• The CEO of one of Russia’s biggest banks said he was concerned about the build up of military equipment in Europe, which amounted to a “new arms race.”
  • Andrei Kostin of VTB said the “dangerous” build up of weapons could cause an “accident” and was worsening tensions between Russia and the West.
  • He said if the US were to impose further economic sanctions on Russia, it would be “like declaring a war.”

LONDON – The CEO of a Russian bank has warned of the growing threat of military conflict in Europe and said further sanctions imposed on Russia by the US would be like “declaring a war.”

Andrei Kostin, head of VTB and a close ally of Russian President Vladimir Putin, told the Financial Times he was worried about the “dangerous” new “arms race” occurring in Europe, which he said could cause an “accident.”

“We are at the beginning of a new arms race,” Kostin said, speaking at the World Economic Forum in Davos.

“Nato is asking for more weapons and spreading more weapons in Europe and Russia will retaliate absolutely the same.”

"So who will benefit from this? Only the generals and those who produce arms," he said.

"America is saying Europe should pay more for this. Who needs it? It is very dangerous."

The US Treasury is due to present a report to Congress next week on oligarchs and "parastatal entities" close to Putin, potentially in advance of further sanctions against Russia.

New measures cut the duration of loans that can be offered to Russian financial firms that are subject to sanctions to 14 days from 30 days, and to 60 days from 90 days, for Russian energy companies on a US sanctions list.

VTB and Sberbank, Russia's two biggest banks, are both majority-owned by the Russian government, and are concerned the US may try to exclude them from the Swift international interbank payment system.

"Any economic sanctions against institutions, personally I would say it would be like declaring a war. I see no reason why the Russian ambassador should stay in Washington any longer after that or the American ambassador staying swimming in cold water in Moscow," said Kostin.

"I think that is a worse than cold war situation and that is very dangerous. And I think that America is playing with fire, because the relationship is going from bad to worse and we are not responsible for that," he said.

However, Kostin said he was "not concerned" about having personal sanctions imposed on him, which, under the Magnitsky Act, would prevent him travelling to the US or having a US bank account.

He warned a build-up of weapons was potentially very dangerous: "There is so much military equipment close together, anything can happen. Maybe it will not lead to a nuclear war, but it will further kill our [Russia and the West's] relationship.

"Who knows what is going to happen in Syria, or in the Baltics or in the Black Sea where you have now American military ships. The more arms you have, the more reason to believe there could be an explosion just by accident," he said.