Russia Preparing for Iran-Style Sanctions

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putin hands off ukraineRussian government officials and businessmen are readying for sanctions resembling those applied to Iran after what they see as the inevitable annexation of Ukraine’s Crimea region, according to four people with knowledge of the preparations.

Iran-style retaliation from the West, which would include freezing Russia’s foreign reserves, banking assets and halting lending to companies, is being treated as an unlikely worst-case scenario, according to the people who asked not to be identified as the talks are under way. Officials are calculating the cost to the economy, the people said.

Some political leaders are hoping that President Vladimir Putin will moderate his response to the crisis, the people said. A sanctions war, with Russia retaliating against the West, could wipe out 10 years of achievements in financial and monetary policy, one of them said. Such escalation could erase as much as a third of the ruble’s value, another said.

Dmitry Peskov, Putin’s spokesman, declined to comment on the matter.

The Ukraine crisis triggered the worst standoff between Russia and the West since the end of the Cold War after Russian forces seized the Crimean peninsula. German Chancellor Angela Merkel yesterday said a round of European Union sanctions is “unavoidable” if Putin’s government fails to take steps to ease tensions.

Obama Warns

President Barack Obama met yesterday at the White House with Ukrainian Prime Minister Arseniy Yatsenyuk and called Russia’s incursion into Crimea a violation of international law. The president told reporters that, if Russia doesn’t change course, the U.S. and the international community “will be forced to apply a cost.”

Obama suggested that if Russia backs down there could be “different arrangements over time” for Crimea in line with Ukraine’s constitution. “But that is not something that can be done with the barrel of a gun pointed at you.”

‘Get Ugly’

In Washington, U.S. Secretary of State John Kerry yesterday said at a congressional hearing that sanctions on Russia could “get ugly fast” if events justified them. Group of Seven countries called on Putin to “immediately halt” efforts to pry Crimea away from Ukraine, to reduce Russian forces to pre-crisis numbers and to allow international monitors and mediation.

The U.S. and the EU used sanctions against Iran to pressure it into negotiations over the Islamic republic’s disputed nuclear program. While almost all U.S. trade with Iran was banned after the Islamic Revolution, the West started imposing stricter penalties on energy, ports, insurance, shipping, banking and other transactions in 2010.

U.S. restrictions also apply to other countries that trade with Iran. Limited relief was granted after Iran signed a temporary accord in November, though core oil and banking restrictions were kept in place.

The EU announced a three-stage sanctions process against Russia last week, starting with the suspension of trade and visa-liberalization talks. Stage two includes asset freezes and travel bans for as-yet unidentified officials and would be imposed if Russia boycotts international talks on a settlement. Stage three envisages “additional and far-reaching consequences” if Russia further destabilizes Ukraine.

Visa Bans

Britain hosted a meeting this week to compile a list of people who could be hit by sanctions. The U.S. banned visas for Russian officials and others it said were complicit in violating Ukraine’s sovereignty, while Obama also authorized financial measures.

EU foreign ministers meet March 17, a day after Crimea votes in a referendum about joining Russia, to consider asset freezes and travel bans on Russian political and business leaders they consider responsible for instigating and profiting from the events on the Black Sea peninsula.

Russia’s position is unchanged by the threat of sanctions, foreign minister Sergei Lavrov said March 4. Three days later, he cautioned Kerry against “hasty and ill-considered moves” that could hurt relations.

Russian Billionaires

The government is in talks with Russian billionaires and state companies about risks they face in case of western sanctions, the people said. The Kremlin needs to know which companies are most likely to be affected by fallout including loss of access to new foreign loans and facing margin calls, they said.

Business is not yet showing too much concern about the possible sanctions, according to three top executives who took part in meetings.

The EU, Ukraine and Russia are economically dependent on each other in many regards, so strict sanctions will be hard on all sides, Putin has said.

“In the modern world, when everything is interconnected and everybody depends on each other one way or another, of course it’s possible to damage each other — but this would be mutual damage,” Putin told reporters March 4.

