News / Europe

    Russian Ties, Trade Lie Behind EU Sanctions Rift

    Reuters

    Germany and Italy have the most to lose if the European Union makes good on its threat to impose harsher sanctions on Moscow, while Britain's overseas territories are soaking up the lion's share of capital streaming out of Russia.

    The picture emerging from United Nations and European Union data shows the impact of restricting trade with Russia would be far from even, with Germany dwarfing others' exposure and those urging sanctions loudest, such as Sweden, having less at stake.

    That makes an EU plan to consider limiting Russian access to European defense and energy technology more difficult, despite pressure from the United States after the downing of a Malaysian airliner over the conflict zone in eastern Ukraine.

    Wary of antagonizing its main gas supplier, the EU has used travel bans and asset freezes so far in reaction to Russia's annexation of Crimea and support for separatists in Ukraine.

    Ministers agreed on Tuesday those measures may be widened if Moscow does not cooperate with an investigation into the plane crash and fails to stop weapons flowing into the country.

    Limiting trade would be damaging because the 28-nation EU sold goods worth 120 billion euros ($161 billion) to Russia last year, even if that was only 7 percent of the bloc's annual exports, according to the EU statistics office Eurostat.

    Germany, Europe's biggest economy, accounted for one-third of sales to Russia, around 36 billion euros. Many of those goods could be restricted by sanctions: manufactured products including those used in defense and energy.

    EU governments are split over tougher sanctions, largely depending on the closeness of their ties with Russia. Germany is the swing state given its position at the heart of Europe and as its weight as the EU's most populous country.

    Britain, Poland and Sweden lead a group pushing for economic sanctions, and whose combined total exports to Russia are less than the size of those of Germany.

    Some 6,200 German firms are active in Russia with 20 billion euros [$27 billion] of investments there, while around 300,000 German jobs are dependant on trade with Russia, according to Germany's Committee on Eastern European Economic Relations.

    “More sanctions increase the price all of us have to pay for this conflict,” Eckhard Cordes, its chairman, told Reuters.

    HeidelbergCement, which does business in Russia, echoed that sentiment and a spokesman for the company said that while it would accept sanctions, “economically there will only be losers because both sides will suffer damages”.

    Still, the Baltic countries, which won their independence from the Soviet Union two decades ago, are the most vocal about the need for sanctions against Russia despite strong trade ties.

    Almost three-quarters of Latvia's drinks and tobacco exports go to Russia, while Lithuania sells a third of its food and live animal there. But the Baltics are eager to diversify away from Moscow. Lithuania will join its Baltic neighbors Latvia and Estonia in the euro zone from next year, cementing a shift westwards.

    $94-Billion Money Trail

    Italy is among the states most strongly resisting tougher restrictions on Russia, along with Greece and Cyprus.

    Italian exports to Russia were second only to Germany's last year at nearly 11 billion euros, double those of Britain and larger than the 8 billion euros of the Netherlands, which has shifted to the pro-sanctions camp after 193 of its citizens were killed in the plane disaster.

    The Netherlands, a nation of 15 million, has an outsized share of imports from Moscow and foreign direct investment flows to Russia because of its position as an oil and commodities trading hub and a tax-efficient base for offshore corporations.

    Much of the Italian sales were manufactured goods, transport machinery and chemicals - the kind of sophisticated products Russia's raw materials-dominated economy needs.

    “Sanctions are always a problem both for those who are subjected to them and those who impose them,” Italian Economy Minister Pier Carlo Padoan told reporters in Brussels.

    Italy's allies include southern European countries such as Cyprus, which stands to lose from sanctions because of the billions of euros Russian oligarchs have invested there.

    Of $94 billion in outward foreign direct investment by Russian residents in 2013, $11 billion ended up in Cyprus, according to U.N. and World Trade Organization data.

    Cyprus, where light regulation and cultural ties through Orthodox Christianity have long attracted the capital and savings of Russians, was only second to the British Virgin Islands, which took in $61.7 billion last year.

    Wealthy Russians took a hit when the euro zone imposed losses on big bank depositors in return for a 10 billion euro bailout of Cyprus last year after a banking meltdown.

