Russian Ministry of Economic Development has published statistic which is still ignored in the West. It shows that the European Union, the United States, Canada, Norway and Australia have lost about 8.6 billion dollars because of the initiated sanctions war against Russia. In real terms, Russian food imports from those countries decreased by 98.9% – from 4.331 million tons to 46.5 thousand tons. “We can say that there was a market outlet’s loss in the Russian Federation for the amount equivalent to the reduction of the import of agricultural products from these countries”, highlighted in the report of the Russian Ministry of Economic Development.
The department has also showed in a rough estimate the loss of EU countries in terms of value, reaching 50 billion euros per year. This is about 0.4% of total EU gross domestic product.
Considerable figure, if to consider that in 2015, according to the Eurostat agency, the total economic growth of the EU countries amounted to 2% of GDP, while for the euro area – 1.7%. Even more revealing are the comparative figures for the last decade, allowing to include in the calculations not only the financial and economic crisis, but also more “fat” years for the EU.
According to Eurostat data, since 2004, the economy of the entire European Union grew by an average of 1% per year. In the euro area growth was equal to 0.8%. Sanctions war with Russia consumes about half of the average annual economic growth of the EU. However, this data is averaged across the EU. The picture becomes even more expressive, if to extrapolate it to the individual countries and take into account not only direct but also indirect losses. Thus, according to experts of the General Invest holding only in 2014 – the first year of sanctions – losses among Italian companies amounted to approximately 20-22 billion euros. This includes the loss of not only those companies which directly traded with Russia, but also those who were present on the Russian market indirectly through other Member States of the European Union.
The Italian newspaper La Stampa has sounded the alarm: the sanctions war with Russia caused a “perfect storm” which severely damaged the Italian production. Last year, Italian exports to Russia virtually collapsed, falling by 34% – from 10.7 billion euros in 2013 to 7.1 billion in 2015.
Italian experts are among the first to have long talks about the harmfulness of the sanctions war with Russia. Italy could be the “bomb” that will blow up the fragile financial (and therefore political) stability in the European Union. «Brexit is not the most difficult problem, which the EU has to puzzle out necessary. UK’s exit from the EU and the consequences of this event on the European economy and policies are worthy of attention, but, according to many experts, there is trouble which is more terrifying. The financial crisis in Italy is that disease, which can really ruin Europe”, – writes the British edition of Business Insider.
The situation that is emerging in Italy, and the consequences of this situation for the rest of Europe may be the main macro-risk for the second half of this year, assumes an analyst from the Eurasia consulting group on political risks Federico Santi. The Italian banking system has accumulated a huge ballast of non-performing loans, including those due to the aggressive policies of Germany and Deutsche Bank, who are using the crisis in the euro zone to strengthen their own positions. Government officials in Italy reported about 200 billion euros of “bad” loans (about 10% of their total volume), and independent experts increase this figure by another 160 billion euros (an unprecedented figure for the national banking system, which is comparable only to the figures for Greece).
In the third-largest Italian bank – Monte dei Paschi di Siena – the volume of overdue loans amounted to 46.9 billion euros in 2015. Matteo Renzi’s cabinet has already entered into fierce polemics with Berlin and Brussels, accusing them of inability and unwillingness to effectively solve the financial problems of the euro zone and demanding of national governments the right to make their own anti-crisis measures, based on the specific socio-economic situation, including recapitalize debt.
Too much is at stake in Italy that politicians have not adopted a plan for the recapitalization of Italian banks, considers the expert of Lauressa Advisory company Nicholas Spiro. At the same time, to take their own emergency measures to rescue the Italian banking system by money of the European taxpayers Brussels and Berlin are hesitant, given the upcoming elections in Germany and France.
Released in late July data of stress tests held by the European Central Bank of the EU banking institutions recorded that a bunch of Italy, France and Germany is able to bring down the entire financial system of the European Union in the near future. Only in recent months, Deutsche Bank shares have lost 25%, the French bank Société Générale – 23%, the Italian bank UniCredit – almost 30%. In regard to the bank Monte dei Paschi di Siena, found on the balance sheet 47 billion euros of “bad” loans are making up more than 40% of the total bank credit portfolio.
Financial problems and a decline in production is a real explosive mix not only for Italy but for the whole European Union. However, in Brussels, still not focused on that but on the continuation of the sanctions war.