/ 27 January 2015

Russia’s falling stock market faces new sanctions

For the first time in 11 years
For the first time in 11 years

Russia’s RTS index fell three percent at opening on Tuesday, a day after the Standard and Poor’s ratings agency stripped the country of its investment-grade rating, cutting it to “junk” status.

The drop in oil prices and Western sanctions over Moscow’s role in the Ukraine crisis have pummelled the Russian economy in recent months, with the ruble collapsing in value.

For the first time in 11 years, Standard and Poor’s moved Russia down into the speculative or “junk” territory, after last downgrading Russia in April. 

Responding on Tuesday, Moscow condemned the decision, saying the downgrade to “junk” status had been ordered by the US.

“I personally have no doubt that this was done not even on the prompting but on direct orders from Washington,” deputy foreign minister Vasily Nebenzya was quoted by the state RIA Novosti news agency as saying.

Russia is also facing a new wave of sanctions. European Union leaders have tasked their foreign ministers to consider sanctions against Russia when they meet in Brussels on Thursday, in the wake of fresh violence in eastern Ukraine.

In a rare joint statement on Tuesday, the 28 EU heads of government expressed concern over what they said was Russian support for pro-Moscow rebels who have launched a new military campaign near the city of Mariupol. Thirty people were killed there on Monday in a rocket attack. 

“In view of the worsening situation we ask the upcoming Foreign Affairs Council to assess the situation and to consider any appropriate action, in particular on further restrictive measures,” the statement said.

The aim was a “swift and comprehensive implementation of Minsk agreements”, it said, referring to a largely ignored peace plan dating from September.

“We express our concern about the deteriorating security and humanitarian situation in eastern Ukraine. We condemn the killing of civilians during the indiscriminate shelling of the Ukrainian city of Mariupol on 24 January 2015,” they added.

“We note evidence of continued and growing support given to the separatists by Russia, which underlines Russia’s responsibility,” the statement added.

The EU leaders would assess the situation at the next meeting in Brussels on February 12, they said.

An uncompromising line
Under EU procedures the foreign ministers would task the European Commission, the bloc’s executive arm, with drawing up new sanctions, which would then have to be approved by the leaders.

The EU has imposed a series of sanctions since Russia annexed the Ukrainian peninsula of Crimea in March, tightening them significantly after the shooting down of Malaysia Airlines flight MH17 over eastern Ukraine in July.

After the Mariupol attack on Saturday, EU foreign affairs chief Federica Mogherini announced the urgent meeting of European foreign ministers to map out the bloc’s response to the latest violence.

Mogherini last week found herself in hot water after suggesting the EU should take a softer stance with Russia, sparking a sharp response from those who believe only a tough, uncompromising line will get Moscow to change its mind. 

A violation 
The UN said on Monday that the Mariupol rocket attack – in which 30 people were killed – deliberately targeted civilians, as Russian President Vladimir Putin spurned Western calls to rein in a pro-Moscow insurgency. 

A senior UN official told an emergency Security Council meeting that the deadly rocket barrage on the port city of Mariupol came from pro-Russian rebel-controlled territory and sought to strike a civilian population, in violation of international humanitarian law. 

Another 12 people were reported killed on Monday, including seven Ukrainian soldiers, as Kiev accused the pro-Russian rebels of firing more than 100 times over the past day on both military positions and civilian areas. 

Fighting was said to be particularly intense near the government-held city of Debaltseve, halfway between the rebel strongholds of Donetsk and Lugansk, where the military said separatists were attacking with tanks and multiple rocket launchers. 

Western governments and Kiev accuse Moscow of arming, training and fighting alongside the rebels. Russia denies any direct involvement, although repeated sightings of large numbers of sophisticated heavy weapons being used against Ukrainian forces has stretched the credibility of those denials. – AFP