Sanctions on Russia

Publication Category: Trade

Sanctions on trade target critical goods, technologies, and supply chains to disrupt Russia’s economic activity and limit access to resources that support its war effort. These measures aim to raise the cost of aggression by restricting exports to and imports from Russia.

  • Long-Run Consequences of Sanctions on Russia

    Long-Run Consequences of Sanctions on Russia

    This paper uses a theoretical model to understand the long-term consequences of sustained trade sanctions of the scale imposed on Russia after the full-scale invasion of Ukraine in 2022. When capital is allowed to adjust, long-run consumption declines are larger, 1.4 times larger for Russia and 2.2 times larger for Eastern Europe, against the intuition that long-run effects are milder than short-run effects due to greater adjustment opportunities. The reason is that for capital, adjustment opportunities amplify, rather than dampen, the initial effects. The losses are largest for Russia and Eastern Europe, and milder for the United States and other Western countries. Neutral regions like China and the rest of the world experience small gains. Real consumption and gross national expenditures (GNE) move roughly in line with one another for each region, reflecting the fact that the shock does not dramatically move either the ratio of nominal investment to consumption, nor the relative price of consumption to investment goods. The shock also tends to reduce the capital stock in the directly affected regions, since the disruption in trade raises the price of investment goods relative to labor. For a standard value of trade elasticity, Russian long-run consumption falls by around 8.5%, Eastern European consumption falls by around 2%, Western countries’ consumption falls by around 0.3%, and US consumption is almost unaffected.

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  • Trade Sanctions Against Russia: Stylized Facts

    Trade Sanctions Against Russia: Stylized Facts

    The authors compile a unique, product-level dataset capturing trade sanctions directed at Russia in the aftermath of early 2022. By merging these sanctions data with import information, they highlight four main insights into how embargoes reshaped Russia’s trade flows.

    First, they note that about one-third of what Russia imported in 2021 was eventually subjected to export prohibitions. In addition, nearly two-thirds of the six-digit product lines Russia had historically imported were sanctioned by at least one of the major implementing countries or trade blocs. Although many of these restrictions took effect in the early stages of the conflict, extra measures introduced in the subsequent months broadened their reach from about 20 percent to 33 percent of Russia’s imports by mid-2024.

    Second, the measures strongly target cutting-edge technologies but do not cover all advanced items. In the three principal high-tech categories—such as machinery, vehicles, and electronics—roughly half of each group’s imports ended up sanctioned. At the same time, basic commodities, consumer goods, and intermediate product categories include sanctioned goods, indicating that bans reach beyond the most sophisticated technologies.

    Third, the study finds that Germany plays an especially large part, banning over twenty billion dollars’ worth of its 2021 exports. Overall, the European Union imposed prohibitions on around two-thirds of its goods shipped to Russia, representing more than 70 percent of all banned flows in the report’s sample. Nearly every country that formerly counted Russia as a sizable destination has already cut off the bulk of those sales; consequently, their capacity to escalate sanctions further seems more constrained.

    Finally, the authors discover relatively uneven coordination among sanctioning countries. While certain trade blocs align strongly in their product lists, many targeted items remain restricted by only a subset of countries, and there is limited overlap across many pairs of sanctioning states. This partial coordination implies that Russia may exploit inconsistencies between countries’ measures by shifting purchases. The authors emphasize that, although powerful, these sanctions do not uniformly seal off every critical import category, and advanced cooperation among sanctioning states would be necessary to prevent rerouting or substitution.

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  • Decision to Leave: Economic Sanctions and Intermediated Trade

    Decision to Leave: Economic Sanctions and Intermediated Trade

    December 2024

    This paper documents a substantial change in the composition, routing and unit values of Russia’s imports in the aftermath of comprehensive trade sanctions imposed on Russia. Analysis of transaction-level trade data shows a steep decline in goods under Western trademarks — but also a rapid rise in rerouted shipments through neutral countries. These indirect routes often involved entirely new combinations of products, brands, and exporters.

