Europe’s Economies Have More at Stake Than U.S. in Russia Clash

• Russia remains the top oil and natural gas supplier to EU nations
• Surging inflation and energy prices are hurting the recovery

The European Union has a lot more to lose than the U.S. from conflict with Russia, explaining why the western allies are having difficulty agreeing on a tough stance in the standoff over Ukraine.

Russia ranks as the EU’s fifth-biggest trade partner — as well as its top energy supplier — while for the U.S. it barely makes the top 30. There’s a similar gap for investment, with Russia drawing in money from Europe’s household names including Ikea, Royal Dutch Shell Plc and Volkswagen AG.

With inflation surging and consumers squeezed by a surge in energy prices, EU officials are moving carefully on the prospect of sanctions. They want Russia to feel more pain than Europe from measures aimed at preventing an invasion of Ukraine. They’re worried a war could choke off natural gas supplies in the middle of winter when they’re needed most.

“European energy prices are a major concern,” Tim Ash, senior emerging-market strategist at Bluebay Asset Management, told Bloomberg Television. He said Russian President Vladimir Putin wants the EU “terrified about gas this winter and being cold. He doesn’t want them to do anything if he goes into Ukraine.”

— With assistance by Andrew Langley, Zoe Schneeweiss, and Kevin Whitelaw – Source Bloomberg