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Further US sanctions would be 'declaration of economic war': Medvedev

12 August 2018
Further US sanctions would be 'declaration of economic war': Medvedev

Russian prime minister Dmitry Medvedev armed himself with fighting talk earlier today, as he warned against any moves by the U.S. to curb the activities of its banks amid fresh sanctions.

The tough message from Prime Minister Dmitry Medvedev reflected growing dismay over announced U.S. sanctions that have sent the Russian ruble plummeting to its lowest level in two years.

The US state department on Wednesday unleashed a new round of sanctions against Russia that pushed its currency to a two-year low, and sparked a wider sell-off over fears of a trend emerging in US-Russia relations.

The Russian economy has only recently started to recover from global sanctions imposed on Moscow in 2014 over its actions in Ukraine, and a crash in oil prices the same year. But if new sanctions proposed by Congress and the State Department are implemented in full, some fear growth could be nearly to zero.

The sanctions follow the US Treasury's imposition of sanctions in March against 19 Russian citizens and five entities for interfering in the 2016 US election - the toughest steps against Moscow since Trump took office.

New sanctions proposals in the U.S. Congress include legislation targeting Russia's state-controlled banks and freezing their operations in dollars - a move that would deal a heavy blow to the Russian economy.

Medvedev said Russian Federation would take any action against its banks as "a declaration of economic war" between the two superpowers.

"I would not like to comment on talks about future sanctions, but I can say one thing: If some ban on banks' operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war", said Medvedev. "And this war will have to be responded - by economic, political and, if necessary, other means".

"Our American friends must understand this".

Medvedev's tough tone was in stark contrast with past statements by President Vladimir Putin and his lieutenants, who have taken a nonchalant posture while talking about US and other Western sanctions, seeking to downplay their impact on the Russian economy.

The announcement of the sanctions on Thursday prompted Russian stocks and the ruble to tumble.

Recently enacted and potential US sanctions against Russian Federation are exacerbating tensions between Russian Federation and the United States and will undermine the White House's efforts to improve ties with the Kremlin.

Previously, similar periods of volatility were "temporary in nature", it said. The United States also recently placed sanctions on Russia for the poisoning of a former Russian spy. Central bank data showed on Friday it had started buying less foreign currency on Wednesday, the first day of the rouble's slide.