Russian Federation warns Washington over new sanctions

Russian Federation warns Washington over new sanctions

Russian Federation warns Washington over new sanctions

What Happened: Russian Prime Minister Dmitry Medvedev said August 10 that USA sanctions on Russian banks would be tantamount to economic war and that Russia would retaliate however it deems necessary, Reuters reported.

Economists expect the Russian economy to grow by 1.8 per cent this year.

On Wednesday, the State Department announced a new round of sanctions that pushed the rouble to two-year lows and sparked a wider sell-off over fears Russian Federation was locked in a spiral of never-ending sanctions. But if new sanctions proposed by Congress and the State Department are implemented in full, some fear growth could be nearly to zero.

Russia's hopes for better ties with the USA under President Donald Trump have withered as his administration has introduced several waves of sanctions against Russian Federation.

That in turn has piled pressure on Trump to show he is tough on Russian Federation ahead of mid-term elections.

New sanctions proposals in the U.S. Congress include legislation targeting Russia's state-controlled banks and freezing their operations in dollars - a move that would deal a heavy blow to the Russian economy.

"While I don't want to comment on the talk about future sanctions, I can say that if we end up with something like a ban on banking activities or the use of certain currencies, we can clearly call this a declaration of economic war", Medvedev was quoted as saying by the Interfax news agency. "By economic means, by political means and if necessary by other means", he added.

Medvedev's tough tone was in stark contrast with past statements by President Vladimir Putin and his lieutenants, who have taken a nonchalant posture while talking about USA and other Western sanctions, seeking to downplay their impact on the Russian economy.

A second round of sanctions that could go into effect 90 days later would cut far deeper, including blocking all American bank loans to Russian entities, an outright ban on USA exports to Russia, and suspension of diplomatic relations.

The announcement of the sanctions on Thursday prompted Russian stocks and the ruble to tumble.

Medvedev said that while the US said the sanctions are meant to punish Russia's "bad" behavior, their goal is to sideline a rival.

One tool it said it might use was limiting market volatility by adjusting how much foreign currency it buys.

The fate of the US bill Medvedev was referring to is not certain.

While it was hard to assess so far in advance, they said it was more likely that only some of its provisions would be included as amendments in another piece of legislation, such as a spending bill Congress must pass before September 30 to prevent a government shutdown.

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