By Alexander Miller, consultant in emerging market – Eurasia Business News, March 11, 2022
The European Union, within the framework of a new sanctions package, will introduce restrictive measures on the imports of Russian steel and iron products and on the exports of luxury goods to Russia. Brussels will also suspend Moscow’s privileged trade and economic treatment an will crack down on its use of crypto-assets.
“We will ban the import of key steel products from the Russian Federation. This will hit the central sector of the Russian economy, depriving it of billions of dollars of export earnings and ensuring that our citizens do not subsidize the war,” the European Commission said in a statement released on Friday in the evening.
The EU on Saturday will present the fourth package of sanctions against the Russian Federation, said in a statement the President of the European Commission Ursula von der Leyen.
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The European sanctions will be aimed at “depletion of resources” that the Russian Federation uses for its military operation in Ukraine launched on February 24. The new EU sanctions will include the abolition of Russia’s most favored country status in the World Trade Organization system. This would allow the EU to ban or impose punitive tariffs on Russian goods.
New sanctions will also target the Russian elite and should close the Russian state and elite access to crypto assets to circumvent sanctions.
The economic consequences of these measures could be huge for the Russian market, since all the G7 countries have decided to add tough restrictive measures against the Russian economy and currency.
Inflation in Russia in 2022 will be 20%, but by 2023 it will be reduced to 8%, reported the Macroeconomic Survey of the Bank of Russia. According to the expectations of analysts surveyed by the regulator, GDP by the end of 2022 could decrease by 8%, but in 2023 it will grow by 1%.
In addition, banning imports of Russian steel and iron will directly impact the European supply chains. Amid high inflation (+5.8% in February 2022 for the Euro area), and soaring energy and commodity prices, such restrictive measures will hit both Russia and the European Union. If the Western policy towards Russia prevails, it could really be a Pyrrhic victory.
Update to come.
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