Kremlin Warns Of Response To Latest US Sanctions, Says “Almost All Communication With US Is Frozen”

Zero Hedge – by Tyler Durden

In response to the latest imposition of US sanctions on Russia, the Kremlin said on Wednesday that the new sanctions would further damage relations between the two countries and that Moscow would respond with its own measures. “We regret that Washington is continuing on this destructive path,” Kremlin spokesman Dmitry Peskov told reporters on a conference call.  

As a reminder, on Tuesday the United States widened sanctions against Russian businessmen and companies adopted after Russia’s annexation of Crimea in 2014 and the conflict in Ukraine.

“We believe this damages bilateral relations … Russia will take commensurate measures.”

Kremlin spokesman Dmitry Peskov

Then again, it is difficult to see how sanctions between the two administration could be any more “damaged”: also on Wednesday, the Kremlin said it did not expect the incoming U.S. administration to reject NATO enlargement overnight and that almost all communications channels between Russia and the United States were frozen, the RIA news agency reported.

“Almost every level of dialogue with the United States is frozen. We don’t communicate with one another, or (if we do) we do so minimally,” Peskov said.

Additionally, RIA said that according to Peskov “he did not know whether President Vladimir Putin would seek re-election in 2018.”

“Everyone’s heads are aching because of work and with projects and nobody is thinking or talking about elections,” Peskov said.

Then again, the sanctions may soon be history. According to a Bloomberg report, the U.S. will start easing its penalties, imposed over the showdown in Ukraine in 2014, during the next 12 months, according to 55 percent of respondents in a Bloomberg survey, up from 10 percent in an October poll. Without the restrictions, Russia’s economic growth would get a boost equivalent to 0.2 percentage point of gross domestic product next year and 0.5 percentage point in 2018, according to the median estimates in the poll.

“It’s still a toss-up whether the U.S. will ease sanctions quickly, with the EU lagging, but the direction of travel is toward easier sanctions or less enforcement, which could reduce financing costs,” said Rachel Ziemba, the New York-based head of emerging markets at 4CAST-RGE. “We think the macro impact would be greater in the medium term than short term as it facilitates a rate easing trend that is already on course. In the longer term, it gives more choice of investment.”

Trump, who’s called President Vladimir Putin a better leader than Barack Obama, has said he may consider recognizing Russia’s annexation of Crimea from Ukraine and lifting the curbs. While dogged by concerns that Russia intervened to tip this year’s elections in the Republican candidate’s favor, Trump has already showed his hand by planning to stack his administration with officials supportive of closer cooperation with the Kremlin, from Michael Flynn, the president-elect’s national security adviser, to Exxon Mobil Corp. chief Rex Tillerson, a candidate for secretary of state.

An equally important consequence of any policy change by Trump would be its affect on the EU’s own penalties on Russia, with more economists saying the bloc will follow suit. Forty percent of respondents said in the Dec. 16-19 survey that the EU will begin easing sanctions in the next 12 months, compared with 33 percent in October.

“If the U.S. eases sanctions, it won’t be possible to achieve a consensus among EU member states to keep their sanctions regime in place as currently formulated,” said Charles Movit, an economist at IHS Markit in Washington.

http://www.zerohedge.com/news/2016-12-21/kremlin-warns-response-latest-us-sanctions-says-almost-all-communication-us-frozen