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No panic over new sanctions in Russia, West awaits disastrous response

July 30, 2014, 17:40 UTC+3 MOSCOW
Analysts estimate anti-Russian sanctions can disrupt the eighteen Eurozone economies that have not properly got back on their feet after the sovereign debt crisis and the common currency
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© ITAR-TASS/Alexei Pavlishak

MOSCOW, July 30. /ITAR-TASS/. New package of Western punitive sanctions on financial services, military supplies and technology announced on Tuesday met a cool reaction in the Russian government, state-owned and private companies and the banking sector.

No response has followed but it is possible. Brussels does not rule out Russia would take measures such as toughening regulatory norms for European imports - from cars to foods. The worst scenario, European experts say, would be disposal of European companies’ assets in Russia, which would deliver a heavy blow to European manufacturers - a measure that analysts in Brussels describe as economic nuclear weapon.

Nobody would survive nationalization of foreign property as nobody would survive a nuclear attack, financial analyst at Academy+ consulting company Bruce O’Connor told ITAR-TASS. This would deliver a disastrous blow to European companies operating in Russia but no less would be the impact on foreign investments in Russia, he said, predicting panicky capital flight.

Analysts estimate anti-Russian sanctions can disrupt the eighteen Eurozone economies that have not properly got back on their feet after the sovereign debt crisis and the common currency. Russia is, after all, the EU third largest trade partner and key energy supplier.

Russian Deputy Foreign Minister Grigory Karasin outlined the general picture: “Speaking the sanction language with Russia does not make any sense. Sanctions will help us summon up so that Russia will have a more effective economy and a healthier society free of illusions.”

Heads of some major Russian corporations are not easily upset either.

President of the United Aircraft Corporation Mikhail Pogosyan does not expect any effect on implementation of state defense procurement: “We make all necessary decisions in cooperation with ministries of defense and industry and trade that give us reasons to say the defense procurement will be carried out 100%” This year $1.5 billion procurement is 10% above 2013 figures.

Rosneft oil giant President Igor Sechin said the company worked “under different conditions and are ready for volatility linked to the sanctions. We’ll work for better efficiency, postpone some projects, but effective work will be our priority”.

Oil and gas British Petroleum hopes “dialogue and diplomacy” will resolve the international political disagreement over Russia, said BP chief executive Robert Dudley. The company had long-term investments in Russia and observed the situation, he added.

BP financial statements explain this attention: “If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations.”

As for financial prohibitive measures, Visa and MasterCard payment systems already announced they had no plans to disconnect cards of VTB, Bank of Moscow and Russian Agricultural Bank (RusAg).

The Central Bank of Russia said it was ready to revise the situation of the sanctioned Russian banks if needed and pledged adequate measures to protect interests of their customers.

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