Russia Braces for Permanent Sanctions From the U.S.

Andrey Kostin, a former Soviet diplomat in London who runs Russia’s second-largest bank, was jubilant when Donald Trump was elected last year. “We may soon see U.S. financial sanctions eased or even lifted,” he said at the time. Now, he’s changed his tune as his state-run VTB Group, like other targeted Russian entities, faces decades of limits on foreign borrowing. President Trump reluctantly codified those sanctions into law on Aug. 2 when he signed a bill that passed Congress with veto-proof majorities. “There’s a war in the area of finances,” Kostin complained at a banking conference in St. Petersburg on July 14.

Desperate to snap out of an investment chill after its longest recession in two decades, Russia is likely to remain walled off from foreign capital and technology for the foreseeable future. U.S. and European Union sanctions imposed in 2014 over Russia’s annexation of Crimea cut off state banks from capital markets and restricted access to energy technology, which along with the crash in oil prices, hit the economy with a one-two punch that drove it into recession.