Too Early to Tell Impact of US Sanctions on Russian Economy, Says CRS
Recent U.S. sanctions on Russians and Ukrainians accused of fueling turmoil in Ukraine are having and likely will continue to have an unclear impact on the Russian economy, said the Congressional Research Service (CRS) in a July 18 briefing, citing prominent arguments among unspecified analysts. Many analysts believe unilateral U.S. sanctions will not have the level of impact the Obama administration is targeting, noting that cooperative European sanctions are critical, said CRS. “Some argue that the direct effects on Russia's economy overall could be limited, because the United States accounts for a small share of Russia's trade and capital inflows,” said CRS. “Russia's economic relationship with Europe is much stronger.” U.S. sanctions on the Russian financial sector could, however, significantly “disrupt” the Russian economy, and the measures may also undermine investor confidence in Russia, said CRS.
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The Obama administration has already sanctioned a number of Russian financial institutions (see 14042812). There also remains the possibility that U.S. sanctions will damage U.S. industry, said CRS, adding that firms like Caterpillar, Boeing, Ford, PepsiCo, Procter & Gamble, and Pfizer are “active” in Russia. The administration first issued an executive order on March 6 to block the assets and prohibit dealings with Russian officials involved in destabilizing Ukraine (here).