The Diplomat
The Minister of Foreign Affairs, José Manuel Albares, warned yesterday that the Russian invasion of Ukraine forces the European Union to “equip itself with its own common foreign and security policy and to rethink the energy market”. For his part, the secretary general of the Organization for Economic Cooperation and Development (OECD), Mathias Cormann, said that the economic impact of the conflict in Spain will be “limited” because “direct exposure” to Russia and Ukraine “is low”.
The invasion is “an absolutely unjustified, illegal aggression, for which Ukraine had not given any reason,” the minister stated during Mathias Cormann’s presentation on the occasion of his participation in an informative event of New Economy Forum in Madrid. “Ukraine posed no threat to Russia’s security, nor did NATO,” but the invasion ordered by Vladimir Putin’s regime “has broken so many things” that it marks the beginning of “an era in which we are just beginning to glimpse the consequences,” he continued.
Therefore, he warned, the “humanitarian catastrophe in which Russia is plunging Europe” will force the EU to “rethink long-standing debates”, especially on its role as a global actor, and to design “a new order of the European Union” in which Europe must “equip itself with a genuine common foreign and security policy”. In this regard, he declared, Europe should have already decided “what it wants to be in the world” by the time of the next NATO summit, scheduled to take place in Madrid next June. “As Europeans, we have to decide who we relate to and how,” he said.
Likewise, Albares said, the EU will have to “rethink its energy market” because “we cannot depend on Russia in this way in gas and oil”. In this area, he recalled, Spain has already been involved for “months” with its proposals for a new European energy plan in which gas and electricity prices would be decoupled. The OECD can help the EU to “design the new economic order” that will make it possible to deal with the consequences of the war in Ukraine and avoid its future dependence on Russian oil and gas, added Albares, who recalled that the origin of this organization is related to the management of the Marshall Plan for Europe after the Second World War.
Mathias Cormann
For his part, Mathias Cormann assured that, although the war in Ukraine “adds more uncertainty to the world situation”, the economic impact of the conflict in Spain will be “limited” because “the direct exposure” of our country to Russia and Ukraine “is low”.
On the other hand, he warned, “there are risks in terms of energy prices and inflation”, despite Spain’s low energy dependence on Russia thanks to its gas diversification between Algeria and the United States. For this reason, Spanish inflation “is going to remain higher” than forecast by the organization at the end of December and will remain at these “high levels during the first half of 2022, to “gradually reduce in the second half of the year and decelerate further in 2023”. To deal with this situation, the OECD Secretary General recommended that short-term measures be taken “to protect consumers and cushion the effect of the energy crisis”, such as raising taxes on electricity companies, taking into account the foreseeable increase in their profits caused by the current rise in prices.
Besides, Cormann recalled that, before the pandemic, only 2% of the foreign tourists received by Spain came from Russia, so that, although the war could generate a problem of international mobility, “the fact that Spain is far away can mitigate the effect”. In any case, he did stress that, “as a whole, there will be an impact on confidence, which will have an impact on investments”, and that the effect of the war “will be felt by foreign customers”, so that “they will have an impact on Spanish imports, leading to a lower demand”.
Following his speech at the event, Cormann – who made his first official trip to Spain since taking up his post in June 2021 – met with Albares and NGO representatives at the Palacio de Viana in Madrid and was subsequently received at the Palacio de la Moncloa by the President of the Government, Pedro Sánchez, with whom he discussed the aggression against Ukraine and “the importance of isolating Russia in international forums”, as reported by the Government. They also reviewed the consequences of the conflict on economic recovery and the leading role of the OECD in coordinating economic policies.
Mathias Cormann also met with the Ministers of Finance and Public Function, María Jesús Montero; and Industry, Trade and Tourism, Reyes Maroto, to discuss, mainly, the measures implemented by Spain in the field of energy, including the Government’s positions on the disconnection of the electricity market from the price of gas and the tax reductions announced by the Executive in favor of the groups most affected by energy prices.
