In February 2022, political tensions between Russia and Ukraine came to a head with Russia's attempted annexation of Ukraine. This situation has sparked outrage in several countries around the world and led to sanctions against Russia, with the aim of isolating Russia. But is such a strategy viable?

Importance of Russia in global economy

With a GDP of $1,479 billion in 2020, Russia is the 11th largest economy in the world. The Russian Federal Customs Service (FCS) has released data that shows for the first ten months of 2021, Russia's total exports (goods and services) reached $395 billion, an increase of 42.8% over 2020. But this dramatic increase is largely due to the post-pandemic economic recovery, as in several regions of the world. Russia‘s Top Five Trading Partners were responsible for 86.9% of all trade between January-October last year and were as follows; China (US$112.4 billion), Germany (US$46.1 billion), Netherlands (US$37 billion), US (US$28.8 billion), Turkey (US$25.7 billion). Russia mainly supplies these countries with fuel and energy, metals, and chemical products. About 13% of exports go to CIS countries, predominantly Belarus and Kazakhstan (trade turnover of $13.4 billion and $11.4 billion, respectively). The main supplies to the CIS are raw materials, fuel, and foodstuffs.

An economic and financial interdependence which makes it difficult to take, any desire for exclusion

One of the things that makes any attempt to isolate Russia from international trade difficult is the difficulty for the countries of the world to speak with one voice. While a country like France can rely on its nuclear power plants to produce energy at a lower cost, countries like Germany and Italy remain heavily dependent on Russian gas. Germany is even forced to return to coal to compensate for gas supply interruptions. In such a context, European solidarity obliges the EU to act with caution in its sanctions. Moreover, countries such as China, Turkey and India, historical allies of Russia, are [url=https://nationalinterest.org/feature/why-india-and-china-won%E2%80%99t-sanction-russia-202352]hostile to the sanctions[/url] that the EU could take. Finally, even beyond European energy dependence, other parts of the world could be affected if Russia is isolated. This is the case of African countries whose grain and wheat supply largely depends on Russia.

In conclusion, any attempt to completely exclude Russia from world trade would result in shortages for which no country is currently prepared. However, this is an eventuality that could occur in a few years, thanks to the REPowerEU plan, a plan to reduce the EU's dependence on Russian gas by two thirds before the end of 2022, and by 100% from of 2027.

Stay Tuned with EXIMA

Want to stay informed on international trade updates and learn how to do business across the globe? Join EXIMA today!

#EXIMA #Internationaltrade #tradefinance #Africanbanks #MNCsfinance

For where? A country that is the center of world energy. The country is just to endowed for it to be ignore. Long live Russia! Long live Putin!