First sanctions against Russia

The US, EU, UK and some of their allies have announced retaliatory measures against Russian interests after Vladimir Putin recognised the independence of the two breakaway republics of Donetsk and Luhansk. By all accounts, these measures, apart from the suspension of the Nord Stream 2 approval process, remain moderate for the moment, affecting personalities close to the Russian government, certain financial institutions but not the most important ones, or the ability of the Russian state and companies to raise debt on the London or New York stock exchanges, which they have been doing less and less since the annexation of Crimea in 2014. The most radical measures, such as cutting off access to the Swift international payment system or an embargo on Russian exports, have been left on the back burner and will be gradually imposed, Western governments say, if Vladimir Putin goes further in Ukraine.

The market reaction was mixed: a moderate downward correction in the equity markets but a rise in long-term interest rates that accompanied the rise in energy prices. The EUR/USD exchange rate is unstable but remains slightly above 1.13 in fine. The ruble has rather strengthened after the announcement of the sanctions and is in any case not collapsing, as was the case in 2014. These moderate sanctions seem to leave the door open for negotiations but may also appear as a sign of weakness that could encourage Vladimir Putin to push his advantage further.