Kremlin says sanctions will cause problems, but they can be fixed

The Kremlin said on Friday that Western sanctions imposed on Russia for its invasion of Ukraine would cause problems for Moscow, but not insurmountable ones, with Russia determined to expand its trade and economic ties with Asian countries.

Missiles hit the Ukrainian capital Kiev on Friday as Russian forces advanced and Ukrainian President Volodymyr Zelenskiy pleaded with the international community to do more, saying the sanctions announced so far were not enough.

Kremlin spokesman Dmitry Peskov declined to comment on the possibility of imposing direct sanctions against Russian President Vladimir Putin.

He said Russia had deliberately reduced its dependence on foreign imports to protect itself from sanctions.

“The main objective was to ensure complete self-sufficiency and complete import substitution if necessary,” said Peskov. “To a large extent this objective has been achieved”, added the spokesperson.

“There will undoubtedly be problems, but they will not be insurmountable,” he argued.

The Economy Ministry said Russia had lived with sanctions for too long and said it would be stepping up trade and economic ties with Asia to counter the threat emanating from the West.

“We understand that the sanctions pressure we have faced since 2014 will now intensify,” the ministry said, referring to measures imposed after Russia annexed Crimea from Ukraine.

“The rhetoric of some of our foreign colleagues was such that we have long been ready for potential new sanctions,” he said.

Citibank analysts did not share Moscow’s optimism, but acknowledged that Russia has strong fundamentals and sanctions so far do not directly target important energy flows.

“Sanctions could have a very significant impact,” the bank said in a note, warning of contagion in broader markets.