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It's 'very important' Europe reacts to Russia's behavior, says EU's Dombrovskis

Key Points
  • Several European countries decided to expel some Russian diplomats from their national territories last month.
  • One of the key hurdles for Europe is its reliance on Russian energy.
EU's Dombrovskis: Europe must respond to Russia threat

It's "very important" that Europe responds to Russia's "unprecedented" behavior, the Vice President of the European Commission Valdis Drombrovskis told CNBC, in the wake of the nerve agent attack on a former spy.

Several European countries decided to expel some Russian diplomats from their national territories last month. The decision followed a nerve agent attack on a former spy, Sergei Skripal, and his daughter in the U.K. The British Prime Minister Theresa May blamed Russian President Vladimir Putin for the attack.

"Certainly there are concerns with this Skripal case. It was indeed chemical weapons used on European territory, so it's quite unprecedented," Dombrovskis told CNBC's Steve Sedgwick at the sidelines of the European House Ambrosetti Forum on Saturday.

"Europe has been clear it's not going to tolerate some kind of aggressive behavior from Russia," the former Latvian Prime Minister said, noting that it's "very important" to react to that kind of behavior.

EU's Dombrovskis: Important to stick with rules-based trade system

One of the key hurdles for Europe, though, is its reliance on Russian energy. According to the European Commission's website, "the EU imports a significant amount of oil, natural gas, uranium, and coal from Russia." There have been a few occasions when Russia decided to reduce its energy supply, leading to energy shortages in Europe. For instance, in 2009, Russia's energy provider Gazprom cut natural gas exports to Europe, leading to higher prices in Ukraine and shortages in different European countries.

"(EU-Russian) relations are complicated but then it takes both sides to be willing to engage constructively and stop certain aggressive behavior," Dombrovskis said.

"So far, as we see there are still some issues," he added.

EU economic reform at a 'critical juncture'

The man in charge of the euro and financial stability wants to see the euro zone implementing key economic reforms — to be better equipped against a financial crisis in the future.

Valdis Dombrovskis
John Thys | AFP | Getty Images

"We are now I'd say in a quite critical juncture, not only as regards (the) banking union but broader deepening of economic and monetary union agenda," Dombrovskis told CNBC.

"So we expect certain progress to be made within the next two months," he added.

The European Council is expected to give the green light to proposals to transform the European Stability Mechanism (ESM) into a European Monetary Fund, similar to the International Monetary Fund (IMF), and to continue the banking union — a set of rules to supervise European banks — in June.

However, rising support for populist movements and a tougher stance from more financially conservative countries, such as the Netherlands, could derail broader plans.