President Vladimir Putin signed laws completing Russia’s annexation of Crimea yesterday, as investors took fright at a US decision to slap sanctions on his inner circle of money men and security officials.
Putin promised to protect a bank partly owned by an old ally, which Washington has blacklisted. His spokesman said Russia would respond in kind to the financial and visa curbs, and his allies laughed them off.
But shares on the Moscow stock exchange – which have lost $70 billion of their value this month – fell sharply after President Barack Obama also threatened on Thursday to target major sectors of the economy if Russia tried to move on areas of Ukraine beyond the Black Sea peninsula.
The financial noose was already tightening with Visa and MasterCard stopping processing payments for a Russian bank owned by two brothers on the US blacklist. Finance Minister Anton Siluanov said Russia might cancel its foreign borrowing for 2014 and raise less domestically if the cost of issuing debt rose.
Europe looks to diversify from Russian gas, oil
European Union leaders – who like Obama insist Crimea is still part of Ukraine – imposed their own sanctions on 12 people, including Russian deputy prime minister Dmitry Rogozin and two aides to Putin.
Shaken by the worst East-West crisis since the Cold War, they also expressed their determination to reduce the EU’s reliance on Russian energy, and signed a political deal with the Kiev leadership that took power after Moscow-backed President Viktor Yanukovych’s overthrow last month.
In a Kremlin ceremony shown live on state TV, Putin signed a law on ratification of a treaty making Crimea part of Russia as well as legislation creating two new Russian administrative districts: Crimea and the port city of Sevastopol, where Moscow keeps part of its Black Sea fleet.
Officials and lawmakers in Moscow have largely derided Western sanctions imposed after Russian troops seized control of Crimea.
A referendum last Sunday in the majority Russian-speaking region – which overwhelmingly backed union with Russia but was denounced by Washington and the European Union as a sham – then opened the way for annexation within a week.
Obama’s decision to go for the financial jugular of the people who accompanied Putin’s rise from the mayor’s office in St Petersburg in the 1990s to the Russian presidency has deepened the diplomatic confrontation.
Putin said Bank Rossiya, singled out by Washington as the personal bank for senior Russian officials, had nothing to do with the events in Crimea.