Frontier Markets At Risk of Ukraine Crisis

Slovakia is one of the fastest-growing countries in Europe, but its proximity to Ukraine—which is in conflict with Russia—poses dangers, the Slovak finance minister and deputy prime minister told CNBC.

The formerly communist country borders Ukraine in the east and is a European Union (EU) member state and has adopted the euro.

“This is the highest risk that you can feel now,” Peter Kažimír told CNBC in the Slovak capital of Bratislava on Monday.

“For us, as a country which is fully dependent on Russia—I’m talking about oil reserves and gas flow—this is very important for us.”

Ukraine has remained in turmoil since the ousting of pro-Russian President Viktor Yanukovych in February prompted Russia to annex Ukraine’s Crimea region. Violent conflict between Ukraine and pro-Russian rebels in the east of the country continues, despite the U.S. and the European Union (EU) threatening escalating sanctions against Russia.

Given that Russia provides the EU with around one third of its natural gas imports, and that roughly two-thirds of Russian natural gas exports travel through Ukraine, a continuation or worsening of the conflict could place Europe’s energy supplies in jeopardy.

This is particularly problematic for eastern Europe, where many countries are highly reliant on Russian supplies. Slovakia, for instance, is almost entirely dependent on imported gas, of which 83.5 percent comes from Russia.

Bulgaria, meanwhile, imports all of its natural gas from Russia, while Hungary imports over three quarters of its gas, all of which come from Russia.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency
trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza