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MH17 bad for business, bad for Russia, say oligarchs

Russia’s oligarchs are getting increasingly distressed over sanctions imposed on the country which is backing pro-Russian separatists in the Ukraine, Bloomberg reports today.

The report, quoting Russian billionaires and analysts, said these businessmen were too afraid to voice out any public opposition for fear of censure by President Vladimir Putin's government.

One unnamed billionaire told Bloomberg that Putin risked joining the likes of Belarus's Aleksandr Lukashenko, an international outcast whom the US had labelled as "Europe's last dictator", should the former not intervene in Ukraine following the downing of Malaysia Airlines flight MH17 last week.

He said what was happening was bad for business and bad for Russia.

“The economic and business elite is just in horror,” the head of Moscow's Centre for Political Technology Igor Bunin was quoted as saying, adding that no one would speak out against Putin because of the threat of retribution.

“Any sign of rebellion and they’ll be brought to their knees,” he was quoted as saying.

The United States and European Union (EU) have previously imposed sanctions on Russian individuals and companies deemed complicit in fuelling the pro-Russian insurgency in Ukraine but Thursday's MH17 incident, which killed 298 people, could see further sanctions.

This was after US Secretary of State John Kerry said that the available evidence suggested that Russia provided the missile used by the separatists to down the plane while UK Defence Secretary Michael Fallon was quoted by the Mail on Sunday of accusing Putin of “sponsored terrorism", the report said.

The UK and the Netherlands, the report said, will be leading the push for "bolder action" at a foreign ministers' meeting tomorrow.

Dutch victims made out the most number of victims of the doomed plane at 193 while there were 10 British citizens on board as well.

The US has imposed penalties on state-run companies and members of Putin's inner circle, including billionaires Gennady Timchenko and Arkady Rotenberg.

A day before the MH17 incident, the US announced that it has barred OAO Novatek (NVTK), a gas producer partly owned by Timchenko, from using American debt markets for new financing with maturities longer than 90 days.

Bloomberg said, following that, Novatek’s London shares fell 8% over two days, cutting its market value by almost US$3 billion (RM9.6 billion).

“Russia risks becoming a pariah state if it does not behave properly,” UK Foreign Secretary Philip Hammond said on Sky News yesterday.

“We now need to use the sense of outrage that is clear to get a further round of sanctions-tightening against Russia.”

A research and advisory firm based in New York, was quoted as saying that additional US sanctions may be imposed in the coming weeks if investigators of the deadly crash determine that the rebels had carried out the attack but Europe, it went on, would be taking less drastic steps as it had closer business ties with Russia.

"The threat of sanctions against entire sectors of the economy is now very real and there are serious grounds for business to be afraid,” Mikhail Kasyanov, who served as Russia’s prime minister during Putin’s first term as president, from 2000 to 2004, told Bloomberg.

“If there will be sanctions against the entire financial sector, the economy will collapse in six months.”

The sanctions already imposed on Russia, Andrey Kostin, head of state-run lender VTB Group was quoted as saying, may lead Russia’s US$2 trillion economy into recession and turn Russia into an outcast of global capitalism. – July 21, 2014.