The sanctions that western countries have imposed on Russia can create problems for Norwegian companies operating in the country.
Many details in the various sanction packages are still unknown, even though they were presented on Thursday afternoon and evening. The new US and UK sanctions have placed major obstacles on Russian banks and companies’ ability to raise capital in the dollar market. Norway will probably follow the EU’s sanctions, which also apply to export financing and a number of specific sectors.
“The problem is that there have been no details about which units and measures are affected. We cannot say anything in detail about which sectors and transactions will be affected,” chief economist Frank Jullum at Danske Bank Norge told NTB.
Fewer obstacles when it comes to payment flows
The sanctions will first and foremost prevent the Russian economy from financing itself outside Russia. In addition, the EU has opened up for what they call “export control.” What that means in concrete terms is also not known. When Russia invaded Crimea in 2014, Norwegian salmon exports to Russia were affected by sanctions and counter-sanctions.
“For the time being, it is possible to transfer funds between Norway and Russia. Russia is not excluded from the international financial system, but its banks are subject to restrictions on what they can do. For Norwegian companies, it depends on who they have connections to,” Jullum said.
He says the actual flow of goods and services can be affected by the sanctions, but there are fewer obstacles when it comes to payment flows.
This is partly due to the fact that Russia has not been excluded from the international transaction system Swift, which would have made the vast majority of banking transactions impossible. Jullum points out that the absence of this sanction probably contributed to the stock market fall in Moscow and in the rest of the world being less than expected on Thursday.
The market was relieved above the level of sanctions
“Sanctions against oil and gas exports and exclusion from Swift would hurt extremely in both Russia and Europe. The market was relieved. Then, you can discuss whether Russia really feels punished or not…” the chief economist said.
In his speech on Thursday night, US President Joe Biden said that the US wanted to exclude Russia from Swift, but that EU countries said no.
“Swift is a system where all financial transactions are located. If Russia is ousted, it will not be possible to transfer money between Russia and the outside world. If you buy an item online, for example, the store must have a Swift code to get information that you have paid for the item,” Jullum explained.
Source: © NTB Scanpix / #Norway Today / #NorwayTodayFinance
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