The EU will not enter into a full-drawn trade battle with Russia over the annexation of Crimea, at least for the time being, EU leaders agreed yesterday following the first of a two-day summit meeting in Brussels.
Although the summit was originally meant to focus on the economy, industry and energy, the latest developments in the Ukraine dominated the agenda.
Prime Minister Joseph Muscat and other leaders were locked for hours in closed-door meetings on the way forward.
Although Dr Muscat did not give any comments to the media, sources close to the government told Times of Malta last night that the island will be taking the same approach as that agreed by the member states as it was important to have a unified voice on the issue.
“Malta is reluctant to escalate the issue with Russia and introduce economic sanctions as these might harm European economies which are still emerging from the recent crisis,” a senior diplomat said.
“From the discussions held so far it seems that there is no real appetite for full-blown economic sanctions among EU leaders.”
Although the EU has already imposed a travel ban and an asset freeze on 21 Russian officials close to the regime – including a former Russian ambassador to Malta – it is expected to add a number of new Russian officials to the list, targeting politicians closer to Russian President Vladimir Putin.
Generally, although the EU does not recognise the referendum held recently and the annexation of Crimea, the larger EU member states fear repercussions on their economies.
France, Germany, Italy, the Netherlands and Poland all have strong economic trade with the Russian Federation and a backlash would most probably result in additional unemployment and massive business losses. Many EU countries also rely on Russian natural gas for their energy.
Economic sanctions would not have an immediate impact on Malta as trade with Russia is very low (see box).
Apart from Ukraine, the summit is expected to endorse a number of EU positions of an economic and financial nature, including the closing of six-year long negotiations on a new savings tax directive – ending secrecy of bank accounts for tax reasons – and the conclusions of the first EU economic semester.
Draft summit conclusions seen by Times of Malta yesterday state that EU leaders will be emphasising the need for more reforms in pensions and healthcare – with many countries including Malta falling short of their commitments.
EU leaders will also discuss the latest preparations on the EU-Africa summit to be held next month.
Malta – Russia trade
According to recent statistics issued by Eurostat, Malta’s trade flows with the Russian Federation are almost negligible.
Last year, Malta imported a total of €5 million in products from Russia, amounting to less than 0.2 per cent of the island’s total imports.
Exports too were very low, amounting to just €35 million worth of goods or 1.3 per cent of the total value of €2.6 billion exported last year.
In the area of tourism, Malta fares better, with some 30,000 Russians visiting Malta on holiday in 2012. Air Malta operates several weekly flights to Moscow and St Petersburg.