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Why The U.S. Has Replaced Some European Countries As Russia's Top Trading Partner
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In value terms, Russian trade turnover to the United States has fallen less than it has to Europe. (Photographer: Luke Sharrett/Bloomberg)
Don't blame sanctions. The fault line on this one lies squarely on weaker commodity prices, namely oil and gas. In value terms, Russian trade with the U.S. has fallen by nearly a third. But that pales in comparison to Russia's biggest trading partners. With Europe slipping, the U.S. has become surprisingly more important to Russian trade flow.
The first half of 2017 was a good one for Russian trade. Foreign trade turnover was around $270.4 billion, up 28% from the first half of 2016.
Last year was the end of back-to-back recessionary years for Russia's commodity-backed economy, so 2016 was a bottom for a number of Russian economic data points.
Russia exports were $396.3 billion in 2014, a year before the recession and sanctions hit. Back then, Russian exports were $254.7 billion in the first half versus the $168.6 billion this year. Imports were $141.6 billion in 2014 and stood at $101.8 billion in this first half of 2017, Russia's full-recovery year.
Russia's foreign trade turnover -- which measures both outbound and inbound trade -- fell with all countries. But most of its top 10 trading partners remained in the top 10, according to the Federal Customs Service.
The only country to drop off the list was Ukraine. The two countries have been going through a bitter divorce since 2014, ultimately leading to sectoral sanctions on some Russian businesses. Ukraine has been looking elsewhere for natural gas, pushing the trade turnover with its old partner from $18.5 billion in 2014 to $5.7 billion this year.
Former Soviet republic, Kazakhstan, took Ukraine's place with $8 billion in trade turnover.
Russia's Top Markets
Russia's top three markets retained their position, though China is now No. 1 with $38.4 billion for the first half of 2017, down 11% from 2014. Germany trade hit $22.9 billion, down 35% and The Netherlands fell 45% to $20.6 billion. Germany and the Netherlands used to be No. 1 and 2, but sanctions have forced Russia to turn eastward. Russia and China have signed a number of joint venture deals, mainly in the commodity businesses like agriculture and energy.
Meanwhile, trade with the U.S., from everything from titanium to pharmaceuticals, managed to fall less than most European countries with much closer ties to Russia. U.S. trade fell 28% to $10.7 billion.
Other top 10 markets in Europe fared even worse than the Germans and the Dutch. Volume with Italy collapsed 55% to $11 billion.
In 2014, the United States was Russia's No. 9 trading partner. Today, despite sanctions, it is No. 6 thanks to precipitous drops in some European countries, according to Russian government figures.