Home Economy Ruble And Shares Crash As Russian Sanctions Bite

Ruble And Shares Crash As Russian Sanctions Bite

Money is more important than armed might – and Russian President Vladimir Putin is finding that out the hard way.

As the US piles on the economic pressure against Russian oligarchs and their companies, the ruble and the Moscow stock exchanged have both tumbled.

The fragile Russian economy kicked on last year, with growth of 1.5% mainly on the back of rising global oil prices.

But the worry in Moscow is how much new sanctions linked to military action in Syria, the Skripal spy poisoning and online interference in elections will hurt.

“One gets the impression that since 2014 we have been convinced that sanctions are painless for our economy,” said Kirill Tremasov, head of research at Loko-Invest and former director of the Russian Economy Ministry’s forecasting department.

New reality for Moscow

“This is completely groundless. What has happened opens a new stage in relations with Western countries. We have found ourselves in a new reality. And it is very, very serious.”

Sanctions have targeted 17 government officials, the companies of seven of Russia’s richest oligarchs and industrialist Oleg Deripaska in particular.

Washington says the sanctions are aimed at the people who have profited most from interfering in the economic and democratic process elsewhere in the world.

“This is an outrageous business from the point of view of illegality, from the point of view of flouting all the norms, and of course careful analysis is needed here,” said a Kremlin spokesman.

“The Russian government was doing everything possible to minimise negative consequences of the US measures.”

Investors panic

Two of the largest companies hit by sanctions are Gazprom, the huge natural gas exporter to Europe and Rusal, which processes around 7% of the world’s aluminium supply.

“Rusal will probably have to be bailed out by Russian state banks,” reported analysts at TS Lombard.

Panic has hit the Russian markets because investors are uncertain if more sanctions are on the way, and if so, which companies they may impact the most.

More is likely to come as the sanctions bar the companies listed from transacting their business in US dollars – the standard currency for international trade in commodities.

Moscow has promised a tough response, but the reality is Russia can do little to hurt the USA economically.

Gholam Rahmani
Gholam Rahmani
Gholam Rahmani, 22, is one of the multilingual writers of Pars Herald. He is fluent in several languages including but not limited to Persian, English, Turkish, Azeri and Arabic. He first joined the group on 2008 but after one year he left Pars Herald. After completion his studies in Turkey he came back to Pars Herald and re-started his career as the Tech writer. He has written articles for Turkey and Azerbaijan based news agencies too. City: Ardabil Phone Number: +989371284596 Email: Gholam {at} ParsHerald.com Name in Persian: غلام رحمانی

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