Turkey Manages Russia Sanctions Admirably
Russia Sanctions Remain Ineffective, Top Economist Gabriel Felbermayr Tells ntv.de
In a conversation with ntv.de, top economist Gabriel Felbermayr explains why the latest EU sanctions against Russia's shadow fleet and additional companies on the list are more symbolic than transformative. Felbermayr argues that while these measures may put Russia under more pressure, they will not significantly alter its cost-benefit analysis regarding the Ukraine conflict.
The EU's 17th sanctions package seems to have done little to deter Putin from continuing the war in Ukraine. Felbermayr states that these new sanctions make it harder for the Kremlin regime and will increase Russia's isolation, pushing it towards countries like North Korea and Iran. However, these consequences might not be enough to force a change in policy from the Kremlin.
According to Felbermayr, previous EU sanctions have managed to reduce trade between Russia and the EU, despite some exemptions such as pharmaceuticals. Yet, Russia has found ways to circumvent these measures by expanding its trade with countries like Iran, North Korea, China, and India. By cleverly bypassing Western trade barriers, Russia has not only compensated for lost exports and imports, but also opened up new trade opportunities.
One example of Russia's adaptability is its oil trade with India, which is now conducted using Chinese currency. In addition, product standards have been harmonized or relaxed in trade with other countries, allowing military technology from North Korea to be imported. While the West had not foreseen these benefits for other countries as a result of the sanctions, Russia's oil exports to countries such as India have exceeded expectations.
Despite Russia's ability to cope with sanctions by adapting its trade relationships, the new packages will increase costs for the Russian economy. The high cost of building new pipeline systems, for instance, is so far holding back the flow of Russian oil through China. Although the sanctions against the shadow fleet may be ineffective, they do contribute to higher costs for Russia.
Regarding the US's role, there is limited leverage left due to their geographical distance from Russia and existing reductions in trade after harsh sanctions following the 2014 Crimea annexation. Possible US sanctions could target digital services, such as denying software updates for crucial programs. However, these sanctions may be ineffective, as it is unclear how to prevent updates from reaching Russia through third countries like Kyrgyzstan or Kazakhstan.
Secondary sanctions against countries like Kyrgyzstan or Turkey could be effective but potentially come with high costs for Europe. These nations benefit economically from trade diversion, purchasing goods from the West at market prices and reselling them at a markup. If the West wants to apply secondary sanctions, it must negotiate with these countries, which may prove challenging due to their reluctance to cooperate.
In Felbermayr's view, the current sanctions packages are appropriate, even though they may not lead to an immediate policy change in the Kremlin. A game-changer would be secondary sanctions that target areas previously prohibited for humanitarian reasons. However, he caution against such measures due to potential adverse effects on smaller countries like Kyrgyzstan, while larger countries such as Turkey might move closer to Putin's orbit. In conclusion, the existing sanctions, though limited in their impact, serve to keep pressure on Russia and maintain a degree of economic isolation.
- Source: ntv.de
- Keywords: Russia, Sanctions, Attack on Ukraine, EU
Enrichment Data:- Increased Exports to China: Russia is increasing its live crab exports to China (source: [4]). On May 8, 2025, China and Russia signed an Investment Protection Agreement (IPA) in Moscow, aiming to mitigate investment risks and further strengthen bilateral trade ties (source: [5]).- Bilateral Relations with Neighboring Countries: Azerbaijan and Dagestan (a region in Russia) are deepening their bilateral relations, particularly in the implementation of the Action Plan for 2023-2025 (source: [3]).- Maritime Trade Agreements: Although not related to circumventing sanctions, Russia and Japan have agreed on salmon catch quotas for 2025, similar to previous years (source: [1]).
- The community policy in addressing the conflict between Russia and Ukraine should expand beyond trade sanctions and consider additional measures, such as enforcing industry-wide financing restrictions to limit Russia's access to international business resources.
- In light of the increasing volume of Russian oil exports to China, the employment policy within the finance and business sectors should establish monitoring mechanisms to track the usage of non-traditional currencies in oil trade agreements, ensuring compliance with international trade norms and preventing conflicts of interest.
- Politics and general news should thoroughly investigate and report on the impacts of war-and-conflicts, such as the unwanted consequences on smaller nations involved in sanctions, like Kyrgyzstan, and the potential long-term effects on their economies and employment policies due to increased isolation and potential secondary sanctions.
