MOSCOW, April 29 (RIA Novosti), Daria Chernyshova – Western sanctions against Moscow are unlikely to disrupt existing business ties with Russia, Renaissance Capital economist Oleg Kouzmin told RIA Novosti.
“We do not think that sanctions would damage the existing business relations with Russia and its trading partners,” Kouzmin said. “Probably they may become an additional obstacle for attracting new foreign businesses to Russia, but as a consequence of increased geopolitical risks,” he added.
The US introduced a third round of sanctions Monday, extending the list of Russian officials subject to asset freezes and visa bans by 7 Russian individuals and 17 Russian companies linked to Russian President Vladimir Putin’s “inner circle.”
The move was mirrored by the EU, which announced Tuesday sanctions on 15 additional Russian and Ukrainian officials. Japan too, said it will deny visas to 23 Russian nationals, including government officials, amid Moscow’s "lack of visible action to reduce tensions in Ukraine.”
“These are only sanctions towards particular individuals or companies, which was broadly expected by the market,” Kouzmin told RIA Novosti, adding that they have little direct economic impact.
“However the second-round effects do create additional headwinds for the Russian economy, including higher geopolitical risks in Russia, higher cost of capital and borrowings for Russian companies abroad, increased capital flight,” Kouzmin said.
“We suggest both US, EU, Japan and Russian top officials acknowledge that our countries have quite close economic relations, especially the EU and Russia, so the breakdown of existing networks might be painful for both counterparties,” Kouzmin noted. “That's probably the main argument why we think that strong economic tensions are unlikely.”
Moscow has repeatedly warned that talking in the language of sanctions is “inappropriate and counterproductive” and warned its Western partners about the “boomerang effect” that sanctions would have.
This has been the third round of sanctions imposed against Russia. At the same time, economists believe more sanctions against Russia are unlikely. “We believe that strong sanctions towards particular sectors of Russian economy are unlikely from any of the developed countries, unless the situation in Ukraine turns into completely red zone, which is also unlikely, in our view,” Oleg Kouzmin said.
Moscow said Tuesday that it retains the right to respond to sanctions imposed by Washington, but cooperation between the two countries is still possible.
“Russia retains its right to appropriately respond to the unfriendly steps against [Russia], including the introduction of any kind of sanction limitations against the Americans," the Russian Foreign Ministry said in a statement.
