EU-Russia economic relations in conditions of restrictions

Abstract

The article examines the fundamental changes in the foreign economic strategy of Russia in 2022 and evolution of foreign trade relations between the EU and the Russian Federation. The study hypothesis is that the new mechanism of «sanctions’ interaction» between the EU and Russia is emerging. Moscow withstood the pressure of unprecedented restrictions, while Brussels has significantly reduced the competitiveness of its own economic and political space. This problem is particularly relevant because the EU developed a system for monitoring compliance with the adopted ten packages of sanctions, measures to stimulate the exchange of data between countries, and is finalizing the rules for interpreting and applying restrictive measures. It is identified that the EU and German initiatives had a significant negative impact on economic cooperation with Russia in 2022. The consequences of the complex pressure of the European Union on Russia and on their business are demonstrated. Particular attention is paid to the FRG, Russia’s main foreign economic partner, that plays a major role in shaping the EU sanctions policy. The forecast for the development of relations is made. The results of calculations of new proportions of EU-Russian and German-Russian trade are presented. Structural shifts in key product groups are analyzed. Significant reduction in exports from the European Union of a number of industrial and technological goods is formed. It is determined that EU imports of energy resources from Russia increased significantly in value terms at the end of the year, but the physical volumes of export have significantly decreased. The development of economic cooperation in non-sanctioned countries of Central Asia and the South Caucasus in the long-term may serve as a “bridge” between the economic and political spaces of the EU and Russia. The matrix of corporate strategies of European companies in terms of presence in the Russian market was developed. It is substantiated that 40% of companies continue to work in Russia. It is concluded that “double risks” develop: for the economic relations of European and Russian companies in the EU economic space due to tightening control and for the remaining European companies in Russia, which are still under pressure from the media.