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RISI VIEWPOINT: Will the Ukraine crisis derail the global economy?

BEDFORD, MA , April 28, 2014 (Viewpoint) - 

Although the crisis in Ukraine is now almost five months old, the situation remains fluid and questions about the possible effects on the global economy continue to arise. With the recovery in Europe still in a fragile state, the US economy still trying to break out of its subpar growth and China's economic reforms putting pressure on growth in the world's second largest economy, what are the possible effects of the crisis on these economies?

After Russia's stealth invasion of and annexation of Crimea, the USA and Europe imposed some sanctions on Russia and have threatened further actions, especially if Russia uses its troops massed near the Ukrainian border to take over more Ukrainian territory. It is highly unlikely that further action by the West would include any kind of military action, so all that is left is additional sanctions and even those may prove difficult to impose due to reluctance to antagonize Russia. So far, sanctions have been fairly modest: travel bans on a few individuals and the blacklisting of one bank where Russia's leaders have some accounts. Additional sanctions could include asset freezes of individuals and companies, blocking Russian banks from the international financial system, limiting Russian energy firms from international markets and even expelling Russia from international organizations like the World Trade Organization, the IMF or the World Bank. The harsher sanctions, however, will almost certainly force retaliation by Russia and so are unlikely to be implemented unless the situation deteriorates significantly.

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This article originally appeared on woodbiomass.com: RISI VIEWPOINT: Will the Ukraine crisis derail the global economy?