19:26 GMT +316 February 2019
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    REVIEW: Russian Economy Weathers Second Wave of US Sanctions

    © RIA Novosti . Dmitriy Astakhov
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    The second wave of US sanctions has scared neither Russian officials nor businesses, affecting only the assets controlled by the already-sanctioned businessmen Gennady Timchenko and brothers Arkady and Boris Rotenberg, as well as Bank Rossiya.

    MOSCOW, April 29 (RIA Novosti), Victoria Matsneva – The second wave of US sanctions has scared neither Russian officials nor businesses, affecting only the assets controlled by the already-sanctioned businessmen Gennady Timchenko and brothers Arkady and Boris Rotenberg, as well as Bank Rossiya.

    None of the 17 companies targeted by the US sanctions trades its stock on exchanges and only two of seven Russian officials listed by the US Treasury Department are directly connected to the Russian economy: Rostec CEO Sergey Chemezov and Rosneft CEO Igor Sechin.

    Buyers on the Moscow Stock Exchange voted with their rubles, concluding the sanctions for Russia’s reunification with Crimea and stance on Ukraine were quite mild. Russian stock markets and the ruble were both up in trading.

    Russian officials and experts were also far from pessimistic.

    "Apparently, our psychology is organized in such a way that we need a strong external negative incentive to unite and consolidate. The more sanctions will be imposed, the stronger will be the consolidation of the elite. That’s the major effect of the sanctions as for now," presidential aide Andrei Belousov told reporters.


    The US sanctions imposed on a number of Russian citizens and companies will have no serious impact on the Russian economy, Belousov said.

    "I think they will result in our mobilization,” he said. “[US authorities] do not understand that by imposing sanctions they have secured the maximum consolidation of the elite for the next 10-15 years," the presidential aide said.

    US Treasury Secretary Jacob Lew, commenting on the extension of sanctions, said that it will have a negative impact on the Russian economy just as the previously imposed restriction measures. "Projected growth of the Russian economy has slowed and capital flight has increased," the US official said.

    Belousov, a former head of the Russian Ministry of Economic Development, disagreed with this position. According to him, the impact of the sanctions on Russia's economic growth, exchange rate and capital outflow is minor. "There will be some short-term influence probably, but it is unlikely that they will have any serious impact in general," he said.


    Russian currency-stock exchange bidders, according to market figures, agree with Belousov. The ruble strengthened against both the euro and dollar, and shares of domestic companies were up. Even shares of Rosneft, whose head was hit by sanctions, fell by less than two percent.

    The lack of sanctions against Alexey Miller, head of the world’s largest gas engineering company Gazprom, came as a surprise for many experts and political analysts who predicted that he would end up on the US list of "Putin's friends." The gas giant’s shareholders have benefited as a result, with the stock climbing more than 2 percent in a day.


    Rottenberg’s Bank SMP was not idly waiting for sanctions. "We have been maintaining balances on correspondent accounts at the minimum level. Currently we have an agreement with a number of Russian banks for the establishment of host-to-host connections to secure operations of our cards," the bank said.

    Sobinbank, which belongs to the banking group Rossiya, said that being included on the US blacklist will have no effect on its work because the bank has already being working under the same conditions since its parent organization was hit by the sanctions.


    Rosneft CEO Igor Sechin regards the sanctions as a compliment on his work by Washington. "It is our understanding that the US administration noted the company’s proactive reduction of risks associated with the one-sided orientation of hydrocarbon exports to specific regional markets," he said.

    He assured shareholders that the company's productivity will not decrease because of the sanctions, and expressed confidence that the cooperation of Rosneft with its American partners will not be affected.

    Sanctions are not a reason for business to leave Russia, Minister of Industry and Trade Denis Manturov agreed.

    "I did not feel that businesses have a desire to minimize the projects that are being implemented today. Firstly, it is money and years invested here. Will they change their mind now because of a whim of some leaders? They are private companies,” the minister said.

    Foreign companies have confirmed confidence in their Russian colleagues. Britain’s BP plans to maintain the status of long-term investor in Rosneft, a BP representative told Reuters.


    Under the declared sanctions, the US Department of Commerce imposed additional restrictions on 13 of 17 Russian companies included in the second blacklist. These restrictions imply tightened policy to deny export license applications for any high-technology items that could contribute to Russia’s military capabilities.

    The main US hi-tech exports to Russia are turbojet engines, generators, aircraft, isotopes and computer technology.

    Russia exports to the United States mineral products (mainly from the fuel-energy complex), metals and metal products, as well as chemicals.

    The fact that Rostec head Chemezov was put on the US blacklist will not affect the work of the state-owned corporation responsible for providing hi-tech industrial products for Russia’s defense sectors, Minister of Industry and Trade Denis Manturov said. After all, Chemezov need not travel to the US to maintain business dialogue with Rostec investors and partners as they can come to Russia instead, the minister said.

    economy, sanctions