Fears of further fuel and food price hikes as Ukraine crisis worsens
A bus takes passengers of an evacuation train for civilians from Donbass at Aprelevka railway station, near Moscow. Picture: Getty
Households are to be hit with further food and energy hikes with experts predicting that crude oil prices could climb by a further 25% because of the Ukraine crisis.
Taoiseach Micheál Martin has also warned that families should brace themselves for further pain at a time when inflation is already running at its highest levels for a generation.
Mr Martin said the escalating tensions are "the last thing the European continent needs, or the world even," as it recovers from the Covid pandemic.
It comes as EU members signed off a package of sanctions aimed at inflicting severe damage on Russia after president Vladimir Putin moved to deploy troops to separatist regions of eastern Ukraine.
The sanctions will blacklist more politicians, and officials, ban EU investors from trading in Russian state bonds, and target imports and exports with separatist entities.
The EU also said that further sanctions will follow a full incursion into Ukraine, but it stopped short of defining what would trigger such a move.
US president Joe Biden announced the first tranche of sanctions on the Russians, targeting Russian financial institutions, sovereign debt, and the country's elites.
Mr Biden described Russia's actions as "the beginning of a Russian invasion", but said he believed there is still time "to avert the worst-case scenario."
“When all is said and done, we’re going to judge Russia by its actions, not its words,” Mr Biden said.
“I’m hoping diplomacy is still available,” Mr Biden said.
It follows weeks of tensions on the eastern border of Ukraine, which Mr Putin claimed, in a national address, never "had a tradition of genuine statehood" following the fall of the USSR.
The sanctions were announced in retaliation for Russia recognising two breakaway regions of Ukraine and sending troops there.
Nato chief Jens Stoltenberg has said that Russian forces continue to prepare for a potential attack on Ukraine after Moscow recognised two separatist regions as independent.
Speaking in Berlin, the Taoiseach said: “The crisis will have a negative impact on oil prices. There's a number of factors that have come into play here.
"There's been high demand all over the world, in respect of energy. So when you combine it all and you get a very serious situation, which could get worse."
Mr Martin said the decision of German Chancellor Olaf Scholz to block the Russian Nord Stream 2 natural gas pipeline was very significant given the amount of money Germany has invested in it.
“Sanctions will have impacts,” Mr Martin said.
He criticised Russia's desire to create a new “sphere of influence” saying such a mentality is not acceptable in the 21st century.
Asked if this current crisis will lead to war in Ukraine, Mr Martin replied: “I hope not. Every avenue in terms of diplomacy will be used and in terms of dialogue will be used by Europe, the United States, the UK, and others to prevent that from happening.
"Because it would be catastrophic if it was to happen in particular for the people within Ukraine.
"This is not how things should be done in the 21st century and creating narratives that really belong to the late 19th century and early 20th century really have no place in the current era. There are ways of resolving this.”
Prices of European wholesale gas soared by 10% yesterday and crude oil spiked towards $100 a barrel threatening to bring further price pressures.
The price of wheat also rose sharply on global markets on fears of disruption for the large number of shipments from Black Sea ports.
“It is not in the economic interests of either Russia or the West to use trade in energy as a weapon against each other, but that is not to say it won’t happen,” said Edward Gardner, commodities economist at Capital Economics in London.
The EU condemned Russia's move to recognise breakaway parts of Ukraine as “illegal and unacceptable” and in violation of Ukraine’s territorial integrity and international law.
The 27 member states also warned that the sanctions will be scaled up significantly if Moscow takes further action.
Finance Minister Paschal Donohoe will meet with fellow EU finance ministers on Friday to discuss potential sanctions against Russia.
He said that the "main effect on the Irish economy will be due to the developments in Ukraine" rather than the effects of any sanctions on Russian companies or individuals in Ireland.
