Jan Strupczewski and Leigh Thomas

PARIS (Reuters) – The European Union is willing to suffer the economic pain of imposing sanction on Russia. These sanctions are likely to result primarily from rising energy prices. Top EU finance officials stated on Friday.

On Thursday, EU leaders agreed to place new sanctions against Russia’s transport, financial and energy sectors. They also introduced export controls and blacklisted more Russians in response to President Vladimir Putin’s invasion of Ukraine.

Russia’s main energy supplier could retaliate by reducing trade revenue from countries selling their products. Russia could respond by cutting gas, oil, and coal exports to Europe, which would cost Moscow.

Paolo Gentiloni (European Economic Commissioner) stated that the EU will have to bear the economic cost of this war upon arriving in Paris for EU finance ministers talks.

He said, “We will talk about this today. How this war will affect our economic forecasts.” I believe that…the costs of responding to the invasion and to international law violations are costs we can afford.

Philip Lane, chief economist at the European Central Bank has stated to fellow policymakers that the Ukraine conflict could reduce the GDP of the euro area by 0.3%-0.4% in this year.

“WE ARE PREPARED”

In February, the European Commission predicted that the economic growth of the 19 euro-member countries would reach 4.0%. This is already lower than the expected 4.3% in November due to more COVID-19 infection, supply chain disruptions, and high energy prices.

Gentiloni said that Russia’s invasion of Ukraine made the 4.0% forecast less certain.

Christian Lindner, German Finance Minister said that there will be a discussion about how to safeguard our people and economy. “There are consequences in energy sectors, for instance, but we’re prepared.”

Bruno Le Maire, Bruno’s French counterpart, stated that the sanctions will be most painful for Russia.

Vladimir Putin made a mistake by deciding to make Russia the economic center of the world. He said to reporters that it would be Russia’s oligarchs who will bear the consequences of Vladimir Putin’s foolish decisions.

EU plans to lessen its dependence upon Russian gas.

Valdis Dombrovskis, Vice President of European Commission, stated that “We propose a common European procurement for, and setting up strategic gas reserves so we reduce our dependence upon Russian supplies.”

“We’re in talks with other suppliers. This week, the prime minister of Norway visited Brussels. “We must strengthen our resilience to Russia’s potential market manipulation,” he said.