Russian politicians and business leaders are urging the West reign back any enthusiasm for sanctions as the current crisis surrounding Ukraine shows no sign of easing.

Washington and some of its European allies have imposed limited sanctions on Russia following what former European Union Trade Commissioner, Lord Peter Mandelson, called Moscow’s “illegal annexation” of Crimea.

At last week’s St Petersburg International Economic Forum, many speakers made reference to the sanctions that could target some of President Putin’s inner circle, with some citing Russian Railways president, Vladimir Yakunin, a SPIEF speaker.

“On certain additional steps, such as sanctions that are applied to Russia, that has a negative impact,” said Russian Union of Industrialists and Entrepreneurs, president, Alexander Shokhin, addressing delegates during the Global CEO Summit element of SPIEF.

“I would like to urge political leaders who take these decisions to emphasise political measures to settle disputes rather than harming our economy.”

Earlier, Russian Minister of Economic Development, Alexey Uljukaev, responded to Mandelson’s’ claims the Crimea accession was a “pyrrhic victory” with the former Commissioner warning of economic instability in the months to come.

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“We all need free trade, free of any restrictions, sanctions, trade duties,” said Uljukaev. “This is the main tool we have today for intensifying growth.

“Replying to Lord Mandelson, I generally agree with what he said about the challenges we are facing. The period of growth is over – it was based on unused assets and labour.

“Our current prognosis of growth is 0.5% GDP and a little more than 1% production growth. We see some symptoms of improving production in the last few months.”

The Minister acknowledged there could be little increase in the price of oil and gas – Russia’s two huge economic staples – with the possibility of even costs reducing.

Addressing the widely-discussed issue of capital outflow in Russia, Uljukaev insisted around one-third of the total, or US$20bn in his estimation, was due to some people moving savings from roubles.

“Inflation – we are currently at a very high level,” he said. “Inflation will gradually go down by the end of this [year] to 6%, which is a bit better than last year.”