The Russian economy’s prospects in a “difficult global economic environment” was the topic of a closed meeting between Putin and senior officials yesterday in the Black Sea resort of Sochi, Peskov said by phone. Putin yesterday urged the government to ensure Russia’s “ability to react immediately to internal and external risks.”

The Russian government is also in talks with companies about speeding up state support in the form of guaranteed loans to reduce potential damage from sanctions, said two of the people. Business leaders have asked for a meeting with Russian Prime Minister Dmitry Medvedev to discuss the situation, the people said.

Medvedev’s spokeswoman Natalya Timakova declined to comment on her boss’s schedule.

Business Week

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16 responses to “Russia Preparing for Iran-Style Sanctions”

  1. MekensehParty Avatar
    MekensehParty

    “hasty and ill-considered moves” said Lavrov about possible sanctions
    How would he describe the invasion of Crimea by Russian forces I wonder?

    1. He would and it is described as justified. Just ask the US when they did worse in Iraq and Afghanistan. Oh hang on, I forgot, the sticky US can do what ever it wants and nobody should question it, Right?

      1. MekensehParty Avatar
        MekensehParty

        Afghanistan declared war on the US and we declared war on Iraq. War is war, theft is theft.
        we didn’t send our soldiers without our flag and insignia to invade British Columbia and annex it to the US. We fought our wars to prove to all not to mess with us ever again.

        1. Sorry, I must of missed it when Afghanistan declared war on the US. I don’t go on CNN or BBC much. Sure they put a good spin on it to brain wash the good citizens of The USA. Ie, people like you. The whole war on terror was convincing in your mind, wasn’t it.
          No your admitting that the US declared war on Iraq for no good reason, yet here you are criticizing Russia which mind you hasn’t declared any war YET. They are merely exercising their right to protect their citizens that live in Ukraine’s Crimea region.

          1. 5thDrawer Avatar
            5thDrawer

            But as Mekenseh says, in a sneaky way. Apparently the locals there now call them ‘The Green Men’ because there are no insignias on uniforms. 😉
            And they are not Russia’s citizens, they are Ukraine’s citizens. Just happen to be retired navy folks from Russia, buying up Ukraine retirement homes.

          2. MekensehParty Avatar
            MekensehParty

            it wasn’t even the Canuks who burned the WH
            it was British soldiers who just arrived from across the Atlantic after we burned York (ON)
            anyway we have no intentions of taking your oil and wood (or we would have already yek yek yek)
            You’re our northern cousins remember?
            The ones who didn’t dare say no to a guy who calls himself the king…
            We love you…r apples
            hahahaha

          3. 5thDrawer Avatar
            5thDrawer

            I know … you love our many games … (e.g. baseball and hockey) … too. 😉
            (we are going to milk those Olympics long as possible … :-))))

          4. MekensehParty Avatar
            MekensehParty

            When you lack the minimal acknowledgment of common rules how can we talk?
            We are on the moon and beyond, you’re trying to find rice to feed your 55 members family. That’s the difference between our civilization and yours.
            So attacking NY is not a declaration of war? Or you probably think it’s the CIA, Zionist emberialist m16 takfiris who did 9/11
            We went to Iraq for fake reasons but a great objective, to draw all your Guantanamo buddies to fight our soldiers… on Arab lands conveniently.
            There is nothing to compare with Ukraine – if we invaded parts of Canada and annexed it then it would be a good comparison, the rest is just losers cries.

  2. Russia should turn the gas lines to the EU off . Then the bastards can freeze. Like them or hate them, Russia with the help of China will be the ones that will put the US back in line.

    1. 5thDrawer Avatar
      5thDrawer

      Sorry Farq … it’s only part of the supply, and they will still have more than Lebanese Electric Corp.

    2. master09 Avatar

      A dream that people can only dream. Will never happen. Turning things of will solve problems, what you think your punishing your son by putting him in corner..lol This is all a business venture and without the UNITED STATES the world means nothing..

