PARIS: Russia’s invasion of Ukraine will dominate EU finance ministers’ planned talks on Friday, officials said, as the EU weighs how much the war on its eastern borders will hit the economy of the 27-nation bloc this year.
Ukrainian forces battled Russian invaders around nearly all of the country’s perimeter on Thursday after Moscow mounted a mass assault by land, sea and air in the biggest attack on a European state since World War Two.
EU leaders will announce new sanctions after an emergency summit on Thursday evening that will freeze Russian assets, halt its banks’ access to European financial markets and target “Kremlin interests”, senior officials said.
EU’s Russia sanctions to take effect on Wednesday
“The Russian aggression will definitely feature prominently in tomorrow’s discussions and the main focus for all finance ministers will be to assess the economic consequences of the escalation as it evolves,” an EU official said.
France’s finance ministry, which is hosting the talks, said in a letter to attendees that the meeting would be an opportunity to demonstrate EU unity. Sessions on Saturday were cancelled.
The ministry said the ministers would discuss the impact of the Russian invasion on their economies and especially the impact on energy prices.
They will also discuss the sanctions that EU leaders are set to agree on Thursday evening as well as potential Russian counter-sanctions.
Before the invasion, the ministers had been due to discuss the post-pandemic economic recovery, changes to their fiscal rules and speeding up the development of EU capital markets.
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“The focus has shifted now,” a second official said.
“Finance ministers will discuss the economic outlook for Europe, but the EU Commission’s winter forecast is rather obsolete now,” the official said.
The European Commission forecast earlier in February that economic growth in the 19 countries sharing the euro would be 4.0% this year, less than the 4.3% expected last November, because of another wave of COVID-19 infections, supply chain bottlenecks and record high inflation caused by energy prices.
But the war in Ukraine creates a new risk factor for the economy, not only because many EU exporters will no longer be able to sell their goods to Russia under the sanctions regime, but also because Moscow may retaliate by curbing gas and oil deliveries to Europe. Russia is the EU’s main energy supplier.
European Economic Commissioner Paolo Gentiloni said before the full-scale Russian invasion that developments in Ukraine made the 4.0% growth forecast more uncertain.
Over the last year, Russia has not raised spot gas deliveries to Europe despite soaring demand, which helped boost energy prices and euro zone inflation to record highs. Fast price growth has become a political problem for EU governments.