    This workaround was most pronounced for high-stakes goods like industrial equipment and dual-use technologies, offsetting about 20% of the original drop. In parallel, Russian importers increasingly turned to neutral-brand substitutes, recovering an additional 23–40% of lost trade.

    Still, the overall picture is clear: Russia is getting fewer of the Western goods it wants — and paying more. Prices for Western-branded products rose as much as 35 percentage points, especially when sellers had publicly pledged to exit the Russian market.

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  • Sanctions and Russian online prices

    Sanctions and Russian online prices

    The sanctions imposed following Russia’s invasion of Ukraine have had a pronounced effect on consumer prices and product availability within the country. This study employs daily online price data to bypass potential distortions in official statistics, providing a granular analysis of how trade and financial restrictions have influenced Russian markets.

    The findings indicate a notable rise in inflation, with average consumer prices increasing by approximately 11.7%, largely driven by fluctuations in the exchange rate and interest rates. Certain product categories, particularly those with high exposure to imports or foreign supply chains, experienced stronger disruptions. These included food items such as meat, fish, and beverages, along with major and small household appliances, spare parts for personal vehicles, and materials used for dwelling repair and maintenance, all of which exhibited large increases in excess inflation or supply volatility. The interplay between financial sanctions and trade restrictions played a crucial role in these outcomes, with the former causing  significant shifts in product availability in fifteen product categories and the latter – in six.

    Beyond price hikes, sanctions also contributed to reduced product availability across various sectors. The financial constraints imposed on Russian firms compromised supply chains and limited access to critical goods. Although the Russian government and retailers have attempted to adapt by encouraging domestic substitution and reorganizing supply chains, the data indicates that product availability in many categories remains below pre-invasion levels, suggesting that these measures have only partially offset the disruptions.

    In the study, the central role in transmitting the effects of sanctions to consumer prices is attributed to exchange rates. The depreciation of the ruble, compounded by financial restrictions, has led to rising costs for imported goods, further amplifying inflationary pressures. Interest rate hikes, implemented to stabilize the currency, have added another layer of complexity, influencing both consumer purchasing power and market stability.

    Authors show that, while Russia has adapted by adjusting trade relationships and emphasizing domestic alternatives, the impact on price stability and product availability remains significant. These findings provide valuable insights into the economic mechanics of sanctions, shedding light on how financial and trade restrictions interact to shape market outcomes.

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  • The (In)effectiveness of Sanctions: An Attempt at Evaluating the Effectiveness of the Sanction Policy Against Russia

    The (In)effectiveness of Sanctions: An Attempt at Evaluating the Effectiveness of the Sanction Policy Against Russia

    The paper seeks to evaluate the effectiveness of sanctions imposed by the European Union, the United States, and their allies on Russia in response to the 2022 invasion of Ukraine. Specifically, it examines how these measures have impacted Russia’s economy and ability to sustain military operations. This question is particularly challenging due to the lack of reliable data from Russia and the complexity of measuring the multifaceted effects of sanctions.

    To address this, the authors analyze statistical data from Russian sources, media reports, and international publications. They assess economic indicators such as trade volumes, budget revenues, and sector-specific impacts while examining how sanctions have influenced Russia’s adaptability and resilience. The methodology focuses on both immediate and long-term effects, considering geopolitical, economic, and institutional responses to sanctions.

    The findings highlight mixed results. On one hand, sanctions have constrained Russia’s access to international financial systems, reduced imports from the European Union, and placed significant pressure on sectors like automotive, technology, and metallurgy. However, the Russian economy has displayed surprising resilience, driven largely by high global energy prices, reorientation of trade toward Asia, and government interventions like currency controls and support for key industries. Despite this short-term stability, the authors suggest that the sanctions could lead to long-term economic isolation, reduced investment, and eventual structural weaknesses. They conclude that while sanctions have not yet achieved their primary goal of halting Russian military aggression, although they have constrained certain aspects of the Russian economy. The authors highlight that the long-term effectiveness of sanctions depends on sustained pressure, better coordination among sanctioning countries, and the gradual erosion of Russia’s economic stability through reduced energy revenues and investment flows. They conclude that the sanctions have pushed Russia toward increased economic isolation and a “Sovietization” of its economy, but their ultimate success in achieving political goals remains uncertain.

