The President of the European Commission, Mario Draghi, said that the most recent developments in Ukraine should not have a major impact on the eurozone, if speaking purely from a financial perspective. He added though that there was a certain potential for much greater turmoil and instability spreading from the neighboring region if the situation were to escalate.
Mr Draghi said that looking at the situation in Ukraine as well as at the amount of trade in goods, services, capital flows, and financial services from a purely technocratic standpoint, one can observe that the interconnections are not as significant as to bring about a major contagion from that region. He also warned that this would be a limited way to gauge the situation since geopolitical implications and risks in the region might possibly become substantial for the European Union. Those could in turn generate such a development of the situation that would be unforeseeable and likely very consequential.
Tensions have continued to rise in Ukraine after Russian military forces and pro-Moscow protesters took control of Crimea, Ukraine’s autonomous region. Although Russia denied that it had sent troops to the region, Moscow says it has every right to defend the interests of Russian speakers and ethnic Russians in Crimea. Ukraine’s interim government vowed not to cede “a single centimetre” of its territory despite the vote of the Crimea’s parliament to join Russia. Moreover, Crimea’s Moscow-backed government announced a referendum within 10 days on the decision.
