New US sanctions: what worries the Kremlin

EU Russia sanctions explained

Moscow’s greatest concern is not the current package of sanctions, but possible further measures.

New sanctions on Russia are expected to be announced on Wednesday, which the US plans to impose under the CWA in response to the poisoning of a former Russian agent and his daughter in the UK. This will be another round of confrontation, which some observers call a protracted war of attrition..

However, the Kremlin is concerned not so much with this package of sanctions as with further measures that a group of American senators from both parties are calling for..

Sanctions this week, including a ban on the export of technology to Russia, drew condemnation from the Russian authorities.

Meanwhile, on Tuesday, the Ministry of Finance announced sanctions against a number of Russian citizens and companies accused of violating bans on energy trade with North Korea, as well as cooperation with the FSB..

Treasury spokesman Sigal Mandelker told the Senate Banking Committee on Tuesday that the administration is ready to tighten sanctions.

“While Russia’s malicious activity continues, we believe that its adventurism is no doubt holding back the awareness that we could do much more economic damage to it,” she said. “We will not hesitate to do this unless there are visible and significant changes in Russia’s behavior.”.

Kremlin spokesman Dmitry Peskov, speaking to reporters this week, called the sanctions unfriendly and illegal, warning that they would negatively affect international trade. At the same time, he did not threaten retaliatory measures, saying only: “Let’s wait for what will happen, if it will be”.

Emily Ferris, an analyst at the Royal Joint Institute for Defense Research in London, notes that the new sanctions will complicate “the already difficult relationship between the United States and Russia,” but the consequences are likely to be small, since America is not the main trading partner for Russia, which is much more active in doing business with the European Union, which did not support the next package of sanctions.

“Russia is likely to wait to see if America will deliver on its promise to extend sanctions. Russia usually responds with mirror measures. She does not want it to come to a trade war, ”the expert notes..

When the United States imposed sanctions on Russia in early April in connection with the “malicious activities” of Russian authorities around the world, this led to a depreciation of the ruble and a decrease in the purchasing power of ordinary Russians traveling abroad or buying foreign goods..

The State Department announced sanctions due to take effect this week, back in August, accusing the Kremlin of violating international law. The US authorities concluded that it was the Russian government that was behind the attempt on the life of Sergei and Yulia Skripal, who were hospitalized after poisoning with a nerve agent..

A 1991 law requires the White House to impose sanctions on any country found responsible for a chemical or biological attack. The law also provides for a second round of tougher sanctions in the event that Russia does not agree within 90 days to stop using chemical weapons and does not allow inspectors to confirm their destruction..

New US sanctions: what worries the Kremlin

Additional measures the administration may take later include withdrawing loan guarantees from American and international banks, banning Russian aircraft from landing on US soil, and even suspending diplomatic relations..

It is the possible second round of sanctions, along with the restrictions provided for by a bipartisan bill aimed against the energy and financial sectors, as well as the sovereign debt of the Russian Federation, that is of greatest concern to Moscow, since these measures could cause much more damage to the Russian economy..

Most worrisome, analysts say, is a proposal to ban dollar-denominated transactions by a Russian state-owned bank. Such a measure is provided for in a bill presented by Senators Lindsay Graham and Bob Menendez. This would force Russian banks to resort to intermediaries in foreign exchange transactions. If the bill is passed, it will be more difficult for Western investors to buy Russian government bonds, and Russia will be limited in its ability to obtain loans abroad..

Andrei Belousov, Putin’s economic adviser, has called for requisitioning profits from Russian metallurgical and chemical companies to fund the government, prompting strong disapproval from some government officials.

In response, the Russian authorities propose the following options: to impose restrictions on the export of titanium, which Boeing uses in aircraft construction, to increase tariffs for passage in Russian airspace for American cargo and passenger aircraft, or even to ban them from flying over Russian territory altogether, and also to stop supplies of Russian rocket engines RD-180, which NASA and the Pentagon use to launch American satellites.

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