Paris: After weeks of threats, the West imposes the first Tuesday sanction in Russia, but for now it will have limited impact on the economy of Russia and the West.
Targeting the Russian financial sector, these sanctions “are in line with the strategies of gradual measures that set aside the energy sector,” said Olivier Dorgans, a lawyer specializing in economic sanctions at the Ashurst law firm.

But he recorded a decision by Germany to suspend Nord Stream 2 gas pipe certification.

– West of hitting the Russian financial sector –

The United States, the European Union and the United Kingdom target the Russian financial sector with their first steps.

England on Tuesday slapped sanctions on five Russian banks including Rossiya and Promsvyazbank (PSB). The European Union is expected to release a list of institutions that are hit by frozen assets, and Washington goes after two banks and their subsidiaries, PSB and Vnesheconbank (VEB) quotes their role in supporting the Russian military.

But Dorgans noted that many Russian capitals have been repatriated as precautions.

This asset freezes on some oligarchs and Russian individuals will also have a limited impact on the Russian economy.

But the Western power aims to slap Russia financing, blocking it from access to the capital market to raise money or refinance its debt. It will burden the value of Russian ruble, and thus driving the power of ordinary Russian purchases to buy imported goods.

Western banks have limited exposure to Russian financial institutions, according to senior European Central Bank officials.

However, some West Banks have operations in this country, including Unicredit Italy, Austria’s Raiffeisen and Societe Generale France through Rosbank subsidiaries.

Washington, however, holds back other potential sanctions, such as excluding Russia from Swift, an international bank transaction system, which will make the most financial transactions with the country it is not possible.

It also does not impose export control that will cut the Russian company from high-tech equipment and software.

– Shock of raw materials –

And beyond the symbolic suspension of the Nord Stream 2 pipe, which has not been operating, the West has so far refrained from targeting the energy sector.

Sanctions “haven’t arrived at that place painful, it is a coherent step in relation to defending European economic interests,” said Dorgans.

Andrew Lohsen, a Russian expert in the center of strategic and international studies in Washington, said his steps seemed to fail from what was threatened by US President Joe Biden, who could push Putin.

His steps “will not force Russia to change direction,” Lohsen told AFP.

However, US officials said more punishment was possible.

The sanction of the Russian energy sector will be a calculated risk for the EU when importing 40 percent of the gas from Russia. This gives Moscow leverage as a while Europe may be able to survive without Russian imports over the coming months, in the long run which might cause severe economic disorders.

Nations exporting gas including the United States and Qatar have limited abilities to increase shipping sharply to Europe.

The conflict has turned fire with commodity prices.

“Russia plays an important role in the global commodity market – Accounting of around 10 percent of the global oil market,” Fitch Ratings said in a recent note.

Crude oil prices almost hit $ 100 per barrel on Tuesday, the level was not visible since 2014, and the price of natural gas as well.

Russia is also a major exporter of palladium, nickel and aluminum, which has been teasing with a high price record.

And it is the main wheat exporter of the world, and together with Ukrainian accounts for a quarter of total grain exports.

The increase in prices on this commodity will filter consumers, regarding their purchasing power when inflation has become a major concern for policy makers.

– Concern about the European economy –

Russian recognition of the Breakaway region in Ukraine will increase economic uncertainty for Europe.

Many depends on the severity of armed conflict, “but in most cases economic impacts on countries outside Russia and Ukraine are possibly limited,” said Neil Shearing, chief economist in the economic field.

In the EU, it is Germany who has the strongest economic bond with Russia, but only two percent of the export head there.

The economic situation in Ukraine is “very fragile”, said Shearing, the warning tends to need additional external financial assistance in the coming months.