Financial markets may view the latest sanctions against Russia as feeble, but the reaction from Moscow – Vladimir Putin threatened to reconsider Western participation in energy deals and his foreign minister, Sergei Lavrov, said they were the work of weak politicians – suggests otherwise.
Russia’s top oil producer, Rosneft, will release first-quarter financial results after its boss and close Putin ally Igor Sechin was put on the U.S. sanctions list. Yesterday, energy giant Gazprom – whose chief escaped censure – said further Western sanctions over Ukraine could disrupt its gas exports to Europe and hit its business and shares.
The International Monetary Fund will report on its regular mission to Russia. On Tuesday, the Fund said it was preparing to cut its growth forecast for the second time in a month. Many are now talking about a recession this year and capital outflows exceeded $60 billion in the first quarter.
The other side of the equation is international help for the government in Kiev. The IMF’s board will meet in Washington to consider aid, having provisionally agreed in March to provide a $14 billion-18 billion two-year package, hoping others would bump that up to $27 billion in total. Some of that needs to flow quickly if the country is to avoid defaulting on its debt obligations.
On the ground in eastern Ukraine, separatists took hold of government building in the city of Luhansk and fired on police headquarters. Similar appears to have just happened in the town of Horlivka.