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August 11, 2022

EU Commissioner for Economy: Effects of the war in Ukraine on the European economy cannot be quantified yet

The effects of the war in Ukraine on the European economy cannot be quantified yet, but it is clear that estimates of economic growth, both in the EU and in Romania, need to be revised downwards, said EU Commissioner for Economy, Paolo Gentiloni, who attended a conference organized by The Economist in Bucharest on Tuesday.

We are not far from the border, bombs continue to fall, we look forward to talks in Istanbul, but right now civilians continue to be killed and thousands of Ukrainians continue to flee for their safety in several countries, including Romania. This is not just an attack on Ukraine, but an attack on the values we hold dear: democracy, freedom and the rule of law, said the European Commissioner.

The war will inevitably have an impact on the European economy and will exacerbate the challenges it faces anyway: rising energy and commodity prices, which puts pressure on consumer prices.

In February, inflation rose to 6.2pct in the EU and by 7.9pct in Romania. We expect the value of these indicators to continue to rise. The disruption of supply chains and the high degree of uncertainty affect confidence, which could negatively affect our current estimates. Member States will be affected differently, depending on their exposure to Russian gas or the high flow of refugees. Romania, for example, is less dependent on Russian gas, unlike other European countries, but has already received more than half a million refugees, almost 600,000, with an extraordinary effort of solidarity, providing assistance that is likely to affect already affected finance in several countries, Gentiloni continued.

It is too early to estimate the impact of the war in Ukraine on the European Union’s economy.

But it is clear that the estimate of economic growth of 4pct that we have for this year, and of 4.2pct for Romania, respectively, will have to be revised downwards. How much? It depends on the development of the war and on our common policy in responding, he continued.

The Commissioner pointed out that the National Recovery and Resilience Plan is very important for economic recovery in several countries, including Romania. If Romania continues its plan, it can increase its GDP by 2-3pct.

The war in Ukraine is a wake-up call for Europe to strengthen its strategic sectors such as energy and defence. The intention is to reduce gas imports from Russia by two-thirds by the end of this year.

The most important thing is to make sure that the price of energy remains affordable. We encourage member states to take steps to reduce the impact of these increases. Secondly, we need to make sure that we have enough gas in storage, because next winter we will have less gas in storage than in the previous year, and we will diversify our gas suppliers, find alternatives to Russian gas, continued Gentiloni.

The key in the long run is to give up our dependence on fossil fuels, the European official added.


If Russia decides to suspend gas deliveries, then the European Union is ready to deal with the situation


The payment of Russian gas in rubles means a breach of existing agreements, and if Russia decides to suspend deliveries, then the European Union is ready to deal with the situation, said the European Commissioner for economy, Paolo Gentiloni, who attended a conference organized by The Economist in Bucharest on Tuesday.

Asked if the EU is ready to pay for gas in rubles, as Russia demands, and if Europe is ready to deal with the situation in which Russia cuts off gas supplies to Europe, the European official said he does not know what to expect from Russia, but paying in rubles would be a breach of existing agreements.

Secondly, are we ready to take a stand on dependence on Russia? Of course we’re ready. We decided to do that, and the war was a wake-up call, but we can’t do anything quickly without sacrifice. Are we ready to make these sacrifices? Definitely yes. We do not put energy sanctions on the table, but if there is such decision [from Russia to cut off deliveries – editor’s note], we are ready to deal it them and we can do so with a strong effort, and we will continue in any way to reduce our energy dependence on Russia, the European official said.

Russia has warned that it will not supply gas to European countries if they refuse to pay in rubles, as requested by Moscow, EFE and TASS report.

Moscow’s decision has raised concerns in the West, where several countries have said they are unwilling to buy gas and oil if payment is to be made in Russian rubles.


Compiled from Agerpres

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