Russia threatens retaliation for fresh round of US sanctions

The Kremlin slammed United States sanctions targeting Russian officials, oligarchs and their businesses as unlawful on Monday and pledged both to retaliate and to protect those hit by the measures.

Russian stock prices plunged on Monday in the wake of the sanctions that the US said were intended to punish individuals and businesses that profited from Russia’s “malign activities” around the globe. Russia’s ruble experienced its biggest one-day dip in value for more than two years, falling 2 per cent to 60.24 to the US dollar.

Kremlin spokesman Dmitri Peskov criticised the US sanctions as "blatantly illegal", telling reporters in Moscow that the measures "trampled on all kinds of norms". It would take time to assess the damage caused by the measures and to develop an appropriate response, he said.

Dmitri Medvedev, the Russian prime minister, ordered his government to draw up a package of proposals to support companies affected by the sanctions.

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The US decision was “certainly unacceptable and we consider it illegal in so far as it falls completely outside the realm of international law”, he told a cabinet meeting on Monday.

Tycoon

Among those worst exposed to the sanctions were listed metals, automobile and electricity companies controlled by Russian tycoon Oleg Deripaska, which lost $6 billion of their value on stock markets on Monday. Rusal, the world's biggest aluminium producer, warned the sanctions might result in technical defaults on some of its credit obligations and be materially adverse to the business and prospects of the group.

Mr Medvedev said the US measures were another manifestation of Washington’s protectionist policies “packaged this time as sanctions”.

The US said it imposed the sanctions to protest against Russia's aggressive actions in Ukraine, its support for President Bashar Assad in Syria's civil war and for moves to subvert western democracies.

Arkady Dvorkovich, Russian deputy prime minister, said the government would need to support sanctioned companies to prevent a possible surge in unemployment. "We're very attentive to our leading companies, they have thousands of workers, very important jobs for our country."

Financial analysts said the US sanctions would heighten the risk of investing in Russia and drag on the country's already anaemic economic growth. "In some respects the ball is now in the Russian court to try to de-escalate," said Timothy Ash, the senior emerging markets sovereign strategist for Bluebay Asset Management. "If Russian-western relations continue on the current path more sanctions will inevitably follow with ever more Russian oligarchs and business interests rolled in."

However, Vyacheslav Volodin, the speaker of the Duma, or lower house of the Russian parliament, sounded a defiant note, accusing the US of using sanctions to contain Russia's development. "This is similar to an attempt to contain Iran's development when such decisions were taken against Iran, " he said during an official visit to Iran on Monday.