Direct Speech, Economics, EU – Baltic States, Foodstuff, Latvia

Vjaceslavs Dombrovskis

''Such a possibility exists of course,'' said Dombrovskis, explaining that Russia's response could primarily affect Latvia's food and transit sectors.

He said that in the food sector, Russia, like as it has done many times before, can call into question food quality standards and ban the import of Latvian food products. ''Then we will have much time to debate whether these are or are not sanctions against us,'' he pointed out.

Meanwhile, when looking at the transit sector, Russia can, for example, suddenly begin ''repairing'' rail lines connecting Russia with Latvian ports. ''Russia's arsenal is quite broad,'' he warned.

The minister denied that he believes Russia's response could trigger a new economic crisis in Latvia, however, added that they could leave a ''destructive impact'' on Latvia's economy and the Baltic region as a whole.

In the most pessimistic scenario in wake of the U.S-EU sanctions against Russia, Latvia's GDP could reduce by 10 percent, but this does not means that Latvia will go through another crisis as serious as in 2009, when Latvia's GDP reduced by about 18 percent, the minister emphasized.

As reported, the European Union agreed Tuesday to impose broad economic sanctions against Russia, hoping to force Moscow to reverse course in Ukraine, EU sources said.

The new measures go beyond the asset freezes and visa bans used until now, instead imposing restrictions on the finance, defense and energy sectors so as to increase the cost to Russia of its continued intervention and support of pro-Moscow rebels in Ukraine.

An unnamed diplomat called the sanctions "significant" as they are intended to curb access to financial markets for Russian banks, and will ban export of military hardware and energy technology to Russia, among other things.

The sanctions are expected to take effect already today.