Despite the animosity in Russia-Europe relations, there was a massive boom in their overall trade. Europe was somehow feeding the Russian War Machine.
The year 2022 will be remembered as the tipping point in Russia-European relations. The post-Cold War security order in Europe has been disrupted by Russia’s invasion of Ukraine, which started in February 2022, and the 30-year-old relationship between the EU and Russia is now completely rewritten. EU adopted eight sets of comprehensive sanctions, and its members were seen gradually severing all economic ties. With the decoupling from Russian gas and oil, fifty years of connectivity and favourable energy relations come to an end.
The pressure on the Russian economic model and Ukraine’s early success on the eastern front put the EU and the western world on edge. Germany, Russia’s top EU trading partner, saw a 34% decrease in exports to Russia in the first half of 2022 compared to the same period in 2021 as a result of the sanctions. Thus, in terms of the countries to which German exports went during that time, Russia dropped from the fourteenth to the twenty-fifth spot. However, the European Union’s heyday was only fleeting. As time went on, various European nations’ businesses began to collapse.
Everyone re-approached their business relationships with Russia differently. Mostly, going back to the beginning, while some continue to have hallucinations. Overall, there was a massive increase in EU’s trade with Russia in 2022.
The 68% increase
Russian exports to the EU increased by 68%, according to data released by Eurostat. According to Eurostat, the EU’s own monitoring agency, bilateral trade volumes between Russia and the member states of the EU actually increased between January and July 2022 despite sanctions. For the time period, trade turnover totaled €171.4 billion. There is no denying that sanctions have had an effect, but not in the way that the EU had hoped. During the first seven months of 2022, EU exports to Russia fell by 33% to just €34.1 billion, whereas EU imports from Russia increased by 69.9% to €137.3 billion.
It is anticipated that many businesses are still continuing to do so. This may be the only explanation for why Brussels has begun to penalise companies that continue to do business with Russia. You can also see how each nation is devotedly participating in the Ukraine war if you look at the data broken down country to country. Starting with the big guns of EU, Germany saw a 33% increase in its trade with Russia. €20.7B worth of trade took place between the two countries. While Italy’s trade with Russia increased by 100% and reached a total of €9.6 billion.
France saw an 84% increase with an amount of €9.5b, Spain also saw an increase of 51% with trade totaling at around €4.7b. In contrast, the countries that openly support Russia are breaking all rules. Hungary’s trade with Russia increased by a staggering 132%, reaching €5.4 billion.
In a similar vein, Slovakia’s trade with Russia increased by 71%. While countries like Sweden and Finland persisted in their efforts to block trade because they wanted to join NATO. Finland’s trade with Russia fell by 7%, while Sweden’s fell by 60%. Slovenia was the one to persevere in the face of all odds. Slovenia’s trade with Russia increased by a staggering 346%. This data is enough to state how every nation has expanded its trade relations with Russia.
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The backdoor trading: Another option
While this data focuses on direct trade, there are speculations that Europeans are also considering options through third parties to boost trade with Russia. How? via neighbouring countries. Just a few weeks ago, Financial Times reported big increases in trade with countries in Russia’s neighbourhood. This raised questions as to whether sanctioned products were entering the country via back door.
The sales to Armenia and Kyrgyzstan from Europe and the US have increased by more than 80%. According to the statistics, Armenia and Kyrgyztan’s exports to Russia have also more than doubled during the same time frame, indicating a potential shift in trade towards new routes. Moreover, Kazakhstan was primarily responsible for the rise in exports of goods from the EU to Central Asia, including automobiles, electronics, farm equipment, and pumps.
Kazakhstan imported €1mn worth of washing machines from the EU in December 2022, four times the amount it did in the December before the invasion. This is raising more suspicions. However, Kazakhstan is denying the speculations. A government spokesperson said: “We have not seen any evidence that specific companies in Kazakhstan are being used to evade western sanctions but will continue to monitor this, and will act swiftly and firmly if we establish any wrongdoing.”
In addition, China has also stepped in to fill the void left by western exports, including, shipping increasing quantities of semiconductors to the country, according to Silverado Policy Accelerator.
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Failing miserably!
So, right now, it appears that there is difference in words and deeds of European officials. On one hand, EU promises Zelenskyy to further weaken Russia’s war machine. However, from backdoor, EU is still funding the Russian war machine. Only because of EU’s silent money, surging military production is helping keep Russian industry going strong, offsetting much of the damage done by international sanctions and other fallout from the invasion of Ukraine.
Russia’s Industrial in 2022 was down only 0.6%, as per the Federal Statistics Service, known as Rosstat. This is almost a negligible effect.
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The EU’s assistance to Ukraine on a financial and humanitarian level appears to be compromised by its own conduct. Despite providing Ukraine with significant financial support to aid it, in its defence against Russian aggression, the EU has unwittingly supported the Russian war machine by secretly maintaining business ties with Moscow. This situation calls into question the efficacy of EU policies and the requirement for increased accountability and transparency in the use of EU funds. It also highlights the complexity of the geopolitical situation in Ukraine and the challenges faced by those seeking to support its independence and sovereignty. Russia is something the EU can avoid, but not for very long.
