Over the last three days, the developments on the central topic of the last two weeks were as follows. First, as announced on Thursday, the EU unveiled a list of 15 individuals (including 9 Russian officials) and 18 entities (only DPR/LPR governmental bodies and corporations transferred to Crimean authorities) added to designations established by Regulation No 269/2014 of 17 March 2014 (the full list is here). Second, the media revealed a letter by EC president Herman Van Rompuy to all EU heads of government. The letter (full text as reported by the FT is here) calls for “the set of restrictive measures related to access to capital markets, defense, dual use goods, and sensitive technologies” to be approved by Tuesday 29 July. Of these, the scope of the capital markets-related restrictions is of primary significance; the scope of the technology restrictions discussed appears to be quite limited at this stage. Otherwise, the weekend was marked by the most direct mutual accusations by Russia and the US, blaming each other for the state of affairs in Ukraine. Also, Netherlands and Australia mulled the possibility of deploying a police force to the eastern Ukraine to protect the MH17 crash site. Meanwhile, the insurgency has been losing ground to Ukrainian government troops in the last few days.
We judge that the US and European rhetoric has become harsher over the weekend. The EU decision on ‘targeted sanctions’ is the central event to watch over the next 48 hours. It goes without saying that the situation remains highly volatile.
VTB Capital analyst
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