Russian Prime Minister Dmitry Medvedev. Picture: REUTERS
Russian Prime Minister Dmitry Medvedev. Picture: REUTERS

Moscow — Russia warned of worsening ties with the US after accusing President Donald Trump of caving in to congress by signing a law that could keep sanctions in place for years.

The legislation is "a declaration of fully fledged economic war on Russia" that could last for "decades", Russian prime minister Dmitry Medvedev wrote on Facebook. The Trump administration "has shown its complete weakness" by signing the law and "relations between Russia and the US are going to be extremely tense", he said.

Russia, which has already retaliated by ordering the US to slash staff at its diplomatic mission by almost two thirds, could take further "counter-measures", according to the foreign ministry.

The law strengthens punitive measures imposed over Russia’s intervention in Ukraine and meddling in last year’s US presidential election, and gives congress the power to block Trump from lifting them. Its passage ended lingering Russian hopes that Trump could deliver on his campaign pledge to work with Russian President Vladimir Putin and turn a new page in US-Russian relations.

"The hopes have already ended, even if there is a residual feeling that Trump, if he was allowed to, would behave differently," Fyodor Lukyanov, who heads Russia’s council on foreign and defence policy, a Kremlin advisory group, said by phone.

Russia will try to maintain some co-operation with the US in areas of mutual interest such as Syria, where the two powers agreed last month on a ceasefire near the border with Israel and Jordan, said Andrey Kortunov, head of the Russian International Affairs Council, a Moscow-based research group set up by the Kremlin.

Economic impact

Though the law doesn’t dramatically expand sanctions, the power it gives congress to block presidential moves to ease them means they’re likely to remain in place for years. The rouble, which has fallen nearly 3% against the dollar this week as the bill awaited Trump’s signature, was unchanged early on Thursday at 60.5620 to the dollar at 12.04pm in Moscow.

While the immediate economic impact is seen as limited, the long-term effect of limiting Russian access to western financing and technology could cap the country’s already lacklustre growth prospects as it emerges from the longest recession this century.

Putin said on state television on Sunday that Russia would refrain from taking further retaliatory steps over the sanctions for now, though "if the time comes, we can consider other options for responding".

This doesn’t mean the president won’t seek to strike at America in ways that are less directly confrontational, lawmakers said.

‘Symbolic’ response

"Sometimes you don’t need to announce sanctions, but you can act in such a way that everyone understands without the need for grandstanding," said Andrey Klimov, deputy head of the foreign affairs committee in Russia’s upper house of parliament.

Russia may penalise US companies working in the country and seek to counter American interests in other parts of the world, according to Oleg Morozov, who also sits on the foreign affairs committee. Even so, the Russian response will be "symbolic" and the Kremlin will try not to burn all its bridges with Trump, he said.

Ultimately, "despite all the euphoria in Moscow after Trump’s election and commentary about Putin as a great strategist, the end result is a more aggressive US sanctions regime doing more damage to Russia", said Timothy Ash, a senior strategist at BlueBay Asset Management in London.

Bloomberg

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