Luxury goods sanctions seen testing Italian solidarity

A baker in Milan, Matteo Cunsolo, offers a specialty "bread for peace" that's coloured blue and yellow, using saffron and a blue flower, Clitoria ternatea.

"Even a 10-year-old boy came to buy one euro of bread," said Cunsolo. "He wanted to help too."

Goodwill, it seems, has broken out all over.

But there's a risk that the mood may change.

In Vicenza, for example, entrepreneurs are increasingly concerned about the rising price of energy and raw materials, and the collapse of exports to Russia.

And all the more so after Brussels approved the fourth package of sanctions against Russia on Monday, including a ban on the export of luxury goods where Russia is an important market.

That's a big deal for Vicenza.

Located in Italy's northeast, Vicenza is a wealthy province where exports to Russia exceeded €400 million between October 2020 and September 2021.

But now Brussels has banned the export of individual goods including wines, leather products, clothing and jewellery worth more than €300 per item — all very important sectors in north-eastern Italy, and particularly Vicenza.

And this year, perhaps unsurprisingly, the Russians and Ukrainians will be largely absent from one of the province's marquee trade shows.

The best hotels confirm that, compared to previous years, there has been a drastic drop in bookings from Russian visitors. Vicenzaoro, an international gold and jewellery fair, is scheduled on Thursday in Vicenza, the provincial capital.

But what Claudia Piaserico, the president of the national federation of gold and jewelry companies Federorafi, fears is a double whammy, where trade with Turkey, a major hub for Italian jewellery sales to the Russian market, drops off too.

"Ankara accounts for five percent of our exports, which is about €370m," Piaserico said. "But if Turkey were to start struggling on the Russian market, of course, we would be affected."

Before the Russian invasion of Ukraine, Italy overall exported goods to Russia worth around €7bn, said Giancarlo Corò, a professor of economics at Ca' Foscari University in the nearby city of Venice.

"Now, much of this export is at risk," he said.

"There are 20,000 companies in Italy that trade with Russia, and not all of them can absorb the blow easily."

Luxury entrepreneurs across the country seem to be among the most worried.

Last week, an entrepreneur specialising in high-end women's shoes, who makes 85 percent of his turnover in Russia, told a television news program that he was at risk of bankruptcy, even before the latest sanctions.

Skyrocketing price of energy and raw materials is hitting Italy hard: factories and energy-intensive businesses over the country — from steel producers to fishing vessels — are halting their operations.

Publishers are short of paper for books and pizzerias of take-away pizza boxes. And due to media-driven hysteria in some parts of the country, people are running to supermarkets to stock up on pasta, flour, sugar and sunflower oil.

The economist Massimo Nicolazzi, professor of economics at the University of Turin said he was "more concerned about producers in the agri-food sector" than the luxury goods sector.

The situation was best summed up on Monday by the Bank of Italy's governor, Ignazio Visco. According to him, the war in Ukraine is a tragic event that casts a shadow of severe uncertainty on the global and Italian economies.

But solidarity with Ukraine looks like enduring for a while yet.

That may be partly to do with how Italy hosts the third-largest Ukrainian community in the EU after Poland and Germany, with over 200,000 people.

The former Milan footballer Andrij Ševčenko is a beloved celebrity.

And there is a large Ukrainian community in Vicenza, made up of entrepreneurs, caregivers and workers. Women wearing blue-yellow ribbons and cockades are a frequent sight in the streets of the city.

Tetyana Kuzhyk, who owns a laundry just a stone's throw from the central Renaissance square, Piazza dei Signori, has lived in Italy for over twenty years but is originally from Lviv.

"I'm feeling a lot of solidarity from the Italians," said Kuzhyk.

"Here in Vicenza there is a Ukrainian church, Saint Joseph, and lots of people have brought everything they could, food, medicines, clothes," she said. "We have already sent five trucks from the church to the various refugee camps."