EU sanctions against Russia should be scaled back to allow for the resumption of funding of Russian SMEs operating in Br, Italian Prime Minister Giuseppe Conte said on Wednesday. On Thursday Conte is expected to make the case for the EU to resume funding Russian SMEs.
The European Investment Bank (EIB) and the European Bank for Reconstruction and Development (EBRD) have halted their funding Russian businesses since Moscow invaded and illegally annexed parts of neighbouring Ukraine.
The new nationalist populist government in Italy, however, wants Brussels to once again allow European banks to provide loans to Russian businesses and for the European Union to immediately halt its practice of automatically renewing the economic sanctions regime that has been levied against the Kremlin since March 2014.
“There should be nothing automatic about the renewal of sanctions,” Conte told the European Parliament, adding that the knock-on effect of the sanctions has been particularly damaging for Italian firms, a fact that has been further exacerbated by the ongoing economic crisis that Italy is still struggling to reign in. The country has the second highest debt to GDP ratio in the European Union, trailing only Greece with its national debt amounting to about 132.04% of the gross domestic product.
Conte will make the case for a policy shift after German Chancellor Angela Merkel and French President Emmanuel Macron inform their partners on the implementation of the Minsk accords.
“We will reaffirm the principle that there should be nothing automatic about the renewal of sanctions,” said Conte, adding, “We need to be very careful about this. Sanctions should be a means and not constitute an end.”
On the campaign trail, both leftist populist 5-Star Movement and the far-right Lega Party promised to forge closer ties with the Kremlin, saying they would pay “close attention” to the interests of Italian firms.
European sanctions on Russian energy, defence, and financial sectors have been automatically extended since Russia’s invasion of Ukraine. Russia has responded by targeting politically sensitive sectors in, such as food exports. which deeply affects country’s like Italy, which was one of the largest European exporters of agricultural and luxury goods to Russia prior to 2014. Rome has repeatedly raised concerns about the effectiveness of the Russia sanctions, saying they do more harm to Italian firms and have had little effect in terms of deterring Moscow from carrying out further aggressive moves against its nearest neighbours.
A number of EU Member States are not likely to take kindly to Italy’s policy shift, including Poland and the Baltic States, who are usually forced to remind their counterparts across Europe that the conflict remains ongoing despite a three-year-old ceasefire agreement.