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The Impact of Economic Sanctions on Russia and its Six Greatest European Trade Partners

Author

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  • Morad Bali

    (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], UNECON - Saint-Petersburg State University of Economics (.))

Abstract

The Ukrainian crisis of November 2013 has led to the proclamation of independence of the Republic of Crimea in March 2014, and its attachment to Russia. This attachment, recognised by Russia and contested by a large number of Western countries, triggered an international crisis between the Russian Federation and the West (European Union, United States of America, et cetera). As a means of applying pressure on Russia, Western countries decided to launch a set of international sanctions. This paper's goal is to assess on sanctions effects on Russian and European economies. Thus, a country structural vector autoregressive (CSVAR) model is used in order to witness the impact of a sanction shock on considered economies. To our best knowledge, this paper is the first to use a CSVAR model to study the economic growth effects of anti-Russian sanctions on the considered economies. The economic conflict repercussions are revealed on the Euro Area (19 countries), on the six biggest trade partners of Russia as a lone entity, and finally on the six biggest trade partners of Russia separately. Results witness that the shock's effects are quite different whether a sum of GDP is used or not. In addition, results reveal that Russia is the most impacted by sanctions with a quarter-on-quarter GDP growth decrease of 3.25% after 3 quarters. Yet, European economies are also negatively impacted by sanctions, even if the impact is much weaker: -0.075% for Finland, -0.025% for France, -0.0125% for Germany, -0.012% for Italy, and -0.063% for Poland. As a consequence, we can say that the own coercive measures of European countries have a negative impact on their economies.

Suggested Citation

  • Morad Bali, 2018. "The Impact of Economic Sanctions on Russia and its Six Greatest European Trade Partners," Post-Print halshs-01918521, HAL.
    • Handle: RePEc:hal:journl:halshs-01918521
    DOI: 10.31085/1814-4802-2018-14-2-45-67
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01918521
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    References listed on IDEAS

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    Cited by:

    1. Bali, Morad & Rapelanoro, Nady, 2021. "How to simulate international economic sanctions: A multipurpose index modelling illustrated with EU sanctions against Russia," International Economics, Elsevier, vol. 168(C), pages 25-39.
    2. Livia Cebotari, 2021. "The impact of the Sanctions and Counter Sanctions on the Russian and EU Member States Economies," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 24(82), pages 56-66, December,.
    3. Zhentao Li & Tianzi Li, 2022. "Economic Sanctions and Regional Differences: Evidence from Sanctions on Russia," Sustainability, MDPI, vol. 14(10), pages 1-23, May.
    4. Livia CEBOTARI, 2021. "Trade Between Central And Eastern European Countries And The Russian Federation In The Context Of Sanctions And Counter-Sanctions," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 30(2), pages 435-447, December.

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    Keywords

    Vector autoregressive models; International crisis; Russian economy; European economies; Economic sanctions; Economie russe; Sanctions économiques; Economies européennes; Crise internationale; Crise ukrainienne;
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