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The impact of financial sanctions on the Russian economy

Authors:
  • Economic Expert Group
  • Economic Expert Group, Financial Research Institute

Abstract and Figures

This paper examines the impact of the current Western financial sanctions on the Russian economy. Modeling the capital flow components (accounting for the influence of other factors, including falling oil prices) reveals that sanctions have directly affected sanctioned state-controlled banks, oil, gas and arms companies by severely constraining foreign funding and have indirectly affected non-sanctioned companies by reducing inflows of foreign direct investment and causing funding conditions to deteriorate. The overall negative effect on gross capital inflow over 2014–2017 is estimated at approximately $280bn. However, the effect on net capital inflow is significantly lower ($160–170bn) due to Russian companies’ self-adjustment, which is evidenced by their utilization of foreign assets accumulated earlier for debt repayment and an overall decrease in gross capital outflow. The sanctions’ estimated effect on GDP is significant (–2.4 p.p. by 2017, compared with a hypothetical scenario with no sanctions) but 3.3 times lower than the estimated effects of the oil price shock.
Content may be subject to copyright.
Russian Journal of Economics 1 (2015) 359–385
Available online at www.sciencedirect.com
www.rujec.org
ً The updated English version of the article published in Russian in Voprosy Ekonomiki, 2016, No. 1, pp. 5–35.
This article represents an extended version of the report “Scenarios of development for the Russian economy in
the conditions of sanctions and falling oil prices” produced for the Civil Initiatives Committee in December 2014.
* Corresponding author, E-mail address: egurvich@eeg.ru.
Peer review under responsibility of Voprosy Ekonomiki.
http://dx.doi.org/10.1016/j.ruje.2016.02.002
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on the Russian economy ً
Evsey Gurvich
a,*, Ilya Prilepskiy
a,b
a Economic Expert Group, Moscow, Russia
b Financial Research Institute, Moscow, Russia
Abstract
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ly affected sanctioned state -controlled banks, oil, gas and arms companies by severely
constraining foreign funding and have indirectly affected non-sanctioned companies by
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($160–170bn) due to Russian companies’ self -adjustment, which is evidenced by their
utili zation of foreign assets accumulated earlier for debt repayment and an overall decrease
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by 2017, compared with a hypothetical scenario with no sanctions) but 3.3 times lower
than the estimated effects of the oil price shock.
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1. Introduction
In March 2014, the EU, the U.S. and a number of other states introduced
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and restricted Russian oil and gas companies’ access to advanced production
techno logies. In response, Russia imposed an embargo on a wide range of agri-
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be no chance of the sanctions being lifted any time soon, although the situation in
Ukraine has somewhat stabilized: in June 2015, the EU announced the extension
of the sanctions until at least the end of the year (and in December 2015, they
were further prolonged until July 31st, 2016 at the very least), while the U.S. ac-
tually expanded the list of companies falling under its sectoral sanctions. In turn,
Russia prolonged its food embargo for another year.
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still has been no convincing evaluation of their effects, and there is no consen-
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IMF (2015) report on the Russian economy indicates that the sanctions and retalia-
tory sanctions may lead Russia to experience a reduction in GDP of 1.0%–1.5%
over the short term, although the accumulated loss may reach 9.0% of GDP over
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tions between 8% and 10% of Russia’s GDP but posit that compensating measures
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cate the time horizon over which this effect may be achieved (Shirov et al., 2015).
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assessed rather tentatively: these authors assumed only that Russia’s private sector
lost all access to the foreign capital markets. Rautava (2014) and Vercueil (2014)
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study (published before the sectoral sanctions were adopted) estimated the impact
as a 1 p.p. reduction in the 2014 GDP growth rate (Rautava, 2014). The second
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gradually lifted, GDP would grow an additional 2 p.p. in 2015 than it would un-
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of Russia’s retaliatory sanctions on public welfare: based on their static model,
the authors estimated a reduction of 0.25%.
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sult of their economic nature, such borrowing limitations are similar to a sudden
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ties in the private sector decreased by USD 37 billion, which sharply contrasted
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tors that are driven by economic logic, whereas in this case, the drop occurred
due to administrative restrictions.
First, we evaluate the impact of the sanctions on the basic components of
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capital from Russia. Then, we conduct a scenario analysis (for the medium term)
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indicators.
We assume that there are only limited effects over the medium term with respect
to oil and gas sanctions (due to reduced production) and technological sanctions
(due to slower productivity growth caused by problems with importing dual-use
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investment and consumption, is also noted in other works (IMF, 2015; Sinyakov
et al., 2015; Shirov et al., 2015). Unlike these studies, our research presents a more
detailed analysis of the impact of sanctions on basic macroeconomic indicators as
well as on the components of the balance of payments.
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owned companies in the fuel/energy sector (Rosneft, Transneft, Gazpromneft)
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there are the more severe SDN sanctions that prohibit foreign exchange payments
(affecting banks and companies whose owners were subjected to personal sanc-
tions). Second, many Russian banks are affected by the so-called “soft” sanc-
tions, which means stricter technical control over transactions that typically slows
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“stage” of their impact on the economy) are considered by Ulyukaev and Mau
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x Increasing uncertainty (beginning even before the sectoral sanctions were in-
troduced) slows down consumption due to rising precautionary savings (often
in USD) and dwindling investments due to higher risk premiums;
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investment opportunities for companies. Moreover, restrictions on technology
exports to the Russian Federation constrain the potential growth of total factor
productivity; and
x Production in sectors dependent on imported components suffers from the ruble ’s
sharp fall.
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global capital markets during the preceding period. In 2006, the main restric-
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3% and 6% of GDP.
