Torbjörn Becker

This chapter analyzes how the European Union (EU) and Russia's interdependence has developed with a focus on Russian energy exports to the EU. The main question is whether this will lead to division or greater cohesion in the EU when Russia's war of aggression against Ukraine has forced the EU to reconsider its dependence on Russian energy. The chapter details the different types of energy EU countries imported from Russia and discusses the sanctions implemented by both sides. The effects of sanctions will be felt both in Europe and in Russia in the short term, but in the longer term, Russia is the big loser both in terms of relations with the EU and its own economic development. Energy exports are a fundamental driver of the Russian economy and without major institutional changes, the country will not be able to rid itself of its dependence on fossil energy exports. For the EU, the major challenge will be to deal with the internal fissures that are exposed when it reconsiders its relationship with Russia. The authors argue that this is a historic opportunity to accelerate the green transition in the EU while improving the Union's security by making itself independent of Russian energy.

This chapter details a plan for the reconstruction of Ukraine with the aim of the country one day becoming a full member of the EU. When the war is over the EU must be ready to help Ukraine build new and better for a future in the union. Every day that the war continues, the enormous cost of reconstruction increases. Ukraine will need extensive support which the authors argue should be handled by an EU agency that coordinates donors in a close dialogue with the Ukrainian government on goals and processes. Other important principles of reconstruction are that aid should arrive quickly, but with appropriate conditions; that the money sent to Ukraine is grants and not loans; and that the focus of the reconstruction is to create a sustainable economy with a clear green transition in terms of energy and infrastructure. Ukraine's entry into the EU should be used to prioritize institutional reforms that strengthen the reconstruction of all sections of Ukrainian society. The authors point out that a successful Ukraine in the EU will strengthen not only Ukraine's but also the entire EU's economic prosperity and security.

This chapter considers how the Russian economy has developed under the leadership of Putin and how it spills over to its neighbours in the CIS region. It stresses the importance of international oil prices as a determinant of policies and outcomes in Russia and highlights how this has impacted macroeconomic performance during Putin’s different terms in office. Although Russia is not an economic superpower globally, the size and importance of Russia for the CIS region is significant; thus, oil price changes also drive the economic development of non-fuel-exporting CIS countries to a significant degree.