You can smuggle but you can’t hide: Sanction evasion during the Ukraine crisis

This paper investigates whether sanctions imposed in the wake of the Ukraine crisis by Western countries and Russia have been evaded by analyzing monthly product-level trade patterns. Consolidating different methods from the literature related to the detection of illicit trade, I find that goods facing sanctions imposed by the Russian government in particular have most likely been evaded. While the detected amounts do not question the general effectiveness of the sanctions, they are non-negligible. Roughly US$482 million, or 8.56% of the total estimated trade loss of $5.633 billion from the Russian sanctions, may have been smuggled either directly or through its neighboring countries. As more than half of the estimated evasion involves trade flows through Belarus and Kazakhstan, the findings highlight the importance of trade policy coordination with third countries, especially if these are part of the same customs union.