Sanctions Hit Key Russian Interests

QUEST MEANS BUSINESS

Sanctions Hit Key Russian Interests; US Stocks End Lower; European Stocks Mixed; Scottish Independence Question; Businesses Worried Over Scotland Vote; Economic Case for Scottish Independence; Brazil Election Race Tightens; Boosting Brazil's Tourism Industry; Pistorius Guilty of Culpable Homicide; PR Boost for Yahoo!; Crowdfunding for a Good Cause; Redesigning the Union Jack; Vinicius Lages is Reading for Leading

Aired September 12, 2014 - 16:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

QUEST: Now, in Moscow, stocks recouped some of Thursday's losses. The ruble continued its slide, hitting a new low against the dollar. The new round of sanctions goes to the very heart of the Russian economy, and since we're in London tonight, let's show you exactly this. If you look at the way in which the sanctions have been designed, for example, let's take this dart. It is the one that looks to go for financial services.

There is a 30-day limit now on loans from EU banks and institutions. Anything more, any bonds, any brokerages, any trading, any instrument to those banks that are on the list with maturities longer than 30 days are no longer permitted.

Then -- so, that's the one that you have there. Then, of course, you've got the way in which certain banks, particularly Russia's biggest bank, Spur Bank, has been specifically targeted. It's been added to the list. Now, Spur Bank will no longer be able to get medium-term, long-term financing in Europe. It's part of the 30-day rule. And yet, Spur Bank serves more than half of Russia's population, millions of customers abroad.

The full implications -- look, what's been done with Spur Bank and these other institutions is still hitting at the wholesale, at the corporate level. But it won't be long before the interest rate differentials and the ripple effects start to go right down through the economy.

And then -- so, you've got financial institutions, but this is a biggie as well. The oil industry. It's now losing access to finance. It's getting bans on tech services to develop water and deep service for the infrastructure necessary. And those companies involved, those, for example, like Exxon, which will also be feeling the pinch -- look at Exxon's oil exploration, particular in these northern parts. The planned -- get in there properly and have a look -- and the oil exploration all around here.

Now, how can you take advantage of these areas, these parcels, if you are not allowed to get drilling rights, if you are not allowed to use equipment and services. Rosneft Oil, Exxon's oil exploration joint venture is worth half a trillion dollars and is key to boosting output, provides critical revenue for the country.

Elizabeth Rosenberg served as a senior advisor at the US Treasury Department. She helped put in place sanctions in Iran, Libya, and Syria, amongst others. Now she joins me from Washington. Elizabeth, when I look at these sanctions that we are talking about at the moment, and I see the sort of targeting, do you think they're going to work?

ELIZABETH ROSENBERG, FORMER SENIOR ADVISOR, US TREASURY: Well, they'll definitely have a significant effect. They will strike directly at Russia's banking sector...

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