      IN CHINA

      The ratio of credit to GDP has jumped by 75 percentage points to 200pc of GDP, compared to roughly 40 points in the US over five years leading up to the subprime bubble, or in Japan before the Nikkei bubble burst in 1990. “This is beyond anything we have ever seen before in a large economy. We don’t know how this will play out. The next six months will be crucial,

      As with all other things in the financial world, what goes up must eventually come down.”

      recent debt restructuring at the China Credit Trust Co., a major Chinese financial institution. Just a few days ago, the Beijing based company was in danger of defaulting on a high risk, complex debt product. Then, suddenly, it managed to get its hands on enough money to restructure the half a billion-dollar deal and prevent the debt from going bad. Nobody knows who the investor was—the central government? a state owned bank? a worried Chinese billionaire? As if that wasn’t bad enough, the secret bailout comes at a time when intra-bank lending rates in China are rising (which means banks don’t trust each other), market volatility is increasing, and the value of risky debt products is plunging.

      Sound familiar? That’s exactly what happened in the run up to the 2008 collapse of Bear Stearns in the U.S.
      Any way Russia is built on prostitution, drugs and gangs.

    3. MekensehParty Avatar
      MekensehParty

      Hahahha
      Yes please turn them off
      Good luck paying Russian employees next week
      Dar dar! Hahahaha

      1. 5thDrawer Avatar
        5thDrawer

        They often don’t get paid now !! Ask the coal-miners …..

        1. MekensehParty Avatar
          MekensehParty

          They’re sacrificing their salaries to put us back in line
          dar dar

  3. 5thDrawer Avatar
    5thDrawer

    Basically, the whole ‘World Economy’ thing is falling apart. ‘SOME’ will like that.

  4. 5thDrawer Avatar
    5thDrawer

    Excerpts -Article in Daily Star – by Young.
    News that Syrian President Bashar Assad had been accepted into the Russian Academy of Sciences makes us wonder about the institution.
    Perhaps not surprisingly, last year the academy was placed under tighter government control. Assad didn’t complain, declaring “Russia has re-established balance in international relations, after long years of hegemony” by the United States. For three years, Russia has indeed underwritten the most barbaric crimes of the Syrian regime. Yet it was only when President Vladimir Putin began preparing the annexation of Crimea that many people in the West realized the kind of individual they were up against.
    Over time, there have been numerous efforts to reinforce the universalist ideals of the U.N. In the aftermath of the Rwandan genocide of 1994 and the Srebrenica massacre a year later, there emerged a new notion in international relations that came to be called the responsibility to protect, or R2P. States had a responsibility to protect their citizens from crimes such as genocide, war crimes and crimes against humanity. When they failed to do so, the international community had the responsibility to intervene and could, as a last resort, act militarily after a vote in the Security Council.
    Today, the Security Council seems utterly incapable of agreeing to such a resolution when it comes to Syria. Mass slaughter is continuing, while room is being made for Assad in the Russian Academy of Sciences by a man directing the takeover of the sovereign territory of a foreign state. Meanwhile, publics in the United States and Europe continue to adamantly oppose any kind of military intervention in Syria, regardless of what happens to civilians.
    This situation sets up a dilemma. A belief in implementing and expanding international humanitarian norms can only grow if there is a conviction that the international community will join together to take up such a burden. But the frequent inability of the U.N. to act decisively on humanitarian matters, as in Syria, has pushed states to act unilaterally in given crises, further eroding the idea of a common interest in defending human rights and international law.
    This reality takes us back to the Hobbesian notion of “all against all.” But if so, if power and force alone are what shape foreign policy, then so be it, in Syria as in Crimea. Let’s stop wasting our time by evoking international law and principles in a world that seems so little disposed to ensuring they prevail or, worse, that cites international law as an excuse to avoid taking any humanitarian action whatsoever.

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