Estonia's new PM says Russia sanctions would hurt, but may be needed

TALLINN (Reuters) - Estonia’s new prime minister said on Tuesday that imposing economic sanctions on Russia would hurt European Union countries, but might be needed to send a strong message to Moscow.

Estonia's Prime Minister Taavi Roivas poses with European Commission President Jose Manuel Barroso (L) and European Council President Herman Van Rompuy (R) during an European Union-Africa summit in Brussels April 2, 2014. REUTERS/Francois Lenoir

Taavi Roivas, who became prime minister of the Baltic state - an EU member that was formerly part of the Soviet Union - in late March, said it was vital for the EU to show unity over Ukraine.

“I think the immediate economic setback is not as important as saying: ‘This is not the way things should be done in today’s world’. We should not accept, by any means, invading other countries,” Roivas told Reuters in an interview.

“I think if Europe as a whole finds a consensus on clear sanctions, then the economic potential setback is, for the European countries, not as important as the actual effects of the sanctions.”

The European Union and the United States have imposed targeted visa bans and asset freezes on Russian and Ukrainian individuals, but have stopped short of broader economic sanctions.

German Chancellor Angela Merkel said on Saturday such measures would be taken “if the territorial integrity of Ukraine continues to be violated”.

Economic sanctions would hit countries like Estonia, where around a quarter of the 1.3 million population are Russian speakers, hard.

About 11 percent of Estonian exports go to Russia, a figure that rises in the other former Soviet Baltic states. Sixteen percent of Latvia’s exports go to Russia and 20 percent of Lithuania’s. All three are 100 percent dependant on Russia for natural gas.

The Baltic states, which all gained independence in the early 1990s and are now EU and NATO members, already expect their economies to slow due to weakness in Europe and, for Estonia, continued sluggish growth in Finland, a prime export market.

This week, Estonia cut its growth forecast for 2014 to 2.0 percent from its previous estimate of 3.6 percent.

Despite that, Roivas said sending a firm message to Russia was vital.

“Everyone in Europe, and not only in Europe, should be worried, the crisis is serious and its influence is not only economic, it is a security issue,” Roivas said.

“Everyone has reasons to be worried.”

Editing by Robin Pomeroy