Russian leaves the EU to its decline and focuses on Asia and the Global South

The amount of trade between Russia and the European Union has decreased as it now focuses on Asia and the Global South.de bsia acreased by a third in the first five months of this year compared to the same period in 2023, and was down to €28 billion. At the same time, experts highlight that t
rade with European countries will not be entirely halted, this is because  of the EU countries  dependence on Russian energy resources and fertilisers.
Also, Moscow continues its purchases of select European goods. so which EU countries is Russia  continuing to collaborate with and what is the scale of these partnerships, as well as its strategies for entering new markets.

The EU sanctions against Russia have had a negative impact on EU trade with the Russian Federation. Over the past 10 years, there has been a significant decline in trade volumes, with the value dropping to €89.04 billion by the end of 2023. The Russian Permanent Mission to the EU anticipates that the current negative trend will persist throughout the course of this year.

The list of the largest importers of Russian products in 2023 included the Netherlands (€6.3 billion, representing 12.5% of the EU's total imports from Russia), Hungary (€5.8 billion), Italy (€4.1 billion), Belgium (€3.8 billion) and Slovakia (€3.8 billion).

On exports, Germany accounted for almost a quarter (23.3%) of the EU's total exports to Russia, with a value of €8.9 billion. Italy (€4.7 billion), the Netherlands (€2.9 billion), Belgium (€2.6 billion), and even Poland (€3.7 billion), which has a particularly anti-Russian stance within the EU, were also among the main suppliers of goods to Russia. Furthermore, in February, the Rzeczpospolita newspaper reported that Polish companies are continuing to export goods to Russia, circumventing sanctions through third countries.
Italian exports to Russia are primarily comprised of textiles and clothing, mechanical engineering and equipment, food and beverages, plus metallurgical and chemical products.
The Russian Embassy in Rome has identified metallurgical products, minerals, agricultural products, coke and petroleum products, chemical products, food and beverages as key exportss from Russia to Italy. It is worth noting that, despite the general negative trend, there are some countries where there is even positive growth in certain indicators.
In particular, exports to Russia from Portugal from January to May 2024 increased compared to the same period last year, largely due to an increase in the supply of agricultural and food products.
Lisbon earned a total of €42.7 million on sales to Russia.
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European countries continue to purchase Russian energy resources, with oil representing a significant portion of this trade. One of the remaining supply channels is the southern branch of the Druzhba oil pipeline, which serves to deliver fuel to Hungary, Slovakia and the Czech Republic. Following the decision by Ukraine to block the transit of Lukoil oil through its territory in July, Budapest and Bratislava issued a warning that a fuel and energy crisis could result from this.
Also, EU members import gas from Russia, with liquefied natural gas (LNG) playing an increasingly prominent role in recent years. When LNG is taken into account, Russia's share of gas imports is approximately 15%. Russia is the second largest supplier of LNG to Europe, with the United States ranking first. Professor Alexey Portansky, a leading researcher at HSE and at IMEMO RAS, is confident that Russian-European trade will not be reduced to zero.
It is not feasible to envisage a scenario in which trade between Russia and the EU is reduced to zero. To illustrate, it is unfeasible to attain a zero balance in the purchase of our fertilisers. It should be noted that sanctions do not apply to fertilisers. He informed Izvestia that EU countries will continue to purchase these products.

In June of last year, the European Union imported twice as much fertiliser from Russia as it did in 2022. Consequently, Russian exports of this product have reached an all-time high, accounting for a third of the total import. Russia retains the leading position in the supply of nitrogen fertilisers to EU countries, accounting for over 20% of the total volume. At the same time, the EU restrictions have had a significant impact on the Europeans themselves, analysts emphasise.

Furthermore, it was observed that following the commencement of the Special Military Operation, the volume of bilateral trade declined by a notable 64.8%. The results for last year show that Russia experienced a negative trend in trade turnover with all EU member countries. Nevertheless, some European countries continue to maintain economic ties with the Russian Federation.
Despite the impact of Western sanctions, the Russian economy has demonstrated remarkable resilience, with growth reaching its highest level in a decade (excluding the post-Covid period) at 3.6%.