In the end, by the time the sanctions were imposed, borrowers had accumulated
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of Russia, 12% of the total amount consisted of short-term debt that was to be
repaid within a year, with over 25% of such debt in the banking sector. Notably,
at that moment, the assets accumulated by Russian economic agents exceeded
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ted among the various sectors: banks and the public sector had positive net assets
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sector had negative net assets (–USD 318 billion).
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restrictions on credit to Russian borrowers are having substantial additional im-
plications that should also be taken into account to evaluate the full effect of
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sanctions.
Direct effects mean restrictions placed on the foreign borrowings of Russian
LVVXHUV,QWKHRU\5XVVLDQEDQNVDQGFRPSDQLHVFDQ¿QGDOWHUQDWLYHFUHGLWRUVEXW
WKLVRSWLRQLV OLPLWHG LQ SUDFWLFHDVDUHVXOW RI WKHJOREDOL]DWLRQRIWKH¿QDQFLDO
Table 1
%DODQFHRIIRUHLJQDVVHWVDQGOLDELOLWLHVDFURVVYDULRXVVHFWRUVRIWKH5XVVLDQHFRQRP\86'ELOOLRQ
as of July 1, 2014
Net 192
$VVHWV 1513
Liabilities 1321
Including foreign debt 733
Including short-term 86
General government and the Central Bank 472
$VVHWV 548
Liabilities 76
Including foreign debt 73
Including short-term 8
Banking sector 38
$VVHWV 309
Liabilities 272
Including foreign debt 209
Including short-term 54
Other sectors –318
$VVHWV 656
Liabilities 973
Including foreign debt 451
Including short-term 24
Source%DQNRI5XVVLD
363
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
system, which has actually become a single marketplace. For example, the likeli-
KRRG RI UHGLUHFWLQJ ERUURZLQJV WR WKH¿QDQFLDO PDUNHWV RI (DVW DQG 6RXWKHDVW
$VLDLVORZGXHWRWKHZHDNVWDUWLQJSRVLWLRQVRI5XVVLDQERUURZHUVLQ$VLDQPDU-
NHWVLQDGGLWLRQWR$VLDQ LQYHVWRUV¶FRQFHUQVDERXWSRVVLEOHQHJDWLYHUHDFWLRQV
from U.S. regulators.
Indirect effects. The persistent geopolitical tension, the potential for new sanc-
tions or an expanded interpretation of existing sanctions by U.S. and EU regu-
lators, in addition to the chance that Russia will impose changes to the “rules
of the game” (e.g., restrictions on capital transactions) are viewed by investors
as an important source of additional economic risk. Thus, the attractiveness of
WKH5XVVLDQ HFRQRP\ IRU 5XVVLDQ DQG IRUHLJQ LQYHVWRUV KDV EHHQ VLJQL¿FDQWO\
UHGXFHG$VDUHVXOWWKHGLUHFWHIIHFWVRIUHVWULFWHGDFFHVVWRIRUHLJQERUURZLQJV
DUHPDJQL¿HGE\WKHLQGLUHFWHIIHFWVRIUHGXFLQJWKHQHWFDSLWDOLQÀRZLQWR5XVVLD
GXHWRKLJKHU¿QDQFLDOULVN:KLOHWKHGLUHFWHIIHFWVOLPLWIRUHLJQERUURZLQJVIRU
issuers that are subject to the sanctions, the indirect effects have more compo-
QHQWVUHGXFHGERUURZLQJVIRUDOORWKHULVVXHUVDGHFUHDVHGLQÀRZRIIRUHLJQGL-
UHFWDQGSRUWIROLRLQYHVWPHQWDQGSRVVLEO\LQFUHDVHGRXWÀRZRI5XVVLDQFDSLWDO
Reaction to the sanctions. The direct and indirect effects that prevent foreign
GHEWIURPEHLQJUH¿QDQFHGDUHGLIIHUHQWIURPRWKHUHIIHFWVGXHWRWKHLUSHUVRQDOL
]HGQDWXUHLH WKH\ DIIHFWVSHFL¿FLVVXHUVDVZHOODVWKHHFRQRP\DVDZKROH
The “affected” issuers can react to the sanctions in a number of ways, ranging
from buying in domestic foreign exchange market funds to repay the debt, to sell-
LQJDFFXPXODWHGIRUHLJQH[FKDQJHDVVHWVLQDQDPRXQWWKDWLVVXI¿FLHQWWRPDNH
IRUHLJQGHEWSD\PHQWV$VVKRZQLQRXUIXUWKHUDQDO\VLVHDFKRIWKHVHDUHDVSOD\V
an important role in determining the overall estimated effects of the sanctions.
Second-order effects involve changes in key macroeconomic indicators (ex-
change rates, prices, exports and imports, etc.) in response to reduced net capi-
WDOLQÀRZ6XFKDVKRFN VKRXOG EH IROORZHGE\DQDGMXVWPHQWLQWKHEDODQFHRI
payments by means of a combination of an increase in the current account and
WKHVSHQGLQJRI);UHVHUYHVE\WKH&HQWUDO%DQN7KHPHFKDQLVPVIRUWKHVHDG-
justments were considered by Gurvich and Prilepskiy (2013), who note, in par-
WLFXODUWKDWFDSLWDOLQÀRZLQGHYHORSLQJFRXQWULHVGHSHQGVPRVWO\RQLWVIRUHLJQ
supply rather than on domestic demand.
