According to Reuters, “Leaders of the United States and major European powers agreed in a teleconference on Monday [July 28] to impose sanctions on Russia’s banking, technology, and arms sectors. The U.S. Treasury imposed sanctions on more Russian banks, targeting VTB, the Bank of Moscow, and the Russian Agriculture Bank, as well as the United Shipbuilding Corp.”One telling sanction includes an arms embargo. It prohibits any technology that could eventually be used by the Russian military. This sanction and others come on the tail of reported allegations that Vladimir Putin helped arm rebel protestors.
Analysts believe the hardest blow, however, could land on western energy investors. Companies such as BP, ExxonMobil, Shell, and Statoil have major ties to Russia and the recent embargos could degrade the odd 10.5m barrels of oil produced per day.
Bloomberg News reports, “As violence escalates in eastern Ukraine between government and separatist forces, the EU yesterday sought to punish Russia for its involvement by restricting exports of deep-sea drilling and shale-fracturing technologies. The U.S. followed suit, with President Barack Obama announcing a block on specific goods and technologies exported to the Russian energy sector.”
Additionally, economists believe the far-reaching sanctions could primarily affect businesses in the EU. London banks and German manufacturing firms, in general, may face some loss due in part to a large Russian customer base.
However, officials are hopeful the sanctions will impact Russia more; expectantly, the harsh bans should awaken Moscow representatives to their crisis.
The Guardian notes, “The latest round of EU sanctions against Russia is designed “to hurt Russia more than it hurts us,” according to the foreign secretary Philip Hammond. With trade between Europe and Russia worth 10 times more than US trade with Russia, European Union leaders are treading a fine line between sanctions that will influence Moscow while not damaging their own economies – many of which are still emerging from the Eurozone crisis.”