A Le Pen Win Would Be Dangerous for Putin and Russia’s Economy

By Gregory WhiteGregory White and Henry MeyerHenry Meyer
February 17, 2017

Far-right French presidential contender Marine Le Pen’s party has received financing from a Russian bank and gets positive coverage in Russia’s state-run media. Does that mean the Kremlin actually wants to see her elected? Not necessarily: Le Pen’s promise to take France out of the euro zone — which could break up the European single currency — might well devastate Russia’s economy and financial stability.

Foreign Currency Reserves

Russia holds close to 40 percent of its foreign currency reserves in euros. President Vladimir Putin said in September in a Bloomberg interview that this means his country is “not interested in the collapse of the euro zone.”

Foreign Currency Reserves
End of second quarter 2016

European Investments

Russia has also invested tens of billions of euros in Europe in sectors ranging from telecommunications to energy and services.

Among Major Russian Investments in Europe...
Source: Bloomberg reporting

Commercial Partners

The 28-member European Union remains by far Russia’s largest commercial partner despite a contraction in trade in recent years after the longest Russian recession in two decades and sanctions imposed because of the Ukraine conflict. Russia’s exports to the euro zone ($91 billion) are almost four times what it sells to China and nearly 11 times the amount of Russian imports in the U.S.

Russia’s Goods Exports
First 11 months of 2016
Source: Federal Customs Service of Russia

Foreign Investments

Russia relies on the 19-nation euro zone for 70 percent of foreign direct investment, led by inflows from Cyprus, Luxembourg and Netherlands, which are a conduit for Russian money.

Foreign Direct Investments From Euro Zone
Accumulated net investment 2010-2016, billions of dollars
Source: Bank of Russia

Russia appears most concerned to shore up support for former Prime Minister Francois Fillon, a pro-Kremlin figure who's been hit by a family finance scandal. His presidential rival Emmanuel Macron this week accused Russia of meddling in the French election by putting out fake news through its media outlets.