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Sometimes all we have left is the hope of good weather. As now, when gas storage facilities in the EU are at one of their lowest levels, the Frankfurter Allgemeine Zeitung wrote recently. In countries like Austria even up to 21%. A month ago, when asked how Austria will cope with the winter with such small reserves, Elena Skvortsova from the board of directors of the energy concern OMV said:
“Weather forecasts promise a mild winter, so we think these stocks will be enough.”
And like all other entrepreneurs and politicians in Europe who want to do business with Russia, she repeated the mantra that despite the political crises of the last 50 years, Russia has always supplied the agreed gas.
However, Gunter Deuber, chief economist of Raiffeisenbank, which is strongly represented in Russia, is less optimistic.
“As tensions escalate, sanctions will follow, which would lead to stagflation in the European economy. In any case, economic development will be severely affected,” he warned.
Politico: EU Sanctions against Russia will Take Effect Today
An analysis by the Vienna Institute for Eastern Europe (WIIW) has identified which countries will be hardest hit by strained relations with Russia. It was quoted by the Frankfurter Allgemeine Zeitung. According to it, Bulgaria will be among the most severely affected by the sanctions and the deterioration of relations with Moscow. According to the analysis, there will be no large-scale military action, but there will be separate military strikes and limited regional military operations. However, the damage to the whole world will be significant.
The energy sector will suffer in the first place.
It is no longer necessary to make guesses about this, Medvedev himself wrote on Twitter:
Those European countries where dependence on gas and oil on Russia is particularly high will be the hardest hit. According to WIIW, these are Bulgaria, Estonia, Finland, Greece, Lithuania, Latvia, Poland and Slovakia.
In any case, their dependence on Russia as an energy supplier is greater than their dependence on Russia as an export market. That is, imports are more important than exports, so sanctions will have a very high price for them. For 2020, Bulgaria even has the largest negative trade balance with Russia - $1,700 billion. Only 4% of Bulgaria’s exports are to the Russian market.
But other EU countries will also feel the serious contraction in Russia's energy exports. This will have an immediate impact on world market prices. Hungary and Romania have also been warned that this would lead to a sharp devaluation of their currencies and rising interest rates on their government bonds.
The Czech Republic will be the least affected, experts say. High energy prices increase the cost of production of chemicals, glass, metals, construction materials. Fertilizer production is problematic, leading to a 10 to 20 percent drop in yields this year. There will be an increase in meat prices. The production of cars and electronics will slow down even more. All this will have a negative impact on government domestic investment and infrastructure projects in recovery programs.
Recalling what happened in the grain markets after the annexation of Crimea, experts predict an increase in grain prices, as Ukraine and Russia are among the major producers.
Naturally, the economy of Ukraine itself will suffer the most. The country needs support in the capital markets to ensure its financial stability.
London has Sanctioned five Russian Banks and Three close to Putin
Financial sanctions against Russia will be a serious blow to major European banks. Russia's largest creditors are France's Societe Generale, Italy's Unicredit and Austria's Raiffeisenbank International.
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