    The policy implications of these findings suggest that sanctions need to be sustained over the long term and continuously adapted to target Russia’s economic vulnerabilities more effectively. This includes reducing European dependency on Russian energy imports and tightening measures to prevent circumvention of sanctions. While short-term impacts may be limited, a prolonged and comprehensive sanctions regime could strain Russia’s economy, especially as global energy prices normalize, potentially leading to deeper economic and political consequences.

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  • Trade Sanctions against Russia and their WTO Consistency: Focusing on Justification under National Security Exceptions

    Trade Sanctions against Russia and their WTO Consistency: Focusing on Justification under National Security Exceptions

    The legal implications of sanctions against Russia within the framework of WTO agreements remain a contested issue, with some sanctioning states arguing that their measures are justified under the security exceptions of international trade law, and some are still to lay out their legal justification. This study examines how different countries’ sanctions interact with WTO commitments, evaluating whether such restrictions can be legally sustained under the organization’s rules. The article supplements this broad framing with a concise, measure-by-measure appraisal (reviewing import bans, MFN-treatment suspensions, and other tools), to see whether each specific sanction meets the WTO’s necessity standard.

    The paper differentiates among various groups of states involved in sanctioning Russia – those directly engaged in the conflict, close NATO allies, neighboring states, and more geographically distant nations. For Ukraine, the study finds that the war itself provides clear grounds for invoking national security exceptions, making sanctions legally defensible under WTO provisions. For NATO member states, the justification under WTO security exceptions is still less clear-cut and becomes plausible only when they can point to a specific, concrete security interest, such as geographic proximity or direct operational involvement, rather than relying on alliance membership alone. However, for more distant countries with no direct security stake in the conflict, the argument for applying the security exception becomes increasingly tenuous. The concern is that broad reliance on security justifications could undermine WTO principles, potentially setting a precedent for trade restrictions unrelated to genuine security threats.

    For neighboring countries, particularly those sharing borders with Russia, the study suggests that WTO security exceptions are more credibly invoked. The proximity to the conflict poses direct risks, reinforcing claims that economic measures are essential for national security. The paper also highlights that certain targeted measures, such as military-relevant goods export controls, may be defensible not only due to proximity but also because the international community has formally recognised the invasion as a threat to international peace and security. However, the analysis also highlights the more general challenge of maintaining consistency in WTO rulings: determining what constitutes a legitimate security interest without opening the door to arbitrary protectionist measures. 

    The paper explores the complexity of balancing state sovereignty with multilateral trade obligations. While WTO rules allow for exceptions based on security concerns, their application requires careful scrutiny to prevent the erosion of international trade norms. The legal landscape remains uncertain, making it imperative for policymakers to ensure that sanctions serve both strategic and legal objectives without setting destabilizing precedents in global trade governance.

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  • On the design of effective sanctions: the case of bans on exports to Russia

    On the design of effective sanctions: the case of bans on exports to Russia

    The article investigates how specifically targeted export bans can significantly undermine Russia’s economic performance and defense capacity, serving as a powerful complement to conventional sanctions like asset freezes or energy embargoes. Using an economic model, the authors analyze over 5,000 product lines at the six-digit HS level, assessing each item’s strategic importance by combining data on Russia’s import volumes with the degree to which a coalition of sanctioning countries dominates the relevant markets. In many categories, such as precision machinery and advanced industrial inputs, countries like those in the European Union or the United States control the majority of Russia’s supply.

    According to the article’s detailed assessment, blocking Russia from acquiring high-tech goods, specialized machinery, and complex industrial components places a pronounced strain on its arms production and broader industrial base. These items, particularly advanced electronics and capital goods used in the fabrication of modern military hardware, are difficult to substitute, and their absence can severely disrupt the functioning and modernization of production lines. Russia may temporarily rely on existing stockpiles or installed equipment, but without continued access to new machines and spare parts, future upgrades or expansions become increasingly difficult, leading to bottlenecks and diminished output.

