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Business And Politics News

American Sanctions Will Cut Investments In Russia


Some experts say that the next round of anti-Russian sanctions imposed a couple of weeks ago is going to undermine the Russian economy. In particular, they are threatening the investment capital inflow.

 

 

 

 
A few weeks after Donald Trump reluctantly signed the new sanctions approved by the U.S. Congress, Russian and foreign investors are still trying to figure out what the actual consequences of this decision are going to be. For now, they seem to have understood enough to be afraid of long-term negative consequences for their existing or potential investments in the Russian economy, which has just started recovering after a 2-year recession.
 
Even those analysts who are skeptical about the efficiency of those sanctions are afraid that cautious investors may start reducing exposure to their Russian investments or quitting them. A top-manager working for a Russian mining company has to admit that the next round of the anti-Russian sanctions is designed to poison the recovery of the Russian economy that has been seen in there for a while. Still, he things those sanctions are going to miss the target anyways.
 
The Russian economy gained 2,5% in the second quarter of the year, which is the highest rate seen in almost 5 years.
 
According to Chris Weafer, Senior Partner at Moscow consulting firm Macro Advisory, the Russian economy is indeed recovering. In particular, the economy gradually got used to low oil prices as well as the sanctions imposed on Russia in 2014. He is convinced that those sanctions won’t curb the economic growth in Russia over the next 2 years. However, in order for the Russian economy to sustain its growth over a longer period, investment inflow is necessary, but the new round of sanctions imposed on Russia jeopardizes it.
 
According to fDi Intelligence, the amount of direct investments in Russia reached $12,9 billion in 2016. This allowed Russia to become Europe’s third biggest country in terms of attracting direct foreign investments, with the UK and France occupying the first 2 positions.
 

 

Meanwhile, some American experts believe that Trump’s administration is not going to advocate those sanctions or implement them since they have never approved those sanctions and Donald Trump signed them reluctantly. Chances are, the U.S. Congress will try to influence President Trump through even tougher moves against Russia. That’s why the experts expect new laws trying to force Trump’s administration into implementing those sanctions. It should also be noted that right in advance of the intermediate election in 2018, the Republicans believe they will benefit from acting tough against Moscow. The experts believe that they will come up with a new draft law within the next 12 months, and in this draft law “maybe” will be replaced with “have to”.

 

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