Putin orders retaliation against western sanctions

Russia’s president Vladimir Putin ordered his government to draw up retaliatory measures as a riposte to western sanctions amid signs Moscow was considering a ban on western airlines using Russian airspace.

His pledge came amid renewed geopolitical tensions over Ukraine, with Moscow demanding “an international humanitarian mission” for the east of the country where Ukrainian forces are seeking to crush a pro-Russian rebellion.

Russia called an emergency meeting of the UN Security Council to discuss the issue. Kiev fears Moscow will invoke a humanitarian crisis to send in troops as peacekeepers.

In his first comments on the broader punitive measures imposed by the US and the EU against Russia in the past two weeks, Mr Putin said he had told his government to prepare retaliatory moves.

“Of course, it should be done very carefully in order to support domestic producers but not hurt consumers.”

The Russian business daily Vedomosti reported that Moscow was considering a ban on airlines flying across Russian airspace to Asian destinations.

Vedomosti, part-owned by the Financial Times and the Wall Street Journal, reported that Russian officials were considering either limiting the number of trans-Siberian routes European airlines can take or banning European airlines from trans-Siberian routes altogether. Any restriction would reverse an agreement between Moscow and European airlines dating back to the 1970s. It has allowed airlines to save up to $30,000 (€22,000) in fuel and fees on each route and shave up to 4,000km off each journey, said Russia's Federal Air Transport Agency.

It has also benefited Russian state-owned airline Aeroflot, which has received up to $300 million (€224 million) in fees a year from the European airlines, in exchange for them flying the trans-Siberian route across Russian airspace.

Shares in Aeroflot fell 5.8 per cent in Moscow yesterday. EU airlines’ shares fell on news of a possible ban on carriers flying over Siberia.

– (Copyright The Financial Times Limited 2014)