EU is willing to bear the economic cost of imposing sanctions on Russia

The European Union (EU) is willing to bear the economic cost of imposing sanctions on Russia, which will likely stem above all from rising energy prices, senior bloc finance officials said.

EU leaders agreed on Thursday to impose new sanctions on Russia’s financial, energy and transport sectors, introduce export controls and blacklist more Russians over Moscow’s invasion of Ukraine.

This means that countries that sell their products to Russia will see their trade revenues fall, while Russia, which is Europe’s main energy supplier, may retaliate by curbing sales of gas, oil and coal to the EU.

“Of course we will pay an economic price for this war,” said European Economy Commissioner Paolo Gentiloni, entering the EU economy ministers’ talks in Paris.

“We will discuss this today, how this war will affect our economic forecasts. I think it will have an impact, but the costs of reacting to this invasion, to this violation of international law, are costs that we must bear,” he indicated.

The European Commission (EC) forecast in early February that the economic growth of the 19 countries that share the euro would be 4% this year, already below the 4.3% forecast last November, due to the increase in coronavirus infections. COVID-19, supply chain bottlenecks and record inflation caused by energy prices.

Gentiloni has said the Russian invasion of Ukraine made the 4% growth forecast more uncertain. EU ministers said they would try to assess its impact on Friday and discuss how to soften the blow.

“We will have a debate on how we can protect our citizens and our economies; Of course, there are consequences in the energy sectors, for example, but we are prepared,” said German Economy Minister Christian Lindner.

His French counterpart, Bruno Le Maire, said that the sanctions will be painful especially for Russia.

“It will be the Russian economy that will pay the price for Vladimir Putin’s decision, it will be the Russian people that will pay the price for Vladimir Putin’s decisions. It will be the Russian oligarchs who will pay for Vladimir Putin’s foolhardy decisions,” he said on the way to the meeting.

“Make no mistake about it, the decisions that Vladimir Putin has made will suffer, not the European economy, not the world economy, but the Russian economy,” he stressed.