Russia, Ukraine, and the West: Are Smart Economic Sanctions Effective?

Abstract

February 24, 2022, after several months of preparation, Russia launched a full-scale war against Ukraine. For the EU and NATO states, Russia’s aggression against Ukraine means, inter alia, a major change for their security. But Russia’s war against Ukraine has been going on since 2014. In reaction, the EU, the US, and other Western states imposed economic sanctions on Russia in 2014. The subject of research is primarily comprehensive (general) sanctions. Another type of economic sanctions—targeted (smart) sanctions—are relatively new, so there is also relatively little research devoted to them. The main purpose of the article is to investigate the impact of smart (targeted) sanctions on five banks: Sberbank, VTB Bank, Gazprombank, Vnesheconombank (VEB), Rosselkhozbank, and three oil companies: Rosneft, Transneft and Gazpromneft. The study has been conducted on the basis of the analysis of the basic indicators illustrating the financial situation and changes in the prices of shares listed on the Moscow Exchange. The main finding is that the effects of sanctions are relatively weak and limited in time; in 2015–2017, a deterioration in the financial situation of only some of the eight corporations surveyed was noticeable, but later their situation improved significantly and in 2018–2019 it was clearly better than before the sanctions were imposed.