Page 23 - RusRPTOct20

participating in initial issues of Russian foreign currency debt, the U.S. pledged not to support any proposals for IMF aid or loans to Russia, and there was a freeze on exports to Russia that could be used to make chemical or biological weapons.
This time, the response is likely to be tougher. It’s Russia’s second transgression in less than two years, and both Congress and public opinion will press the White House to double down, according to Ivan Timofeyev, program director of the Russian Council on International Affairs, a state-funded think tank. The White House could expand restrictions on purchase of Russian debt, introduce new bans on U.S. banks lending to Russian clients, or even ban all U.S. flights for Russia’s national carrier, Aeroflot. Sanctions under the CBW Act do not require approval from Congress, but the process can still be lengthy: the response to the Skripal affair took 8 months to implement.
The outlines of any EU sanctions are less clear. Russia’s most vulnerable spot is the almost-complete NordStream 2 gas pipeline under the Baltic Sea on which over $5 billion has been spent. Everything in relation to NordStream 2 depends on Germany which, thus far, has supported the project despite U.S. pressure. In April, the European Parliament called for the pipeline to be blocked, but the resolution was non-binding. In the days immediately after Navalny’s poisoning, Chancellor Angela Merkel insisted NordStream remained a different issue. But after it became clear Navalny was targeted with Novichok, she hardened her position, appearing to support German Foreign Minister Heiko Maas, who said Germany could suspend the project.
Whatever the fate of NordStream 2, some EU sanctions seem inevitable (even if they do require the unanimous agreement of all 27 member states). However, measures are likely to be limited to individuals involved in the poisoning, or benefitting from it. That’s no big deal for the Kremlin — almost all senior Russian officials are already sanctioned.
A much more meaningful response by the EU would be an asset freeze for individuals named as corrupt in Navalny’s investigations (the European Parliament called for this Thursday). This might include billionaire Alisher Usmanov, who spends much of his time in Munich, or former deputy prime minister Igor Shuvalov, who owns real estate in Austria. But the legal basis for such sanctions is shaky. If there is no clear definition why an individual is under sanctions, the European Court of Justice can lift restrictions in a single hearing, according to Sergey Glandin, an expert on sanctions law at Pen&Paper.
2.9 ​ ​Kremlin hikes taxes for the first time in 20 years
The Kremlin has approved a new budget that will greatly increase spending but has also used the cover of the coronacrisis to hike a variety of taxes, many for the first time.
Spending is due to rise. Revenues are going down, but the tax rates in Russia compared to most European countries are very low and simple. Putin introduced a flat tax regime when he first took office and has barely touched
23 ​RUSSIA Country Report​ October 2020 ​ ​www.intellinews.com