US and Europe Increase Sanctions Against Russia

US and Europe Increase Sanctions Against Russia
July 30, 2014

The recent tragedy whereby Russian backed separatists were blamed for shooting down Malaysia Airlines Flight MH17 highlighted the political unrest in Ukraine. 298 passengers on board the civilian airliner were killed. President Putin was approached to make a statement about Russia’s part in the tragedy but has not yet given the world any real insight. In a recent press conference, President Obama stated,

“Russia and it’s proxies in the Ukraine have failed to cooperate with the investigation and to take the opportunity to pursue a diplomatic solution to the conflict in the ukraine”

As President Obama Announces Increased Sanctions :

President Vladimir Putin’s ongoing campaign to fuel violence in Eastern Ukraine has caused a new casualty, and this time it’s the Russian Economy. On Tuesday 29th July, President Obama announced increased sanctions against Russia. Whilst previous sanctions have focused on specific businesses and individuals such as those close to Putin, the new increased sanctions are designed to hit the foundations of the Russian economy. These sanctions now include oil and gas supplies, as well as technology, the banking and finance sectors, and defense companies. The EU also targets banks and trade but it has been previously reluctant to impose heavy sanctions because so much of the European economy is dependent on Russian natural gas. The heavy sanctions are a sign that the EU takes this issue incredibly seriously, and are willing to suffer the possible repercussion on their economy.

The US hopes that its close coordination with Europe on these strict  sanctions will have a larger effect on the Russian economy, thereby pressuring President Putin to recognise Ukraine’s sovereignty. In a statement announcing the new measures, the EU said that the sanctions are a strong warning to Russia and stated that the,

“Illegal annexation of territory and deliberate destabilization of a neighbouring sovereign country cannot be accepted in 21st century Europe”

Obama reassures us that this is not the beginning of another Cold War. He went on to state that this is simply a very specific issue related to the Russian inability to recognise that Ukraine can chart its own path. The cold war used currency that was valueless on the world economy, but this has now changed and Russia is far more susceptible to economic sanctions than they ever were.

Interestingly, defiant Russian officials stated that their focus will shift to the domestic market. Morgan Stanley analysts have hinted that Russia is capable of cutting off European gas supplies. If this happens, it will send energy costs soaring as Russia is responsible for a third of Europe’s natural gas supplies. Putin now faces one of two choices, either he will back down and assist in the de-escalation of Ukrainian unrest, or he will retaliate by focusing Russian resources into Russia itself. Only time will tell.

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Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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