European diplomacy relies mainly on economic relations. The Russian economy is heavily dependent on revenues from Russian energy exports. More specifically, Russia exports 26% of its oil and 40% of its gas to the EU, respectively.
This fact determines that the European energy market is a major issue of survival for Russia. As the EU now prioritizes the implementation of the green economy, the Russian economy in the next 5-10 years will be in an extremely difficult position.
Russian industry will be forced to invest tens of billions in modernization so that it does not go so far as to impose tens of billions of environmental tariffs on the EU.
Photo by the website www.trtworld.com
The shift of the Russian economy to oil and gas exports to China to reduce its dependence on the EU has not yielded expectations as 27% of Russian oil exports go to China and only 2% of exports of Russia on natural gas is headed to China.
Given the above findings, the Russian economy is mainly dependent on energy exports while showing the inability of the Russian political and economic elite to independent the Russian economy by developing other sectors to claim a more important international role.
Fossil fuel exports account for 60% of the total exports of the Russian economy, 40% of the annual revenues of the federal state budget and 25% of Russia’s GDP.
The EU absorbs 34% of Russia’s products and EU Foreign Direct Investment in Russia amounts to € 312 billion. On the other hand, Russia’s Foreign Direct Investment in the EU amounts to € 136 billion, which is 1% of the total Foreign Direct Investment in the EU.
What characterizes the EU is its ability due to its economic size to impose its own trade agreements and rules as well as sanctions on those who wish to have access to its market.
Following Ukraine’s accession, the EU imposed an embargo on certain exports to Russia. The aim was to increase the political and economic costs of Vladimir Putin’s regime to pursue a more compromising policy on the Ukrainian issue.
The President of Russia used the EU embargo as a source of problems that Russian citizens face in their daily lives, increased production in the primary sector of the economy (agricultural, livestock) reducing the dependence of the Russian economy on imported European products and at the same time oriented towards China.
In 2014, 43% of Russia’s total exports were from the EU and only 17% from China. In 2020, 34% of Russia’s respective imports came from the EU and 24% from China.
That is why the EU embargo on Russia after the annexation of Crimea (2014) did not work in both the economic and political spheres.
