From Russia with love…

 
MOSCOW
 
Hard times are awaiting the Russian peninsula since its attack over Ukraine in order to take over Crimea. The European Union alongside the United State decided to take economic sanctions over Putin's area a few months ago, in order to establish order and reduce Russian attack against Crimea. Being hit hard by those 2 superpowers, Russia decided to retaliate, in kind... but before looking at Russia's counterattack plan, let's just take a look on sanctions taken by Western countries against the Ex-Soviet Union.
 
USA First, let's begin with sanctions imposed by the world's largest economy. The US has constructed a financial bomb 12 years ago, knowing that it would be useful to take corrective measures against war countries. The US treasury designed this secret weapon in order to bring countries down to their knees without having to use any military power. Relying on total and utter control over the targeted countries Banking Systems, Russia's financial lifeblood might stop flowing in the economy, bringing it down to near primary sector level economy. Given this, the Russian Ruble might suffer harshly and fall down against major currencies on the market. Moreover, it can be seen that the Russian GDP compared to countries such as Europe and China is drastically decreasing. 
 
EUROPENow, let's focus on the European Union, an area where various countries depended on Russian gas provider (Gazprom). The European area decided to limit Russian Oil companies' access to European financial markets. The EU will also extend its list of individuals covered by existing travel bans and asset freezes to include the new leadership in Donbass, the government of Crimea as well as Russian decision makers. Pretty scary for the Ruble isn't it? Moreover, the EU sanctions have now blocked the export of services and deep-water technology for Russia's oil industry. Three major Russian state oil firms are targeted: Rosneft, Transneft and Gazprom Neft, the oil unit of gas giant Gazprom.
 
DO THOSE SANCTIONS AFFECT KREMLIN ONLY?Given those sanctions by the EU and the US, the Russian Ruble suffered a consequent loss recently, falling to its all-time low against the greenback. The ruble slumped to 37.72 against the dollar on the 12th of September 2014. Will Kremlin's currency fall to ground due to those sanctions? Well, Rubble's fall might not be as important as it seems. The main concern is of how President Putin will deal with lifting the Rubble up to its original standards. Moreover, this economic war is not only affecting the Russian economy, but also the European Union. How? Simple, if the EU tries to introduce penalties against their companies for violating the sanctions, that'll have a worse and inverse result on the country, leaving the country's economic wallet in danger. Is it a danger for Britain? Time will show what will happen to the European Union and its members. Moreover, the central bank will announce its interest rate decision soon. 
Economists expect that the Bank of Russia will leave the one-week auction rate at 8% and other economists forecast an increase to 8.5%.
 
RUSSIAN ECONOMIC PLAN TO RETALIATE As we all know, the Ex-Soviet Union is not the kind of country which will remained arms crossed to those kinds of economic attacks. Following those attacks, Russia decided to retaliate, in kind... Putin's country decided to ban imports over agricultural goods which includes dairy products, meat and fruits. Although Europe's total percentage exports towards Russia is relatively low, it might suffer from the lack of money inflow due to the actual economic situation in Europe. European exports account to a figure of at least €120 billion, compared to global goods exports which gives us a figure of €1.7 trillion. A growing stagnation in trade and investment between the Europe and Russia, could harm sentiment in Europe at a fragile moment. Data for gross domestic product in second quarter for the 18-country euro zone, due Aug. 14, are expected to show that large swaths of the Continent are still struggling to recover from those long years of financial crisis. 
Warren Tancredi By: Warren Tancredi
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