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Do EU/U.S. Russia sanctions have teeth?

Friday, March 21, 2014 - 02:40

March 21 - Visa and Mastercard freeze cards at sanctioned Russian banks, and a Russian billionaire is forced to sell a stake in oil trading firm Gunvor. So are EU and US sanctions beginning to bite? Joanna Partridge reports.

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Calling on European leaders to stop talking and start acting. These Ukrainian protesters say EU sanctions imposed on Russia aren't enough. The Crimea crisis and conflict between Kiev and Moscow was the central issue at a two-day EU summit. European Council President Herman van Rompuy said the EU will work to reduce its reliance on Russian energy. SOUNDBITE: Herman van Rompuy, European Council President, saying (English): "Sharing more information, bringing more transparency on contract conditions, all that to increase our joint bargaining power. Leaders are ready to maximise their collective hand, they have asked the Commission to come up with a concrete action plan in time for our June summit as a basis." The EU also signed the core elements of a political association deal with Ukraine, the same deal rejected by former president Viktor Yanukovich last year. Europe added 12 names to the list of Russians targeted with sanctions - taking the total number to 33. The United States has blacklisted 20 people and businesses. They include Yuri Kovalchuk, the largest shareholder in Bank Rossiya and a close Putin advisor. Rossiya said on Friday said U.S. credit card companies Visa and Mastercard had stopped providing services for payment transactions. The same happened at lender SMP. Billionaire Gennady Timchenko was also on the U.S. list - forcing him to sell his almost 50% stake in the vast oil trading empire Gunvor, which he helped found. Amid signs the tougher-than-expected sanctions were beginning to bite, Putin signed laws completing Russia's annexation of Crimea. He also promised to protect Bank Rossiya and said Russia would respond in kind to the financial and visa curbs. Shares fell sharply and the MICEX index slid as investors took fright. The rouble also dropped. But the Western sanctions can cut both ways, says Simon Quijano-Evans from Commerzbank. SOUNDBITE: Simon Quijano-Evans, Head of EM Research, Commerzbank, saying (English): "The sanctions really deal with sentiment to start with. It's important for politicians to really think this through now, on both sides, do they want to move ahead with this? Russia has about $500 billion of FX reserves, which in the past it has used to buffer the banking sector, the economy in dire situations and it would probably do this again at some stage if need be." Officials and lawmakers in Moscow have so far largely laughed off Western sanctions. And as Europe and the U.S. have been deciding what to do, Putin sent the head of oil company Rosneft to Asia. Making it clear if the Kremlim is isolated - it will look East for new business, military contracts and political alliances.

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Do EU/U.S. Russia sanctions have teeth?

Friday, March 21, 2014 - 02:40