ABSTRACT
This chapter aims to survey the initial rise of Russia's economic statecraft as a tool for constructing a Greater Europe. A Greater Europe is conceptualised as a project to eliminate the institutional divide that remained after the Cold War by accommodating Russia in formats with favourable symmetry. The chapter addresses the absence of geoeconomic thinking by the Yeltsin administration as a rationality deficit. The economic decline of Russia in 1990s was exacerbated by squandered comparative advantage of Soviet industry and failure to develop new and effective institutions and industry. Economic statecraft in Russia revealed disproportionate reliance on monopolising control over energy resources to extract political concessions. The continuation of Western-centric foreign policy severely limited Russia's bargaining power to negotiate new format for Europe and to diversify the economy by attracting technology transfer and investments on favourable terms. The chapter concludes that Europe's dependence on Russia as energy supplier has been balanced by Russia's reliance on Europe as an energy consumer.
