MOSCOW, September 23 (RIA Novosti) - The possible revision of EU sanctions against Russia will not be sufficient to change the investors' perception of the country, as long as the United States maintains its restrictions, Craig Botham, economist at British multinational asset management company Schroders, told RIA Novosti Tuesday.
"Comments suggesting the EU may revise its sanctions could offer a limited amount of solace. But in reality as long as the US maintains financial sanctions, firms will be wary of diving back into Russia," Botham said.
Following Crimea's reunification with Russia, the West introduced several rounds of economic sanctions against Russia. The latest round of restrictions complicated access to Western capital markets for a number of key Russian banks, including the largest lender Sberbank, as well as oil and defense companies.
Even the possible easing of the sanctions will not prevent the Russian economy and finance sectors from tightening further, the economist said.
"The central bank will likely have to maintain an interventionist stance to ensure sufficient FX liquidity, and ruble weakness could persist, adding to inflationary pressures," Botham said.
Russia’s Kommersant daily reported Tuesday that the European Union may start reconsidering economic sanctions against Moscow on September 30, when the EU Foreign Affairs Council reviews the implementation of the Minsk peace plan for southeastern Ukraine, and the ceasefire regime in particular. In the best-case scenario, EU officials may support a gradual easing of certain sanctions, the newspaper said, citing an anonymous EU source.
Representatives of Russia, Ukraine, the self-proclaimed Donetsk and Luhansk people’s republics and the Organization for Security and Cooperation in Europe brokered a ceasefire agreement between Kiev and eastern Ukrainian independence forces during the meeting of the Contact Group on Ukraine held in Minsk on September 5.
The possible revision of certain sanctions, most likely in the energy sector, is timely, Botham said, as Europe recognizes the importance of sustainable Russian gas supplies ahead of winter.
"September’s extension of sanctions by the US and EU targeted the financial and oil sectors once more, with the exclusion of gas a telling reflection of the resource’s importance to Europe with winter not far away," the Schroders economist said.
"However, as with previous rounds of sanctions, the more immediate growth negative effects are likely to come from the increased scope of financial sanctions, pushing up the cost of credit for the Russian economy as a whole. While some firms will have access to government funds – Rosneft and Novatek are set to receive money from the National Wellbeing Fund – smaller firms are less likely to be so protected," Botham said, referring to the largest state-owned oil producer and the largest independent gas producer.
Russia's domestic demand, particularly investment, is likely to suffer as a result of the sanctions, the economist said.
