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US sectorial sanctions against Russia are so far soft - Kudrin

July 18, 2014, 0:39 UTC+3 MOSCOW
It would slow down Russia’s economic growth
1 pages in this article
© ITAR-TASS

MOSCOW, July 18, /ITAR-TASS/. Russia’s former finance minister, Alexei Kudrin, said on Thursday that the new U.S. sanctions against Russian companies were soft, although they were bound to undermine investors’ trust of the Russian market and would slow down Russia’s economic growth.

On July 16, the U.S. Department of the Treasury announced the so-called sectorial sanctions against Russia banning the mid-term and long-term crediting of the NOVATEK gas producer, the Rosneft oil company, the Vneshekonombank development bank and Gazprombank.

“These are the very first steps in sectorial sanctions. They are soft and do not imply the arrest of assets and securities that are already in circulation. They concern future security issues; participation in privatization campaigns and crediting. I would call these measures a mild option of sectorial sanctions,” Kudrin said.

The former finance minister assumes that the new sanctions are unlikely to have an immediate effect but will reduce the potential of the companies (under sanctions) in the years to come.

“They are going to be hurt because they will lose some of their market possibilities,” Kudrin said.

"The sanctions will reduce the quality of investment climate in Russia and will continue raising new questions. Americans believe that Russia is somehow involved in supporting militias in Ukraine. A certain opinion about Russia’s actions is being spread. Many people in the West are taking it seriously for lack of information,” Kudrin went on to say.

According to him, Russia will lose approximately 1% of its due growth because of the U.S. sanctions. The new sanctions will not be critical for the Russian economy but will be in the same line.

Kudrin expects the United States to strengthen sectorial sanctions if a political solution in Ukraine is not found.

Kudrin believes that the companies under sanctions should start searching for new markets and new partners in countries that are not taking part in the sanctions regime.

“These companies (under U.S. sanctions) will be restricted in certain operations. Therefore, they will try to re-orient themselves to other financial institutions with which they will have to work in servicing their debt. They will have less possibilities of refinancing or receiving new credits,” Kudrin stressed, adding that funds from third countries that are not applying the U.S.-imposed sanctions would be ready to participate in the expansion of Russian companies.

“Russia will have to open additional investment opportunities for China, the Arab and Asian countries. Russia used to be reserved about the idea of foreign investments in strategic sectors. I expect these sectors to become more open to these investments now,” Kudrin said in conclusion.

The individuals and companies added to the U.S. sanctions list include State Duma Vice-Speaker Sergei Neverov; Oleg Savelyev, the minister for Crimean affairs; presidential aide Igor Shchegolev; Federal Security Service Colonel Sergei Beseda; Alexander Borodai, one of the leaders of the proclaimed Donetsk People’s Republic; the Donetsk and Lugansk People’s republics; Russia’s Vneshekonombank, Gazprombank; the Rosneft oil company; the Feodosiya Oil Company in Crimea; the Concern of Radio-Electronic Technologies (KRET), a subsidiary of the state-owned company Rostec; the Voronezh-based Sozvezdiye company; the Tula-based KBP design bureau of instrument-making; the Uralvagonzavod company and the NOVATEK gas company.

Meanwhile, Russian Prime Minister Dmitry Medvedev said on Thursday that U.S. sanctions imposed against separate Russian industries and enterprises would further increase the anti-American and anti-European sentiment in Russia.

The Russian society will get more consolidated against “those countries and people that are trying to restrict our country and are acting against the national interests of its citizens,” Medvedev said, adding that the new series of sanctions against Russia were unlikely to help Ukraine in any way.

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