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Russia-Europe-US economic relations and implications

source: U.S. Department of State, New Republic, Agence France-Presse

Russia is one of the largest import and export merchandise trade partners for US and Europe. The following is a summary of economic relations and dependency, which automatically affect political relations.

Germany Russia

Angela Merkel and Vladimir Putin in 2012

One of the two largest oil producers in the world, Russia surpassed Saudi Arabia again by pumping almost 10.4 million barrels per day (BPD). It is also one of the world’s largest exporters of oil, with nearly 5 million BPD. With the world’s largest proven reserves of natural gas, Russia is also the top producer of natural gas, accounting for about 20 percent of the world’s total. This makes Russia’s oil and gas supply the best geo-strategic tools.

Since Rosneft bought Russia’s third-largest private company, TNK-BP, it has become the largest publicly traded oil company in the world by output. As a result, the state share of Russia’s oil production increased from 20% in the early 2000 to 56% today, with Rosneft accounting for 48% of the total. The increase in the state ownership paralleled a steady rise in overall production.

Click on the image for a detailed look (PDF file)

Oil and Gas pipelines from Russia to Europe

RUSSIA – EUROPE

Russia is Europe’s biggest single energy supplier and its natural gas pipelines mainly run through Ukraine, where some is used and the rest passes through to major Western economies such as Germany.

From the International Energy Agency, here is the breakdown of Germany’s oil imports by country of origin:

German oil imports by country

The same chart for Germany’s natural gas imports:

German natural gas imports

Germany’s position in the European Union is particularly important as Germany often dictates monetary policy set by the European Central Bank, basically controlling the markets and policies in its favor.

Other than being a major oil supplier, Eurostat data shows that Russia is also European Union’s third most important trading partner, behind the USA and China.

RUSSIA – UNITED STATES

Last year, Russia was a $11.2 billion market for the US as well according to Commerce Department data.

Over the period from 2004 to 2011, U.S. exports to Russia rose an average of 16 percent per year; in 2011 U.S. exports to Russia rose by 40 percent. U.S. companies reported numerous major business deals in Russia, including Boeing’s sale of 50 aircraft to Aeroflot and 40 planes to Russian airline UTAir, a joint venture between Exxon-Mobil and Rosneft to explore for oil and gas in the Arctic, and GE’s joint ventures with Russian partners Rostekhnologii and InterRAO. In December 2011, after 18 years of effort, Russia was invited to join the World Trade Organization (WTO). This major accomplishment will bring the largest economy outside the WTO into the organization.

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POLITICS

According to the Wall Street Journal, Phillip Missfelder, a senior member of the German legislative body, said,  (referring to the recent Russia-Ukraine crisis) “Economic sanctions against Russia would damage Germany itself. Sanctions are always bad for Germany as an export-driven nation.”

German Foreign Minister Frank-Walter Steinmeier also said on Sunday that the G7 countries should not kick Russia out of the G8.

Late 2013, while Ukraine protests were unfolding, Russia also threatened the tiny country of Moldova (ex-Soviet republic) for seeking closer ties with Europe.  During a visit to Moldova’s capital, the Russian deputy prime minister declared “We hope that you will not freeze this winter”, referring to Moldova’s dependency on Russian gas.

Read full article here Russia Putting a Strong Arm on Neighbors

“Being nice to Mister Putin – Chechnya”

Documentary made by Marcel Theroux

“With moves to increase Russian influence within Nato, it seems that Chechen suffering will go virtually unchallenged by Western governments. What seems important is that Russia is kept open for business.”

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