Business confidence in Russia waning, European bank says

Sanctions imposed in response to the situation in eastern Ukraine have resulted in a loss of business confidence in Russia, a European bank said Thursday.

The U.S. and European governments have imposed punitive sanctions on Russian energy companies Rosneft, Gazprom Neft and others in response to the crisis in Ukraine. Last week, the European Union increased the pressure with sanctions on deep water energy operations, arctic oil exploration and shale projects.

The European Bank for Reconstruction and Development said the sanctions were taking a toll on the Russian economy.

"The Western sanctions, combined with uncertainty about their possible escalation in the future, have negatively affected business confidence in Russia, constrained the ability of corporations and banks to access international debt markets, and contributed to capital flight," the bank said in a briefing.

The Kremlin last week said it was the duty of the government to support the energy sector during what Rosneft Chief Executive Officer Igor Sechin said were difficult operating conditions.

In terms of Ukraine, the EBRD said the lack of Russian gas supplies because of contractual issues could create a secondary crisis during the upcoming winter heating season.

"So far the transit flow of gas [through Ukraine] to Europe has not been affected," the bank said.