Russia’s economic realignment leaves Europe in the cold.
As the eyes of the world watch negotiations over Kiev’s future, and the “special military operation” that was intended to last ten days nears the end of its fourth year, Russia is carefully deepening its economic ties outside of the West’s sphere of influence.
In this sense, the deal signed between the Russian-led Eurasian Economic Union (EAEU) and Indonesia—Southeast Asia’s largest economy, and the world’s 17th largest ($1.4 trillion)—on December 22nd is emblematic of an ongoing structural realignment pursued by Russia in the last year. Reached after two years of negotiations, the EAEU–Indonesia Free Trade Agreement (FTA) suits each nation’s economic interests well: Indonesia’s main exports are palm oil, coconut oil, coffee, and cocoa—products either heavily sanctioned by the West, or strictly regulated (like palm oil); while exports from the EAEU are coal, potassium fertilizer, wheat, and ferro-alloys—commodities necessary to support a still mostly agrarian economy.
But the FTA matters even more so because of what it signals: an attempt by Russia to turn away permanently from Europe and the West as its main trading partners.
European nations have relied on a steady supply of Russian gas for their energy, allowing the European Union quietly to outsource its energy demands and offset the requirements of a “net-zero” economy. Given the war in Ukraine, however, diplomatic pressure has forced the bloc’s hand to end all imports of Russian gas by the fall of 2027. A statement from the European Council made it clear that the move was intended to “end dependency on Russian energy following Russia’s weaponisation of gas supplies with significant effects on the European energy market.”
The impact on Europe’s economies may well be significant, as it will force the bloc to consider alternative, almost certainly more expensive, sources of energy. But the most interesting consequence of this move is that it is accelerating a process that has long been underway: deepening Russia’s ties to nations that are increasingly ambivalent toward, and even hostile to, the West.
The sanctions imposed following the invasion of February 2022 were intended, as all sanctions are, to weaken the Russian economy and force it to consider withdrawing from the region, avoiding a protracted war and increasing domestic pressure on Vladimir Putin. Almost all of the intended results backfired, at least in the short term: a debate hosted by Brookings in early 2024 asked why the Russian economy had proved more resilient than first expected; a war economy buoyed domestic production, with “the International Monetary Fund estimat[ing] that Russia’s gross domestic product actually increased by 3.6% in 2024—a higher growth rate than the United States and many other Western economies—due to massive war spending”; and Putin remains firmly in power, despite growing unrest and a number of failed terrorist attacks.
But regardless of the domestic impacts of sanctions, part of the reason they work (or are presumed to work) is that they are seen as a temporary interruption to a nation’s relationship with its major trading partners. Russia, on the other hand, seems to be taking these sanctions as a system change in its global standing; indeed, in mid-2024, Reuters reported that Russia was preparing for the West’s sanctions to last “decades.” Key to this (planned) resilience is the EAEU.
The EAEU began life as a post-Soviet trading bloc, facilitating trade whilst encouraging closer alignment between the federation members. This is a well-trod path: it was the explicit realpolitik idea behind Prussia’s Zollverein in the mid-19th century, and it was a founding principle of the EU. But now, the EAEU is pivoting to act as a facilitator to developing states, but principally those in Southeast Asia and South Asia. The deal with Indonesia is, therefore, merely the latest in a string of such moves in attempts to court what can be termed “non-aligned developing states.”
Vietnam, for example, is pursuing deeper relations with Russia over its food exports, principally tuna and other saltwater fish, which dovetails neatly with the Indonesian FTA, whilst avoiding conflicts of interest with Vietnam’s US-focused “tiger economy” strategy. This is a trading relationship that is already resilient and reliable: as reported by VietnamPlus, “bilateral trade grew strongly in 2024, reaching $4.6 billion, up 26% from the previous year. In the first eight months of 2025, trade volume rose to $3.3 billion, an increase of 5% year-on-year. Key projects are underway in energy, science, and technology.”
Likewise, Russia’s ongoing courting of Narendra Modi’s India, and the shared goal of increasing the value of their trade to $100 billion by 2030, is an attempt to deepen relations with states that are increasingly looking away from the West for economic opportunities and international leadership. In early December 2025, India hinted at intentions to reduce its trade deficit with Russia, an ambition which only suits the federation’s strategy of adapting to the impact of sanctions rather than evading them altogether. The key plank of this shared ambition, it seems, is a replication of the Indonesia FTA: a free-trade zone between the EAEU and India.
Russia is no longer trying to “wait out” Western pressure, but actively constructing a parallel economic geography in which Europe is peripheral, and the US is no longer considered hostile. 2025 marks a consolidation phase in this strategy, with fewer symbolic gestures and more legally embedded, long-term arrangements that could permanently alter the EU–Russia relationship—and not to the EU’s benefit.
