US/NATO War on Russia

[David Guyatt]

Putin laughs off sanctions as he signs bills to transfer Crimea to Russia

President promises to open account at blacklisted bank as west signals intent to maintain pressure over Ukraine crisis

• Alec Luhn in Moscow
  
• theguardian.com, Friday 21 March 2014 13.05 GMT
  

Russia's president, Vladimir Putin, signs a law on ratification of a treaty making Crimea part of Russia, in the Kremlin in Moscow. Photograph: Mikhail Klimentyev/AFP/Getty

Vladimir Putin has laughed off western sanctions against Russia, promising to open an account in a bank on the US blacklist, but indicating that he will not escalate the Ukraine crisis further.
A day after the US extended its sanctions blacklist to take in businesspeople and aides from Putin's inner circle, the Russian president told his security council that he would not take retaliatory measures against the US sanctions nor against threats that Ukraine will implement a visa regime with Russia.
But at the same time, he completed the annexation of Crimea by signing new legislation completing the transfer of the peninsula to the Russian Federation. Putin described it as a "remarkable event", as he signed the bills on Friday.
Western powers signalled their intention to maintain the pressure, with France announcing a suspension of all military co-operation with the country and offering warplanes to the Baltic republics, which also have sizeable Russian minority populations and borders with it. The US was reportedly organising military exercises in eastern Europe to include Poland and the Baltic trio of Latvia, Lithuania and Estonia.
But Putin appeared insouciant in the face of the western manoeuvres. In response to the US move to include Bank Rossiya on the blacklist because it is believed to be the "personal bank for senior officials of the Russian Federation", Putin joked: "I personally didn't have an account there, but I'll definitely open an account there on Monday."
As for the 20 influential officials added to the US sanctions list, a smiling Putin warned: "Stay away from them, they'll compromise us".
Visa and Mastercard have stopped servicing cardholders of Bank Rossiya, as well as those of SMP Bank, which is controlled by the Rotenberg brothers now sanctioned by the US. The move marked the first time sanctions have affected ordinary Russians.
There was a stern Russian attitude towards Ukraine, however. At the meeting, the Russian prime minister, Dmitry Medvedev, said that an agreement under which Russia gave Ukraine deep discounts on Russian gas in return for allowing Russia to keep its Black Sea fleet in Crimea should be cancelled now that Russia controlled Crimea. Russia should seek the return of the $11bn (£6.7bn) that Ukraine saved under the agreement, as well as $5bn in other debts, Medvedev said.
Investcafe analyst Andrei Shenk said the threat to call in debts was likely meant to keep Ukraine from taking radical steps, such as instituting a visa regime.
"It's a deterrent that can later be used in negotiations" over Russia's use of Ukrainian gas pipelines to sell its product to Europe, which may eventually be cut off in the political conflict, Shenk said.
Putin told the meeting that "millions of completely innocent Ukrainians" who worked in Russia would suffer under any visa regime.
At the same time, the US sanctions seemed to be taking a slight toll on the Russian economy. Russian stocks dropped on Friday, with the Moscow market falling by as much as 4%, although it later began to recover. Companies connected to individuals on the sanctions list suffered the most.
Meanwhile, the US ratings agencies Fitch and S&P downgraded the outlook on the country's long-term foreign and local currency ratings to negative.
But, Shenk said, the mainly political US sanctions posed "the threat of harm more than direct harm" to the Russian economy. For now, only financial organisations would really be affected, as the cost of credit from western banks would rise for them, he said.
The already weakened ruble did not fall significantly against the euro and the dollar on Friday.
Russia's Central Bank promised to support Bank Rossiya, apparently guaranteeing that it would not let the bank fail now that US sanctions had cut off its dealings with international credit card companies and other institutions.
Shenk said Russia was unlikely to respond to the US sanctions not only because it lacked the instruments to do so, but because firing back with its own sanctions would admit the legality of the measure.
"For now, it's a political decision not to answer sanctions, not to acknowledge the legitimacy of such actions," he said.

Putin saying he will not take any retaliatory measures against US sanctions, nor Ukraine's threats to impose Visa restrictions, steals the wind from the sails of the neocons I think. They'd love nothing better than him hitting back so they could justify further escalation.