Russian media have published estimates predicting that the Russian economy will be hit by new US sanctions in the coming year. The newspaper 'Kommersant' cites forecasts from the financial institution 'Bank of America Merrill Lynch', which expects Russia to lose up to one billion dollars in foreign investment by the end of this year. According to the 'Moscow Times', 'Bank of America Merrill Lynch' has stated that US sanctions could potentially expose Russia to a 'black swan' event in 2018, similar to the occurrences of 2014. The black swan theory refers to rare and surprising events that are not anticipated. In December 2014, the value of the Russian ruble fell by 30% in just 10 days. 'Bank of America Merrill Lynch' is a subsidiary of the multinational megabank 'Bank of America', providing banking and investment services. Herman Gref, CEO of 'Sberbank', told the 'Financial Times' that he believes there is little chance that the United States will impose severe sanctions targeting the 'oligarchs' or state-owned companies that were legally targeted last summer. However, Gref added that if such sanctions are enacted, their consequences would be far more severe than those of the Cold War. This year, the US Congress passed a bill aimed at tightening sanctions against Russia, Iran, and North Korea, which President Donald Trump signed into law in August. This law imposes new sanctions on companies involved in Russian offshore oil extraction projects and the country's oil and gas pipeline facilities. Companies collaborating with Russian military and security entities have also been targeted by sanctions. Moscow officials reacted strongly to this law, with the Russian Prime Minister stating that it is akin to declaring a 'full-scale trade war' against the country. According to the 'Financial Times', the worst possible sanction that could be imposed on Russia would be preventing its banks from accessing the international 'SWIFT' system, which is used for secure financial messaging between banks. Since 2014, following the events in Ukraine, the annexation of Crimea, and Western sanctions, sanctions of this severity have not yet been implemented.
Estimates of the 'Negative Consequences' of US Sanctions on the Russian Economy in 2018
Russian media report that new US sanctions could significantly harm the Russian economy in 2018, with estimates suggesting a loss of up to one billion dollars in foreign investment. The potential for severe sanctions, including exclusion from the SWIFT financial system, raises concerns about a 'black swan' event similar to the 2014 ruble crisis.
👥 Key Players
📰 What Happened
US sanctions are expected to significantly impact the Russian economy, potentially leading to a loss of foreign investment and a 'black swan' economic event. The sanctions target Russian oil and military sectors, with severe measures like exclusion from SWIFT being considered.
- US sanctions could lead to a $1 billion loss in Russian foreign investment.
- Potential exclusion from SWIFT could severely disrupt Russian banking.
💡 Why It Matters
📚 Background
US sanctions are a response to Russia's actions in Ukraine and its global military activities. Similar sanctions have been applied to Iran, highlighting a broader US strategy of economic pressure.
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