May 17, 2022

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Putin warns the West: Moscow can end exports and deals

Putin warns the West: Moscow can end exports and deals

Russian President Vladimir Putin delivers a speech during a meeting of the Council of Lawmakers at the Federal Assembly in Saint Petersburg, Russia, April 27, 2022. Sputnik/Alexey Danishev/Kremlin via Reuters

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  • Putin begins criticism of Russia over sanctions against Ukraine
  • Gives wide powers to cut raw materials and produce exports
  • Transactions with sanctioned entities are prohibited
  • Retaliatory moves could cause chaos in the markets
  • Who will be on the sanctions lists will be the key now

LONDON (Reuters) – Russian President Vladimir Putin told the West on Tuesday that he could end exports and deals in the Kremlin’s strongest response yet to the sanctions burden the United States and its allies imposed over Russia’s invasion of Ukraine.

Putin, Russia’s supreme leader since 1999, signed a broad decree on Tuesday banning the export of products and raw materials to people and entities on the sanctions list he ordered the government to prepare within 10 days.

The decree, which went into effect with its publication, gives Moscow the ability to sow chaos across markets where it can at any moment halt exports or tear up contracts with an entity or individual that it has sanctioned.

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The Russian government has ten days to prepare lists of those it will punish, unlike the Western politicians who have already done so.

Putin expressly formulated the decree as a response to what he described as the illegal actions of the United States and its allies aimed at depriving “the Russian Federation, citizens of the Russian Federation and Russian legal entities of property rights or restricting their property rights”.

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The decree stipulates “special economic retaliatory measures in relation to the unfriendly actions of some foreign countries and international organizations.”

Russia’s invasion of Ukraine on February 24 prompted the United States and its allies to impose the toughest sanctions in modern history on Russia and Moscow’s business elite, moves Putin describes as a declaration of economic war.

The West’s attempt to economically isolate Russia – one of the world’s largest producers of natural resources – has plunged the global economy into uncharted waters with soaring prices and warnings of food shortages.

Putin, 69, has repeatedly warned that Moscow will reciprocate, although the Kremlin’s toughest economic response until Tuesday had been to cut gas supplies to Poland and Bulgaria and demand a new payment plan for European gas buyers.

The decree issued on Tuesday prohibits the export of products and raw materials to persons and entities that have been sanctioned by the Kremlin. Any transactions with such persons or entities are prohibited – even under existing contracts.

Putin tasked the government with drawing up a list of foreign individuals and companies that would be punished, as well as setting “additional criteria” for a number of transactions that could be subject to restrictions.

“This is a framework decree,” said Tatiana Stanovaya, a nonresident scholar at the Carnegie Moscow Center and founder of the political analysis firm R-Politic.

“Now all the lists identified by the government must be drawn up. This is the main thing and we must wait.”

Since the West imposed sanctions on Russia, the $1.8 trillion economy has been heading for its biggest contraction since the years after the 1991 dissolution of the Soviet Union, amid rising inflation.

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A major transfer of Russian assets began as the Russian state gained greater influence over the economy, and many major Western investors – such as energy giant BP (BP.L) paralyze (coincidence) – Exit, and the oligarchy is trying to restructure their business empires.

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Written by Guy Faulconbridge. Editing by Kevin Levy and Mark Heinrich

Our criteria: Thomson Reuters Trust Principles.