7KHLPSDFW RI WKHVDQFWLRQV FDQQRW DOZD\V EH GH¿QLWLYHO\ GHFRPSRVHG LQWR
the aforementioned channels. For example, it is clear that a sharp decrease in
WKHGHEWOLDELOLWLHVRIEDQNVQRWVSHFL¿FDOO\WDUJHWHGE\WKHVDQFWLRQVFDQEHH[-
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banks on the sanction list may be caused by both direct and indirect effects, i.e.,
the unwillingness of countries that did not impose sanctions to lend to them due
to their concerns about the potential negative reactions by U.S. and EU regu-
ODWRUV $V DUHVXOW ZH DWWHPSW WR HYDOXDWH WKHRYHUDOO FKDQJHV LQ FDSLWDO ÀRZV
DIWHUVDQFWLRQV ZHUHLPSRVHG7KXVWRWKHEHVW RIRXUDELOLW\ZHGH¿QHFHUWDLQ
FDWHJRULHVRIHIIHFWVWKDWFDQEHLGHQWL¿HG)RUH[DPSOHZHVHSDUDWHO\FDOFXODWH
WKHLPSDFWRIVDQFWLRQV RQ JURVVFDSLWDO LQÀRZ PDLQO\ DVVRFLDWHGZLWK WKHDF-
WLRQVRIIRUHLJQLQYHVWRUVDQGJURVVRXWÀRZZKLFKZHFRQVLGHUWREHDUHDFWLRQ
RI5XVVLDQEDQNVDQGFRPSDQLHVWRFKDQJHVLQFDSLWDOLQÀRZV
7KHGLUHFWHIIHFWVRIWKHVDQFWLRQVGXULQJWKH¿UVWPRQWKVDUHVKRZQLQ7DEOH
the amount of foreign debt securities and public banks’ syndicated loans was re-
364 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
duced by USD 11.2 billion during the second half of 20142. This result demon-
strates that those banks and companies affected by the sanctions were, to a great
H[WHQWIRUFHGWRIRUHJRUH¿QDQFLQJWKHLUIRUHLJQOLDELOLWLHV
+RZHYHUWKHGLUHFWHIIHFWDORQHFDQQRWDFFRXQWIRUWKHVKDUSGHFUHDVHLQJURVV
FDSLWDO LQÀRZV LQWR WKH5XVVLDQ HFRQRP\7KXV WKHDPRXQW RI IRUHLJQ OLDELOL-
ties in the banking sector dropped by USD 30.8 billion during the second half of
7KLV ¿QGLQJ PHDQVWKDWWKHH[WHQWRIWKHLQGLUHFWHIIHFWVLQWHUPVRIGHEW
¿QDQFLQJPLJKWKDYHEHHQWZLFHDV VLJQL¿FDQWIRUWKHEDQNLQJVHFWRUDV WKHH[-
WHQWRIWKHGLUHFWHIIHFWV,QWXUQIRUHLJQOLDELOLWLHVLQWKHQRQ¿QDQFLDOVHFWRUGH-
creased by more than USD 15 billion despite the fact that the major companies
affected by the sanctions (e.g., Rosneft and Gazpromneft) had no foreign debt
securities to be repaid during that period.
0RUHRYHU DFFRUGLQJ WR WKH%DQN RI 5XVVLD GXULQJ WKHVHFRQG KDOI RI
 WKHIRUHLJQ GHEW RI WKHEDQNLQJ DQG QRQ¿QDQFLDO VHFWRUV GHFUHDVHG E\
USD 83.6 billion and that of banks and companies that were more than 50%
publicly owned fell by USD 41.1 billion (without considering liabilities to direct
LQYHVWRUV$OWKRXJKWKH%DQNRI5XVVLDGRHVQRWSURYLGHLQIRUPDWLRQUHJDUGLQJ
the contribution of transactions and FX revaluation to changes in foreign debt by
SULYDWHDQGSXEOLF FRPSDQLHV VHSDUDWHO\ZHFDQ FRQFOXGH WKDW RQDTXDOLWDWLYH
basis, the effect for private banks and companies (those not directly affected by
the sanctions) is at least comparable to that for public companies, even if only
GHEWREOLJDWLRQVDUH FRXQWHG 7KXV ZH VWUHVVWKHKLJKVLJQL¿FDQFH RI WKHRWKHU
channels of the sanctions’ impact, which include, in particular, the decreased
DYDLODELOLW\RI ERUURZLQJ RSWLRQVIRU WKHSULYDWH VHFWRU DV DZKROH$V DUHVXOW
WKHVKDUH RI UH¿QDQFLQJ IRU IRUHLJQ OLDELOLWLHV KDV GHFUHDVHG VLJQL¿FDQWO\ $V
VKRZQLQ7DEOHGXULQJWKHODVW IHZ TXDUWHUV WKLV VKDUHKDVEHHQFRQVLGHUDE
O\ ORZHU WKDQ KLVWRULFDO LQGLFDWRUV IRU ERWK WKHEDQNLQJ DQG QRQ¿QDQFLDO VHF-
WRUVWKH³WURXJK´IRUWKHQRQ¿QDQFLDOVHFWRUZDVUHDFKHGGXULQJWKH¿UVWTXDUWHU
of 2015 against the background of generally increasing uncertainty concerning
the prospects for the Russian economy related to falling oil prices, and this rate
remains close to zero for the banking sector.
Notably, indirect reactions to the sanctions include reduced gross capital in-
ÀRZV QRW RQO\ WR WKH¿QDQFLDO DQG QRQ¿QDQFLDO VHFWRUV EXW DOVR WR WKHSXEOLF
2
+HUHLQDIWHUZKHQZHVSHDNRIWKHFKDQJLQJ DPRXQWVRIIRUHLJQOLDELOLWLHVZHPHDQWKHLUFKDQJHVWKURXJK
WUDQVDFWLRQVQRWWKURXJK );UHYDOXDWLRQ 6RXUFHVIRUVXFKVWDWLVWLFVLQFOXGHWKH%DQNRI 5XVVLDDQG &ERQGV
7KLVDQDO\VLVHQDEOHVWKHLPSDFWRIVDQFWLRQVRQFDSLWDOÀRZVZKLFKDUHUHÀHFWHGLQFKDQJHVLQIRUHLJQGHEW
WREHGLVWLQJXLVKHGIURPFKDQJHVLQGHEWGXHWRDZHDNHUUXEOHZKLFKLVVLJQL¿FDQWXQGHUFRQGLWLRQVLQZKLFK
approximately 1/5 of the foreign debt of Russian issuers is denominated in rubles).
