Litexco Report (Part II) The struggle between the European Union and the United States for dominance of the "New Europe" and Russia

The war in Iraq has caused an unwanted and deep rift between some members of the European Union and the United States. Their shared interests suggest that time will heal the gap and facilitate a consensus on the model of international relations between the two economic blocs.

Of the countries that make up the "New Europe", Poland is the country that has received the most investment from the EU and the United States.

Following the Iraq conflict, the countries of the so-called "New Europe" (EU candidates in 2004 and 2007) quickly sided with the Americans, and the ambition of both the United States and the European Union to gain economic and commercial control of this new market of 75 million inhabitants, which has been gradually integrating into the free market system since the fall of the Berlin Wall in 1989, has been brought to the forefront.

Russia, with its 145 million people and substantial energy and natural resources, is another of the new markets in the former planned economy zone that is attractive for economic conquest. Judging by its actions in recent years, the United States does not appear to want to lose the trade battle in Russia and, consequently, repeat the negative outcome it experienced with the countries of the "New Europe," which are comfortably dominated economically by European companies.

The struggle between the US and the European Union

In 2002, the European Union was the leading investor in the Russian Federation, with nearly €1.900 billion, far surpassing the just over €600 million invested by American companies. However, if instead of focusing on the most recent year, the analysis of net direct investment in Russia is extended to a period dating back to 1995, the balance of the economic battle between the United States and the European Union for dominance of the Russian market appears much more balanced. During this eight-year period, European companies invested just over €11.100 billion, representing 39% of the corporate resources received by Russia, while American companies invested approximately €9.600 billion, or 33,5% of total investment in the Russian Federation.

Taking into account the resources provided by Western governments and other types of resources such as the purchase of securities, shares, government-backed loans, and international intercompany transfers, the differences are more pronounced in favor of the European Union. Its governments have been more active in promoting investment projects in Russia to foster its economic and social development. Thus, the total investment figures indicate that European Union countries have allocated almost €41.800 billion, 48% of the economic flow received by Russia, while the United States has invested just over €16.300 billion, approximately 16% of the investments destined for Russia.

In terms of trade, European Union companies are far more active than their North American counterparts. Sales of Russian products to the EU reached €40.000 billion, representing approximately 37% of Russia's total exports. As for purchases made by Russian citizens, those from the European Union totaled €18.300 billion, accounting for 39% of Russian imports.

Conversely, the results obtained by the commercial activities of North American companies are far from the European figures. Thus, they sold goods worth 4 million euros, representing 8,5% of Russia's imports, while Russian exports to the other side of the Atlantic amounted to 3.000 billion euros, or 2,8% of total Russian-made sales.

In the energy sector, Russia possesses significant reserves (gas and oil) and natural resources (metals) that account for approximately 70% of its exports. This added value has been a determining factor in the foreign policy of President Vladimir Putin's government, which, aware of this national advantage, has simultaneously initiated "energy dialogue" with the United States federal government and the European Union. This strategy of engaging equally with both economic giants has allowed President Putin to seek solutions for extracting oil and gas in substantial volumes and for constructing pipelines, essential infrastructure for marketing these energy resources.

In the battle for oil, North American multinationals have launched themselves headlong into the Russian market, while European multinationals such as Agip, TotalFina-Elf, and Repsol-YPF have been less decisive. The European exception is the British company BP, which, either alone or in alliance with its North American counterparts, is pursuing a strategy of penetrating and controlling extraction and pipeline construction in Russia.

The battle for dominance of the "New Europe"

It is clear that there is an undeclared competition between the United States and the European Union to gain the greatest possible influence over the Russian Federation. This covert race represents a repetition of the process that began in 1989, after the fall of the Berlin Wall, in the territory comprising the countries of Central and Eastern Europe (CECES), formerly the political core of Eastern Europe, where investment data and trade figures accumulated in recent years indicate that the United States has lost the battle.

In the market of the future members of the European Union enlargement, companies from the main European countries (excluding Spain) have seen from the first moment of the opening of their markets a field of business opportunities and a strategic platform to access new markets (the Middle East, the Balkans, Russia and the former federations of the defunct Soviet Union).

Thus, the group of countries known as "New Europe," with 75 million people, and Russia, the largest of the former Soviet republics, with 145 million inhabitants, form a privileged and highly attractive market for both the United States and the European Union. This has led to an economically aggressive race to achieve a favorable level of influence that would facilitate preferential trade, economic, and strategic relations.