The European Union and Russia have seen a series of trade restrictions since Moscow’s invasion of Ukraine in 2022. The ten rounds of sanctions imposed by the EU aimed to cut Russia’s revenues and access to technology used in war. While the EU seeks to crack down on circumvention routes that bypass existing sanctions, several countries, including the United Arab Emirates, Turkey, Armenia, Georgia, Kazakhstan, and Kyrgyzstan have been identified as potential routes.
Despite these sanctions, a significant amount of trade continues between the two blocs due to successful lobbying and unwillingness to bear the economic brunt harder or risk ripple effects on global supply chains. In 2021, Russia was the EU’s fifth-largest trading partner with goods exchanged worth €258 billion- mainly fuel, wood, iron and steel, and fertilizers. However, the value of EU imports from Russia fell by half to around €10 billion in December 2022 since the invasion.
Gas Exports Unaffected By Sanctions
The EU sanctioned imports of Russian coal and seaborne oil last year but excluded gas from these sanctions. The Union has been hesitant about imposing sanctions against Russia’s nuclear industry even though it remains unprotected by any bans. Some EU countries have publicly opposed such measures against Russia’s nuclear sector.
Russian state-operated nuclear energy firm Rosatom’s contribution to fuel enrichment services worldwide means it is a critical global source for new nuclear facilities. Near one in five nuclear power plants worldwide are either present in Russia or are Russian-built.
How Sanctions Affect Corporate Governance In Russia?
Russia’s weak managerial class lacks a Western-style CEO class; only shareholders and founders are deemed to be decision-makers. Balancing interests between managers, shareholders, state, employees and customers is a crucial factor for economic growth in Russia. Despite all the complexities, sanctions have added another layer to weak managerial class in Russia that has led to restructuring, including corporate governance.
Sanctions have created a matrix of situations for companies and their management. Managers under personal sanctions usually leave their position to bypass creating additional risk around the company. However, some managers continue working despite the restrictions. Despite its challenges, some experts believe that the country could develop new models of corporate governance with the help of the government.
Russia’s Nuclear Power Influence
Russia’s nuclear energy production is one sector that has managed to evade sanctions completely. The country’s state-operated energy firm, Rosatom, is a key global source for nuclear fuel enrichment services and funding for new nuclear facilities. While other sectors face stringent sanctions after the invasion of Ukraine, Rosatom’s activities have been unaffected.
Russia’s growing nuclear influence has given it significant leverage worldwide. Sanctioning Russia’s nuclear industry would be a daunting logistical and political task because of interlocking dependencies.
Impact on Europe’s Dependence on Kremlin’s Energy
Being reliant on the Kremlin’s energy supply was a point of contention between Europe and the United States before Ukraine’s invasion. Europe slowly ramped up energy sanctions without significant damage due to uncharacteristically mild weather. Although they did not cause major economic loss for Russia, Europe began imposing gradual damage in 2014 by reducing municipal energy supplies from across its member states.
In conclusion, EU-Russia trade relations remain complex and multifaceted due to the ongoing Ukraine crisis and ongoing sanctions imposed since then. While several sectors are under strict sanctions, others such as Russia’s Nuclear industry are untouched despite having considerable influence worldwide.
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