EU Sanctions Against Russia: Top Economist Gabriel Felbermayr on Their Impact and Effectiveness
Turkey is achieving its objectives effectively amidst the imposed sanctions by Russia
In an interview with ntv.de, renowned economist Gabriel Felbermayr discusses the latest EU sanctions against Russia and their impact on the Kremlin. While the new measures may seem symbolic, Felbermayr explains they still pose a challenge for Russia and could lead to its further isolation.
ntv.de: Given the EU's 17th sanctions package, which expands restrictions on Russia's shadow fleet and adds more Russian companies to the list, do the new measures mark a significant shift in the efficacy of sanctions against Russia?
Felbermayr: The previous sanctions have not succeeded in changing the Kremlin's policies regarding the Ukraine conflict. However, each new tightening adds a layer of difficulty and expense for the Russian regime in its contravention of international law. The Kremlin remains isolated, driven towards partners like North Korea and Iran, which negatively impacts its economy and war financing.
What is the current extent of the sanctions' impact on Russia?
The EU's sanctions have significantly reduced trade with Russia although many products, including pharmaceuticals, remain exempt. While Russia has circumvented existing sanctions, it has suffered losses in the trade sector. Western trade barriers have been replaced by Russian trade relations with Iran, North Korea, China, and India.
In what ways has Russia restructured its trade relations?
Russia has expanded its financial market cooperation with other partners, such as central banks, insurance services, and payment systems. Its oil trade with India is now conducted in Chinese currency, and product standards have been harmonized or lowered for trade with other countries, such as military technology from North Korea.
Will the sanctions ultimately impact Russia's economy in the long run?
If Russia had not incurred costs or enjoyed benefits from circumventing the sanctions, it would have developed these trade relations earlier. While the sanctions can be mitigated, they still represent added costs for Russia. The new sanctions packages further increase these expenses. If Russian oil ends up flowing through pipelines to China, sanctions against the shadow fleet would prove ineffective.
What role does the US play in the current situation, and could additional US sanctions help bring Russia to the negotiating table?
The US, due to its geographical distance from Russia and the previous sanctions imposed after the annexation of Crimea in 2014, holds less trade leverage than the EU. Potential US sanctions may target digital services, rendering no further software updates for vital programs accessible. However, past experience has shown that such sanctions have had minimal impact.
Would secondary sanctions be necessary?
Secondary sanctions could be effective but would incur high costs for Europe, as they would require engagement with countries in Central Asia and Turkey. These nations, particularly Turkey, have not expressed interest in such cooperation. Economic gains are motivating them to maintain their current trade relationships with Russia.
People may question whether the West is achieving its goals with Russia sanctions or if there are alternative strategies. Felbermayr suggests that secondary sanctions in areas previously exempted for humanitarian reasons or new sanctions in vital sectors could be game-changers. However, he warns against using such measures due to potential negative consequences for smaller countries and increased risks for the EU.
Christina Lohner spoke with Gabriel Felbermayr
Source: ntv.de
- Russia
- Sanctions
- Attack on Ukraine
- EU
- The new EU sanctions, which target Russia's shadow fleet and more Russian companies, could lead to a significant shift in the effectiveness of the sanctions, as they add layers of difficulty and expenses for the Russian regime's contravention of international law, potentially driving Russia towards further isolation.
- The EU's sanctions have had a significant impact on Russia's economy, particularly in the trade sector, as many products remain exempt, and Western trade barriers have been replaced by Russian trade relations with countries like Iran, North Korea, China, and India, despite Russia's efforts to restructure and circumvent existing sanctions.
