Slovak Prime Minister Robert Fico announced on Thursday, 2 December, that the coalition government would discuss retaliatory measures against Ukraine for halting the flow of Russian gas through its territory to Slovakia.

In a video message posted on Facebook, Fico stated that the Smer party would consider cutting off electricity supplies to Ukraine, reducing aid to Ukrainian refugees, and demanding the restoration of gas transits or compensation for losses Slovakia claims to have suffered due to the cessation of Russian gas flows.

Russian gas exports via Soviet-era pipelines through Ukraine ceased on New Year’s Day when the transit contract between Russia and Ukraine expired, marking the end of Moscow’s decades-long dominance of European energy markets.

Slovakia has alternative sources of gas, but Fico emphasized that the country would lose its transit revenues and incur additional transit fees to import non-Russian gas. He also warned that gas and electricity prices in Europe would rise as a result of Ukraine’s actions.

Fico announced that a Slovak delegation would discuss the situation in Brussels next Tuesday, after which his ruling coalition would consider retaliating against Ukrainian President Volodymyr Zelensky’s actions, which he labeled as ‘sabotage’.

‘I declare that (my Smer-SSD party) is ready to discuss and agree in the coalition on the issues of stopping the supply of electricity and significantly reducing support for Ukrainian citizens in Slovakia,’ Fico stated.

The Slovak leader argued that the only alternative for a ‘sovereign Slovakia’ was to demand the restoration of transit or mechanisms to compensate for the loss of around 500 million euros in public finances.

Last week, Zelensky accused Fico of opening ‘a second energy front against Ukraine at Russia’s behest’.

Slovakia’s majority state-owned gas transit network operator, Eustream, reported revenues of €158 million and an after-tax profit of €25 million in the six months to 31 January, the latest period reported on its website.

State-owned Slovak gas importer SPP, which supplies about two-thirds of Slovak demand, stated on Wednesday that replacing all Russian gas this year would result in additional costs of about 90 million euros, mainly due to transit fees.

Slovakia, which borders Ukraine to the east, exported 2.4 million megawatt hours of electricity in the first 11 months of 2024 to Ukraine, which has been suffering from electricity shortages due to Russian bombardment, according to data from the Slovak grid operator.

Fico, who visited Russian President Vladimir Putin in Moscow on 22 December, said last week that Slovakia would consider reciprocal measures against Ukraine, such as halting back-up electricity supplies, if Kyiv stops gas transit from 1 January.

According to a survey conducted by the German Mittelstand Business Association (BVMW), eight out of ten Mittelstand companies anticipate a rapid contraction of the German economy in 2025.

The Mittelstand refers to traditional German companies, many of which dominate up to 90% of the export market. These firms cannot be classified as classic SMEs (small and medium-sized enterprises). Companies within the Mittelstand category form the backbone of the German economy, particularly in terms of employment.

As reported in WELT, 58% of the surveyed companies expect an economic downturn. One in five companies is already preparing for a crisis within the next twelve months.

The survey also revealed that 40% of Mittelstand companies experienced a decline in turnover over the past year. Another 40% of respondents indicated plans to reduce investments in the coming year compared to the previous year.

Beyond the general economic outlook, Mittelstand companies are particularly concerned about the shortage of skilled labor: 62% fear they will be unable to fill vacant training positions in the upcoming year.

Christoph Ahlhaus, Federal Managing Director of the BVMW, stated: “Not only our economy but also confidence in the recovery has been shaken by the political upheavals of recent years. Anyone assuming political responsibility in Germany must clearly articulate how our economy can move forward again.”

Hans-Jürgen Völz, Chief Economist at the BVMW, emphasized the importance of implementing reform policies in areas such as red tape reduction, energy costs, the labor market, and social policy. These measures are crucial to restoring hope and encouraging companies to invest in Germany.

Völz added, “It is essential to focus on the 3.5 million Mittelstand companies rather than large corporations and organizations that can relocate globally. Well-meaning speeches praising the Mittelstand on Sundays must be matched by concrete political actions in parliament from Monday to Friday.”

A submarine power cable connecting Finland and Estonia was damaged on Wednesday, Finnish Prime Minister Petteri Orpo announced. This marks the latest in a series of incidents involving submarine cables and energy pipelines in the Baltic Sea.

Arto Pahkin, operations manager for Finland’s electricity grid, informed public broadcaster Yle that the possibility of sabotage could not be excluded. However, Orpo assured that Finland’s electricity supply was unaffected by the blackout. “The authorities remain vigilant even at Christmas and are investigating the situation,” he wrote.

The energy operator Fingrid reported that the flow of electricity through the EstLink 2 cable, which transmits power to Estonia, was disrupted at 12:26 local time (13:26 TSI). This event follows a similar pattern of recent disruptions in the Baltic Sea.

Last month, two telecommunications cables linking Sweden and Denmark in the Baltic Sea were severed. Suspicion quickly fell on the Chinese ship Yi Peng 3, which monitoring websites indicated was near the cables at the time of the damage. Despite these suspicions, Sweden announced last Monday that Chinese authorities declined a request by Swedish prosecutors to investigate the vessel, which has since left the area.

Earlier incidents include the damage to the Arelion cable, running from the Swedish island of Gotland to Lithuania, on November 17, and the severing of the C-Lion 1 cable, which connects Helsinki to the German port of Rostock, on November 18 south of the Swedish island of Öland.

European authorities have suggested that these incidents may be acts of sabotage connected to the ongoing war in Ukraine. However, the Kremlin has dismissed these allegations, labeling them as “absurd” and “ridiculous.”