EU diplomats today are to pour over the legal texts drafted by the EU commission for imposing sectoral economic sanctions on Russia for its role in the Ukrainian conflict. The sanctions are expected to be approved tomorrow.
According to an EU source familiar with the legal texts, the economic effect of the sanctions will hurt the Russian economy by €23 billion this year (1.5% of its GDP) and €75 billion in 2015 (4.8% of its GDP).
The Economist meanwhile has calculated that the pain Russian firms will suffer from these sanctions could go up to one trillion US dollars (€744bn).
But the EU will also be hurt by the capital markets restrictions and trade bans for defence, high technology and goods that can be used both for military and defence purposes.
The EU commission expects the EU to lose €40 billion (0.3% of GDP) this year and €50bn in 2015 - the equivalent of 0.4 percent of the EU GDP - as Russia is expected to retaliate with trade bans of its own against EU countries, the source said.
This has already caused concern in southern member states - notably Russia-friendly Italy - where economic growth is meagre and recession may kick in again due to the Russian sanctions regime.
At a meeting of EU ambassadors last week, the southern countries called on the EU commission to take into account the sanctions fallout when it evaluates how they stick to deficit and debt rules.
Germany, who so far was reluctant to endorse wide-ranging economic sanctions, is bracing itself for the fallout, too. (more)
Read the whole story here: http://euobserver.com/economic/125118
Source: EUobserver - Valentina Pop