Taking stock
As severe sanctions against Russia take shape, economists, executives and investors around the world are trying to gauge the effects. Europe and its allies will wage “total economic and financial war,” Bruno Le Maire, France’s economy minister, said today. “We are going to cause the Russian economy to collapse.”
Markets have been volatile, but the moves in some global benchmarks have been more muted than one might expect. The S&P 500 appeared headed for a major fall yesterday, but ended down less than a quarter of a percent. (Futures suggest U.S. markets will open lower again today.) And investors have been seeking safety in bonds, pushing down yields to where they were about a month ago.
Investors are weighing the long-term implications of the sanctions, which are designed to undermine the ruble and limit Russia’s ability to reverse the damage. Experts said the sanctions were based on lessons that the U.S. and its allies learned from 2014, when Russia occupied Crimea and the West’s financial punishments proved an ineffective deterrent.
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Elina Ribakova, the deputy chief economist at the Institute of International Finance, called the sanctions “serious” and predicted Russia’s economy could contract by double digits.
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Others were more skeptical, saying that carve-outs for oil and gas exports would prop up Russia’s economy. “The devil is in the details of how sanctions are enforced,” Juan Zarate, a former assistant secretary of the Treasury…
