Effect of the Russia Ukraine War on France

Russia – Ukraine Crisis and Global Implications (1)

On an uneventful Thursday morning, Russia began its invasion of Ukraine, with explosions reported in Kyiv, Ukraine’s capital.

Emmanuel Macron, the French president, denounced the invasion and demanded that military activities be suspended immediately.

France and the EU imposed economic penalties on Russia in the run-up to the invasion, cutting off some trading ties with the country.

The French government has stated that this will have no negative impact on the French economy, with Economy Minister Bruno Le Maire telling the Senate that the French economy is only “somewhat exposed” to developments in Ukraine.

While the financial market is primarily dependent on informed conjecture and is not usually an accurate predictor of future events, it is worth mentioning that the CAC 40, a Paris-based stock index, dropped about 5% in response to the invasion.

Trade & Gas

Russia’s GDP is lower than Italy’s, and France has no significant trade ties with it. The biggest source of concern, though, is a potential increase in energy expenses, as France imports roughly 20% of its gas from Russia.

Concerns about supply concerns due to the invasion of Ukraine caused a 10% increase in gas prices on the global market.

The invasion, according to France’s economy minister, demonstrated the country’s need to diversify its energy supplies. Car drivers in France are set to suffer as a result of the war, with gasoline prices already above €1.70 per litre.

Food Prices

Grain producers have profited from a recent increase in commodity prices, while livestock farmers, for whom grain feed is a major expense, have been squeezed. The government issued a 270 million euro ($304 million) assistance package for the pork industry at the end of January.

Agriculture markets are becoming more volatile as a result of the Ukraine conflict, with Paris wheat futures hitting a new high in recent days. Farmers are also concerned that the crisis will exacerbate supply tensions in fertilisers, causing crop growth to be disrupted in the spring.

Businesses from France that operate in Ukraine and Russia

According to the French press, 160 French companies are working in Ukraine. If the country devolves into all-out conflict, it’s unlikely that these will continue to work.

French foreign residents in Ukraine have been asked to leave by the French authorities. Meanwhile, the presence of French companies in Russia implies that France is the country’s second-largest source of foreign direct investment.

In Russia, 35 of France’s 40 largest companies have branches, employing roughly 160,000 people. French enterprises have thrived in Russia throughout prior moments of conflict between the West and Russia.

The Revival

The French prime minister unveiled a multibillion-dollar strategy to help businesses weather the storm. It comes after the government stepped in to help businesses affected by the COVID-19 health crisis, which shut down vast swaths of France. There were no specific figures given.

Prime Minister Jean Castex announced a slew of economic aid measures, including partially covering fuel costs for fishermen’s boats at 0.35 euros (39 cents) per litre and truckers at 0.15 euros (17 cents) per litre.

He highlighted that the aid package is just the beginning of what will be a complex situation as Europe puts sanctions on Russia for invading Ukraine, which would disproportionately affect European Union enterprises and persons.

The War’s Capability to Spillover: France’s Take

Russia’s war on Ukraine, according to French Defense Minister Florence Parly, could spill over into Europe. Let us not allow war to come to Europe’s doorstep.

France is determined to preserve Europe’s security in these uncertain times. NATO does not pose a threat to Russia, according to Parly, because the Western alliance’s commitment to its members is “defensive, not offensive.”

Since Moscow launched its war on Ukraine, France has maintained a strong relationship with Russia, led by President Emmanuel Macron, who has spoken with his Russian counterpart Vladimir Putin.

According to a French government statement, Macron “underlined the fundamental imperative of preventing any attack on the integrity of Ukrainian civil nuclear installations” in their last talk.

He also emphasised the importance of continuing to negotiate and reaching a deal that is entirely acceptable to Ukraine.

Attempts to blame the Russian military for the recent disaster at the Zaporizhzhia nuclear power plant, on the other hand, were “part of a cunning propaganda operation,” according to Putin.

Putin “spoke in detail about provocations put out by Ukrainian radical nationalists utilising sabotage groups in the neighbourhood” of the nuclear plant, according to a Kremlin statement.

“He stated his willingness to continue the talks on the condition that Russia’s unconditional and widely-publicized demands be met. “It is critical that the Ukrainian side remains committed to agreements that are critical to reaching a cease-fire,” the statement stated.

According to UN data, at least 364 civilians have been killed and 759 more injured in Ukraine since Russia initiated the war, with the exact toll expected to be much higher. According to the UN refugee agency, more than 1.7 million people have fled Ukraine to neighbouring nations.

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