To spite grandma: Europe has come up with a strange plan for Russia
The European Union plans to impose duties on iron and steel, inorganic chemicals and potash fertilizers from the Russian Federation. It is assumed that the measures should again "reduce the dependence" of the EU on Russian goods. In fact, analysts warn, all this will again boomerang the economy of the association itself. For more information, see the Izvestia article.
We need to get rid of
According to Politico, Estonia, Latvia, Lithuania, Poland, Finland, Sweden and Germany supported the introduction of duties on Russian goods.
Thus, the initiative group proposes to the European Commission to impose tariffs on Russian iron and steel, inorganic chemicals and potash fertilizers, the volume of exports of which in 2024 brought the Russian Federation 5.4 billion euros.
As the newspaper notes, in 2024, European companies purchased Russian goods worth €33 billion. Excluding oil and gas, about 11 billion rubles were spent on goods such as iron and steel, nickel, fertilizers, aluminum, fish and industrial equipment.
Some of the goods either do not fall under EU sanctions or are excluded from the list. Now, according to European officials, it is time to correct these flaws and "strengthen economic security."
They keep buying
The EU has imposed a ban on the import or purchase of iron and steel products containing iron or steel produced in Russia and processed in other, third countries. The EU and the UK banned the import of certain types of iron and steel products from Russia for the first time in March–April 2022.
If Russian steel is present in imported iron and steel products, import is prohibited. If the European importer does not provide sufficient documentation from the point of view of the customs authorities, the import will be refused, says Evgeny Sumarokov, associate professor at the Department of International Business at the Financial University under the Government of the Russian Federation.
However, despite the restrictions imposed earlier, Russia continues to supply significant volumes to the EU.
—In 2024, these are 1,029 thousand tons of pig iron, 3,150 thousand tons of slabs, 0.3–0.4 million tons of aluminum and about 3 million tons of fertilizers,— says Sergey Zaborov, managing partner of the consulting company Triada Partners.
All this, as the EU complains, allows for various exceptions and "loopholes in import sanctions," and therefore in Germany, for example, they are ready to go even further: they propose to introduce a complete ban on steel and aluminum supplies to EU countries. According to the workers' wing of the conservative CDU/CSU (CDA), which is part of the ruling coalition, this step will help bring the German steel industry out of the crisis.
At the same time, an industrial crisis has already broken out in Germany itself. And the largest companies, such as Volkswagen, BMW, Mercedes-Benz, BASF, are reducing capacity in the EU with might and main.
Shortages and rising prices
As economists warn, the effect will be exactly the opposite of what was intended, and for the entire European Union. That is why a number of European countries are not at all interested in duties, much less in a ban: in this case, their industry will lose affordable resources.
— Additional restrictions may lead to a shortage of certain high—quality steel grades - for example, high-strength steels and steels with improved weldability for the automotive industry. This is due to the fact that Russian factories have been investing for years in the production of slabs with special characteristics that were ideally "sharpened" for the needs of European rolling machines. Rising prices for raw materials and lower demand due to the high cost of products will provoke a new wave of production shutdowns, especially at electric smelters," says Sergey Zaborov.
The new EU sanctions policy will lead to serious disruptions in existing supply chains, forcing European companies to look for alternative ways to purchase raw materials, possibly of the same origin, but through third countries. This will be a slow process, which will result in an increase in the cost of goods and services, adds Evgeny Sumarokov.
Everyone will suffer
A number of critically important sectors of the EU economy will be under attack.
First of all, agriculture and the food industry, where fertilizers are the basic resource; automotive industry with high consumption of steel and aluminum; construction and mechanical engineering, which consume a lot of steel and aluminum. And finally, the chemical industry, which is already in crisis due to high gas prices, warns Zaborov.
As a result, as the economist emphasizes, Germany with its largest automotive and chemical concerns will inevitably suffer. This will be followed by Poland, the Czech Republic, and Slovakia, whose economies are heavily integrated into German production chains, and whose own metallurgy industry is heavily dependent on Russian semi-finished products.
— Finland and Sweden will have a hard time, as their timber, pulp and paper industries, as well as metallurgy, will face rising energy and raw material prices. The agricultural sector of France, Spain, and Italy (the largest in the EU) will also suffer due to the sharp rise in the price of fertilizers, the expert draws attention to.
It is not difficult to predict further processes in the European economy: acceleration of deindustrialization, relocation of production facilities to the USA and China with available resources and substantial subsidies for localization, further loss of competitiveness by European industry. In general, everything that, apparently, has long been accepted in Europe.
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