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Putin's stance on Ukraine is bad for business, Russian billionaires say

| Monday, July 21, 2014, 11:29 p.m.

Russia's richest businessmen are increasingly frantic that President Vladimir Putin's policies in Ukraine will lead to crippling sanctions and are too scared of reprisal to say so publicly, billionaires and analysts said.

If Putin doesn't move to end the war in Ukraine in the wake of the downing last week of a Malaysia Air jet in rebel-held territory that killed 298, he risks becoming an international outcast like Belarus' Aleksandr Lukashenko, whom the United States famously labeled Europe's last dictator, one Russian billionaire said on condition of anonymity. What's happening is bad for business and bad for Russia, he said.

“The economic and business elite is just in horror,” said Igor Bunin, who heads the Center for Political Technology in Moscow. Nobody will speak out because of the implicit threat of retribution, Bunin said by phone. “Any sign of rebellion, and they'll be brought to their knees.”

Branding Russia, like Iran or Gaddafi's Libya, a “state sponsor of terrorism,” as the British defense minister suggested, would be a major move that would have “a very significant impact on Russia and companies dealing with Russia,” said Timothy Ash, an emerging-market economist at Standard Bank in London.

Europe's foreign ministers will meet on Tuesday in Brussels to discuss toughening sanctions against Russia. British Prime Minister David Cameron and Dutch Prime Minister Mark Rutte are among leaders who want harsher measures more in line with the American approach.

“We should push our partners in the European Union to consider a new range of hard-hitting economic sanctions against Russia,” Cameron said, adding that the EU should move to the highest of three tiers of sanctions in which entire sectors were targeted.

“Russia risks becoming a pariah state if it does not behave properly,” Britain's Foreign Secretary Philip Hammond said on Sky News. “We now need to use the sense of outrage that is clear to get a further round of sanctions-tightening against Russia.”

Additional U.S. measures may be imposed in the next few weeks, with industry-wide sanctions probable in September.

“The threat of sanctions against entire sectors of the economy is now very real, and there are serious grounds for business to be afraid,” Mikhail Kasyanov, who served as Russia's prime minister during Putin's first term as president, from 2000 to 2004, said by phone from Latvia. “If there will be sanctions against the entire financial sector, the economy will collapse in six months.”

Andrey Kostin, head of a state-run lender, said last week that the sanctions in place could tip Russia's $2 trillion economy into recession and turn Russia into an outcast of global capitalism.

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