    A key insight is that certain export bans impose economic costs on Russia that far outweigh any losses to the sanctioning states, sometimes by a factor of 100. The impact grows more powerful when countries act in coordination. A broad coalition spanning the EU, the US, and other partners can increase pressure on Russia by up to 80 percent compared to uncoordinated efforts, without significantly raising costs to themselves. Even modest overlaps in market share across sanctioning countries can cause severe shortfalls in essential imports, forcing Russia to delay or abandon procurement, rely on slower workarounds, or accept lower-quality substitutes.

    While some current measures already affect about 20 percent of Russia’s imports, the authors argue that many strategically important product lines remain unsanctioned. They stress that targeting items in which sanctioning countries hold dominant positions, especially advanced technologies and capital goods, can create lasting disarray across manufacturing, infrastructure, and the high-tech sectors of Russia’s economy.

    Although the paper’s framework is primarily economic, it recognizes that export controls are also used to curb Russia’s defense modernization and restrict energy-sector capabilities. It also notes enforcement challenges, including smuggling, parallel imports, and retaliation. Still, the central message is clear: sanctions are most effective when they target chokepoints where Russia depends on a narrow set of foreign suppliers, and when likeminded countries coordinate their restrictions. This strategy, if implemented precisely, can simultaneously maintain coalition unity and aggravate Russia’s long-term economic and technological vulnerabilities.

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  • The EU’s Autonomous Sanctions Against Russia in 2014 Versus 2022: How Does the Bureaucratic Politics Model Bring in the Institutional ‘Balance of Power’ Within the EU?

    The EU’s Autonomous Sanctions Against Russia in 2014 Versus 2022: How Does the Bureaucratic Politics Model Bring in the Institutional ‘Balance of Power’ Within the EU?

    The European Union’s sanctions response to Russia in 2022 reflected a fundamental shift in the way the bloc engages with economic statecraft. Compared to the limited and fragmented measures imposed after the annexation of Crimea in 2014, the sanctions following the full-scale invasion of Ukraine were stronger, more coordinated, and more sustained. This paper examines the political and institutional forces within the EU that shaped these differences, focusing on the evolving role of European bureaucracies in driving foreign policy decisions.

    In 2014, sanctions against Russia were marked by hesitation and internal divisions. The European Council, dominated by the varied national interests of its member states, struggled to impose meaningful restrictions. Certain countries with stronger economic ties to Russia acted as a brake on harsher measures, while the European Commission played a relatively passive role, allowing national governments to set the pace. As a result, the sanctions were limited in scope and enforcement, failing to exert significant economic pressure.

    By contrast, the EU’s 2022 response revealed a more centralized and decisive approach. The European Commission played a more proactive role in shaping sanctions policy, advancing proposals and applying pressure on hesitant member states through negotiation and strategic framing, rather than deferring to national governments. Member states that had previously resisted tough sanctions found themselves constrained by the momentum toward unity, as the scale of Russian aggression made inaction politically untenable. The paper argues that this shift in institutional dynamics was instrumental in enabling a more cohesive and sustained sanctions campaign, highlighting that effectiveness arises when power is shared rather than concentrated in a single EU body.

    The study highlights that the EU’s ability to impose effective economic restrictions depends not only on external geopolitical events but also on its internal power structure. The increased role of supranational institutions in 2022 enabled the EU to act with greater speed and cohesion, demonstrating how bureaucratic evolution can directly shape the effectiveness of sanctions. Whether this marks a long-term transformation in EU foreign policy or a response specific to the crisis at hand remains an open question, but the findings suggest that institutional alignment plays a critical role in determining the bloc’s capacity to respond to international conflicts.

