Russia

The Russian Federation covers an area of over 17 million km², stretching from Eastern Europe to Northern Asia. It shares borders with 14 countries, including China, Mongolia, Kazakhstan, Finland, and Norway. The country is bordered by the Baltic Sea to the west, the Black Sea to the southwest, and the Pacific Ocean to the east. Russia’s population in 2023 is estimated at 146 million people, with the capital, Moscow, home to over 12 million residents.

Economic Overview

Russia’s Gross Domestic Product (GDP) is estimated at approximately $2 trillion in 2023, with modest growth of +1.5%, reflecting a period of economic adaptation to international sanctions imposed due to the war in Ukraine. The GDP per capita stands at $13,500. The Russian economy heavily depends on the export of natural resources, particularly gas and oil, which account for about 45% of the state budget revenues.

Russia’s exports in 2023 exceeded $400 billion, with its main trading partners being China, India, and Turkey—countries that have expanded trade relations with Moscow following its disengagement from Western markets. Imports, however, have dropped significantly from pre-war levels, partly due to sanctions, standing at $290 billion. Inflation reached 8% in December 2023, a decrease from 2022 but still high due to disruptions in supply chains. The unemployment rate is around 5%, with industries such as manufacturing and IT suffering setbacks, while the energy and defense sectors remain strong.

Forecasts

Russia’s economy is expected to continue growing in 2024, but at a slower pace (+1.2%). Global sanctions, although partially circumvented through alternative trade routes in Asia, still weigh on the country’s ability to access advanced technology and foreign capital. However, Russia’s economic resilience is supported by its energy sector and increasing integration with emerging economies. Inflation is projected to decline slightly, stabilizing around 6-7%.

Country Risk

Russia presents a high country risk due to geopolitical tensions, economic sanctions, and heavy dependence on sectors vulnerable to global dynamics, such as energy. The political landscape remains stable under Vladimir Putin’s leadership, but growing international pressure and internal uncertainties, driven by the costs of the war, pose long-term threats.

Foreign Direct Investments (FDI)

FDI inflows into Russia have drastically declined since 2022 due to Western sanctions and international isolation. Investments from Europe and the United States have virtually ceased, while China and other Asian economies are gradually increasing their presence in infrastructure, energy, and technology sectors.

Geopolitical Analysis

Role in Eurasia and the World

Russia is a Eurasian power with a central geopolitical position that grants it a key role in major global dynamics. After the dissolution of the Soviet Union, Moscow sought to maintain its sphere of influence in the former Soviet space, engaging with countries like Belarus, Kazakhstan, and Armenia through the Eurasian Economic Union (EAEU) and other regional alliances such as the Collective Security Treaty Organization (CSTO). However, the conflict in Ukraine has weakened relations with some former Soviet republics, pushing countries like Georgia and Ukraine closer to the West.

Despite political and economic isolation from the West, Russia has continued to strengthen ties with China, deepening its strategic partnership in opposition to Western dominance. Relations with China, particularly in the energy sector, have become increasingly crucial, with Moscow exporting gas and oil to the Asian giant to compensate for the loss of European markets.

Relations with the West and NATO

Russia remains in open conflict with the West following its invasion of Ukraine in 2022. Relations with NATO are at historic lows, with Moscow viewing the Alliance’s expansion into Eastern Europe as an existential threat. This sentiment has been reinforced by Finland and Sweden joining NATO, further extending the NATO-Russia border. Russia seeks to counter NATO by developing new alliances and bolstering its military capabilities, including nuclear arsenals and air defense systems.

Energy Relations and the “Gas War”

Energy resources are one of Russia’s main tools of geopolitical influence. Before the war in Ukraine, Russian natural gas accounted for 40% of Europe’s supply. However, following sanctions and the blockade of Russian exports to Europe, Moscow has accelerated its pivot toward Asian markets, particularly China and India. This shift has altered global energy dynamics, reducing Russia’s direct influence over Europe while maintaining its status as a major player in the global energy sector.

War in Ukraine and Geopolitical Impacts

The conflict in Ukraine has reshaped the European and global geopolitical order. Russia now faces political and economic isolation from the West, with sanctions affecting key sectors such as technology, finance, and trade. The prolonged war is straining Moscow’s military and financial resources, and the growing number of casualties is creating discontent within the Russian population.

At the same time, the war has strengthened Russia’s ties with countries not aligned with the West, including Iran, Venezuela, and some African nations, which view Moscow as a counterbalance to Western hegemony.