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DIW: The sanctions could hit Putin ten times more

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DIW: The sanctions could hit Putin ten times more

The current DIW study shows that the potential for sanctions was not fully exploited during the annexation of Crimea. MIKHAIL KLIMENTYEV/RIA NOVOSTI/AFP via Getty Images

According to Study According to the German Institute for Economic Research (DIW Berlin), the sanctions potential for the annexation of Crimea was not fully exploited.

Accordingly, the economic damage to Russia would have been ten times greater if the sanctions coalition had been larger at the time or if the sanctions had been expanded into a trade embargo.

However, the current sanctions make better use of the potential.

The European Union has imposed further sanctions against Russia. The new measures are primarily intended to affect companies based in Turkey and China as well as procurement networks for drone parts. According to the German Institute for Economic Research (DIW Berlin), the current measures against Russia are effective. However, there is still significantly more potential for sanctions, such as the current one DIW study shows.

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As part of the study, the DIW, in collaboration with the Institute for the World Economy (IfW), examined the effects of the sanctions against Russia in response to the annexation of Crimea in 2014. The researchers also analyzed how the effect of the sanctions would have increased if the coalition had been larger or if the sanctions had been expanded into a trade embargo against Russia.

I said

According to study results, coalition sanctions reduced welfare in Russia by 1.4 percent in 2014 – measured by the change in real consumption. However, if there had been a global coalition and a complete trade embargo against Russia, the economic damage would have been ten times greater. “The potential for sanctions was not fully exploited in 2014,” summed up DIW economist Sonali Chowdhry.

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There is still potential in the sanctions against Russia

The study gives an idea of ​​how great the potential for sanctions still is. Nevertheless, Chowdhry is satisfied. “The current sanctions, which restrict Russia’s access to the international payment system SWIFT and energy trading, certainly make better use of the sanctions potential than the 2014 sanctions,” she comments on the study.

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The 2014 sanctions also affected small economies geographically close to Russia. But the damage to Russia was ultimately greater than the burden on emerging countries. In the future, specially established funds could balance the distribution of burdens between the coalition partners. This would also “promote the participation of other countries,” says IfW researcher Joschka Wanner.

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