EU ambassador to Russia: Moscow’s self-isolation will harm both European and Russian economies

Addressing a conference of the Lithuanian Confederation of Industrialists, Lithuania’s former foreign minister acknowledged that talks on closer integration between the EU and Russia are increasingly becoming a distant prospect.

“Indeed, there are an increasing number of worrying signals that Russia is trying to reverse its existing level of economic integration with the EU and other advanced economies: Protectionism is on the rise, self-reliance is becoming an objective per se, economic policies focus on “import substitution” and one gets the impression that Russia is increasingly seeking to single-handedly reverse globalization by insulating itself from the rest of the world,” Ušackas said.

“Reversing economic integration with the EU will, no doubt, harm the European economy. It is also unlikely to help the Russian economy which, to use the words of the Russian Minister of Economic Development Alexey Ulyukaev is “oscillating between stagnation and recession,” the diplomat said.

Usackas underlined that “it is hard to find success stories among the countries that went for import substitution and even a country as large as China has based its extraordinarily successful development strategy on the export of manufactured products and its increasingly deep and complex integration into global production value chains.”

According to Ušackas, the negative impact of Russia’s self-isolation is especially evident in the Russian region of Kaliningrad, wedged between Lithuania and Poland, where GDP per capita is a fifth lower than in Lithuania, and the level of direct foreign investments per capita in the Russian region is five times lower than in Lithuania.

Speaking about the situation in Lithuania, the diplomat said that economic growth in Lithuania is among the fastest in the EU and the Baltic country’s eurozone membership would provide “additional stability, security and will promote investment and growth.”

He added, however, that following the currency change, the positive impulse would be weaker than from Lithuania’s EU membership and therefore further implementation of structural reforms would be needed for the country’s progress.