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Russia and Brexit - will the UK be Russia's new, strong trading partner?

of Jonas Prien, Ausserer & Consultants

Russia and Great Britain recently clashed at the diplomatic level: not only the case of MI6's double agent, Sergej Skripal, but also Russia's dubious involvement in the outcome of the Brexit election make the relationship more difficult. Now both countries are on the periphery of the European Union and also have some parallels to show. What does this mean for British-Russian relations and their trade?

Russia and Great Britain are initially very different states with completely different political systems. While Britain has a parliamentary monarchy with a lively culture of debate, Russia is known to have authoritarian, semi-democratic leadership.

Under former world powers

In their relations with Europe, however, they have some things in common. Both countries always viewed strong European hegemony with suspicion. Despite their intellectual and spatial distance, they went into the field as allies during the Napoleonic Wars and the two world wars. Nonetheless, both countries do not see themselves as “European”, but always as something more. This dual identity is not only due to the situation on the periphery of Europe, but is also an expression of the imperialist past. The streets of London still reflect the glory of days gone by when the kingdom conquered more than a fifth of the world and rose to become an empire. London may continue to be an important metropolis and a center for finance and trade today, but the city on the Thames no longer has its former world significance. The same applies to Moscow. While the Empire of Great Britain mainly comprised colonies overseas, Tsarist and Communist Russia comprised a vast land mass from the Baltic Sea to the Pacific. A faint wish to restore these realms belongs to the fantasies of nostalgics and those of the past. However, the fact that the formerly occupied territories continue to represent an elementary component of the foreign policy interests of Russia and Great Britain cannot be denied. Terms such as “near abroad” have shaped Russian foreign policy since the fall of the Soviet Union in 1991. [1.]

In many places, the question of how things will now go with the completed Brexit is being considered. The situation seems more complicated than ever: economic downturn, heated mood, political dilemmas, difficult negotiations on free trade agreements and numerous identity conflicts in Ireland and Scotland. Many an analyst, like Gideon Rachmann from the Financial Times, already compares post-Brexit Great Britain with post-Soviet Russia. That may sound far-fetched, but certain parallels can be seen in politics and in the tense social climate. The current relationship between Great Britain and the European Union is also in a critical condition, although both sides are trying to establish diplomatic manners.

Brexit as a turbo for Russian-British trade?

In short: no. Such wishful thinking is not far from the nostalgic of the Empire. But one after anonther. Economically, Brexit is a disaster for the European Union and for Great Britain, even if the damage will be very unevenly distributed across the country. Ironically, the Brexit advocates from the so-called Midlands, a region in the north of England that was shaped by industrialization and manufacturing, could accept the greatest losses, while the Brexit opponents from London are most likely to benefit from it.

Much depends largely on how the trade agreements between London and its global partners are defined. Great Britain already has a number of bilateral EU agreements that will automatically continue after Brexit. These include treaties with Switzerland, Norway and Iceland, South Africa, Chile and several countries from the Caribbean, Africa, Oceania, the Middle East and South America. However, these represent a trade volume of 104 billion pounds, or just 8% of the total UK trade in 2018. One of Prime Minister Johnson's core tasks this year will be to negotiate a number of trade deals with partners around the world. Until the end of the year, however, free trade with the EU will remain in place as a transition period. [2.]

Disregarding the current political relations between London and Moscow and focusing on the economic models, a large increase in trade relations between Russia and the UK remains unlikely due to the distance. In 2018 the volume increased slightly, but it was 9.95 billion pounds (for comparison: Switzerland and Great Britain have a volume of 32.4 billion pounds). Even with a (purely hypothetical) free trade agreement between Moscow and London, it should still be more attractive for British companies to ship goods to Europe than to Russia.

Brexit is already casting a wide shadow. The European Union will (must) change, just as Britain will change. On the other hand, there will be no improvement in relations between London and Moscow or a significant increase in the volume of trade. It is pure dream that Russia or the USA will replace the EU as the UK's most important trading partner.




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Tags: Brexit Deal, England-Russia, Financial Times Russia, Talks between Russia and the EU, Great Britain, Imperialism Russia, London and Moscow, Russian-British trade, Russia, Soviet Union comparison, Turbo Brexit, world powers, economy