Putin's gas law: New sanctions hit Russia's economy hard!

Putin's gas law: New sanctions hit Russia's economy hard!

In a dramatic turning point, Russian President Vladimir Putin must change key laws governing the gas industry as new U.S. sanctions deal a major blow to his economy. These sanctions, imposed on November 21, directly target Gazprombank – a key bank for Russian gas exports. The effects are catastrophic: the ruble is heavily burdened, inflation is high and the key interest rate is around 21 percent, a record high that economists say could rise further in December, like fr.de reported.

The new sanctions put pressure on Russia, as they have been avoided in the past to allow countries in Europe to continue making gas payments to Russia. In response, Putin changed a law regulating gas payments by foreign customers and reducing dependence on Gazprombank. In the future, alternative banks could be approved for gas payments, although the details of how are still unclear home.treasury.gov reported. This could significantly complicate access to Russian gas for many European countries that still rely on this energy source.

Scope of sanctions

The extensive sanctions, which affect over 50 Russian banks and more than 40 securities registrars, aim to further limit Russia's access to the international financial system. According to Janet L. Yellen, the US Treasury Secretary, these measures will further weaken Russia's military capacity and make it more difficult for the Kremlin to maintain funding for its military activities. The aim is to undermine Russia's illegal war effort against Ukraine by stifling economic ties.

In particular, Gazprombank plays a central role in financing the war and paying bonuses to soldiers. With sanctions now enforced, pressure will increase on Russia to find alternative financing avenues to continue supporting its military activities. In a worsening political climate, the Russian economy and its financial institutions face significant challenges.