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The words of the head of the Russian diplomat, Sergey Lavrov, about the willingness of his country to even go to break relations with the European Union in case Brussels imposes “painful sanctions on the Russian economy”, may mean that there is not much left to break the “Camel’s back” in the deterioration of political relations between the two parties. Some observers describe this deterioration as the worst since the end of the Cold War. This is not mitigated by the Kremlin’s restraint of the words of Russia’s Foreign Minister Lavrov, emphasizing the importance of developing relations with the Union, nor is it mitigated by the reaction of the German Foreign Ministry, which emphasized the importance of dialogue to resolve increasingly complicated disputes over Ukraine, Syria, Belarus, cyberattacks and others.
The European position rejecting the imprisonment of Russian opponent Alexei Navalny tops the list of critical issues among them today. At a time when Brussels calls for his immediate release, Moscow vehemently rejects it and considers it an unacceptable interference in its internal affairs.
Where does the economics of deteriorating relationships come from?
And if political cooperation between the European Union and Russia heads towards further deterioration, their economic relations continue to maintain their strength and ramifications more than ever, despite being adversely affected by successive economic sanctions since the annexation of Crimea to Russia in 2014. There are signs of adherence to economic relations, such as Germany’s insistence on completing the “Northern Torrent 2” project despite strong opposition from Washington and other European countries. The completion of this project guarantees the pumping of more than 50 billion cubic meters of Russian gas to supply the German and European market with a clean and cheaper energy source than the American one.
The importance of existing economic cooperation for both
Russia currently supplies Western Europe with more than a third of its natural gas consumption. It also supplies the European markets with other commodities such as oil, petrochemicals, metals, wood, steel, iron and other important materials for various industries.
About 37 percent, or about $ 157 billion of total Russian exports to European Union countries in 2019, went to Russia, compared to $ 91 billion in Russian imports from these countries, which also they constitute about 37 percent of Russia’s total imports. Germany is Russia’s most important European economic partner, with an annual trade value of more than $ 53 billion in the mentioned year.
At the European level, Russia is the third most important trading partner for Germany and the Union after the United States and China, according to data from the German Trade and Investment Corporation. Unlike Russia, which mainly exports raw materials to the Union, the latter’s exports to Russia are mostly high value-added industrial products such as electronics, machinery and transport.
In light of this strong and solid level of economic cooperation between Russia and the European Union, it is difficult to imagine a scenario of breakdown in political relations that could lead to a deterioration of economic relations between the two parties. One of the good reasons for this is that such a scenario opens the door to a confrontation that threatens even to break out a wide-ranging war that neither side wants in trouble spots like Ukraine.
On an economic level, such a confrontation means the loss of tens of billions of dollars annually for both parties at a time when both are groaning over the disastrous consequences of the Corona pandemic and the damage of the trade war that was fueled. by the administration. of the former president of the United States, Donald Trump. Furthermore, representatives of the economy in Europe’s trade unions and chambers of commerce and industry are opposed to the boycott, especially as hundreds of European companies aspire to more trade and investment in the large and promising Russian market.
On the other hand, Russia cannot do without sales of its raw materials and other products on European markets, which make up the bulk of its foreign income. In addition, a large number of its vital companies, projects and institutions depend on imported Western technologies. On the other hand, the countries of the European Union cannot offer alternatives to the Russian energy resources that they have depended on since the days of the Soviet Union. And don’t forget that the EU countries themselves are divided over the position on Moscow. Countries like Hungary, Italy and Greece do not want to impose sanctions on Russia, and even Berlin does not seem enthusiastic about them at a time when Poland and the Baltic countries seek to toughen them.
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