A top Russian business lobbyist pleaded with Putin to 'demonstrate as much as possible' that Russia wants to remain 'part of the global economy'

Vladimir Putin and Alexander Shokhin
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  • The president of a major Russian business groups urged Putin to dodge economic fallout of the Ukraine invasion.

  • Countries including the US and UK have levied new sanctions on Russia after it attacked Ukraine Thursday.

  • Alexander Shokhin called on Putin to "demonstrate as much as possible" that Russia "remains part of the global economy."

The head of one of Russia's biggest business groups urged President Vladimir Putin on Thursday to avoid severe economic pain and remain "part of the global economy" as NATO members ready a harsher salvo of sanctions.

Putin held a televised meeting with the Russian Union of Industrialists and Entrepreneurs just hours after Russian forces began attacks in Ukraine. The invasion has quickly rippled throughout the global economy, with financial markets plummeting, commodity prices soaring, and experts warning of weaker economic growth. The attacks have also prompted the US, UK, and the European Union to discuss more painful economic retaliation.

The threat of new sanctions was enough for Alexander Shokhin, the business group's president, to raise concerns with Putin about remaining a member of the world economy. The lobbyist urged the president to pad against major economic pain and to ensure conflict in Ukraine doesn't fuel widespread harm to the global financial system.

"Everything should be done to demonstrate as much as possible that Russia remains part of the global economy and will not provoke, including through some kind of response measures, global negative phenomena on world markets," Shokhin said.

The New York Times reported Shokhin was "very much visibly nervous" during his appeal.

Putin responded by defending the attack as a "necessary measure," adding that countries imposing sanctions "created such great risks" that it was "impossible to react with any other means."

Markets didn't seem to buy the defense. The MOEX Index — a popular benchmark for Russian stocks — cratered 33% in Thursday trading, marking the fifth-worst drop in stock-market history. The Russian ruble also sank to a record low against the US dollar as investors lost faith in the currency's value.

The market moves reflect fears that retaliation will damage more than a few Russian businesses. Sanctions announced just ahead of the attacks targeted Russian financial institutions and elites, but new proposals are markedly more severe to the country's entire economy.

The US and UK ramp up their sanctioning efforts

President Joe Biden unveiled a second tranche of punitive measures Thursday afternoon, promising Russia would "bear the consequences" of its invasion. The latest sanctions target more Russian elites and freeze technology exports to the country. The US also expanded its sanctions against Russian banks to include more firms including Sberbank, Russia's largest financial institution and the holder of almost one-third of the banking sector's wealth.

"Full-blocking" sanctions were also announced for four more Russian banks, essentially banning them from operating with US entities and freezing their US-based assets.

The UK followed with its own updated sanctions. Prime Minister Boris Johnson rolled out new measures targeting Russian banks, businesses, and oligarchs on Thursday, effectively kicking them out of the UK's financial system. The British government also clamped down on exports of technology to Russia and banned the country's Aeroflot airline.

The economic damage, then, is set to intensify. When Russia starts to feel the heat remains uncertain. It's "going to take some time" before the newest US sanctions start to strangle the Russian economy, Biden said Thursday. The president added that more damaging measures, such as blocking Russia from the Swift financial communications network, remain on the table.

Read the original article on Business Insider