Analysis: Sanctions on Russia might inflict pain on Slovenia’s exporters

NEWS 25.02.2022 16:07
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Source: Pixabay / Ilustracija

Sanctions against Russia after it invaded Ukraine will affect Slovenia's exporters, who, according to initial estimates, exported commodities to Russia worth €900 million in 2021. The move will especially hit Slovenia's pharmaceutical industry which accounts for 40 percent of Slovenia's exports to Russia.

This on the most part refers to the Krka pharmaceutical company which has a robust business on the Russian market where it sells its generic medicine and has its own factory in Russia. The price of shares in the company dropped by 20 percent this week and they are currently selling for about €90 per share whereas a few months ago they were selling for €120 on the Ljubljana Stock Exchange, Slovenian media have reported.

Based on experience from 2014 when sanctions against Russia led to the ruble tumbling, executives from the Krka company said they are used to complex business operations in eastern Europe and that they will adapt the company’s plans if significant changes occur on those markets. Last year Krka exported products worth €90 million to Ukraine.

Apart from pharmaceutical companies, other industries in Slovenia that could be affected by the sanctions against Russia come from the electrical industry and engineering companies as well as the Gorenje company which sells its products in eastern European countries. Slovenian media recall that Russia has significant investments in Slovenia’s metal industry. Russians own the Slovenske Industrije Celika (SIJ) steel company in Jesenice.

Slovenia’s government discussed the possible effects the situation in Ukraine could have on Slovenia with Economy Minister Zdravko Pocivalsek saying that the government is prepared to help the economy regarding the expected energy price hike.

According to initial data, 55 percent of Slovenia’s gas consumption last year was from Russia. Prime Minister Janez Jansa has said that in light of Russia’s aggression on Ukraine, Europe has to have energy independence from Russia and in that regard, Slovenia has to boost its energy independence, which it plans with the construction of a second block at the Krsko nuclear power plant.

Minister of Infrastructure Jernej Vrtovec said that diversification of energy sources is essential for energy independence and it would be good for Slovenia to have its own LNG terminal, similarly to Croatia on Krk Island and one in Trieste, Italy.

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