BRUSSELS (AP) — After the political outrage against Russia comes the economic toll.
Finance ministers from the 19 countries that use the euro met in Paris on Friday to weigh the economic fallout from Russia’s invasion of Ukraine and the resulting European Union sanctions. The EU and allies like the US are trying to deprive Russia of international capital and key industrial technologies.
The finance talks will be “devoted exclusively to the Ukrainian question, the economic consequences and what we can do to protect our economies”, French Finance Minister Bruno Le Maire said in a televised address.
In an emergency meeting on Thursday evening, EU heads of government approved new sanctions aimed at making Russian President Vladimir Putin pay a heavy price for an invasion that has shaken the security order of the post-cold war. The sanctions will be finalized and submitted for approval to EU foreign ministers on Friday.
They target Russia’s finance, oil and transport industries and cover goods for military and civilian use. Like the United States, the measures stop short of excluding Russia from the SWIFT international payments system – a move Ukraine demanded but some EU countries, including Germany, resisted.
While the EU’s 27 national leaders said the sanctions would “impose massive and severe consequences on Russia for its action”, some acknowledged the pain would also be felt in Europe.
“All these measures will be expensive, also for us,” Luxembourg Prime Minister Xavier Bettel said on Thursday. “But peace also has a price.”
The EU faces considerable costs due to the close economic ties with Russia, especially the bloc’s Russian energy imports.
BusinessEurope, which represents a range of EU-based companies, called on European authorities for “support measures” to lessen the impact of new sanctions against Russia.
“European businesses will bear the burden, including businesses that trade and operate in Russia,” the Brussels-based group said.
The EU is moving beyond more targeted economic sanctions introduced in 2014 after the Kremlin annexed Ukraine’s Crimea region and began backing separatist rebels in eastern Ukraine. Russia retaliated at the time by banning imports of agricultural products from the EU.
Although these restrictions on both sides remain in place, trade in goods between the EU and Russia is still significant. It totaled more than 174 billion euros ($195 billion) in 2020, making Russia the EU’s fifth-largest trading partner and the bloc Russia’s biggest trading ally, according to the European Commission.
Of the roughly €95 billion in EU imports from Russia in 2020, when the economy collapsed during the COVID-19 pandemic, around €67 billion – or 71% – were petroleum products.
Even before the invasion, Europe faced economic difficulties.
Eurozone inflation hit a record 5.1% in January, fueled by soaring energy prices. Europe’s economy has also entered tough times, reflecting other factors including the omicron variant of COVID-19 and a shortage of semiconductors that are used in everything from cars to game consoles.
This combination is a tricky test for policymakers as they seek to protect consumers from rising prices and continue to drive business activity.
Two weeks ago, the European Commission, the executive arm of the EU, predicted that economic growth in the euro zone would slow from 5.3% last year to 4% this year and 2.7% in 2023.
Paolo Gentiloni, the European Commissioner for the Economy, signaled on Friday that these forecasts may already be out of date.
“We will economically pay the price for this war,” Gentiloni said in Paris.
While European Commission President Ursula von der Leyen said the new EU sanctions would “gradually erode Russia’s industrial base”, including by hampering the country’s ability to refine oil, she stressed the bloc’s dependence on Russian fossil fuels and called for faster development of renewable energy in Europe. .
“It will be our new strategy that we have to step up,” she said in Brussels on Friday.
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