European companies' Russian ties could make sanctions tough

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Europe is contemplating sanctions against Russia if it invades Ukraine—and the work is far from simple.

FILE - A logo of the German car manufacturer Mercedes Benz is pictured in Berlin, Germany, on June 25, 2021. European governments are contemplating new sanctions against Russia if it invades Ukraine – and it’s going to be complicated. Sanctions would aim to maximize the pain for the Kremlin, its key banks and energy companies but also avoid jeopardizing the continent’s Russian-dependent energy supplies or inflicting too much damage on European companies with strong ties to Russia.

The European Union's executive commission isn't revealing the sanctions it's discussing in order to leave the Kremlin guessing. Officials say measures would be more sweeping and severe than those imposed in 2014 after Russia annexed Ukraine’s Crimea peninsula.Given that it’s not known what the measures would be, European corporations are warily watching developments and limiting their comments to hopes for a diplomatic solution.

Italian tiremaker Pirelli, which is Chinese owned, operates two factories employing some 2,500 people in Russia, producing tires mostly for the domestic market but also for export. Likewise, Italian bank Intesa SanPaolo, which supports Italian businesses in Russia, says its mission hasn't changed. Sanctions also could open the door to competitors from China and other countries that wouldn't punish Russia. After the 2014 sanctions banned exporting equipment with potential military use to Russia, some smaller German machinery companies gave up rather than deal with the bureaucracy and risk of unintentionally violating complex rules.

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