The shoes, 600 pairs in all, lay untouched inside an Italian warehouse: magenta sandals, décolleté heels and gold ballerina flats, destined for Russian boutiques but stuck in a limbo of sanctions and economic upheaval from Russia’s war in Ukraine.
Sergio Amaranti, the Italian shoe company saddled with the mountain of unpaid merchandise, is among thousands of European businesses grappling with a widening blowback from the conflict.
“It’s scary,” said Moira Amaranti, who manages the company founded by her father and uncle. She said she worried that the sudden financial loss could destabilize the 47-year-old firm, which sustains her 20 longtime workers and their families. “Russia is half of our business,” she said. “And now we have a problem.”
Russia’s monthlong war on Ukraine is lashing Europe’s economic rebound from the Covid-19 pandemic, threatening its job-rich recovery. Manufacturers and retailers that were benefiting from renewed growth are adjusting to wild swings in business conditions that have injected fresh uncertainty into economic decision-making.
Sanctions intended to punish Moscow for its invasion are blowing back to companies in unexpected ways, undermining confidence and their ability to plan. Small firms like Sergio Amaranti face a hazy future as exports to one of its key markets grind to a halt. Large multinationals that have been pulling back from Russia are assessing the risk of asset seizures or nationalization.
The war’s reverberations on surging energy, food and commodity prices are causing even wider problems, forcing European turbine makers, glass factories and zinc plants to slow or pause production. Growing congestion in logistics and supply chains has added to inflationary pressures, prompting retailers to pass rising costs onto consumers and find alternative supplies. Annual inflation hit a 40-year high of 7.5 percent in Europe last month.
As the disruptions pressure European businesses and their workers, governments in France, Spain and neighboring countries are redirecting spending priorities and pledging huge subsidies to offset the pain, on top of hundreds of billions already spent to keep them afloat during the pandemic.
The European Commission authorized companies affected by sanctions against Russia to receive up to €400,000 ($441,000) in state aid. European businesses and consumers are getting government rebates at the gas pump and in their energy bills.
“The longer the war lasts, the higher the economic costs will be and the greater the likelihood we end up in more adverse scenarios,” Christine Lagarde, the European Central Bank chief, warned on Wednesday. On the same day, Germany, Europe’s largest economy, slashed its forecast for growth in 2022 by more than half, to 1.8 percent.
Cogemacoustic, a family-run enterprise employing 50 people in Limoges, in southwest-central France, never expected a war would have an impact on it. The company, which specializes in mammoth industrial fans used in tunnels and mines, secured contracts for the first time in Russia last summer to help make up for a slowdown in business from pandemic lockdowns, said Marion Oriez, the chief executive.
Russian sales quickly ramped up to 5 percent of the business, and were expected to double this year — until Russia invaded Ukraine. Russian customers were unable to pay €90 million owed for delivered fans because of sanctions on Russian banks, Ms. Oriez said. An additional 20 fans, about the size of small trucks, destined for Russia are sitting on her factory floor — a sunk cost of €350,000.
The company was already grappling with supply shortages and rising commodity and energy costs when the war cut off steel from Ukraine needed to make the fans, requiring Ms. Oriez to find new sources and slowing factory production.
“Our situation is still difficult,” Ms. Oriez said. “There’s a lot of uncertainty for the enterprise.”