Table 2
Repayment of foreign loans by banks subject to sanctions during the second half of 2014 (USD billion).
%DQN Debt securities Syndicated loans Total
Sberbank 0.9 4.2 5.1
97% 0.1 3.1 3.2
Gazprombank 1.7 1.2 2.9
Total 2.7 8.5 11.2
Note7KH%DQNRI0RVFRZ DQG5RVVHONKR]EDQNKDG QRIRUHLJQOLDELOLWLHV WREHUHSDLG GXULQJWKHVHFRQGKDOI
of 2014.
Source: C-bonds.
365
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
VHFWRU$FFRUGLQJWRWKH%DQNRI5XVVLDQRQUHVLGHQWVEHJDQWRVHOOJRYHUQPHQW
ERQGVDVHDUO\DVWKH¿UVWTXDUWHURIDJDLQVWWKHEDFNGURSRIWKHLQLWLDOHVFDOD-
WLRQRIWKH8NUDLQHVLWXDWLRQDQGUHVXPHGVHOOLQJGXULQJWKHWKLUGTXDUWHURI
which was likely due to concerns about the possibility of Western sanctions and
FDSLWDOÀRZUHVWULFWLRQVE\5XVVLDQUHJXODWRUV7KHFDSLWDORXWÀRZIURPWKHSXE-
OLFVHFWRUEURNHDUHFRUGGXULQJWKH¿UVWTXDUWHURI±86'ELOOLRQLQ
WKLVFDVHKRZHYHUDVLJQL¿FDQWFRQWULEXWLRQ ZDV PDGHE\WKHGRZQJUDGLQJ RI
Russia’s sovereign rating, which was likely to have automatically led to sales of
securities by many institutional investors.
$SDUWIURPWKHHIIHFWVUHODWHGWRFKDQJHVLQWKHEHKDYLRU RIHFRQRPLFDJHQWV
investing in Russian assets, the sanctions also resulted in changes to the deci-
sions made by Russian banks and companies regarding investment in foreign
assets, i.e., in an active reaction. This effect was most noticeable during the third
TXDUWHU RI  ZKHQ WKHEDQNLQJ VHFWRU UHGXFHG LWV IRUHLJQ DVVHW KROGLQJV
by USD 29.9 billion in anticipation of major foreign debt repayments during
WKHIRXUWKTXDUWHU E\ FRPSDULVRQ DQDYHUDJHRI86'ELOOLRQLQDVVHWVZDV
DFFXPXODWHG EHWZHHQ WKHVHFRQG DQG IRXUWK TXDUWHUV RI $VLPLODU WUHQG
ZDVREVHUYHGLQWKHQRQ¿QDQFLDOVHFWRUEHJLQQLQJLQWKHWKLUGTXDUWHURI
asset accumulation slowed abruptly (both in terms of direct and portfolio invest-
PHQWDQGLQWKH³JUH\´RXWÀRZLQFOXGLQJEDODQFHRISD\PHQWVFDWHJRULHVVXFK
DV³QHWHUURUVDQGRPLVVLRQV´DQG³¿FWLWLRXVWUDQVDFWLRQVUHODWHGWRIRUHLJQPHU-
chandise trade, etc.”).
7KHRYHUYLHZ RI WKHFKDQJHV LQ FDSLWDO ÀRZV IROORZLQJ WKHLPSRVLWLRQ RI
VDQFWLRQVLVSUHVHQWHGLQ7DEOHZKLFKFRQWDLQV¿QDQFLDODFFRXQWLQGLFDWRUVIRU
WKHIRXUTXDUWHUVRIWKHVDQFWLRQVLH WKHVHFRQG KDOI RI DQG¿UVWKDOIRI
20153), as well as for similar periods from preceding years. These data show
DQ LQFUHDVH LQ QHW FDSLWDO RXWÀRZ IURP 5XVVLD DIWHU VDQFWLRQV ZHUH LPSRVHG
%RUURZLQJDQGIRUHLJQGLUHFWLQYHVWPHQWZHUHUHGXFHGWKHPRVW
+RZHYHUDOORIWKHREVHUYHGFKDQJHVLQFDSLWDOÀRZVFDQQRWEHDWWULEXWHGWR
the effects of the sanctions. The magnitude of these changes depends on many
3
We will call this period the “sanction period” for brevity.
Table 3
(VWLPDWHGLQGLFDWRUVRIUH¿QDQFHGIRUHLJQGHEWXQGHUVDQFWLRQVa
Period %DQNV 2WKHUVHFWRUV
2Q 2015 5 98
1Q 2015 7 60
4Q 2014 19 74
3Q 2014 56 93
$YHUDJHIRU4WKURXJK4b 120 120
For reference:
2010 157 113
2011 144 183
2012 174 142
a The change in foreign debt from transactions, divided by anticipated foreign debt repayments (from
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and Rosneft and are not included in the calculations for this reason.
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factors, such as export revenues (most importantly) as well as the exchange rate,
interest rates, investment demand, etc. Next, we examine the basic factors that
must be taken into account in evaluating the effects of the sanctions:
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also by falling oil prices and the associated revised forecasts of the prospects
and investment attractiveness of the Russian economy;
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to some experts’ estimates) is related to funds transferred from Russian compa-
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be explained not only by the reaction to the sanctions but also by the measures
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explained by changes in the variables generally used in the models by leading
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those in developed countries and, second, the VIX volatility index calculated by
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Thus, to correctly evaluate the effects of the sanctions, we must distinguish
between their effects and those of other factors. The general approach applied
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Table 4
Certain components of the balance of payments (USD billion).
