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Russia's and the EU's Sanctions. Economic and Trade Effects, Compliance and the Way Forward

Author

Listed:
  • Oliver Fritz

    (WIFO)

  • Elisabeth Christen

    (WIFO)

  • Franz Sinabell

    (Austrian Institute of Economic Research)

  • Julian Hinz

    (Kiel Institute for the World Economy)

Abstract

This report summarises empirical facts about the economic impact of the EU sanctions against Russia and the Russian countersanctions, both implemented in the summer of 2014. The observed decline in trade volumes between the EU and Russia is not only due to the sanctions, but also by other economic factors, such as the downturn of the Russian economy, largely caused by the falling oil price and the ensuing ruble depreciation. Furthermore, empirical evidence suggests that European and Russian companies alike managed to partly divert trade flows to other international markets in response to the deteriorating trade relationships. Overall trade diversion, however, cannot nearly compensate for losses of EU exports to Russia and thus mitigate the economy-wide negative impacts. Finally, descriptive evidence and additional information seem to indicate that compliance with the sanctions was partly circumvented right after the implementation of the sanctions in 2014, in particular for agri-food goods via countries of the Eurasian Economic Union. Legal trade diversion through countries unaffected by the sanctions has also taken place. It is important to emphasise that this study does not assess the political costs or effectiveness of the sanctions, but merely analyses potential economic costs caused by all sanction measures in place.

Suggested Citation

  • Oliver Fritz & Elisabeth Christen & Franz Sinabell & Julian Hinz, 2017. "Russia's and the EU's Sanctions. Economic and Trade Effects, Compliance and the Way Forward," WIFO Studies, WIFO, number 60669, July.
  • Handle: RePEc:wfo:wstudy:60669
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    File URL: https://www.wifo.ac.at/wwa/pubid/60669
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    References listed on IDEAS

    as
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