Sanctions Hurting Russian Economy

Russia’s stock market has witnessed a recent 20% value decline, and now Visa and MasterCard have cancelled business with some Russian banks as Washington’s sanctions are beginning to hurt the Russian economy, yet Russian political leader strongman, Vladimir Putin, shows little sign of backing down from troops amassed and poised to possibly invade the greater Ukraine. In defiance, Putin today boldly proclaimed that Europe will not stop buying Russian oil. And, about that fact he may be right for now.  Some political analysts have long argued that modern Russia and it’s government are largely an oil oligarchy masquerading as a country. And Europe is a huge market for Russian oil.  Russia’s government owns most of the oil pipelines in the nation in a the state-controlled TRANSNEFT company , and the state owned GAZPROM is the largest oil exploration and production company in the entire world. Russia is also the largest oil producing nation in the world as far and away the largest natural gas producing nation in the world as well.  Although many who have investment in the Russian stock market, especially those oil billionaires have recently watched their portfolios decline in value, and are feeling pressure from the sanctions, they are hoping the Ukraine crisis blows over soon, and they see their stock market values return soon.

On Friday, the Obama Administration may bring new sanctions that further hurt Russia’s oil billionaires and state run oil oligarchy business-government alliance. While phone calls between the two presidents in Washington and Moscow have not managed a diplomatic breakthrough at some point so far, new sanctions that hurt Russia’s ability to sell or profit from their huge oil export business seem to have the best opportunity to reign in Russia’s military stand-off with the Ukraine and begin the process of healing and normalizing relations once again.

For the last 40 years, Europe has had a huge reliance on Russian oil, with Gazprom the biggest profiteer of much of those huge oil export contacts. Sanctions that hurt this state run oil oligarchy has the best hope of changing this military standoff that carries serious dangers for a East-West crisis.gazprom

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