Finland to seek compensation if Russia sanctions hit economy

Finland will seek compensation from the EU if sanctions imposed on Russia last week lead to an economic crisis in the country, Finnish Prime Minister Alexander Stubb said Wednesday (06/08/2014).

"It is without doubt clear that, if sanctions hit Finland disproportionately, we will seek support from our European partners," Stubb said at a press conference.

"We have to stick to the principle of economic solidarity. In practice, this means that those member states most affected by the sanctions should also receive some form of compensation."

Stubb did not specify what type of compensation he would demand.

Finland struggled with recession in 2012 and 2013 and is already feeling the effects of weaker trade with neighbouring Russia since the beginning of the Ukrainian conflict.

The Bank of Finland estimates a three-percent fall in the Russian economy would shrink Finland's output by 0.5 percent.

"I dare say that there is a potential risk of - and I stress that it is potential - an economic crisis 2.0," Stubb said.

"The indirect impacts of the sanctions can be significant."

Finland's government is expected to present its budget for 2015 on Wednesday afternoon and Stubb said that the forecast would take into account possible effects of a weaker Russian economy.

The European Union announced broad economic sanctions against Russia last week.

That includes limiting access for Russian state-owned banks to Europe's financial markets, a ban on arms sales and curbing trade in sensitive technologies that will hit the oil sector, a key sector in the Russian economy. - AFP