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  • Economic Sanctions: Evolution, Consequences, and Challenges

    Economic Sanctions: Evolution, Consequences, and Challenges

    The authors describe the 2022 sanctions against Russia, triggered by the invasion of Ukraine, as notably broad and powerful – the largest such measures ever targeted at a substantial economic power. From their perspective, this coordinated response stands apart from previous sanction episodes in both scale and international reach. They point out that, for the first time, a large cluster of World Trade Organization members revoked privileges such as Russia’s most favored nation status, relying on WTO rules that permit trade barriers in cases of essential security threats.

    These punitive steps extend beyond traditional restrictions on trade. They include cutting off Russia’s access to global credit, freezing important assets, and limiting the travel of prominent individuals and business figures. There is also a concerted effort to halt the flow of goods with potential military uses, all in an attempt to weaken Russia’s capacity to continue its campaign in Ukraine.

    The authors stress that even the most vigorous sanctions often face challenges in practice. Some countries may not strictly enforce the measures, while others could see chances to make up for lost trade or investment. With Russia’s economy being large enough to matter to global markets, concerns arise that major third parties, such as China or India, might fill the gaps, undercutting the intended effects. Because of this, sanctioning nations, especially the United States, have threatened additional penalties on outside actors if they help Russia bypass the restrictions.

    Whether these measures will definitely change Russia’s actions remains an open question. In the authors’ view, the sanctions are likely to impose lasting economic costs, both on Russia and on the nations applying or complying with the restrictions. Despite these burdens, there is no guarantee that they will directly persuade Russia to halt its military activities. However, constraining Russia’s ability to finance and replenish its armed forces could indirectly influence the conflict’s course, potentially affecting developments on the battlefield.

    In the bigger picture, the Russia-Ukraine case highlights how sanctions have evolved into a tool employed by a wide network of countries for urgent security concerns, rather than strictly economic disputes. It also illustrates how modern sanctions can ripple well beyond the immediate target, creating dilemmas for allies, partners, and global institutions. The authors emphasize that this situation may further encourage major powers to reduce their vulnerability to foreign pressure, possibly spurring new financial and commercial alignments and challenging longstanding global trade rules.

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  • Revisiting the effectiveness of economic sanctions in the context of Russia’s invasion of Ukraine

    Revisiting the effectiveness of economic sanctions in the context of Russia’s invasion of Ukraine

    The paper explores the effectiveness of economic sanctions imposed on Russia in response to its invasion of Ukraine, utilizing a framework of five dimensions: compliance, subversion, deterrence, international symbolism, and domestic symbolism. The primary research question is whether these sanctions have achieved their stated and implied goals, such as curbing Russian aggression and influencing global perceptions.

    The authors analyze the sanctions’ outcomes across these dimensions by reviewing economic, political, and social impacts on Russia since the sanctions began. They focus on changes in Russian behavior, domestic and international perceptions, and the implications for global geopolitics. The methodology includes qualitatively evaluating economic indicators, political stability, and public opinion data.

    The analysis suggests that sanctions have been partially effective in terms of compliance, as they have contributed to Russia’s adjustment of its military strategy but have not halted its aggression. Subversion, the goal of destabilizing or changing the Russian regime, has so far been largely unsuccessful, as Putin remains in power and the Russian political system continues to function. However, sanctions so far appear effective in deterrence, discouraging further territorial expansion beyond Ukraine and signaling to other potential aggressors, such as China, that similar actions would lead to severe economic repercussions.

    Beyond direct strategic outcomes, the study finds that sanctions have been effective in the realm of international symbolism, reinforcing Western unity and demonstrating solidarity with Ukraine. They have also served as a tool of domestic symbolism, enabling policymakers in sanctioning countries to show firm action against Russian aggression, which has generally been well-received by their domestic audiences.

    While the paper acknowledges that sanctions have imposed significant economic costs on Russia, it also highlights the limitations of these measures in compelling immediate policy changes. Given the long-term nature of economic pressure, the authors argue that future assessments of sanctions should take a more interdisciplinary approach to understand their evolving impact.

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