EK has advised companies to be prepared for the fact that the first sanctions may come from the United States.
Situation Ukraine’s borders are tightening day by day, and there are already demands from Western countries to impose economic sanctions on Russia.
The Latvian Foreign Minister demanded the imposition of sanctions on Sunday Edgar Rinkevich.
“As we can see, Russia is continuing its aggression against Ukraine and Russian troops are not leaving Belarus. It is clear that the transatlantic community needs to start imposing sanctions and NATO needs to move more troops into the region, ”he wrote on Twitter.
Rinkēvičs reacted to a Sunday by the Belarusian Ministry of Defense notificationaccording to which Russian troops who entered the country for military exercises will not leave the country after the end of the exercise, as Russia has previously promised.
NATO estimates that Belarus has about 30,000 Russian troops and a lot of heavy equipment. They were to leave the country at the end of the exercises.
In doing so, Russia again broke another promise to withdraw its troops from the Ukrainian border. In total, there are an estimated 190,000 Russian soldiers near the border.
Also the Minister of Foreign Affairs of Ukraine Dmytro Kuleba insisted that at least some of the sanctions should already be implemented.
“Russia must be stopped immediately. We’ll see how things go, ”he said.
West have threatened Russia with unprecedented economic sanctions, but have not unequivocally said what the sanctions could trigger. EU leaders have reiterated the message that sanctions will be resorted to if Russia expands its military aggression.
“As far as sanctions are concerned, it is good to proceed step by step. We are now preparing a package of sanctions related to Russia’s military operations in Ukraine. If Russia expands it, the EU will respond with its partners with very strong economic sanctions, ”said the Prime Minister. Sanna Marin (sd) said Friday.
German Chancellor Olaf Scholz said in an interview with CNBC on Saturday that the EU should not say too much about its intentions to Russia.
“I don’t think it makes sense to publish them [pakotteita]. It is good for us that Russia does not know what we are going to do. ”
Uncertainty is also known in many European companies.
When the Confederation of Finnish Industries (EK) organized a training event on sanctions for its member companies last week, the number of participants surprised the organizers. About 300 companies registered, and questions were flooded.
How far should supply chains be felt to avoid sanctions? How would sanctions treat Russian subsidiaries? How would US sanctions affect Europe?
“Worry escalation is real, ”says the director Petri Vuorio From the EC.
According to Vuorio, it is very difficult to assess how likely it is that sanctions will be invoked.
The first uncertainty concerns whether Russia will launch an attack that is feared in the West. The influx of Russian troops across the Ukrainian border would certainly lead to Western sanctions.
However, another, possibly more significant, factor of uncertainty is what kind of sanctions could be triggered by an act less than a full-scale land war.
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“The concern about escalation is real.”
Eastern Ukraine has not been in a state of peace for eight years. An estimated 15,000 people have died in the war and the ceasefire has been constantly violated.
Ukraine has been hit by an occasional grenade fire in recent days, and Western countries have accused Russia of provoking Ukraine. Westerners believe Russia is trying to stage a situation in which it could claim to defend itself against an attack by Ukraine. Ukraine has denied responding to the fire.
Ukraine has also been the target of cyber-attacks by Russia, which it says originated in Russia.
It is also feared in the West that when a large number of soldiers are concentrated near the border and when the atmosphere at the border tightens, escalation may be triggered by misjudgment or human error. This was the case in 2014 when rebels in eastern Ukraine shot down an MH17 passenger plane with a Russian missile. A completely unforeseen event led to strong sanctions by the West and counter-sanctions by Russia.
EC has also advised companies to be prepared for the first sanctions to come from the United States. Western countries have confirmed that they will work together, but Vuorio believes that the threshold for the use of sanctions by the United States and Britain is lower than in the EU.
These countries have thinner trade relations with Russia and are less vulnerable to possible Russian retaliation, such as disruptions to energy supplies. In addition, Britain’s distances to Russia have deteriorated since the Skripal poisoning incident.
In practice, US sanctions also affect European companies, Vuorio says.
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Vuorio believes that the threshold for the use of sanctions by the United States and Britain is lower than in the EU.
Banks do not want companies on the US sanctions list to be customers, as was seen in the case of Arctech, the owner of the Helsinki shipyard. Companies’ agreements may also contain entries related to sanctions.
In addition, US export restrictions may also affect Finnish export companies if the company’s products use restricted components. In addition, there will be reputational risks in an important market if it appears that the company is violating U.S. sanctions, even if they are not legally subject to it.
With regard to Iran sanctions, it was seen that, in practice, the United States forced European companies to choose between the Iranian and U.S. markets. After the imposition of sanctions, all major European companies withdrew from Iran.
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