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US curbs on Russian banks would be act of economic war: PM Dmitry Medvedev

Reuters/Moscow 11 Aug 18 | 12:00 AM

Russia Prime Minister Dmitry Medvedev

Russia warned the United States on Friday it would regard any US move to curb the activities of its banks as a “declaration of economic war" and would retaliate, as new sanctions took their toll on the rouble and US lawmakers threatened more.

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The warning, from Prime Minister Dmitry Medvedev, reflects Russian fears over the impact of new restrictions on its economy and assets, including the rouble which has lost nearly 6 per cent of its value this week on sanctions jitters.

Economists expect the Russian economy to grow by 1.8 per cent this year. But if new sanctions proposed by Congress and the State Department are implemented in full,  some fear growth could be almost to zero.

President Vladimir Putin discussed what the Kremlin called “possible new unfriendly steps by Washington" with his Security Council on Friday.

ALSO READ: Here's why the new US sanctions on Russia and Iran unlikely to be a success

Moscow’s strategy of trying to improve battered US-Russia ties by attempting to build bridges with President Donald Trump is backfiring after US lawmakers launched a new sanctions drive last week because they fear Trump is too soft on Russia.

That in turn has piled pressure on Trump to show he is tough on Russia ahead of mid-term elections. The State Department announced new sanctions on Wednesday linked to the poisoning of a former Russian spy in Britain in March.

On Friday, the White House condemned the poisoning incident, which a spokesman for Trump’s National Security Council called “a reckless display of contempt for the universally held norm against chemical weapons".  The new sanctions pushed the rouble to two-year lows and sparked a wider sell-off over fears Russia was locked in a spiral of never-ending sanctions.

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