanctions would require agreement from EU member states. As the consequences of tougher sanctions might hit countries differently, getting that approval could be a protracted process.
That said, at this moment there appears to be strong political will in the US and Europe for action that is more than just symbolic.
"If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions," President Barack Obama said.
It is a statement from which many observers say he cannot now back down.

http://www.bbc.com/news/business-26612848

Comments

Popular posts from this blog

Communist party launches 'China Operating System' to oust iOS and Android

hina officials have launched a national operating system in an attempt to take back control of the country’s computer market from American companies such as Google and Apple. The software has been in development for more than a year, but has been released at a crucial time with revelations about US-led surveillance sparking fears over the integrity of American-designed software. Known simply as the China Operating System, or COS, the software can run on PCs, tablets and smartphones and has been based on the open-source Linux operating system. Chinese media say that the OS has been created “entirely independently” in order to provide better localization for a range of features – from Chinese-language keyboards, to integration with the country’s banks. At the launch of the event, one of the developers involved with the project reportedly criticized Western software , saying that Apple’s iOS was too closed, that Google’s Android OS suffered from fragmentation (ie, too many versi

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may also be u

How to avoid injurious sitting posture at work? Take care of Ergonomics

The impact of poor consideration of these, as well as other, ergonomic elements can be very hazardous to our  well-being. Some of the effects include increase chances of suffering from carpel tunnel syndrome, decreased eye sight, cramps in our joints, strain from overworking certain muscles and joints,  and decreased blood-flow circulation. Work productivity also decreases when we are in environments that are not designed for proper ergonomics. One other important thing to consider is the lighting levels in the space. I actually did not even think of this as an ergonomic design issue, but it truly is.  Our eye muscles are the most used muscles in our entire body.  We use our eyes in every situation throughout our entire day.  Poor considerations for lighting causes very negative short and long-term effects.  It is recommended that we use mixed levels of lighting in our environments. This allows for multiple options for each user depending on his or her preferences and physical nee