Russia’s economy is heavily reliant on the European Union (EU). Over the last six years, we have seen a decline in trade relationships between the neighbours with EU investment falling by heights of as much as 44pc in 2014. Could the recent alleged Russian chemical attack in Salisbury, Britain hammer the final nail in to the coffin of an already dying economic relationship?
The EU/Russia trade relationship is based on the price of oil. Here’s why: The EU market’s relationship with Russia is dependent on the growth of the Russian economy, but this growth is intrinsically linked to oil prices. If this commodity does badly, then Russia does badly. Since 2011, and most significantly 2012-2016, the price of oil began to a steady decline – which is correlated to the weakened financial partnership between the EU and Russia. This was seen most notably at the end of 2015, when hydrocarbon exports were down 42pc from 2012. This subsequently leaves Russia in a weakened financial position – they could not burden further blows and remain buoyant in their current economic situation.
But the Salisbury attack could be the last straw. Western states have already begun an exodus of Russian politicians from their embassies which worsens Russia’s geo-political influence worldwide. So far, this has had no impact on the EU/Russia trade deal. Yet, if these sanctions begin to affect trade relations, Russia’s economy could find itself on life support as it stumbles toward a nadir. Its economy is already being pressurised by the decline in oil price, and a dwindling relationship with the EU – trade sanctions would leave the Russian economy in a hopeless situation, seeking alternative solutions.
It seems Russia is aware of this and have begun reaching out to alternative markets to keep their economy afloat. In difficult circumstances Russia has reached out to Turkey, a nation who has been trying to gain access to the EU for years but has been rejected for a myriad of reasons – most notably their poor human rights record. Earlier this month, Putin joined President Erdogan at a ceremony for a Russian made Nuclear Power Plant. This isn’t the first sign of a romance brewing between the two nation states. Over Christmas they finalized an agreement that Turkey would purchase their S-400 Missile Defence System. Aside from this, they are building the Turkstream pipeline to transfer Russian gas to Turkey. Will Russia need the EU if relationships blossom with alternative markets? They have reached out to Turkey, but could this become a patterned behaviour?
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