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After months of escalating tensions over Ukraine and talk of a new cold war, Russia and the West could soon reach a sanctions rapprochement. The eurozone economy is suffering badly and sanctions are partly to blame. Winter is also upon us, and that reminds everyone Vladimir Putin still holds the cards when it comes to supplying gas.

The clincher, though, is that Kiev is in a deep financial hole and fast heading towards financial meltdown. Unless an extremely large bail-out is delivered soon, there will be a default, sending shockwaves through the global economy. That’s a risk nobody wants to take – not least in Washington, London or Berlin.
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After three rounds of US-inspired sanctions against Russia, Moscow has finally retaliated. We’re now on the brink of a fully-blown East-West trade war. Since March, the West has imposed successive travel bans and asset freezes on various lawmakers and other prominent individuals – the most wide-ranging restrictions on Russian commerce since the Soviet era. In late July, the screw was turned even tighter, as America and then the EU limited Russian state-owned banks’ access to international capital markets.

President Putin then snapped. A 12-month ban on food imports from America, the EU, Australia, Canada and Norway was imposed and there’s talk of stronger measures to come. Diplomacy having failed – having barely been attempted – the economic gloves are now off. Will tit-for-tat sanctions between Russia and the West escalate, worsening the commercial and political damage? Or will they be contained?
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