Russian Energy and the Economy - Time to Move on?

 Is now the time that Russia needs to diversify its economy? 

Should Russia start to diversify its economy beyond natural resources? Currently, while the increased energy funds continue to fuel their adventurism for the time being, what happens when the dust settles? European nations are shifting towards no longer being reliant on Russian supplies and are diversifying their own energy needs, which includes importing from other resource rich nations as well as green energy supplication. The longer the war continues, Europe's resolve to move beyond Russian supplies will harden and endure.

As European nations maneuver to wean their energy supply off of Russia, this transition could still be years in the making. Recent legislation will limit any maritime importing of Russian energy; landlocked nations, such as Hungary, will still be allowed to import supplies through pipelines. However, the reliance and assumed energy exportation to the West can no longer be a given; they will either have to find new consumers or risk dealing with the fallout of lessened revenue. 

Although energy is continually supplied to Europe, that will soon dwindle. But as Europeans wean themselves off of Russian energy, Asian nations have taken the mantle of buying Russian crude, albeit at a discount. China and India are currently the main patrons of discounted Russian oil, while Turkey, Sri Lanka, and others seek to buy cheaper energy. Daily barrels of crude to Europe dropped by a little more than half a million over the past three months, while Asian nations have imported nearly as much in the same time period.

Inflation and high energy prices have given Russia the financial means to continue with its directive within Ukraine. Instead of suffering, Russia is able to take advantage of the situation by maintaining its coffers and prolonging the war. Moscow has no need to prematurely end its aggressive undertaking and is not weakened by any international sanctions.  If anything, Russia is emboldened by its campaign.

But once the war ends, Europe is committed to lessening its energy off of Russian supplies over the long term. The energy needs from the East will abate and the West will move towards new suppliers. Will Russia's economy suffer in the next few decades as their energy funds decrease as a result of nations moving beyond Moscow's supplies?

For too long, Russia has been able to utilize their energy resources to maintain their GDP and maintain a healthy foreign reserve fund. But what happens when energy prices decline to their normalization prior to the war? What happens when nations find new resources to stimulate their energy needs? Will Russia maintain its aggressiveness and continuation of conflict to keep energy prices high? 

Is now the time that Russia needs to diversify its economy and move beyond an over-reliance on energy? Some Gulf nations have started to modify their economies to reflect a global shift towards green energy and to reduce their dependence on fossil fuels.  Should Russia pursue the same approach not only to create a healthy economic ecosystem, but also in preparation of global shifts? If not, Russia could find itself combatting inner turmoil that reflects a spiraling economy, as well as regional destabilization as remittances shift downward. 

As energy prices reach a sustained pinnacle, now would be the time to allocate those funds towards new internal projects. Diversification will help sustain the economy once prices return to normal.