Digital transformation and connectivity: Prospects for economic interaction between the EU and Russia in times of sanctions?

EU-Russia Experts Network on Foreign Policy (EUREN) published the summary of the 9th EUREN meeting devoted to economic relations between the EU and Russia. The participants agreed that cooperation in the digital sphere could be advantageous for both the EU and Russia. How the first steps can look like? What are the main problems in economic relations between the EU and Russia? And what is the prospect of lifting sanctions? Read in the report.

There was a rather sober assessment of the current state of economic relations at the beginning of the discussion. Whilst the participants agreed that the economic bond between Russia and the EU is still significant for both sides, they also highlighted negative aspects and developments. The political context of the economic relations was particularly important for EU speakers. They stressed that the EU's restrictive measures against Russia were not an arbitrary punishment, but were instead, a necessary, moderate and targeted reaction to events in Crimea and the Donbas in 2014. The EU participants conceded that sanctions slowed down economic relations between the EU and Russia. However, they were not the only or even the most important problem in this relationship, compared to the negative investment climate and the lack of rule of law in Russia, which counted for more in the eyes of European investors. Russian participants, on the other hand, were pessimistic about the future of EU-Russia economic relations. The EU's share in Russia's foreign trade would continually shrink in the coming years. This was as much due to Russia's economic reorientation as it was to political disagreements and sanctions. No one could predict, however, whether this development would be linear. The Russian and EU participants expressed doubts as to whether economic relations could be restored to their pre-crisis scope and depth should the political crisis come to an end at some point.
The Eurasian Economic Union was touched upon in this context (see EUREN Chronicle no. 5). One Russian speaker asked which of the two narratives was stronger in the EU debate about the EAEU: that the EAEU was too weak to be an appealing cooperation partner, or that it was a Russian hegemonic project and should, therefore, be treated with caution. The response from the EU side was that these were complementary, rather than competing narratives: the low level of interest and multilateral interaction in the EAEU convinced observers that there must be a (Russian) political rationale behind the project. Russian participants agreed it would be "silly to deny" this political rationale in Russia's approach. However, they argued that there was an economic rationale, too, not only from a Russian perspective, but also from the perspective of the other member states. The EAEU would continue to exist and the EU would have to deal with it in the future.
Read the full report here
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