Sector July 2010
June 2011
July 2011 –
June 2012
July 2012 –
June 2013
July 2013 –
June 2014
July 2014 –
June 2015
General government 3.5 8.1 13.8 1.5 –9.9
Liabilities 3.5 8.1 13.8 1.5 –9.9
Banks 1.8 5.0 –13.7 –19.2 –8.5
Debt liabilities 31.6 24.3 33.8 0.1 –37.3
$VVHWV –29.8 –19.3 –47.5 –19.3 28.8
Other sectors (without cash
foreign currency)
–14.9 –2.9 –23.2 –1.0 –55.8
Direct investment –16.8 –19.2 –18.2 –12.6 –35.7
Liabilities 45.6 38.3 70.6 39.3 2.2
$VVHWV –62.3 –57.5 –88.8 –51.9 –37.9
Loans 1.8 16.3 41.4 11.5 –20.2
Liabilities 1.8 16.3 41.4 11.5 –20.2
Cash foreign currency 6.7 0.2 4.0 –17.2 –10.9
Total –3.0 10.5 27.2 –36.0 –85.1
Liabilities 82.5 87.0 159.6 52.5 –65.1
$VVHWV –85.5 –76.6 –132.4 –88.4 –20.0
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367
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period, which means that we calculated values that might have been observed
without the sanctions but with the actual values of the rest of the exogenous in-
dicators (such as oil prices and the foreign debt repayment schedule). We view
WKHGHYLDWLRQIURP ³QRUPDO´ E\ WKHDFWXDOLQGLFDWRUVRIWKH¿QDQFLDODFFRXQWDV
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determining the estimated effects because the combination of sanctions, falling
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was not consistent with the fundamentals (i.e., a clear overshooting occurred),
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turn, had a positive feedback with the demand for foreign exchange cash, lead-
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In other words, the situation at the end of 2014 was caused not only (and not to
the greatest extent) by the combination of objectively measured economic factors
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In the end, for purposes of evaluating the effects for 2014 (more precisely,
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2014, whereas the simulations for 2015 through 2017 were based on the calcu-
lated values of deviation for the components of the balance of payments from
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prices (3Q 2014), the passing of the price “trough”, the very high uncertainty re-
garding economic prospects (1Q 2015), a slight rebound in prices and reduced
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discussed “background” volatility of indicators do not allow the analysis to be
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this manner offer only a general view of the extent of the sanctions’ effects.
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indicators, which is to be performed in the second stage, must consider that the ef-
fects of the sanctions immediately lead to deviations from the “normal” trajectory
RIWKHPDFURHFRQRPLFLQGLFDWRUV )RU H[DPSOH WKHLQDELOLW\ WR UH¿QDQFHIRUHLJQ
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value compared with the hypothetical “normal” scenario. For this reason, we built
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scription of the potential development trajectory without the sanctions and assum-
ing continuously high oil prices (at USD 100 per barrel). In the second version, at
every step, the foreign capital not received as a result of the sanctions is deducted.
The macroeconomic indicators are then found for the next step, the capital not re-
ceived is again calculated and deducted, etc. Comparing the indicators for the two
versions provides an evaluation of the sanctions’ effects.
368 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
We also consider two additional scenarios that are characterized by reduced
oil prices (between USD 50 and USD 53 per barrel) and that correspond to
WKH0LQLVWU\ RI (FRQRPLF 'HYHORSPHQW IRUHFDVW GDWHG 2FWREHU  4
Considering these scenarios enables us to evaluate the effects of falling oil prices
and the sanctions separately, with high and low oil prices. Thus, we can under-
stand whether any synergy occurs when the two negative factors are combined,
or if their effects are just added to one another.
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We now consider each of the separate components of the balance of payments
under the sanctions.
3.1. Changes in debt liabilities
To determine the impact of the sanctions on foreign debt liabilities, we used
WKHLQGLFDWRUV RI IRUHLJQ GHEW UH¿QDQFLQJ IURP 7DEOH  ZKLFK VKRZ WKDW LW LV
gra dually decreasing. We believe that this trend can be explained by the reduc-
tion in investment demand under conditions of decreasing (see Fig. 2) expected
growth rates for the Russian economy (and for growth in domestic demand, ac-
4
http://economy.gov.ru/minec/about/structure/depMacro/20151026.
5
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Fig. 1.3ULYDWHVHFWRUFDSLWDOÀRZV86'ELOOLRQ
Source%DQNRI5XVVLD7KH¿UVWTXDUWHURILVH[FOXGHGEHFDXVHRIWKHHIIHFWVIURPWKH%35RVQHIWGHDO
369
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UH¿QDQFLQJYDOXHZDVDVVXPHGWREH³QRUPDO´DVGLVFXVVHGDERYHWKH¿UVWTXDU-
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the previous debt.
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debt under the sanctions was calculated as an average indicator for the sanction
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their foreign debt partially rather than in full (as before) and, second, Russian
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that the share of debt liabilities in the overall reduction of foreign liabilities for
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GXFHVVLPLODUHVWLPDWHV RI UH¿QDQFLQJVKDUHVLH  IRUEDQNVDQG  IRU
WKHQRQ¿QDQFLDOVHFWRUWKHUHE\FRQ¿UPLQJWKHLUDGHTXDF\
To evaluate the effects of the sanctions in this area, we applied the calculated
LQGLFDWRUVRIUH¿QDQFLQJWRWKHIRUHLJQGHEWUHSD\PHQWVFKHGXOHWKDWLVSXEOLVKHG
E\WKH%DQNRI5XVVLD)RUWKHVHFRQGKDOIRIZHXVHGGDWDDVRI-XO\
IRU VXEVHTXHQW \HDUV ZH XVHG GDWD DV RI -DQXDU\ 6 $V DUHVXOW WKH¿UVW
component of the effect of sanctions (reduced foreign borrowing) is evaluated
at approximately USD 60 billion in annual terms. The majority of this amount
(USD 44.3 billion) consists of borrowings by banks, while the losses in the non-
¿QDQFLDO VHFWRU DUH RQO\ 86'  ELOOLRQ LH VOLJKWO\ PRUH WKDQ RQHIRXUWK
RIWKHWRWDO$FRPSDULVRQRIWKHDFWXDODQGK\SRWKHWLFDOZLWKRXWWKHVDQFWLRQV
trends of foreign borrowing is presented in Fig. 3.
