BCN-13,14 U.S. economic war looms larger as new sanctions near

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U.S. economic war looms larger as new sanctions near

MOSCOW, Aug. 12, 2018 (BSS/Xinhua) – Russia-U.S. confrontation is
extending to the economic and trade field as Washington is poised to slap new
and powerful sanctions in a move Moscow views as the declaration of an
“economic war.”

The U.S. State Department said Wednesday that Washington will impose new
sanctions on Russia on or around Aug. 22 over the alleged poison attack on
ex-Russian spy Sergei Skripal and his daughter Yulia in the British city of
Salisbury in March.

According to the Russian Foreign Ministry, the U.S. restrictions will
possibly include a ban on foreign assistance to Russia and sale of military
and dual-use items to the country, as well as renunciation of providing state
loans and other financial aid.

U.S. State Department officials estimated that the sanctions may affect
hundreds of millions of dollars worth of exports, dealing a blow to some 70
percent of the Russian economy which may result in an approximately 40-
percent fall in workforce.

“All I can say is: if they ban banking operations or the use of any
currency we will call it the declaration of an economic war,” Russian Prime
Minister Dmitry Medvedev said Friday.

“And we’ll have to respond to it – economically, politically or in any
other way, if need be. Our American friends should make no mistake about it,”
he warned.

News about the upcoming U.S. sanctions has thrown Russian ruble to a
record low since 2016. The currency traded 67.72 per U.S. dollar on the spot
market at the Moscow Exchange Friday.

Russian stocks also tumbled on Friday, with the ruble-denominated MOEX
Russia Index falling 1.5 percent and the U.S. dollar-denominated RTS Index
dropping 3.68 percent.

Russian Finance Minister Anton Siluanov attributed the ruble depreciation
partly to the new U.S. sanctions. But he added that the unstable situation on
developing markets are also to blame.

Despite the volatility, Kremlin spokesman Dmitry Peskov said Russia’s
financial system is “fairly stable” and it has proved its resilience in
difficult times.

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Russia’s broader economy is recovering from years of recession. The
Russian federal service for state statistics said Friday that the country’s
GDP grew 1.8 percent in the second quarter of the year, up from 1.3 percent
in the first three months.

Russia’s trade surplus surged 78 percent year on year in June to reach
15.5 billion dollars, the Russian Central Bank said Friday.

On Aug. 5, Russia started imposing additional import tariffs of 25-40
percent for a range of U.S. goods, including road construction, oil and gas
industry, metal processing machinery as well as fiber-optics.

The volume of the new Russian tariffs, in retaliation for U.S. extra
tariffs of 25 percent on steel and of 10 percent on aluminum starting March
23, will amount to 87.6 million dollars a year.

The United States also seeks to contain Moscow’s energy sector, which the
Russian economy heavily depends on.

Medvedev on Friday criticized Washington for forcing European countries to
buy more U.S. liquefied natural gas (LNG) and complicating the construction
of a new Russian gas pipeline to Europe.

Russia’s Nord Stream 2 will expand the existing Nord Stream main gas
pipeline by linking Russia and Germany via the Baltic seabed, bypassing
Ukraine, Belarus, Poland and other eastern European and Baltic countries.

U.S. President Donald Trump lashed the German government for agreeing on
the project last month at the headquarters of the North Atlantic Treaty
Organization in Brussels, saying that the pipeline will make Germany
dependent on Russia.

Peskov said Trump’s criticism was aimed at promoting sales of U.S. LNG to
Europe and the Kremlin considered this to be a manifestation of unfair
competition.

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