The end of simplicity in economic policy

Minister of Economy Franz Fayacht discusses the economic implications of the war in Ukraine and the naive attitude towards European dictatorship.

Ukraine-Russia conflict

Minister of Economy Franz Fayacht discusses the economic implications of the war in Ukraine and the naive attitude towards European dictatorship.

(Tuberculosis with Thomas Klein)-The war in Ukraine is a turning point in many ways. In the short term, it should lead to a significant decline in the economy, which has barely recovered from the consequences of a pandemic. In the long run, it will permanently modify both Western economic policy and its relationship with the dictatorship. the Luxemburger Wort He spoke with Economic Minister Franz Fayacht (LSAP) about the immediate consequences of the Luxembourg economic crisis and the need to rethink the strategy.

Despite the uncertainty of the current situation, Franz Fayacht: Can we estimate the impact of the war in Ukraine and sanctions on the Luxembourg economy?

Franz Fayot: “We first created the inventory, but now we find that there are about 20 Luxembourg companies operating in Russia and 4 have their own subsidiaries. For these companies, Business is obviously not easy. You need to consider in detail which business partners your company is working with, whether it is affected by sanctions, and whether your company can continue to do business.



Parliament again considered the war in Ukraine on Tuesday. EU sanctions on Russia have gained widespread support.


On the other hand, here is a series of Russian companies that are active not only in the financial sector, for example, but also in industry and services. Their activities are, of course, affected by war, sanctions, and possible Russian countermeasures. We are currently working on a map to get an overview of the Luxembourg companies or shareholders affected by the sanctions.

Only then will we be able to accurately assess the impact on the Luxembourg economy. However, it is clear that it will have a large impact on trade relations with Russia.


Franz Fayacht seeks more strategic autonomy in Europe.

Franz Fayacht seeks more strategic autonomy in Europe.

Photo: Luc Deflorenne

What will happen to Russia’s exclusion from the Swift system for the Luxembourg financial industry?

“Of course, Swift sanctions affect Luxembourg’s financial centers. At this stage, it is not yet possible to fully assess their severity or depth. Here are some Russian banks and Russian banks. There is a holding of Luxembourg in the enterprise and there is a set of interdependencies.


(File) In the photo of this file, taken on February 2, 2017, Russian President Vladimir Putin is holding a press conference with the Prime Minister of Hungary at the Parliament Building in Budapest. -Russian President Vladimir Putin

Professor Florian Töpfl discusses the role of Russian state media in preparing for President Vladimir Putin’s attack on Ukraine.


In the past, we have built good economic relations with Russia. There is an embassy in Moscow, where there is an “economic attaché”. You can skip it now. This war of aggression is completely unacceptable. We are in absolute solidarity with the Ukrainian people and fully support the sanctions of the European Union.

Systematic conflicts are becoming more and more concrete between Western countries and Russia, and perhaps China. Does this mean that the era when politics and economy were seen as separate territories is over? Can businesses remain neutral in this constellation?

“The German Chancellor used the term” change of the times “in his weekend speech. I think that is exactly what is needed. It was already visible before the war, but now it is even clearer. Conflict with Russia, conflict between the United States and China, this new Cold War-all of which will transform the world.

After the outbreak of the war, we have witnessed two developments. It is a growing solidarity within the EU and a greater emphasis on NATO. The EU needs to rethink its strategy and set common defenses. The request for strategic autonomy was already made earlier in the context of a pandemic.

Our gas tank is empty, this was all expected. Putin’s war is ready.

This means that again, we need to occupy some important sectors, from semiconductors to electric vehicle batteries, healthcare and pharmaceuticals. I understand that various productions need to be moved to Europe.

The same is true for decarbonization of industry and economy. It turned out to be vulnerable to blackmail because it relies on fossil fuels. Our gas tank is empty, this was all expected. Putin’s war is ready. The only positive side effects of this horrific war are accelerated decarbonization and investment in renewable energy.

Was the West too naive in its economic policy while countries like China and Russia took a more strategic approach?

“I think I probably underestimated the fact that someone like Putin used his economic and energy policies in the direction of his war and his politics. Especially Germany underestimated Russia’s reliance on gas. But I think we’re a little less naive in the last two years, especially for China, which has made strategic investments in many parts of Africa and Europe. It will be further questioned in the future and will probably not be possible in this format.

You don’t have to be anywhere and deal with everyone.

This also supports this trend towards expanding Europe’s autonomy and protecting some of its home markets. All of this is aimed at Europe better protecting itself from dictatorships like Russia and China. And that’s a good thing.

It has always been advantageous for Luxembourg to establish itself as a “gateway to Europe”, including investors from countries such as China and Russia. Is the new strategic geopolitical constellation narrowing the room for maneuvering small countries?

“For example, if you are part of the European Union, it is clear that opposition to sanctions in any way is out of the question. In principle, this doctrine of foreign trade that you can work with anyone is no longer valid. A lot of attention needs to be paid to human rights as well as the theme of “human rights due diligence”, the issue of war and peace. I think it’s a positive development and I don’t think it’s a problem.

You don’t have to be anywhere and deal with everyone. Instead, the policy should be consistent. We pursue pacifism and feminist foreign policy, which is strongly based on human rights issues. Of course, this needs to be in harmony with economic policy. “

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