:LWKUHJDUGWRRWKHUFRPSRQHQWVRIWKH¿QDQFLDODFFRXQWZHXVHGDVRPHZKDW
GLIIHUHQWPHWKRGRIDQDO\VLV7RREWDLQ³QRUPDO´LQGLFDWRUVRIFDSLWDOLQÀRZDQG
6
For 2017, we estimate debt repayments by applying the average maturity estimated on the data for 2015–2016.
Fig. 2. IMF forecasts of Russian GDP growth for the next calendar year (%).
Source: IMF.
370 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
RXWÀRZIRUHDFKFRPSRQHQWRIWKHEDODQFHRISD\PHQWVZHEXLOWHTXDWLRQVXVLQJ
WKHTXDUWHUO\GDWDIURPDIWHUWKH±FULVLVWRGHVFULEHWKHFKDQJHVLQDV-
VHWVDQGOLDELOLWLHVLQWKHQRQ¿QDQFLDOVHFWRUVHSDUDWHO\LQ86'ELOOLRQEDVHG
on oil prices, GDP, expected economic growth rates, etc. It should be noted that
VLPXODWLRQVRYHUWKHVKRUW WHUP UHGXFH WKHSUHFLVLRQ RI WKHHVWLPDWHV +RZHYHU
LQ RXU RSLQLRQ WKLV DSSURDFK LV MXVWL¿HG EHFDXVH RI WKHTXDOLWDWLYH FKDQJH LQ
PRQHWDU\ SROLF\ E\ WKH%DQN RI 5XVVLD ZKLFK SXUVXHG DJUDGXDO WUDQVLWLRQ WR
LQÀDWLRQWDUJHWLQJDQG DÀRDWLQJ H[FKDQJH UDWH 7KLV SROLF\VKLIW LQ SDUWLFXODU
GLVFRXUDJHGWKHLQÀRZRIVKRUWWHUPFDSLWDOGXULQJWKHSRVWFULVLVSHULRGGXHWR
lower predictability of the ruble’s exchange rate.
 'LUHFWLQYHVWPHQWLQÀRZ
)RUWKLVFRPSRQHQWZHREWDLQHGWKHIROORZLQJHTXDWLRQKHUHLQDIWHUWKHt-statis-
WLFYDOXHVDUHJLYHQLQSDUHQWKHVHVXQGHUWKHFRHI¿FLHQWV
fdi_in = 7,17 + 0,289 gdp_g(–1) + 0,705 gdp_gf + 25,8 d_2013q1 (1)
(5,15) (2,18) (1,94) (36,4)
7KHGLUHFW LQYHVWPHQW LQÀRZ fdi_in was determined based on the economic
development prospects that we characterized using IMF growth forecasts for
the current year (gdp_gf WKDWDUHSXEOLVKHGRQDTXDUWHUO\EDVLV-DQXDU\$SULO
-XO\2FWREHUDQGODJJHG*'3JURZWK UDWHV gdp_g (–1), or the year preceding
WKHFXUUHQWTXDUWHU7KHGXPP\ YDULDEOH d_2013q1 was added to take into ac-
FRXQWWKHFRORVVDO%35RVQHIWWUDQVDFWLRQPHQWLRQHGDERYH
7KHPRGHOLQJ UHVXOWV DUH SUHVHQWHG LQ )LJ  7KHDFWXDO LQÀRZ ZDV EHORZ
³QRUPDO´E\86' ELOOLRQ LQ WKHWKLUG TXDUWHU RI  DQG E\ DQDYHUDJHRI
86'ELOOLRQLQWKHWKLUGTXDUWHURIDQGLQWKH¿UVWDQGVHFRQGTXDUWHUV
of 2015 (this estimate is used in the medium-term simulation below). The tenta-
Fig. 3.&KDQJHVLQWKHIRUHLJQGHEWRIEDQNVDQGWKHQRQ¿QDQFLDOVHFWRU86'ELOOLRQ
Notes: $VDUHVXOWRIWUDQVDFWLRQVQRWLQFOXGLQJGHEWWRGLUHFWLQYHVWRUV4WHQWDWLYHHVWLPDWHV
Source:$XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
371
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
WLYHHYDOXDWLRQIRU WKHWKLUG TXDUWHURI SURGXFHV DVOLJKWO\ORZHUYDOXH RI
USD 2.5 billion.
