Bad news for Russia all around as Standard & Poor’s downgrades the country’s credit rating to near junk. The Russian economy has not been growing at a rate that would suggest the country will dust itself off from the rating anytime soon.
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The Wall Street Journal reports, “That’ll be a significant problem for an economy already struggling to grow. Between 2000 and the financial crisis, the Russian economy expanded an average of 7 percent a year. It rebounded smartly after a hefty decline in 2008, but by 2013, it only grew 1.3 percent.”
In addition to Russian inflation and its waning currency, the United States recently imposed sanctions that could significantly affect the country’s manufacturing industry, including high-tech and oil manufacturers.
According to Bloomberg News, “The list of officials and companies sanctioned by the U.S. yesterday includes powerful businessmen close to Putin, such as Igor Sechin, OAO Rosneft’s chief executive officer, and Sergei Chemezov, director of State Corporation for Promoting Development, Manufacturing and Export of Russian Technologies High-Tech Industrial Products, also known as Rostec. While the sanctions don’t apply to Rosneft or Rostec, banks such as InvestCapitalBank and SMP Bank are on the list.”
The sanctions, however, will only impact those Russian companies that also operate within the United States.
Fox Business notes, “The sanctions announced Monday freeze all of the assets of the individuals and entities that are within U.S. jurisdiction. Additionally, the sanctions prohibit transactions between U.S. citizens and the Russian individuals and entities.”
Amidst the cash flow cut chaos, interestingly enough, the Russian to U.S. weapons manufacturer and exporter will not be affected by the sanctions.
A report by the Washington Times states, “Russia’s main weapons exporter Rosoboronexport, a state-owned company currently being paid by the Pentagon to support U.S. efforts in Afghanistan, emerged unscathed Monday as the White House and its European allies added new sanctions against Moscow.”
The Pentagon and the White House have not responded to critics who believe this lack of sanctions on Rosoboronexport could point to future trouble for the United States amidst the Russia-Ukraine conflict. [/show_to]