Russia denounces new US sanctions as illegal, unfriendly

US move hits investor sentiment, sends rouble falling to two-year low

MOSCOW • Russia condemned a new round of US sanctions as illegal yesterday, after news of the measures sent the rouble tumbling to two-year lows and sparked a wider asset sell-off over fears that Moscow was locked in a spiral of never-ending curbs by the West.

Moscow has been trying with mixed success to improve US-Russia ties since Mr Donald Trump won the White House in 2016, and Russia's political elite were quick to chalk up a summit last month between Mr Trump and President Vladimir Putin as a victory.

But initial triumphalism swiftly turned sour as anger over what some US lawmakers saw as an overly deferential performance by Mr Trump and his failure to confront Mr Putin over Moscow's alleged meddling in US politics galvanised a new sanctions push.

Having bet heavily on improving ties with Washington via Mr Trump, Moscow now finds that the US President is under mounting pressure to show he is tough on Russia ahead of mid-term elections.

In the latest broadside, the US State Department said on Wednesday it would impose fresh sanctions by the month's end after determining that Moscow had used a nerve agent against a former Russian double agent, Mr Sergei Skripal, and his daughter Yulia, in Britain, something Moscow denies.

The Kremlin said the sanctions were illegal and unfriendly and that the United States' move was at odds with the "constructive atmosphere" of the encounter between Mr Trump and Mr Putin in Helsinki.

Russian Foreign Ministry spokesman Maria Zakharova said Moscow was starting to work on retaliatory measures.

The new sanctions come in two tranches.

The first, which targets US exports of sensitive goods related to national security, comes with deep exemptions and many of the items it covers have already been banned by previous restrictions.

However, the second tranche of sanctions, which would be activated after 90 days if Moscow fails to provide "reliable assurances" that it will no longer use chemical weapons and allow on-site inspections by the United Nations or other international observer groups, is more serious.

The sanctions would target exports of national security-related goods including sectors such as specialised oil and gas technology and some electronics and sensors, a senior US State Department official said.

Asked whether sanctions would apply directly to Russia's biggest airline Aeroflot, the official said they would not, but they could theoretically affect the company if it tried to import any of the goods covered by the sanctions.

The US State Department's announcement fuelled already worsening investor sentiment about the possible impact of more sanctions on Russian assets and the rouble at one point slid by over 1 per cent against the US dollar, hitting a two-year low, before recouping some of its losses.

The US move also triggered a sell-off in Russian government bonds and the dollar-denominated RTS Index fell to its lowest since April 11.

The Kremlin said the new sanctions were "illegal and do not correspond to international law".

"Such decisions taken by the American side are absolutely unfriendly and can hardly be somehow associated with the constructive - not simple but constructive - atmosphere that there was at the last meeting of the two presidents," said Kremlin spokesman Dmitry Peskov.

Washington had become an unpredictable player on the international stage, Mr Peskov added, saying that "anything could be expected" from it.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 10, 2018, with the headline 'Russia denounces new US sanctions as illegal, unfriendly'. Print Edition | Subscribe