Economist: Russia has benefited from sanctions
Russia can easily bypass Western sanctions, says an economist. Trade with emerging countries has even surpassed Western trade. The expert warns against further tightening sanctions.
According to Vienna-based trade economist Gabriel Felbermayr, Russia has benefited from Western sanctions. While trade with the West has "significantly decreased," the director of the Austrian Institute of Economic Research told "Der Spiegel," trade with emerging countries has increased. With China by 40 percent, with Turkey by 23 percent, and with India even by 140 percent.
"This trade has not just replaced Western trade, it has even exceeded it," said Felbermayr. "The net effect of sanctions and additional trade with China, Turkey, and India is positive for Russia." The involved countries have succeeded in improving their economic relations and reducing the costs of their trade, Felbermayr explained.
"Agreements between governments, cooperation of central banks, and learning effects of the involved companies" have contributed to this. "Our calculations show that Russia and its partners have facilitated their trade to an extent equivalent to a tariff reduction of four to five percentage points."
Felbermayr: West should not tighten sanctions further
The past two years have shown that one should not expect too much from sanctions, and they are rather a symbolic weapon, Felbermayr said. Russian oil and gas continue to reach the world market, just via different routes. Some European countries, including Slovakia, Hungary, and Austria, remain heavily dependent on Russian oil, he explained.
The expert warned Western countries against further tightening sanctions. This would "redirect trade flows even more," he told "Der Spiegel." Instead, the West should try to expand its own coalition and draw countries like Turkey to its side. "The trade with these countries should be facilitated," Felbermayr demanded, "for example through additional trade agreements."
According to Felbermayr, the goods Russia gains through trade with emerging countries are likely of lower quality than those from the West. Nevertheless, the Russian economy manages to maintain its war production.
Despite the attack on Ukraine, Russia has managed to increase its trade with emerging countries, notably China, Turkey, and India. This trade has not only replaced Western trade but has even surpassed it, according to economist Gabriel Felbermayr.
Further tightening of sanctions could redirect trade flows even more, Felbermayr cautions, suggesting instead that the West should focus on expanding its coalition and drawing countries like Turkey into its side to facilitate trade with them.