     

    You May Like

    How Aleppo Rebels Plan to Withstand Assad's Siege

    Rebels in Aleppo are laying plans to withstand a siege by Syrian President Bashar al-Assad’s forces in likelihood the regime cuts a final main supply line running west of city

    Probe Targeting China's Statistic Head Sparks Concern

    Economists now asking what prompted government to launch an investigation only months after Wang Baoan had been vetted for crucial job

    HRW: Both Sides in Ukraine Conflict Targeted, Used Schools

    Rights group documents how both sides in Ukraine conflict carried out attacks on schools and used them for military purposes

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growthi
    X
    February 10, 2016 5:54 AM
    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Civil Rights Pioneer Remembers Struggle for Voting Rights

    February is Black History Month in the United States. The annual, month-long national observance pays tribute to important people and events that shaped the history of African Americans. VOA's Chris Simkins reports how one man fought against discrimination to help millions of blacks obtain the right to vote
    Video

    Video Jordanian Theater Group Stages Anti-Terrorism Message

    The lure of the self-styled “Islamic State” has many parents worried about their children who may be susceptible to the organization’s online propaganda. Dozens of Muslim communities in the Middle East are fighting back -- giving young adults alternatives to violence. One group in Jordan is using dramatic expression a send a family message. Mideast Broadcasting Network correspondent Haider Al Abdali shared this report with VOA. It’s narrated by Bronwyn Benito
    Video

    Video Migrant Crisis Fuels Debate Over Britain’s Future in EU

    The migrant crisis in Europe is fueling the debate in Britain ahead of a referendum on staying in the European Union that may be held this year. Prime Minister David Cameron warns that leaving the EU could lead to thousands more migrants arriving in the country. Meanwhile, tension is rising in Calais, France, where thousands of migrants are living in squalid camps. VOA's Henry Ridgwell reports.
    Video

    Video Valentine's Day Stinks for Lebanese Clowns

    This weekend, on Valentine's Day in Lebanon, love is not the only thing in the air. More than half a year after the country's trash crisis began, the stink of uncollected garbage remains on the streets. Step forward "Clown Me In," a group of clowns who use their skills for activism. Before the most romantic day of the year the clowns have released their unusual take on love in Lebanon -- in a bid to keep the pressure up and get the trash off the streets. John Owens reports from Beirut.
    Video

    Video Families Flee Aleppo for Kurdish Regions in Syria

    Not all who flee the fighting in Aleppo are trying to cross the border into Turkey. A VOA reporter caught up with several families heading for Kurdish-held areas of northern Syria.
    Video

    Video Rocky Year Ahead for Nigeria Amid Oil Price Crash

    The global fall in the price of oil has rattled the economies of many petroleum exporters, and Africa’s oil king Nigeria is no exception. As Chris Stein reports from Lagos, analysts are predicting a rough year ahead for the continent’s top producer of crude.
    Video

    Video 'No Means No' Program Targets Sexual Violence in Kenya

    The organizers of an initiative to reduce and stop rape in the informal settlements around Kenya's capital say their program is having marked success. Girls are taking self-defense classes while the boys are learning how to protect the girls and respect them. Lenny Ruvaga reports from Nairobi.
    Video

    Video Chocolate Lovers Get a Sweet History Lesson

    Observed in many countries around the world, Valentine’s Day is sometimes celebrated with chocolate festivals. But at a festival near Washington, the visitors experience a bit more than a sugar rush. They go on a sweet journey through history. VOA’s June Soh takes us to the festival.
    Video

    Video 'Smart' Bandages Could Heal Wounds More Quickly

    Simple bandages are usually seen as the first line of attack in healing small to moderate wounds and burns. But scientists say new synthetic materials with embedded microsensors could turn bandages into a much more valuable tool for emergency physicians. VOA’s George Putic reports.
    Video

    Video Researchers Use 3-D Printer to Produce Transplantable Body Parts

    Human organ transplants have become fairly common around the world in the past few decades. Researchers at various universities are coordinating their efforts to find solutions -- including teams at the University of Pennsylvania and Rice University in Houston that are experimenting with a 3-D printer -- to make blood vessels and other structures for implant. As VOA’s Greg Flakus reports from Houston, they are also using these artificial body parts to seek ways of defeating cancerous tumors.
    Video

    Video Helping the Blind 'See' Great Art

    There are 285 million blind and visually impaired people in the world who are unable to enjoy visual art at a museum. One New York photographer is trying to fix this situation by making tangible copies of the world’s masterpieces. VOA correspondent Victoria Kupchinetsky was there as visually impaired people got a feel for great art. Joy Wagner narrates her report.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.