Sanctions will hit Russia hard, but Europe also under strain

BROADER US and European sanctions could send the Russian economy into free fall, but business people fear that the impact on the European economy could be severe.

The big question now is whether Russian President Vladimir Putin will buckle - provided US and European leaders give him an opportunity to save face, analysts say.

Under the sanctions on Tuesday, the EU agreed to restrict Russia's access to European capital markets, and EU nationals may no longer buy securities and financial instruments from Russian banks. Broking services are also banned. There is an embargo on the arms trade as well, and exports of energy-related equipment and technology will have to be scrutinised.

Products destined for deep-water and shale exploration will be banned. The measures apply to new contracts and, for this reason, European stock markets rallied as participants had feared that there would be ret…