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Sanctions and countersanctions − effects on economy, trade and finance

Iikka Korhonen, Heli Simola and Laura Solanko

Focus on European Economic Integration, 2018, issue Q3-18, 68-76

Abstract: In this paper we review the history and current state of sanctions imposed on Russian entities by the EU, the U.S.A. and others, as well as Russia’s countersanctions. We try to assess what kind of economic effects these measures have had, although any such analysis is bound to be confounded by the large drop in the price of oil that occurred in 2014 and 2015. We find that sanctions have had a clear, negative effect on the Russian economy, although the decline in the price of oil affected Russian GDP much more strongly in 2014−2016. The U.S. and EU sanctions have worked e.g. by restricting Russian banks’ access to capital. EU countries’ trade with Russia and their market share in Russia have declined, but this is partly a continuation of a long-term trend. Russia’s countersanctions have e.g. affected exports of foodstuffs from the EU, but macroeconomic effects in the EU are very small.

Keywords: Russia; sanctions (search for similar items in EconPapers)
JEL-codes: F51 (search for similar items in EconPapers)
Date: 2018
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