Finland Times

 

Prime Minister Alexander Stubb is speaking at a press briefing in a beach café in Espoo Haukilahti on Wednesday. Photo Lehtikuva.

While voicing his support for the latest round of EU sanctions against Russia, Prime Minister Alexander Stubb admitted that it will exert a significant indirect impact on the Finnish economy.

 

The prime minster also said that Finland will seek compensation from the European Union, if counter sanctions by Russia hits it disproportionately.

 

Speaking at a press conference in Espoo in southern Finland on Wednesday, the premier said the direct impact on the Finnish economy would be limited but the indirect effect in the long term could be quite significant.

 

The impact could potentially even lead to an economic crisis in Finland, Stubb stressed.

 

Poland has already demanded compensation from the EU after Russia banned Polish fruit and vegetable import.

 

Stubb, however, termed the sanctions imposed on Russia necessary.

 

The sanctions were imposed to influence the diplomatic process, said the premier.

 

File picture of professor Pekka Sutela. Photo Lehtikuva.

Stubb reiterated that the effects of the counter sanctions should be spread uniformly across the Euro zone.

 

Referring to the sanctions as a common problem, the prime minister stressed the need to find common solutions.

 

“The continuation of cross-border cooperation is an example of how we protect our own interests,” said Stubb, referring to the EU July summit.

 

It was feared before the summit that the EU cross-border cooperation with Russia was going to be suspended.

 

The prime minister expressed his view that a separate report on NATO membership is not necessary. According to the premier, a more extensive review is enough.

 

 

News Agency Xinhua adds: 

 

ECONOMIC DECLINE PREDICTED

 

As a close neighbour to the east, Russia is one of the most important trade partners of Finland. Russia’s share of Finland’s exports last year was 10 per cent.

 

The Bank of Finland predicted that a 3 per cent decline in the Russian economy will mean a 0.5 per cent decline in Finland.

 

Stubb estimated the indirect impact of the sanctions could be up to billions of euros.

 

The deterioration of the Russian economy before sanctions were imposed has already exerted negative impacts on the Finnish economy.

 

According to the Federation of Finnish Technology Industries, the technology industry’s Russian exports between January and April were 18 per cent less in comparison to the corresponding period of last year, with the largest drops being experienced in the metal and electronic industries.

 

Experts from the federation believed that the engineering and technology industries are among the most seriously affected sectors.

 

Lack of investment could be one of the major reasons, as sanctions targeting the Russian financial market will obstruct the Russian state-owned financial enterprises’ access to finance.

 

Finnish companies’ access to finance in Russia will also become problematic, explained Jorma Turunen, managing director of the federation.

 

Dairy products will face a big challenge following the Russian sanctions on EU countries. Photo Lehtikuva.

The Finnish tourism industry will also be among the hardest-hit industries. 

 

Pekka Sutela, a professor at the University of Lappeenranta, estimated that the Russian ruble will be devalued due to the sanctions, thus curbing the flow of Russian visitors to Finland.

 

 

POSSIBLE COUNTER MEASURES

 

The Finnish economy will be affected more, provided Russia adopts counter measures, Stubb warned. The Finnish government therefore has worked intensely towards curbing possible damage on Finland.

 

Media reports said the Russian authorities have approved bans on agricultural imports from countries that have sanctioned Russia.

 

Heikki Juutinen, director of the Finnish Food and Drink Industries’ Federation, said the bans would present a huge challenge to the Finnish food industry, as about 25 per cent of Finnish food exports go to Russia, and they are worth more than 400 million euros.

 

Finns are more worried that Russian officials are considering imposing flight restrictions on European airlines transiting over Siberia to Asia.

 

If the proposal is put to effect, the Finnish national carrier Finnair would be seriously affected, as Finnair’s flights to East Asian countries account for 40 per cent of the airline’s passenger traffic turnover.

 

Stubb on Wednesday emphasised that if the sanctions hit Finland disproportionately, the government will seek EU compensation to cover any significant loss.