Policy Article

Trade with Russia: Limits of Economic Sanctions (original publication German only)

Wirtschaftsdienst, 95 (7)

In June 2015, the European Union extended its sanctions against Russia which in turn decided to maintain its counter-sanctions. Basically, sanctions are always a double-edged sword, as they are a deliberate restriction of free trade, which according to theory increases the prosperity of the participating countries. Accordingly, sanctions are always associated with costs. The analysis for the Russia trade shows that there are costs of sanctions, which can be painful in individual cases. But overall, the impact on trade flows is limited.

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