 3RUWIROLRLQYHVWPHQWLQÀRZSDUWLFLSDWLRQLQFDSLWDOGHEWLQVWUXPHQWV
 DUHDFFRXQWHGIRUE\WKHUH¿QDQFLQJVKDUH
7KLVFRPSRQHQWRIFDSLWDOLQÀRZLVVXEVWDQWLDOO\DIIHFWHGE\WKHODJJHG*'3
JURZWKUDWHVTXDUWHUO\VHDVRQDOO\DGMXVWHGgdpsa_g ±$GGLWLRQDOO\IROORZ-
ing the 2008–2009 crisis, a general downward trend in the accumulated portfolio
LQYHVWPHQWDQGDQRWLFHDEOHVHDVRQDOLW\HPHUJHGWKHLQÀRZLVKLJKHULQWKH¿UVW
TXDUWHUZKLFKLVWDNHQLQWRDFFRXQWXVLQJWKHGXPP\YDULDEOHd_q7KHHTXD-
WLRQIRUWKHH[SHFWHGFDSLWDOLQÀRZXVHVWKHIROORZLQJIRUP
p_in = –3,55 + 1,16 gdpsa_g(–1) + 2,36 d_q1 (2)
(–4,92) (2,57) (3,23)
7KHUHVXOWLQJIRUHFDVW VHH)LJVKRZVWKDWWKHDFWXDOLQÀRZ RISRUWIROLR
LQYHVWPHQW ZDV 86'  ELOOLRQ ORZHU WKDQ SUHGLFWHG LQ WKHWKLUG TXDUWHU RI
Fig. 4.'LUHFWLQYHVWPHQWLQÀRZ86'ELOOLRQ
Source:$XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
Fig. 5.3RUWIROLRLQYHVWPHQWLQÀRZ86'ELOOLRQ
Source: $XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
372 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
 86'  ELOOLRQ ORZHU WKDQ SUHGLFWHG GXULQJ WKH¿UVW TXDUWHU RI 
DQG86'ELOOLRQKLJKHUWKDQLQWKHVHFRQGTXDUWHURIWKHODVWTXDU-
ter for which report data are available). The average estimate is low in terms
of absolute value; in fact, we consider this component of the overall effect of
WKHVDQFWLRQVWREHLQVLJQL¿FDQWO\GLIIHUHQWIURP]HURDQGH[FOXGHLWIURPIXU-
ther calculations.
3.4. Changes in the foreign liabilities of the public sector
This indicator is relatively stable when measured as a percentage of GDP.
)URPWKURXJKWKHFDSLWDOLQÀRZWRWKHJRYHUQPHQWERQGPDUNHWDYH
UDJHGRI*'3SHUTXDUWHU
public_in / gdp_doll = 0,00457 (3)
(3,69)
,QWKHWKLUGTXDUWHURIWKLVDPRXQWZDV86'ELOOLRQORZHUWKDQSUH-
GLFWHG,QWKH¿UVWTXDUWHURIWKHGHYLDWLRQZDVHYHQJUHDWHU86'ELOOLRQ
see Fig. 6), which appears to have been caused by the downgrading of Russia’s
VRYHUHLJQUDWLQJE\6WDQGDUGDQG3RRU¶V$OWKRXJKWKHUHYLVLRQRIWKHUDWLQJZDV
also caused by the sanctions against Russia, the main factor is most likely the drop
LQRLOSULFHVZKLFKLVSDUWLDOO\FRQ¿UPHGE\WKHFDOFXODWLRQVEHORZZKRVHUHVXOWV
GHPRQVWUDWH WKHZHDN QHJDWLYH LPSDFW RI WKHVDQFWLRQV RQ ¿VFDO UHYHQXHV LQ
WKHPHGLXPWHUP$FFRUGLQJO\ZHWDNHLQWRDFFRXQWWKHLPSDFWRIWKHVDQFWLRQV
RQFDSLWDOLQÀRZWRWKHSXEOLFVHFWRULQEXWQRWIRUWKURXJK
 'LUHFWLQYHVWPHQWRXWÀRZ
This component of the balance of payments is determined mainly by GDP in
U.S. dollar terms:
fdi_out / gdp_doll = 0,0275 + 0,109d_2013q1 (4)
(8,79) (8,70)
Fig. 6. Portfolio Investment in Russian government bonds (USD billion).
Source: $XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
373
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
7KHRXWÀRZ ZDV 86'  ELOOLRQ ORZHU WKDQ SUHGLFWHG LQ WKHWKLUG TXDUWHU
of 2014 (see Fig. 7) and was, on average, USD 3.0 billion lower throughout
WKHVDQFWLRQSHULRGH[FOXGLQJWKHIRXUWKTXDUWHURI7KHWHQWDWLYHHVWLPDWH
IRUWKHWKLUGTXDUWHURILV86'ELOOLRQ
 3RUWIROLRLQYHVWPHQWRXWÀRZ
2LOSULFHVWKHurals YDULDEOHVLJQL¿FDQWO\DIIHFWWKHRXWÀRZRISRUWIROLRLQYHVW-
ment, probably through the channel of foreign investment by oil and gas companies:
p_out = –2,08 + 0,026 urals (5)
(–1,94) (2,22)
7KHRXWÀRZ ZDV 86'  ELOOLRQ ORZHU WKDQ SUHGLFWHG LQ WKHWKLUG TXDUWHU RI
DQGLVFRQVLVWHQWZLWKWKHIRUHFDVWRQDYHUDJHIRUWKHWKLUGTXDUWHURIDQG
WKH¿UVWDQGVHFRQGTXDUWHUVRIVHH)LJDFFRUGLQJWRWKHWHQWDWLYHHVWLPDWH
WKHRXWÀRZLV86'ELOOLRQKLJKHULQWKHWKLUGTXDUWHURI$FFRUGLQJO\DG-
ditional deviations in this component are not included in the forecast.
Fig. 7.'LUHFW,QYHVWPHQWRXWÀRZ86'ELOOLRQ
Source: $XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
Fig. 8.3RUWIROLRLQYHVWPHQWRXWÀRZ86'ELOOLRQ
Source: $XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
374 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
3.7. Changes in assets in the form of cash foreign currency
7KHIROORZLQJHTXDWLRQGHVFULEHVGHPDQGIRUIRUHLJQH[FKDQJHcash changes,
depending on the nominal exchange rate of the U.S. dollar (the er variable).
