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Russia's response to sanctions can destroy Latvian economy — minister

July 31, 2014, 14:11 UTC+3 RIGA
Food industry was one of the most vulnerable sectors accounting for half of Latvian export and easily affected by phytosanitary restrictions, , Latvian Economics Minister Vyacheslav Dombrovsky said
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A view of central Riga

A view of central Riga

© ITAR-TASS/Sergei Sevostyanov

RIGA, July 31. /ITAR-TASS/. If Russia decides to focus retaliatory sanctions against the EU on Latvia, they can have a disastrous effect on the national economy, Latvian Economics Minister Vyacheslav Dombrovsky said on Thursday.

“The EU sanctions have no direct influence on the Latvian economy”, whereas Russia’s sanctions, if focused on Latvia, would deliver a blow to “the small country closely connected to Russia economically”, he said in an interview to Latvian TV.

According to Dombrovsky, potential damage in that case would be less than during the sharp 2009 economic crisis, when the country’s gross domestic product contracted 18%.

“Even if we close the border with Russia, the country won’t see a similar GDP fall”, but the effect would also be serious, he added, estimating it at about 10% of GDP.

Food industry was one of the most vulnerable sectors accounting for half of Latvian export and easily affected by phytosanitary restrictions, Dombrovsky said. Transit was also prone to sanctions, he added, where unplanned maintenance works on railways going to the Latvian sea ports and other measures were possible.

Latvian Prime Minister Laimdota Straujuma has recently said the EU anti-Russian sanctions would not affect the Latvian economy as at its stage no transit and exports were in question, which was positive for Latvian entrepreneurs.

Neither does Foreign Minister Edgar Rinkevics expect any adverse effects as Russia had always influenced trade volumes without sanctions. Without third level of sanctions and attempts to stop violence in Ukraine worse problems could emerge, he added.

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