In some negative news for the Russian economy, it was reported today that the European Union had extended by six months a visa ban and asset freeze targeting several close associates of Russian President Vladimir Putin and others involved in Russia’s annexation of Crimea and other territorial disputes in Ukraine. The EU in a statement said that the assessment of the situation did not justify a change in the regime of the current sanctions imposed on the Russian economy. It is important to point towards the fact that 28 nation European Union coordinated its sanctions in close cooperation with Washington. The extension of sanctions came amid continued unrest in eastern Ukraine throughout the year.
It is imperative to state that despite a ceasefire being declared in February, both Ukrainian troops and the Russia backed separatists have been carrying out artillery strikes until both sides pledged anew to implement a truce from September 1. Kiev and several other Western countries have accused Russia of backing the separatists with arms and other support, a charge which has been vehemently by Moscow. It is important to point towards the fact that separate sanctions on trade and investment with Russia run until the end of January.
It is important to point towards the fact that the Russian economy is on the verge of entering into a recession on the back of the sharp plunge in crude oil prices. The sanctions have made it difficult for Russian companies to get access to capital which has affected the capital investment plans in the economy. The rouble has been one of the worst performing emerging market currencies which has led to high inflation in the economy and impacted the consumption pattern in the Russian economy. Many believe that if oil prices remain low, Russia could head towards a default.