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

Tunnel Bombs Highlight Savagery of Aleppo Fight

Rebels have used tunneling tactic near government buildings, command posts or supply routes to set off explosives; they detonated their largest bomb this week under Syria's intelligence headquarters More

Sierra Leone Launches New Initiative to Stop Ebola Spread

Government hopes Infection and Prevention Control Units, IPC, will help protect patients and healthcare workers More

UN Official: Fight Against Terrorism Must Not Violate Human Rights

UN High Commissioner for Human Rights says efforts by states to combat terrorism are resulting in large scale rights violations against the very citizens they claim to defend More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960s Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7 to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More