Russian Operation in Syria May Prompt EU to Lift Sanctions against Moscow

Despite the fact that the Russian military operation in Syria gave some investors the jitters, Moscow’s engagement in the conflict will not harm the country’s economy, financial analyst Kenneth Rapoza wrote.

Europeans are getting tired of anti-Russian sanctions as Russia is a major business partner for Europe. Many European businesses are waiting for the sanctions to be lifted so they can return to Russia and invest.

“Russia is a sentiment-driven market today and investor sentiment on Russia is dependent on Ukraine first, oil second, Syria a distant third,” Rapoza wrote.

According to the author, multinational companies would not stop investing in Russia because of Syria.

The situation may result in the removal of European sanctions against Russia, the author wrote. However, there is still the risk of further decline in oil prices and “perhaps getting in a battle of wits with Washington over Syria.”

Such a turn could scare foreign investors away from Russian securities, the analyst pointed out.

“While downside risks are manageable and relatively low, a positive outcome in Syria facilitated by Russian intervention has the potential to improve relations with the West, namely Europe, which is reeling from a Syria refugee crisis,” Rapoza wrote in his article for Forbes.

“What we expect is that Putin will be the grown-up among all these kids playing with fire and ultimately making no decisions in the West,” Martin Charmoy, director of Prosperity Capital Management, was quoted as saying by the author.

If the European Union wants to extend sanctions against Russia by six months or a year, it needs 27 countries to agree to that. Such a consensus seems very unlikely today, according to Charmoy.

Former US Deputy Assistant Secretary for International Trade and Investment Policy at the US Treasury Gary Hufbauer claims that the continuing stabilization of the situation in eastern Ukraine may lead to the lifting of sanctions the United States has imposed on Russia.

“I think there is a chance the EU sanctions could end in January,” he added.

SPUTNIK

R.S