Ukraine: what repercussions for the French economy and local businesses?

Elise Denjean and Aurélien Fleurot, edited by Solène Leroux 3:00 p.m., February 25, 2022

TO ANALYSE

Last night, the President of the United States presented a new arsenal of sanctions against Russian finances.

Washington has not excluded Moscow from the Swift interbank network, yet an essential cog in global finance, an option also rejected by Brussels.

The 27 agreed last night on a new set of sanctions, the most severe ever implemented, according to the head of diplomacy.

Unprecedented isolation through limited access to European capital and aeronautical and space technologies.

A rain of sanctions and a risk also for the European economy, already weakened by galloping inflation.

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Yet it is Russia that has the most to lose.

The latter is much more dependent on Europe than the reverse.

This may seem counter-intuitive, as the country is the leading gas supplier to the European Union.

But this advantage is double-edged, because if she turns off the tap, she deprives herself of colossal income.

And gas accounts for up to 20% of the Russian state budget.

Apart from hydrocarbons, Europe imports very little from Russia, mainly metals: nickel, titanium, aluminium, a few chemicals such as nitrogen fertilizers, but not much more.

Moscow weighs only 5% in the foreign trade of the European Union, that is to say about as much as Switzerland.

As for France, Russia represents less than 2% of imports and 1% of exports.

Which makes it, to use the words of Bercy, a third-tier trading partner.

French companies established on site awaiting

There may still be economic consequences for France, particularly in the fields of energy and agriculture.

Russian gas represents 17% of our imports and 15% for oil.

The two countries, Russia and Ukraine, massively export cereals, but also fertilizers to Europe.

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Some French companies established in Ukraine and Russia could also be affected.

First observation: 35 CAC 40 companies are present in Russia, but to varying degrees.

There are, for example, the five largest French banks, but only Société Générale has a local subsidiary, Rosbank, which has 235 branches and two million customers.

But the French bank relativizes: it weighs only 2% of its international activity.

Ukraine's largest foreign employer

Another sector concerned, the food industry.

France exports to Russia up to 780 million euros of products such as alcohol, animal feed and dairy products.

Automotive, mainly through Avtovaz, a Renault subsidiary which sold 350,000 Ladas and 130,000 Renaults last year, making Russia its second largest market.

The equipment manufacturers Valeo, Michelin, Faurecia are also present, as is La Poste via its subsidiary GeoPost, which says it is "following the situation with concern".

Auchan, Decathlon, Leroy Merlin, Safran, TotalEnergies and Alstom also have interests there.

And then, on the Ukrainian side, there are 160 French companies, 30,000 employees, which makes France the leading foreign employer.