FRANKFURT Aug 7 The crisis in Ukraine
represents a risk to the euro zone economy, although the likely
impact of European sanctions on Russia and retaliatory measures
is uncertain, European Central Bank President Mario Draghi said
"Our risks to the recovery were on the downside to begin
with, and certainly one of these risks would be the geopolitical
developments," Draghi told a news conference after the ECB left
interest rates unchanged at record lows.
The European Union has imposed sanctions targeting Russia's
banking, defence and energy sectors because of Moscow's support
for pro-Russian separatists in eastern Ukraine, while Russia has
banned fruit and vegetable imports from the European Union.
Draghi said it was hard to assess the likely impact of a
crisis at the beginning, adding that "if one looks at the
figures for trade or financial flows, they would by and large
reveal a picture of very limited interconnections". He said only
a handful of major European financial institutions were
especially exposed to Russia.
"However, it's very hard to assess what the actual impact is
going to be once sanctions on one side and counter-sanctions on
the other side are going to be undertaken," Draghi added.
(Writing by Paul Carrel; Editing by Catherine Evans)