Economic Interdependence
For more than two decades, trade between the European Union and Russia could be presented as a textbook example of economic interdependence. The European Union was the largest importer of Russia’s energy exports and natural resources such as oil and gas, growing dependent on these essential imports to power European industry and deliver consumer energy. Meanwhile, Russia was one of the European Union’s largest export markets, investing large amounts of capital and offering access to innovative technologies across a multitude of sectors. The relationship between the two was essential to the growth and development of both economies, and it was assumed that this seemingly essential bond would stabilise relations and avoid any major disruptions.
Energy eventually became the primary focus of the relationship, with Russian oil, gas, and coal becoming the main imports for the European Union, while exports to Russia focused heavily on machinery, vehicles, the chemical industry, and consumer goods. Even though political tensions existed between the two power bases, trade flows and the economic relationship continued due to their importance to both economies. European foreign policy operated under the assumption that sustained economic engagement and close trade relations would counteract the risk of confrontation and prevent overt conflict.
Energy Dependence
The European Union’s large imports of Russian oil, gas, and coal became essential to Europe’s industrial and consumer energy base, which ultimately proved to be a major vulnerability. Although concerns over this dependence were raised at times, the risks were often pushed aside due to convenience and short-term reliability. This reliance also boosted Europe’s industrial competitiveness and played a significant role in supporting Europe’s domestic energy transition toward new fuel alternatives and technologies.
Turning Point
Although tensions had occasionally risen between the two, trade remained stable and functioned as usual until the outbreak of full-scale conflict between Russia and Ukraine in 2022. Leading EU actors viewed Russia’s actions as an act of aggression and responded with an all-encompassing sanctions policy. These sanctions targeted Russian banks, transport, exports, and, critically, the energy sector. The European Union initiated a framework to phase out oil, coal, and gas imports in an effort to reduce dependence and minimise potential economic fallout. Russia responded by reducing energy supplies and redirecting its infrastructure and export focus toward new partners in Asia.
Economic Fallout and Future Outlook
The initial economic shock to Europe was severe, and many observers note that the region has yet to fully recover, highlighting stagnant growth in contrast to other countries. Emergency measures and subsidies have affected consumer costs at multiple levels, while increased taxation aimed at funding alternative energy development has generated widespread frustration and concern.
The collapse of EU–Russia trade relations marks a significant shift in economic thinking, as trade is increasingly viewed through the lens of geopolitical security rather than efficiency and development. Sanctions have become a primary tool for responding to perceived hostile actions, while supply chains are receiving heightened attention to improve resilience and security.
Although pre-2022 relations are unlikely to be restored given the continued strain between Europe and Russia, some European leaders have signalled the importance of re-engaging with Russia and attempting to find a path toward limited normalisation.
BakuTiflis 