The level of hardship that can be endured by people in the cause of nationalism is not to be underestimated, so when it comes to the Ukraine - Russian crisis, I am firmly against economic sanctions....
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div>The level of hardship that can be endured by people in the cause of nationalism is not to be underestimated, so when it comes to the Ukraine - Russian crisis, I am firmly against economic sanctions of any kind.
History tells us that sanctions will not break the resolve of the likes of Putin. Rather we stand the risk of backing what appears to be an angry and unpredictable despot into a corner, at which point he is likely to become more vicious and defensive than ever.
No doubt Putin has carefully thought through the economic costs of accomplishing his objectives in Ukraine, having already weathering a fall in the Moscow stock market that wiped nearly $60 billion off the value of corporates, as he deployed troops in the Crimea.
Looking closer to home, Western economic sanctions against Russia will result in a tit-for-tat exchange, with Russia's Duma likely to impose regulation on foreign companies that will effectively work as sanctions.
There on, Western organizations with operations in the country will be under threat of having their assets seized, particularly if action is taken to seize the overseas assets of, for example, ousted Ukrainian president Viktor Yanukovych.
At one level, such action would make me smile - reportedly Yanukovych's son was a small-time businessman at the start of his father's presidency, and the third-richest man in Ukraine, as his father made his exit.
Corruption will have been the main means of accruing this level of wealth - Yanukovych once told journalists "I came from a very poor family and my main dream in life was to break out of this poverty."
But in the UK we have been welcoming oligarchs, most notably to invest in London's super-prime property market, and with one Mayfair house currently for sale at £40 million, it may just be the crisis in the Ukraine that pricks the bubble, particularly if sanctions against Russia are just around the corner.
Turning to the impact of a sanctions war on the eurozone, real GDP in the euro area rose by 0.3 per cent in the last three months of 2013 and looking ahead, the ongoing recovery is expected to proceed at a slow pace.
In a recent press briefing, Mario Draghi, President of the European Central Bank, took stock of the of the Ukraine crisis on the energy market as follows: "If we look at the next six months, the answer is: It is going to be very mild. If we look at a year and a half, it could be very serious."
So, Mr Draghi's vision of the euro as an "island of stability" is already deeply under threat because of uncertainly, "central bankers do not have enough information to give a reliable assessment of the economic impact at such an early stage in the crisis," he said.
But from the Russian point of view, an EU paper on natural resources policy by Manfred Hafner makes interesting reading.
No separation between the transit gas network and the domestic gas network exists in Ukraine so, according to Mr Hafner, Ukrainian customers usually served themselves from the transit volumes.
Unsurprisingly, Russia viewed this as theft of gas and regularly pressured Ukraine to make political and/or economic concessions in exchange for erasing the accumulating gas debt.
However, "the Ukrainian non-payment issue was structural, as soon as a gas debt had been erased, it started again to accumulate".
This would go some way to explaining why the tariff for gas is so high in the Ukraine compared with Germany and Poland and why Russia's no-nonsense intervention in the Crimea reflects a level of frustration with the Ukraine that the West find hard to understand.
But returning to the UK and the London property bubble, it is here and in the short term lending markets that I see the potential for extremely unpleasant consequences from the Ukrainian crisis.
With travel and economic sanctions against Russia looming, foreign investors, whether countries or individuals, will be increasingly wary. Added to the mix, corruption issues under review in China could mean that the London property market is hit by a double whammy.
While Russian investment could go out like a light, Chinese investment could fade like the morning star as spotlights land on corrupt Chinese politicians.
Meanwhile, it would appear that no-one knows what wealth ex-president Yanukovych actually holds in the UK as Ukrainian debt spirals to its current estimate of $37 billion. A staggering achievement, when you consider that the gas bill was left unpaid! Has anybody got any dollars for the meter?
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