Eurogroup to consider blocking Russian gas imports
The Eurogroup will hold its monthly meeting today.
The group of finance ministers from eurozone member countries will discuss the area’s economic prospects and the future of the euro. The topic of discussion will likely relate to the recent Russian invasion of Ukraine. The EU recently announced a number of sanctions following Russia’s recognition of the breakaway regions of Luhansk and Donetsk. Given the crisis has since escalated into a full invasion, more sanctions are likely to follow.
The group is likely to develop strategies to address its dependence on Russia for energy and gas supplies, which will likely be targeted in any further sanctions. Currently, Russia supplies approximately 40% of the EU’s natural gas needs. To mitigate this dependency, Eurozone states are likely to attempt to increase gas imports from the US and the Caucasus.
In the event of an escalation in the conflict, initial supply issues and sanctions will likely slow growth in the Eurozone and depreciate the value of the Euro against other global currencies. In the medium to long-term these effects may subside, provided fuel import reorientation is successful. However, the higher transport costs of non-Russian gas could dampen medium-term economic prospects for the EU.
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