Europe stands to lose a total of €100bn from its economy due to the trade sanctions it has placed on Russia, putting around two million jobs across members states at risk according to an independent Austrian study published by German daily newspaper Die Welt today.
The EU and other international partners announced trade sanctions against Russia last year in response to Russia's aggression in Ukraine. Despite apparent division between the EU member states strongly in favour of sanctions and those who feel sanctions are doing too much harm to European economies, EU foreign ministers are next week expected to formally agree to renew them until the end of the year.
Now the independent Austrian Institute of Economic Research in Vienna (WIFO) has estimated that, as a result of the political fallout with Russia, both the sanctions and counter sanctions imposed by Russia are putting around €100bn in potential export revenue and economic development at risk.
"The faltering exports which last autumn we hypothesised would happen have become a reality," said Oliver Fritz, one of the authors of the study. The study itself uses the similar economic trends observed between January and March of 2015 in Europe and produces the estimates in the hypothetical scenario that those trends continue.
According to the study, the loss of the Russian market could impact jobs in the EU and non-member Switzerland over the next few years. Reduced exports across Europe will be the main cause of redundancies, however reduced tourism from Russia could also impact employment levels.
Germany would be one of the biggest losers in terms of jobs, as reduced trade with Russia could put 465,000 German jobs in jeopardy, while Poland would be second, with 335,000 jobs at risk. Italy is the third with 215,000 and though Spain and France are also in the top five, relative to their size their projected losses of 160,000 and 145,000 respectively are considerably lower. WIFO estimate that the UK could lose around 110,000 jobs.
In terms of export revenue, Germany is the major European economy which would be most affected with a possible loss of 1.6% over the next few years, while Italy, Spain, France and the UK would each lose less than 1%.
Smaller countries however are likely to be much worse affected, with Estonia feeling the greatest hit relative to its size. It's projected to register an almost 16% drop in revenue from exports compared to 2013, before any sanctions were imposed.
Despite not being an EU member and famous for its neutrality in international conflicts, Switzerland has partially backed sanctions, blacklisting 27 pro-Kremlin individuals and organisations and ceasing trade with Crimea. WIFO estimates 40,000 jobs could be at risk in the country.
The EU has not officially declared the impact that diminished trade relations with Russia have had on its economy in the last year, however both Russian president Vladimir Putin and prime minister Dmitry Medvedev have warned that Brussel's initiative will harm European economies.
Medvedev conceded last year, as Russia was embroiled in its worst currency crisis since president Boris Yeltsin's administration in 1998, that sanctions were hurting Russia. Prior to that the Kremlin had maintained that Russia could replace its trade with the West by increasing business with Asia and South America.
Last December Putin estimated that it would take two years for Russia to recover from its economic crisis.Try Newsweek: Subscription offers