Brussels (Brussels Morning Newspaper) – A European Central Bank blog post stated that the European Union is progressively engaging in trade with autocratic regimes, providing funding for their often expansionist policies and possibly supporting an existential threat to the bloc.
The European Union has historically emphasized a values-driven approach to its economic policies, incorporating social justice, human rights, labor standards, and environmental criteria into its trade relations.
Why is the EU increasing trade with autocrats?
Trade with autocratic regimes increased steadily from 1999 until the bloc implemented widespread sanctions on Russia following its invasion of Ukraine, as explained in a blog post by ECB economists Claudia Marchini and Alexander Popov.
“Our findings show that, despite its pledges, the EU is indeed increasingly trading with countries run by autocrats and dictators,”
The blog, which does not reflect the ECB’s views, stated. “We see an interruption to this trend only recently.”
The shift occurs as the EU reassigns imports toward less democratic nations and as democratic governance quality declines among current trading partners.
How does trade with dictators threaten the EU?
“‘Trading with dictators’ amounts to generating profits for regimes that often have an explicit expansionary and militaristic agenda,”
The blog said.
“Ultimately, this can potentially become an existential challenge to the EU.”
Is China the main factor behind this trade trend?
However, the article dismisses the idea that increased trade with China is the main cause, noting that a similar pattern appears even when China is excluded. It also challenges the notion that democracy is declining, pointing out that the median country outside the bloc has actually become more democratic.
In addition to reputational and existential risks, the trend is worrisome because many of the essential resources for the bloc’s green transition are located in countries governed by autocrats, the blog noted.
“Our findings suggest a trade-off associated with the green transition,”
The blog said.
“Current low-carbon technologies rely on a range of rare earth materials that are typically found in countries with autocratic regimes.”
