Tuesday, 14 October 2014

European Business in Russia Is Sacrificed Over Ukraine

Sanctions, sanctions...

European business interests in Russia are being hurt badly over Ukraine, according to Philippe Pegorier, chairman of the Association of European Business lobby group in Moscow.

“The European business community is angry that it is being sacrificed by both the European and Russian authorities,” Pegorier, who is also president of the French power equipment maker Alstom SA (ALO) in Russia, told AEB members at a briefing today. “The EU sanctions hurt very hard our business in all the sectors. The Russian retaliation also hurt our companies hard and does not meet Russia’s commitments under the WTO.”

European Union direct investments in Russia amount to 170 billion euros ($215 billion), or 75 percent of all FDI inflows into the country, said Pegorier, whose AEB represents about 600 European companies. Russia is the EU’s third-largest market for exports and the EU is the top destination for Russia’s products, he said.

Russia in August banned imports of meat, fish, dairy, fruits and vegetables from the U.S., EU, Canada, Norway and Australia for a year in retaliation for penalties levied over the conflict in Ukraine. The U.S and its allies have imposed sanctions against individuals close to President Vladimir Putin as well as Russian companies and the finance, energy and defense industries.

Taking Toll

Russian sanctions are taking their toll on Germany, Europe’s biggest economy. German exports to Russia fell 14 percent in August, amid a 5.8 percent decline in total exports from July, according to data compiled by Bloomberg. Germany is Russia’s third-biggest trading partner after China and the Netherlands.

The country most affected by the sanctions is “of course” Germany, Pegorier said in an interview after the briefing.

“Our politicians must open their eyes now,” he said. “The reason sanctions will be lifted will be when unemployment is raised even more in our member countries.”

European taxpayers may face 40 billion euros in damages from sanctions this year, and a further 50 billion euros in 2015, according to Russia’s Foreign Minister Sergei Lavrov.

“The EU should worry about its own interests and act in line with those interests,” Lavrov told the AEB delegates in Moscow today.


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