The U. S. House of Representatives overwhelmingly voted to impose new sanctions on Moscow, triggering an angry reaction from Russian officials, but analysts are playing down the impact.
The U.S. House of Representatives overwhelmingly voted to impose new sanctions on Moscow, triggering an angry reaction from Russian officials, but analysts are playing down the impact.
The sanctions, which have yet to be approved by the U.S. Senate and President Donald Trump, expand and tweak a list of existing sanctions, but cannot be viewed as a game changer, analysts said.
Russian President Vladimir Putin will decide if and how Moscow will retaliate once the fresh sanctions become law.
Below are highlights from the bill and analysts' reactions:
ON REASON FOR SANCTIONS
The United States "should continue to uphold and seek unity with European and other key partners on sanctions implemented against the Russian Federation, which have been effective and instrumental in countering Russian aggression in Ukraine".
ON RUSSIAN DEBT
"The Secretary of the Treasury shall submit ... a report describing in detail the potential effects of expanding sanctions ... to include sovereign debt and the full range of derivative products."
The Secretary of the Treasury shall review sanctions from 2014 "to ensure that the directive prohibits the conduct by United States persons or persons within the United States of all transactions in, provision of financing for, and other dealings in new debt of longer than 14 days maturity or new equity of persons determined to be subject to the directive, their property, or their interests in property".
ON PARTICULAR AREAS, INDIVIDUALS
"The Secretary of the Treasury may determine that a person meets one or more of the criteria ... if that person is a state-owned entity operating in the railway, or metals and mining sector of the economy of the Russian Federation."
The Secretary of the Treasury, in consultation with the Director of National Intelligence and the Secretary of State, shall submit a detailed report on Russia's senior foreign political figures and oligarchs.
ON ENERGY PROJECTS
The bill is designed "to continue to oppose the NordStream 2 pipeline given its detrimental impacts on the European Union's energy security, gas market development in Central and Eastern Europe, and energy reforms in Ukraine".
Trump, in coordination with allies of the United States, may impose sanctions on an entity that makes an investment described in the Act or "sells, leases, or provides to the Russian Federation, for the construction of Russian energy export pipelines, goods, services, technology, information, or support ... any of which has a fair market value of $1,000,000 or more; or that, during a 12-month period, have an aggregate fair market value of $5,000,000 or more."
ANALYST VIEWS
"With the Senate voting 92-2 and the House 419-3, it is highly unlikely that President Trump would veto the bill," said Charles Robertson, Global Chief Economist at Renaissance Capital in London.
"Long term this is really bad news. We know from Jackson-Vaneck that these kind of sanctions are hard to remove once in place. This will further stall foreign investment into Russia, negatively impacting growth and development, furthering long-term capital flight and brain drain. It will further the isolation from the West, and stagnation of the Russian economy," said Tim Ash, a Senior Strategist at BlueBay Asset Management in London.
"Most importantly for Russia, the original Senate bill with regard to Nord Stream 2 was watered down as it now requires coordination with 'allies' when imposing such sanctions. Moreover, the bill only gives the option for the president to introduce such sanctions, but does not require that he does so. So, overall, I expect marginal negative effect," Ivan Tchakarov, senior economist at Citi in Moscow.
"In general we think that the impact on the Russian economy should be relatively limited. Compared to 2014 when the first set of sanctions was introduced the Russian economy is in much better state to weather the measures," said Liza Ermolenko, emerging European economist at Barclays in London.
"In the U.S. sanctions bill we have not seen any direct negative implications for the rouble so far. Some tightening of the trade financing terms would not have a material negative impact on the rouble, although it may lead to a shortage of the dollar liquidity in the market and it's not clear how well companies and banks were prepared to this," said Alexey Pogorelov, chief economist at Credit Suisse in London.
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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