‘US sanctions would be declaration of economic war’

MOSCOW: Russia warned on Friday that if the US followed through with threats to impose further harsh economic sanctions it would be seen as a "declaration of economic war".

The warning by Prime Minister Dmitry Medvedev came after Washington unveiled a raft of new sanctions against Russia over its alleged use of the Novichok nerve agent against a former double agent which Britain has blamed on Moscow.

The incident, which took place in Salisbury in southern England in March, triggered a major diplomatic crisis despite Russia’s denial of any role. Announced late on Wednesday, the first set of sanctions, which will take effect in just under two weeks, impose a ban on the export to Russia of "national security sensitive" US technologies.

Until now such exports had been previously allowed on a case-by-case basis, with a senior State Department official saying the move could cut off hundreds of millions of dollars worth of exports to Russia.

"While I don’t want to comment on the talk about future sanctions, I can say that if we end up with something like a ban on banking activities or the use of certain currencies, we can clearly call this a declaration of economic war," Medvedev was quoted as saying by the Interfax news agency.

"And we must absolutely respond to this war. By economic means, by political means and if necessary by other means," he added. "Our American friends must understand this." The announcement of the sanctions on Thursday prompted Russian stocks and the ruble to tumble.

The ruble fell further Friday morning, reaching its lowest level since August 2016, before rebounding slightly. The central bank in a statement said it was following the situation and had the necessary instruments to react.

It said the situation was a "natural reaction of the financial market to news about new potential sanctions". Previously, similar periods of volatility were "temporary in nature," it said. A second round of sanctions that could go into effect 90 days later would cut far deeper, including blocking all American bank loans to Russian entities, an outright ban on US exports to Russia, and suspension of diplomatic relations.