European companies prepare for the blow of possible sanctions on Russia

Brussels, Jan 29 (Latest).- European companies are already preparing for the impact that the economic sanctions that the European Union and the United States plan to impose on Russia would have if it attacks Ukraine, especially those that export to the country or depend on Moscow’s energy and would be the most affected.

Geopolitical tensions are added to the problems of supply of raw materials, access to energy or high inflation as the most important challenges in the next two years for European companies, which also have the ecological and digital transitions pending, he explains in an interview with Efe the new president of Eurochambres, Luc Frieden.

“Concrete steps have not yet been taken, so there is no direct impact yet, but obviously there will be some companies and countries more affected than others,” says this former Luxembourg Minister of Finance, Defense and Justice, who this month has taken the reins of the network of European chambers of commerce and in March it will visit Spain.

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The neighboring countries of Russia and those with closer ties to Moscow, the companies that export to the country or have activity in it and the sectors that depend on Russian energy, something that “to a certain extent directly or indirectly impacts everyone”, would be the main losers, according to Frieden.

The financial sector would also suffer in particular, as capital flows are expected to be affected by sanctions whose details are not known, but which include cutting off Moscow’s access to financial markets and restricting its exports.

Against this background, Eurochambres calls for “doing everything possible to continue dialogue and find peaceful solutions”, while European companies “are already analyzing the impact that sanctions could have on their business”, especially in those sectors directly affected, says Frieden.

If materialized, the sanctions would come after a year marked by a rise in energy prices before which the organization calls for action at the European level to guarantee “sufficient energy and at acceptable prices.”

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“There may be some sectors in some countries that need financial support or fiscal benefits to survive this difficult period, but from a structural point of view, to ensure that you have enough energy in times of geopolitical tensions and at acceptable prices, the EU is much more stronger than individual countries,” says Frieden.

In particular, when it comes to negotiating with third countries such as Russia, “the only possible path is for the EU to lead”, adds the president of Eurochambres, who is in favor of joint gas purchases proposed by countries such as Spain, although he warns that it would not be as easy as the joint acquisition of vaccines against covid.

It also calls for more European coordination to promote renewable energies “as quickly as possible” and support for companies to undertake an ecological transition that will require million-dollar investments.

“Politicians often underestimate the difficulties of this transition, including its enormous financial impact,” says Frieden, for whom “more realism” and dialogue with the different sectors are required to know “what they need and what is realistic” for decarbonization.

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In this area, one of the EU’s priorities this year will be to approve the new Carbon Border Adjustment Mechanism (CBAM), which will tax imports from countries with more lax environmental legislation to avoid unfair competition with European producers.