Sunday

15th Dec 2019

Opinion

EU-Russia trade bouncing back despite sanctions

  • After three years in decline due to sanctions, EU-Russia trade relations have picked up 20 percent so far in 2017 (Photo: kremlin.ru)

Earlier this year, I published an academic research paper on EU-Russia trade relations after sanctions were imposed in July 2014.

The article showed a drastic decline in both import and export in sectors affected by sanctions as well as other economic sectors that were suffering from the uncertainties created by the crises in Crimea and Ukraine.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

In September, the EU Parliament published a report confirming that this decline continued in 2016 and this news was also reported by EUobserver.

However, the trend has changed in 2017.

Eurostat data from the first seven months of the year shows that this decline has stopped and, in fact, the trend was reversed with an expected increase of 20 percent by the end of the year compared to 2016.

EU-Russia trade was up to €285 billion in 2014. In 2016, this number dropped to €181 billion. In only three years, EU members imported €64 billion less from Russia and exported to it €31 billion less. This decline affected Germany, Italy, Austria and Lithuania above all, which constitute €14.5 billion less in export towards Russia.

However, Austria, Ireland and Lithuania are the three members that suffered the most in relative terms with declines in export of 51, 50 and 40 percent respectively in two years only. Interestingly, Luxembourg is the only country that increased its exports to Russia from 2014 to 2016.

The average decline for EU members was 34 percent in import and 29 percent in export with Russia. The trend was reversed starting in January 2016 when trade with most of EU member states started to recover.

Granular data

This is evident if we look at data for the half-year period. When we compare the first six months of 2016 with the same period of 2017, we notice that the volume of EU-Russia trade increased by €27 billion. The lion's share is for Germany with an expansion by €6 billion and the Netherlands with €4 billion. The only country that reduced its trade is Malta with a decrease of €400,000.

If we look at the exports only in the first six months of 2017 compared to last year, then the leading countries are Germany (plus €2.6 billion), Italy (plus €739 million) and the Netherlands (plus €707 million). The only countries decreasing their exports are Malta, Cyprus and the United Kingdom.

Winners...and losers

However, there are specific countries that have scored very positive results in relative terms. For instance, Bulgaria has almost doubled its export to Russia (plus 96 percent), Ireland experienced a 43 percent increase and Latvia by 37 percent.

Instead, Malta lost almost its entire export to Russia (minus 85 percent), while Cyprus limited the loss to 25 percent of its exports. On average, EU-wide exports to Russia increased by 25 percent compared to the first six months of 2016, which equals to more exports for €8 billion.

The projection for 2017 based on the first six months of the year indicates that the EU-Russia trade has been recovering since the lowest point of 2016 with an overall expected trade volume of €230 billion. While this is still far from the 2014 level, it is well above the levels reached in 2015 and 2016.

The behaviour of trading partners may be an indication that the Crimea crisis has been discounted already and that politics will, slowly, adjust.

One of the signals was the critical stand of some EU members to the recent round of secondary sanctions imposed by US Congress on Russia, which could create problems for companies involved in the construction of Nord Stream II.

While it is hard to predict the direction of trade flows in the future, we can state that the positive trend seems to lead towards a normalisation of EU-Russia trade in the coming future despite the unresolved crises in Crimea and Ukraine.

Francesco Giumelli is assistant professor in international relations at Groningen University and the author of "The Redistributive Impact of Restrictive Measures on EU Members: Winners and Losers from Imposing Sanctions on Russia"

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

European shipping's dirty secret

As the EU launches its flagship Green Deal, the Greens call for shipping emissions to be included in carbon targets. Ships carrying goods to and from the UK emitted more CO2 than all the cars in Britain's 15-largest cities.

News in Brief

  1. EU Scream podcast wins media award
  2. Sturgeon will set out Scottish independence plan next week
  3. Slovenia, Croatia ex-leaders highlight jailed Catalans
  4. Italian court tells Facebook to reopen fascist party's account
  5. EU extends sanctions on Russia until mid-2020
  6. UK exit poll gives Johnson majority of 86
  7. Orban: 'financial guarantees' to reach climate neutrality
  8. Merkel hopes EU leaders agree 2050 climate-neutrality

EU investment bank 'wide open to abuse by fraudsters'

Fundamental reforms are needed if the EIB is to become more accountable, democratic and transparent. Establishing a firm grasp on corruption to ensure that public money no longer feeds corrupt systems is a vital first step.

European beekeeping in crisis

Europe's bee population is dying. The number of pollinator species threatened by extinction is increasing each year, and human activity is the main cause.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. EU values face scrutiny This WEEK
  2. EU sighs relief after 'decisive' Johnson victory in UK
  3. Huge win for Conservatives in UK election
  4. Behind bars: a visit to an imprisoned Catalan politician
  5. Leaders agree 2050 climate neutrality - without Poland
  6. EU leaders cagey on 'Future of Europe' conference
  7. Pressure mounts to grill Malta's Muscat at EU summit
  8. Revealed: little evidence to justify internal border checks

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us