Europe and Russia Need Each Other

• 04.22.2015, 18:06
•  Europe,  Region,  World

Western sanctions imposed on Russia costs around $106 billion to country; it cost $26.7 billion in 2014 and it could can reach to $80 billion in 2015, CNN reports. According to the statistical data Russian’s foreign trade has decreased by 30% in the beginning of this year. Moreover, the trade has fallen by more than a third with its biggest partner- the European Union. The counter-blow by Russia to its Western partners was the ban on food imports to Europe and the US. Indeed the imports of food fell by 40% in the first two moths of 2015. This has pushed inflation up to 17% in March.

Oil price drop over 50% makes Russia’s economy more vulnerable, because the country relies on oil and natural gas exports. The energy export decreased by 40% in January and February, which led government to cut spending, because half of its government spending are based on oil and gas exports revenues. Overall estimation shows that GDP of the country can shrink by 5% this year.

The only choice for Russia is to start strengthen its trade relations with eastern partners, especially with Japan and China.

It should be mentioned that sanctions imposed on Russia by Western partners does not have negative impact only on Russian economy; it has its bad reference on Europe as well. According to the words of Ivan Grachyov, who is the chairman of the State Duma Committee for Energy, sooner or later Europe will realize that it needs gas from Russia in order to save its energy security. He also warned that Russia in his tern should diversify the gas export to Europe.

Overall, this picture shows that sanctions against Russia will further be reflected on Europe, because it is not only about oil and natural gas, but many other sectors of economy are strongly connected with the West. The break of business connections is mutually harmful for both sides.