BOFIT Viikkokatsaus / BOFIT Weekly 2020/01

In the months following Russia’s annexation of the Crimean peninsula in spring 2014, the EU, US and several other Western countries joined in imposing sanctions on Russia for the Crimean occupation and Russia’s actions destabilizing the situation in Ukraine. The key sanctions from the macroeconomic viewpoint deny certain Russian state-majority-owned banks, defence contractors and companies operating in the oil & gas sector access to long-term financing and ban arms trade with Russia. The sanctions also restrict exports to Russia of dual-use products and technology used in oil exploration and production. The EU reviews its sanctions every six months, and currently the sectoral sanctions are set to remain in force until the end of July. The sanctions will be lifted if Russia meets the Minsk agreement terms related to the conflict in Ukraine.

In August 2014, Russia posed import bans on several foodstuffs produced in the EU, the US and certain other countries as a counter-measure. The continuance of the bans is currently not tied to the sanctions of other countries. The import bans support Russia’s longer-term aim at self-sufficiency in food production and the development of its domestic agricultural sector. The bans also align with the more general protectionist trends of Russian trade policies in recent years.

During 2016–2019, the US placed on various grounds a number of Russian individuals and firms on its Specially Designated Nationals (SDN) list, which, among other things, prevents American persons and firms from doing business with listed persons and entities.  The US has also imposed other sanctions on Russia for reasons not related to the Ukraine conflict. These sanctions include prohibitions on American financial institutions from participating in new issues of Russian sovereign currency bonds. Last month, the US passed a law that threatens sanctions on companies and persons participating in the construction of the undersea Nordstream 2 gas pipeline from Russia to Germany.