Russia Could Step Up Sanctions to the West

Moscow is biting back. In June it ended flows of oil and gas to Ukraine, and it is restricting exports to other European customers as winter approaches. The Kremlin has banned agricultural imports from countries that have participated in the sanctions. It has closed four McDonald’s restaurants, using health inspections as a pretext, and it is flirting with a national payment system that could replace Visa and MasterCard. Western airlines may find themselves unable to fly over Siberia, forcing flights to Asia to take big detours. American consulting and accounting firms may be prevented from operating in Russia.

Russia has more cards to play. It could cut off supplies of engines to the US space programme. It is a big exporter of titanium and other resources needed by western companies. Moscow could emerge as a sanctions-busting financial partner to a country such as Iran, at the height of nuclear negotiations. The Kremlin could also enlist criminal networks to attack the computer systems of western targets, including major banks.

The west needs a comprehensive strategy that intensifies financial pressure on Moscow while deterring Russian escalation. Sanctions should no longer be tied to diplomatic milestones. Instead, they should be seen as a continuous campaign that leaves Mr Putin and the markets guessing. This approach has proved highly effective in Iran.

via FT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza