Russia 'vulnerable' after sanctions
International sanctions against Russia over its destabilisation of Ukraine have left it more vulnerable to economic shocks such as the current slump in oil prices, Downing Street has said.
The sanctions will be discussed by EU leaders including David Cameron at a summit of the European Council in Brussels on Thursday.
The meeting comes after a shock 6.5-point hike in Russian interest rates to 17%, implemented by Moscow's central bank in a bid to stem inflation and prop up the rouble following a 10% decline in its value on Monday. The central bank had gradually increased the rate from 5.5% earlier in the year without producing the required effect.
The rate rise triggered a brief rally in the value of the rouble, before it fell once more to historic lows. The Russian currency has lost half of its value this year as global oil prices have tumbled from more than 100 to less than 60 US dollars a barrel and the sanctions have started to bite.
Asked for Mr Cameron's assessment of the situation in Russia - which is heavily dependent on revenues from hydrocarbon exports - the Prime Minister's official spokesman said: "What he would say is that it is not unreasonable to look at this in terms of the fact that Russia has made itself more vulnerable to economic shocks that major oil producers may face as a result of the fluctuations in the oil price, as a result of the relative isolation through sanctions that it has faced due to events in Ukraine."
The EU and US have gradually stepped up a range of co-ordinated sanctions targeted at the inner circle of President Vladimir Putin, as well as key sectors of the Russian economy, after the annexation of the Ukrainian province of Crimea in March and the subsequent destabilisation of eastern Ukraine by pro-Russian forces.
The PM's spokesman poured cold water on any suggestion that the sanctions could be scaled back in response to Russia's economic woes, telling reporters: "That requires de-escalation in the Ukraine."
He added: "We have been clear that if Russia continues not to take the path of de-escalation, it will continue to face consequences. These have primarily been through sanctions, which have had an economic focus.
"We have already seen financial flows through global capital markets reflecting the sanctions imposed on the Russian authorities in recent months. I think that does expose vulnerabilities when other economic shocks come along."