Russia has said its currency crisis is over. But for Polish companies like the family-run shoe producer Conhpol, which just opened its first store in the capital Warsaw, the danger signs are still flashing. Many Russians have stopped traveling to countries like Poland for shopping and vacations.
Sebastian Konopka, who helps his father run Conhpol from its headquarters in the village of Stanislow Dolny, says orders from Russia have abruptly dried up. “If we were dependent only on Russian clients, we would have problems now,” he says.
For most of 2014, a militarily strong Russia has spooked the EU, particularly those countries formerly under the Soviet yoke. But now an economically hobbled Russia is looking equally problematic for its some of its European neighbors.
“The fact that Russia is in a difficult situation from a financial point of view is not good news,” Federica Mogherini, the EU’s new foreign policy chief, said at a recent summit of EU leaders, “first of all for Russian citizens, but also it is not good news for Ukraine, it is not good for Europe, or for the rest of the world.”
Most European companies are less exposed to Russia than they were in 1998, when Russia last defaulted on its debts. Only 4 percent of Polish exports, for example, go to Russia.
But many in Europe are still looking warily at Russia’s sinking economy. Those with stakes include small and medium businesses like Conhpol, the shoemaker, to border crossings dependent on Russian trade, to countries worried about any setbacks to already weak economic growth.
Russia’s finance minister said the acute crisis sparked by the ruble’s crash is over. But inflation is growing, and perhaps most tellingly, Russian President Vladimir Putin said his ministers would not be able to take New Year holidays this year because of the economic downturn.
After Russia annexed Crimea and sent shockwaves through Western capitals, the EU struggled to forge consensus on how to punish Mr. Putin. At the time, economics loomed large: European politicians fretted over the impact on gas supply and luxury goods and, for cities like London, rich Russian expats.
Now some countries may voice a more conciliatory tone, as they consider how Russia’s economic woes might ripple outwards.
Schmieding says those countries, like Poland, that are the closest to Russia are the most immediately vulnerable, from tourist flows to exports.
Ryszard Petru, president of the Association of Polish Economists in Warsaw, says Polish companies have grown wary of depending on its giant neighbor.
Still, Marek Rogalski, chief analyst at Brokerage House BOŚ in Warsaw, says that Russia is still a key market for many companies.
In the 1990s, Mr. Konopka, the shoemaker, focused almost exclusively on exports to Russia, as well as the domestic Polish market. The company, which was founded in 1978, now depends on Russia for around one in ten of its overseas sales. Still, he’s hopeful of expanding his business there, if and when the economic and political turbulence subsides.
