Finland Times

 

Although a new round of U.S. sanctions against Russia might not have a direct impact, they could increase Russia's sense of panic and ratchet up pressure on the country's embattled economy, experts said.

     

U.S. President Barack Obama on Thursday signed into law a new round of sanctions against Russia, but for now, does not intend to use them, saying the administration is keeping an eye on the situation in Ukraine.

     

"My administration will continue to work closely with allies and partners in Europe and internationally to respond to developments in Ukraine and will continue to review and calibrate our sanctions to respond to Russia's actions," Obama said in a statement, adding that he was prepared to roll back sanctions should Russia take the necessary steps.

     

Russia's economy has for months been flailing amid a falling currency and Western sanctions over the crisis in Ukraine. Energy prices have also fallen, dealing a severe blow to the Russian economy, as oil and gas industry comprises around 50 percent of its revenue. Earlier this week saw the sharpest drop in the ruble in 16 years.

     

While it is unclear whether the new sanctions would have a direct impact on Russia, the anticipation alone is enough to give investors the jitters, and that could in turn lead to even more economic turmoil in the embattled country, experts said.

     

Indeed, the greatest effect of sanctions has not been from the sanctions themselves but rather the broader effect of leaving investors, Russian and foreign, nervous about the Russian economy, leading to capital flight, RAND Corporation Senior International Policy Analyst Olga Oliker told Xinhua.

     

"The limits that the sanctions have placed on Russia's access to capital markets have been very important, but general investor skittishness, over and above the sanctions, has been more important, and stands to last indefinitely," she said.

     

The White House is keeping an eye on the situation, with White House spokesman Josh Earnest saying earlier this week that the administration has "suggested the longer the sanctions regime is in place, the more isolated the Russians would be and the greater the impact it would have on the broader Russian economy."

     

"And every week and month that goes by that the sanctions regime is in place, we see that the toll that is being taken by the Russian economy grows," he said.

     

From Russian President Vladimir Putin's annual press conference on Thursday, it is not clear that Russia has a plan for the beleaguered economy. Putin said that it may take a couple of years for Russia's economy to get back on track, which might mean he was betting on a rise in the price of oil, the eventual lifting of sanctions, or both.

     

Whether the situation will affect Russia's policy in Ukraine remained to be seen, Oliker said.

     

Meanwhile, it remained unknown how the Obama administration would move to implement the sanctions. There is some leeway, in that the administration can choose among the menu of sanctions enumerated in the language of the act, and have some time to make decisions, Oliker said.

   

U.S.-Russia relations are at a low point not seen for more than a decade, with the crisis in Ukraine causing a major rift between the United States and Russia. But chilled ties are unlikely to plunge the world headlong into another Cold War, experts said.

     

Whereas the Cold War was a conflict that lasted decades whereby the United States and the former Soviet Union were fighting over the fate of the world in a conflict that involved the entire planet, today's situation is only between the two nations, they said.