Written by Marcin Szczepański
Russia is the European Union’s third biggest trading partner. In 2014, trade volume between the European Union (EU) and Russia decreased, mainly due to the impact of the recession on the Russian economy, as well as the conflict in Ukraine which led to EU sanctions and Russian countermeasures.
Beginning in early 2014, the EU introduced and extended a range of diplomatic and economic sanctions against the Russian Federation in protest at Russian involvement in destabilising Ukraine and violation of Ukraine’s territorial integrity. Russia has retaliated with an embargo on certain EU agricultural products. Both the EU and Russian measures will be in place until at least June 2016.
It is hard to disentangle the effects of these sanctions from those stemming from the deteriorating economic situation in Russia. Although the overall impact on the EU economy has been rather limited, certain sectors and countries are more significantly affected. Estimates of the impact vary, but indicate overall that the European economy is resilient to the adverse effects of falling trade with Russia. Importantly, the EU’s financial sector is not considered to be systemically threatened by its exposure.
The most visible direct effect is the substantial fall in EU agri-food exports to Russia. The losses are, however, mitigated to a large extent by redirecting exports to alternative markets.
Read the complete briefing on ‘Economic impact on the EU of sanctions over Ukraine conflict‘ in PDF.