Putin cautions West: Moscow can halt exports and agreements

Russian President Vladimir Putin warned the West on Tuesday that he could shut down exports and agreements, the Kremlin’s strongest response to the sanctions imposed by the United States and its allies against the Russian invasion of Ukraine.

Putin, the most powerful leader of Russia since 1999, signed Tuesday a broad decree that prohibits the export of commodities and raw materials to individuals and entities on a list of sanctions and directed the government to prepare the report within ten days.

The decree, which took effect when it was published, gives Moscow the power to wreak havoc on the markets because it could at any time stop exports or rip up contracts with an entity or an individual it has sanctioned.

The Russian government has 10 days to establish lists of those it will sanction over and above the western politicians, it already has.

Putin explicitly formulated the decree as a response to what he portrayed as the illegal actions of the US and its allies aimed at depriving “the Russian Federation, citizens of the Russian Federation and Russian legal entities of property rights or restriction of their property rights”.

The Western effort to economically isolate Russia — one of the largest global producers of natural resources — has driven the global economy to the uncharted waters with rising prices and warnings of food shortages.

Putin, 69, has warned on numerous occasions that Moscow will respond in kind, until Tuesday, the Kremlin’s most difficult economic response had been to cut off gas supplies to Poland and Bulgaria and demand a new payment system for European gas purchasers.

Tuesday’s decree prohibits the export of products and raw materials to individuals and entities that the Kremlin has sanctioned. It prohibits any transaction with those persons or entities, even under the current contracts.

Putin instructed the government to establish the list of foreign persons and enterprises to be sanctioned, as well as defining “additional criteria” for a number of potentially restricted transactions.

“This is a framework decree,” said Tatiana Stanovaya, a non-resident researcher at the Carnegie Moscow Centre and founder of the policy analyst firm R Politik.

“Now it is up to the government to create all the lists. That’s the main thing, and we have to wait.”

Since Western sanctions were imposed on Russia, the $1.8 trillion economy is heading for its largest contraction since the collapse of the Soviet Union in 1991, against a backdrop of runaway inflation.

A large transfer of Russian assets has started as the Russian state gains even more influence on the economy, many important Western investors — like energy giants BP and Shell —exit, and oligarchs seek to restructure their trade empires.