ABSTRACT
Despite numerous proposals for Russia–EU economic integration put forward during the 2000s, progress here has been very limited. Economic relations between the two actors are now reduced to a bare minimum and essentially regulated by WTO norms. They are characterised by a vast asymmetry in the trade structure, a persistent trade surplus on the Russian side, net capital outflows from Russia to the EU and a low level of mutual investment penetration. Using a range of economic theories and methods, this chapter demonstrates that, when it comes to matters of integration with each other, neither the Russian nor the EU position has been entirely rational from an economic point of view. Russia has constantly advocated a free trade area with the EU, although the immediate gains for Russia from this would be modest at best. Potentially more promising for Russia would be opening up to investment from the EU under an ‘asymmetric’ integration scenario involving adopting large parts of EU norms into domestic law – something Russia has been reluctant to accept for political reasons. For the EU, in turn, integration would be beneficial even on Russian terms but Russian advances in this respect have not been reciprocated by the EU.
