Spell turned against the sorcerer: ‘surprising’ effect of sanctions against Russia

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The policy of economic sanctions imposed against Russia would be having adverse effects on the economy of the countries that promote it, especially in European economies, study finds.

Economists Matthieu Crozet of Lingnan University of Hong Kong and Julian Hinz of the Kiel Institute of World Economics recently published a study entitled “Friendly Fire: The Commercial Impact of Sanctions against Russia and Countermeasures.”

As reported the German newspaper Handelsblatt, countries that have imposed sanctions against Russia bear about 45% of the costs, while Russia bears 55%.

In general, the price of the Russian staple basket rose 0.2% due to import bans, says the study.

The European Union is the most affected among the actors studied and suffers 92% of the damage.

One particularly disadvantaged country is German. The European country bears 38% of losses, representing a sum of about $8 billion annually.

French companies also suffer from sanctions as their exports to Russia plummeted. According to the researchers, France would have compensated only a small part of the losses by exporting to other countries.

Economic-trade sanctions policy

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Relations between Moscow and the so-called West have worsened since the incorporation of Crimea into Russia in 2014. The incorporation was approved by popular referendum, with 96% of the votes in favor.

In the same year, the US, the European Union and some allies approved a package of economic and trade sanctions against Russia.

Moscow, in turn, has approved an embargo on food imports from these countries. In 2018, the Russian Central Bank also embarked on a policy of economic decentralization in order to reduce Russia’s exposure to economic sanctions.

Meanwhile, Ukraine has lost its status as an industrialized country, Russian President Vladimir Putin said when speaking at Russian Energy Week 2019.

“Ukraine, when together with Russia was part of the Soviet Union, was a high-tech industrialized republic,” while at present “has lost the status of an industrialized country,” said the Russian leader.

He added that Ukraine’s Gross Domestic Product (GDP) “has not simply fallen but has collapsed in recent years due to the loss of the Russian market, some sectors of Ukrainian industry have virtually ceased to exist.”

Relations between Russia and Ukraine worsened following the conflict in Donbass and the accession of Crimea to Russia following the referendum in March 2014, in which more than 96% of voters supported this option.

Ukraine accuses Russia of intervening in the internal affairs of the country and participating in the Donbass conflict.

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