International Economics

<< N°162

  N°162  
Issue Q2 2020  
Collateral damage: The Western sanctions on Russia and the evaluation of implications for Russia’s post-communist neighbourhood  
Vugar Bayramov
Nabi Rustamli
Gulnara Abbas
 
This paper reviews the Western sanctions on Russia and endeavours to evaluate the medium-term implications of these sanctions for post-communist neighbours of Russia. Growth spillovers are examined via VAR model. This model reveals that the Western sanctions against Russia have significant impact on Russia’s post-communist neighbours: the accumulated response of CIS GDP to a 1% shock to Russian GDP is −0.72, while the accumulated response of CEE GDP is −0.22. Export, remittance and FDI links of these countries with Russia are examined using panel regressions. Almost all CEE countries are less integrated with Russia compared to CIS countries. Oil and gas exporting CIS countries are not directly dependent on Russia. The remaining CIS countries are the most vulnerable group, and the remittance channel retains its importance for their economies. Costs of Western sanctions for the CIS countries can be minimised by integrating these implications to the design and implementation process of sanctions. F51
Abstract

   
Western sanctions ; Russia ; CIS ; CEE countries ; Baltic states ; Spillover channels ; Keywords
C22 ; C23 ; F15 ; F24 ; F44 ; JEL classification
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