Since our last post, the situation with western
sanctions against Russia for its invasion in Ukraine has become slightly
clearer. On the one hand, Ukraine’s hopes to restore its sovereignty over
Crimea may be raised by Barak Obama’s words on Tuesday that the annexation of
Crimea “is not a done deal” and could be reversed. However there is a lack of
understanding at the moment as to how that could be done.
On the other hand, the U.S. and European Union are indicating their readiness to apply serious economic sanctions against Russia if there is an escalation in the situation. At the meeting in The Hague this Monday, the G7 indicated that it was "ready to intensify actions including coordinated sectoral sanctions that will have an increasingly significant impact on the Russian economy, if Russia continues to escalate this situation". Markets appear to have taken positively to this statement - indicating that things are cooling down: the Russian market’s RTS index has risen by 13% since its 5-year bottom registered at the height of the Crimean invasion on March 14.
That said, the picture of possible Western sanctions against Russia is starting to shape up. U.S. President Barak Obama has named Russia’s financial services, energy, defence and mining sectors among those which could suffer in the future. This week, the U.S. Senate is expected to consider legislation to cut off all U.S. business with Russia's state-owned arms exporter, Rosoboronexport. As an important move to secure Europe’s energy independence from Russia, the U.S. and Europe are currently negotiating a trade agreement which would make it much easier to obtain licenses for the American liquefied natural gas exports to Europe. We can only hope that sanctions become strong enough to get Russia to back down and reverse its aggressive stance against Ukraine and the region.
By: Ukrainian Credit Union Limited
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