EU Sanctions Against Russia Likely On The Way

The euro was steady at $1.3498 at 8:40 GMT on Tuesday morning with geopolitical tension keeping markets subdued. The common currency has been trading near $1.35 as investors focus primarily on US data and geopolitical factors.

After a Malaysian Airlines passenger plane was shot down near the Russian border in Ukraine, EU companies are facing increasing pressure to act on the situation by severing some business relationships with Russia. European Union foreign ministers are set to meet later on Tuesday to discuss how to move forward with the situation between Ukraine and Russia.

Western leaders have been demanding that Russian President Vladimir Putin use his influence over the pro-Moscow separatists to end the conflict, but so far Putin has remained detached. Now, with accusations that Russia provided the missile system that shot down the passenger plane last Thursday and trained the separatists on how to use it, many are expecting to see a new round of stricter sanctions from the EU.

For European companies, this could be a hit to the economy as countries like Germany and France may be forced to cut off multi-billion dollar deals with Russian firms. The Wall Street Journal reported that Peugeot Citroen has built large car-making plants in Russia and sold about 23,000 vehicles in the nation during the first half of 2014. Severing that relationship would be a massive blow to the auto-maker’s profits.

Until now, European companies were working hard to avoid sanctions and remain in business with Russia regardless of the political situation. However, with the majority of the passengers on the downed plane being European, and some even employees of these companies, it will be harder to continue with business as normal.