Slovakia is one of the fastest-growing countries in Europe, but its proximity to Ukraine—which is in conflict with Russia—poses dangers, the Slovak finance minister and deputy prime minister told CNBC.
The formerly communist country borders Ukraine in the east and is a European Union (EU) member state and has adopted the euro.
"This is the highest risk that you can feel now," Peter Kažimír told CNBC in the Slovak capital of Bratislava on Monday.
"For us, as a country which is fully dependent on Russia—I'm talking about oil reserves and gas flow—this is very important for us."
Ukraine has remained in turmoil since the ousting of pro-Russian President Viktor Yanukovych in February prompted Russia to annex Ukraine's Crimea region. Violent conflict between Ukraine and pro-Russian rebels in the east of the country continues, despite the U.S. and the European Union (EU) threatening escalating sanctions against Russia.
Given that Russia provides the EU with around one third of its natural gas imports, and that roughly two-thirds of Russian natural gas exports travel through Ukraine, a continuation or worsening of the conflict could place Europe's energy supplies in jeopardy.
This is particularly problematic for eastern Europe, where many countries are highly reliant on Russian supplies. Slovakia, for instance, is almost entirely dependent on imported gas, of which 83.5 percent comes from Russia.
Bulgaria, meanwhile, imports all of its natural gas from Russia, while Hungary imports over three quarters of its gas, all of which come from Russia.
"We have to be very cautious about the needs of our economy. So, we are preparing for winter—that will be very interesting," Kažimír told CNBC.
As well as causing supply problems, disruption in gas flows could also push up energy prices. Further sanctions targeted at Russian energy companies could drive prices higher still, potentially hurting European factory production and consumer spending.
The head of the Slovak Investment and Trade Development Agency said the conflict endangered all of Europe.
"We have not seen any negative effects in that respect, but certainly that is a threat or a risk, not only for Slovakia, but for Europe," Robert Simoncic told CNBC in Bratislava.
Meanwhile, the director of a boutique asset management firm with bases in both Slovakia and the Czech Republic said the crisis was "being felt".
"It cost us some money, hedging the Ukrainian risk," said Tomas Martinec of Metatron Capital.
"Locally of course, it is being felt. It is around the corner and the situation is not resolved. People are still fighting and what we are seeing daily on the TV screens is horrible."
—By Katy Barnato in Bratislava, Slovakia