What are the lessons from Russia/EU Decoupling?
The great crash that wasn't
When Russia commenced its invasion of Ukraine in February of 2022, more than a few commentators noted the apparent anachronism of it all. A full-scale conventional war between powers that were, it turned out, near-peers, lasting more than a few weeks? Such a conflict hadn’t been seen since perhaps the Iran-Iraq war, and there were myriad questions (and predictions) about how the war would impact its participants and the rest of the world. When the war did not quickly end, many assumed that mounting EU sanctions and Russian retaliation would wreck both economies. After all, they were deeply intertwined before the war - over a third of Russian trade occurred with the EU, and Russia was the EU’s largest source of fossil fuels prior to 2022.
This was not only an important economic question: liberal theories of international relations have often appealed to the “Kantian Tripod” of democracy, international law, and commercial interdependence to create peace. A major argument for continuing open trade, even with countries that are not democracies or particularly inclined to follow international law, has been that economic interdependence would make war so costly that both sides would go out of their way to avoid it. The Center for Strategic and International Studies is only one of many institutions to take essentially this line when dealing with the question of trade barriers in geopolitics, arguing for Kant’s assertion that “The spirit of trade cannot coexist with war, and sooner or later this spirit dominates every people”. Clearly the economic interdependence between Russia and the EU (and it is really the EU, and not Ukraine, that had the capacity to harm the Russian economy) did not forestall hostilities entirely. However, it would be some vindication of the logic behind the theory of the Russian and European economies were devastated by the severance of their economic interconnection.
The results have been far less dramatic than many predicted. While some predictions (Glenn Beck confidently declaring that EUROPEANS WILL FREEZE) probably shouldn’t have been taken too seriously, even more levelheaded publications like The Economist seriously contemplated the chances of a truly horrific winter - and likewise the expectation that Russia’s economy would face a massive collapse turned out to be largely unfounded as well. Some of these results were due to unforeseeable circumstances - a very warm winter in Europe, for example. But the results of this (hopefully) once in a generation event tell us a great deal about what modern interconnected economies look like and especially what leverage they do - and do not - provide countries over one another, and call into question the idea that trade interdependence makes war unthinkable.
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