Luxembourg finance minister Yuriko Backes has said that the euro area “is well positioned to meet the challenges of this heightened uncertainty” sparked by the Russian invasion of Ukraine. Speaking after a meeting of the 19 Eurogroup finance ministers on Monday, Backes conceded that the invasion of Ukraine will have an economic impact on all countries, at least in the short term. “And the longer the war lasts, the greater the effects will be, among other things because of rising energy prices,” she explained. But she also reiterated the Eurogroup’s determination to “ensure close coordination of our budgetary policies” in the coming weeks.
Backes was in Brussels for two days and on Tuesday attended the Economic and Financial Affairs Council (Ecofin). That resulted in further economic sanctions on Russia, including the decision to end treating Russia as a most favoured nation at the World Trade Organization.
“We are responding to Ukraine’s military aggression by Russia with extremely severe economic and financial sanctions,” Backes said. “Only a common European approach is effective, and it is in this context that I welcome the fourth round of sanctions that the European Union has just adopted.”
This deepens Russia's pariah status in the eyes of the global community.
Commission executive vice-president Valdis Dombrovskis said that the move to end treating Russia as a most favoured nation at the WTO was unprecedented. “It is backed by a very large trading bloc of countries alongside the members of the EU,” Dombrovskis added, explaining that the countries imposing the measure represent more than 40% of the world's GDP. “This deepens Russia's pariah status in the eyes of the global community.”
No international tax agreement
The 27 ministers failed to find agreement on the EU Directive implementing Pillar II of the OECD Agreement on International Tax Reform. Backes said that Luxembourg had supported this initiative throughout and had contributed proactively and constructively to the drafting of the text. “I remain confident about the possibility of reaching an agreement soon,” she said.
The ministers did, however, manage to reach agreement on a general approach to the creation of the EU Border Carbon Adjustment Mechanism (CBAM), a decision that Backes called “a key element of the Fit for 55 package, and an important step on our path to carbon neutrality.”
On the sidelines of the meetings, Backes held bilateral meetings to discuss the Ukraine situation and the completion of the banking union with her Finnish counterpart Annika Saarikko, Belgium’s Vincent Van Peteghem, and Slovenian finance minister Šircelj. She also met with Van Peteghem and Dutch state secretary Marnix van Rij to agree on ways to .