FrontierView recently launched The Lens, a weekly newsletter published by our Global Economics and Scenarios team to highlight developments and trends that will have the highest impact on business scenarios. Below is an excerpt from this week’s edition highlighting developments in US economic sanctions against Russia.
- The Trump Administration repeatedly dismissed several sanctions, initially destined to be enacted in late 2018.
- Despite strong bipartisan anti-Russian sentiment within the US Congress, the Trump Administration has demonstrated continued interest to improve ties and calm hostilities.
- Secretary of State Mike Pompeo met with the Putin Administration this past month, then had high-level talks with President Donald Trump, confirming interest.
- Trump and his foreign policy team seem eager to create spheres of influence with Russia, which entails avoiding further sanctions against Russia in exchange for compliance with US foreign policy goals around the world (notably in Venezuela and Iran).
- While further economic sanctions are unlikely, there is a strong probability that the US implements more limited measures.
Our view on sanctions against Russia
Trump wants to fulfill his campaign promise to improve US-Russian relations now that allegations of collusion with Russia have subsided. Still, the possibility of relations improving and lasting is unlikely, indicating that sanctions will be delayed, but remain a threat. However, disagreements over the Ukraine conflict or the future of Venezuela and Iran could easily break this rapprochement and spark renewed pressure for further sanctions.
Firms will benefit from a minimally-improved ruble, and increased demand and investor sentiment in the coming months. Firms should closely monitor US domestic and global affairs, as sanctions could be delayed indefinitely. Higher political priorities could last into the 2020 US presidential election season. These include the US-China trade war and the various allegations that could undermine Trump’s presidency. At that point, sanctions would again fall further out of focus.
FrontierView clients: See our most recent CIS Monthly Market Monitor update for further insights.