Contrary to the interpretation in Christopher Hartwell’s (CASE – Center for Social and Economic Research) and my recent article “Why EU Sanctions on Russia Are Overrated but Still Needed” on the website of the “Atlantic Council” (http://www.atlanticcouncil.org/blogs/new-atlanticist/why-eu-sanctions-on-russia-and-their-possible-cancellation-are-overrated-but-still-needed, reposted in Russian by “Novoe vremia,” “Obozrevatel.ua,” and “inoSMI.RU”), Kholodilin and Netsunaev come in their DIW paper “Crimea and Punishment: The Impact of Sanctions on Russian and European Economies,” at https://www.diw.de/sixcms/detail.php?id=diw_01.c.530649.de, to the conclusion that the Western sanctions had a high independent impact on the Russian economy.
The DIW researchers seem to argue that the sanctions did not only compound the effects of the structural weaknesses of the Russian economy in combination with the oil price slump as well as decline of foreign trust into the sanity of the Kremlin and potential of the Russian market. Actually, if we believe Kholodilin’s and Netsunaev’s findings, the sanctions themselves hit the Russian economy quite hard, and were not just an intervening factor, in the decline of the Russian economy since 2014. Their most important sentences are: “The counterfactual analysis suggests that the direct eﬀect of sanctions is much more pronounced for Russian economy than for the aggregate euro area. On average, Russia lost about 2 percentage points of the GDP quarter-on-quarter growth due to restrictions on international trade and ﬁnancial transactions. If one translates that into the growth over the last two years of the sanctions war, the economic eﬀect is very pronounced. On the contrary, we observe rather negligible eﬀects of sanctions for the euro area.”
While I am not economist, this appears counter-intuitive to me. First, the sectoral sanctions did not substantially diminish the freedom of movement for Russian companies internationally, as they only concerned certain selected financial instruments and quite specific technologies. Second, in 2009-2010, Russia’s economy was hit hard by the global financial crisis and its various repercussions (esp. on oil prices). There were no sanctions in place back then, yet Russia’s economic slump was deeper than in 2014-2015. Comments/corrections welcome esp. from economists.