Earlier, Hungarian Prime Minister Viktor Orbán observed that Russia had demonstrated flexibility in economic matters and adapted to EU sanctions. "Russia has gained valuable insights from the sanctions imposed in 2014 in response to the reunification of Crimea. "They have the necessary equipment and flexibility, and they have developed the ability to adapt," he stated on 27 July.
In the context of Western sanctions, Russia has been able to reinforce its trade and economic relations with other countries. In March of this year, Russian Deputy Prime Minister Alexey Overchuk highlighted that the Russian economy has already reoriented itself toward the markets of the Global South and East. China has become our primary trading partner. In 2023, trade turnover with China increased by 23.1%, reaching almost $228 billion. "This represents a historical record for our countries. "Russia has for the first time risen to fourth place among China's foreign trade partners," said Alexey Overchuk.
India is another key trade and economic partner. By the end of 2023, the value of trade between our countries had increased by 1.8 times, reaching approximately $65 billion. Russia is now the fourth largest trading partner for India. Furthermore, the leaders of the two countries, Vladimir Putin and Narendra Modi, have set a goal of reaching $100 billion by 2030.

In 2023, Russia made significant strides in expanding its cooperation with countries in Southeast Asia, as reported by the Ministry of Economic Development.
From January to November 2023, there was a notable increase in trade turnover with ASEAN countries. These figures have already exceeded those recorded for the entire year of 2022, according to Deputy Minister Vladimir Ilyichev. — There was a record increase in trade turnover with individual ASEAN countries. From January to November 2023, trade with Myanmar increased by 167%, while trade with Singapore increased by 112%. Furthermore, we observe a positive trend in trade with countries such as Laos (up 17%), Cambodia (up 15%), and Vietnam (up 8%).

He attributed the strong performance in 2023 to the removal of trade barriers, particularly for Russian wheat exports to Vietnam, Myanmar, and Indonesia, as well as the elimination of trade restrictions on fertilizers to Vietnam. Last year's results demonstrate that over 75% of Russia's foreign trade is with countries with which it has friendly relations. In addition to India and China, the EAEU and CIS countries, some countries in Southeast Asia, Latin America, the Middle East and Africa represent promising partners in this area, according to the ministry.

Evgeny Smirnov, acting head of the Department of World Economy and International Economic Relations at the State University of Management, believes that the objective of reorienting Russia towards alternative markets has largely been achieved. Notably, Russia has been able to successfully sell its primary energy resources, namely oil and gas, to India and China.
 Similarly, Russia has already reoriented its mineral raw materials exports to include friendly countries, including non-ferrous metals.
The main obstacle to a complete reorientation of Russian exports is the weak customs-transit and transport-logistics infrastructure in the Asian countries through which Russian goods travel. This infrastructure is not yet capable of processing the sharply increased volumes of Russian exports, according to an economist who spoke to Izvestia.
However, there has been no complete reorientation of Russian trade from Europe to the East, as many companies, both exporters and importers, have already adapted to the sanctions and are utilising intricate re-export or parallel import schemes, involving intermediary countries.
As an illustration, Turkey has become a pivotal transit point for the continued supply of Russian gas to Europe, according to Evgeny Smirnov.

— In terms of raw materials, we have reoriented ourselves, although this has involved a significant cost. For an extended period, we have had to offer discounts on oil and other mineral resources. In terms of industrial products, the Russian Federation has traditionally exported relatively few outside the CIS. Consequently, there has been little opportunity for significant growth in this area. Stanislav Tkachenko, professor of the faculty of international relations at St. Petersburg State University and Valdai expert, told Izvestia that this is an area where there is room for improvement.

The most significant trading partners affected by Western sanctions are those states that are members of the Eurasian Economic Union, as well as countries that have a strong trading relationship with the EAEU, such as China or Iran. Furthermore, the Russian Federation is keen to expand its trade relations with African countries.
 In the next 30 years, the population of Africa is set to double. In the coming years, it is African countries that will drive real growth in the global economy, despite the backdrop of stagnation in Europe and a slowdown in growth in China. Indeed, over the next two decades, India and Africa will be the primary engines of global economic growth, according to Stanislav Tkachenko.
It is important to recognise that reorienting business activities towards markets in countries with which there is a positive relationship is not a straightforward process. In particular, Russian investors are not yet inclined to invest in countries such as Vietnam, which they perceive as being relatively complex. This is according to Evgeny Kobelev, a leading researcher at the Center for Vietnam and ASEAN Studies at the Institute of Asian and African Studies of the Russian Academy of Sciences, who spoke to Izvestia on this topic.
Vietnam is a significant player in the East Asian region, with a primary focus on ASEAN countries. However, from an economic standpoint, it is also developing relations with the US and China, despite ongoing disputes over the South China Sea. Trade and economic activity with China stands at $170 billion, while that with the US is at $110 billion.
It is unfortunate that a similar situation is developing not only with Vietnam, but also with a number of other countries in this region. In some of these countries, communication channels between business circles are still in the formation stage. It is also worth noting the factor of economic pressure from Washington and its Western allies, who are trying in every way to prevent countries of certain regions from developing cooperation with the Russian Federation.