cash = –0,141 + 0,598 cash(–1) + 32,1(er/er(–1) –1) (6)
(0,207) (3,13) (1,82)
When estimating the effects of the sanctions in this case, it should be noted
WKDWKRXVHKROGVEHJDQWR EX\ IRUHLJQ FXUUHQF\FDVKDVHDUO\DV LQ WKH¿UVW KDOI
of 2014, due to the escalation of tensions in Ukraine and the pressure on the ru-
EOHIURPWKHWHUPLQDWLRQRITXDQWLWDWLYHHDVLQJ E\WKH86)HGHUDO5HVHUYH$V
a result, the increase in the respective assets was considerably higher than pre-
GLFWHGVHH )LJ  DQG WKHVDQFWLRQVLPSRVHG LQWKHWKLUG TXDUWHU GLG QRW OHDG
WRDGGLWLRQDODFFHOHUDWLRQ2QDYHUDJHIRUWKUHHTXDUWHUVRIDFFXPXODWHG
foreign exchange cash was USD 4 billion higher than predicted. The valuations
IRUWKH¿UVWDQGVHFRQGTXDUWHUVRIDUHQRWVXI¿FLHQWO\UHSUHVHQWDWLYHLQWKLV
FDVHEHFDXVHWKH\ODUJHO\UHÀHFWWKHUHERXQGDIWHUWKHIRUHLJQFXUUHQF\SXUFKDVHV
FDXVHG E\ WKHSDQLF GXULQJ WKHIRXUWK TXDUWHU RI  WKHUHERXQG FRQWLQXHG
LQWRWKHWKLUGTXDUWHURI'XHWRWKHLQVXI¿FLHQF\RIGDWDXVHGWRVLPXODWH
the period from 2015 through 2017, we do not include the effects of the sanctions
in the form of increased foreign currency purchases for this period.
 2WKHUDVVHWV
In our opinion, the trends for the other assets of the private sector (which in-
FOXGHWKH³JUH\´RXWÀRZUHÀHFWPRVWO\WKHUHDFWLRQE\5XVVLDQEDQNVDQGFRP-
panies to the sanctions. Thus, with respect to the banking sector, these assets de-
FUHDVHGE\86'ELOOLRQEHJLQQLQJLQWKHWKLUGTXDUWHURIZKLFKLVFORVH
WR WKHDPRXQW RI WKHSD\PHQWV XQGHU WKHXQUH¿QDQFHG GHEW GXULQJ WKHSHULRG
86'ELOOLRQ+RZHYHUWKHTXDUWHUO\G\QDPLFVZHUHTXLWHYRODWLOH7KHVHDV-
VHWVGHFUHDVHGGXULQJWKHWKLUGTXDUWHURIIRUWKHPRVWSDUWZKLFKZDVSRV-
sibly associated with initial concerns about introducing more severe sanctions,
Fig. 9.$VVHWJURZWKLQWKHIRUPRIIRUHLJQH[FKDQJHFDVK86'ELOOLRQ
Source: $XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
375
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
XSWRDQGLQFOXGLQJIUHH]LQJ5XVVLDQDVVHWV6XEVHTXHQWO\LQWKHPHGLXPWHUP
simulation, we ignored this volatility and simply assumed that the foreign assets
RIWKHEDQNLQJV\VWHPGHFUHDVHE\WKHYDOXHRIWKHXQUH¿QDQFHGGHEWWKHEDQNV
RIIVHW ORVVHV IURP LQVXI¿FLHQW UH¿QDQFLQJ E\ PHDQV RI ORZHU DFFXPXODWLRQ RI
other assets).
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WLRQRIRWKHUDVVHWVVHH)LJ+RZHYHUWKLVWUHQGEHJDQHYHQEHIRUHWKHVDQF-
WLRQV ZKHUHDV WKURXJKRXW WKHSHULRG IURP  WKURXJK  WKHRXWÀRZ RI
Russian capital through this channel averaged 9.6% of goods and services ex-
SRUWVLW KDVUHPDLQHG FRQVLVWHQWO\ EHORZ WKLV PDUN VLQFH WKHIRXUWK TXDUWHU RI
DQG UHDFKHG D³WURXJK´ OHYHORIRIH[SRUWVLQWKHVHFRQGTXDUWHURI
EHIRUHWKHLQWURGXFWLRQ RI VHFWRUDO VDQFWLRQV$V QRWHG DERYH WKLVWUHQG
ZDVSUREDEO\DVVRFLDWHGZLWKWKH%DQNRI5XVVLD¶VVWUXJJOHDJDLQVW³JUH\´FDSLWDO
RXWÀRZVFKHPHVKRZHYHUEHFDXVHLWLVQRZGLI¿FXOWWRGLVWLQJXLVKEHWZHHQWKLV
trend and the secondary effects of the sanctions, we assumed that the accumula-
tion of other assets in our estimates decreases regardless of the sanctions. Thus,
ZHFRQVLGHUWKHVHFRQGDU\HIIHFWVIRUWKHQRQ¿QDQFLDOVHFWRUWREH]HURZKLFK
might result in slightly overestimating the overall impact of the sanctions.
3.9. Overall effect for 2014 and the sanction year
In Table 5 and Table 6, we sum up the estimated effects of the sanctions on
WKH¿QDQFLDODFFRXQW FRPSRQHQWV IRUDQGWKHVDQFWLRQ\HDU7KHHVWLPDWHV
for direct investment and public sector liabilities were simply multiplied by four
to put them into annual terms. We derived estimates for debt liabilities for 2014
EDVHGRQWKHUH¿QDQFLQJOHYHOLQWKHWKLUGTXDUWHUDQGWKHGHEWUHSD\PHQWVFKHGXOH
IRUWKHVHFRQGKDOIRIVXEVHTXHQWO\GRXEOLQJWKHPIRUWKHVHFRQGKDOIRI
WKHVDQFWLRQ \HDU ZH XVHG DFWXDO UH¿QDQFLQJ VKDUHV7KHGHFUHDVH LQ EDQN DV-
VHWDFFXPXODWLRQZDVFDOFXODWHGDVWKHIXQGVUHTXLUHGWRUHSD\WKHXQUH¿QDQFHG
Fig. 10. 2WKHUDVVHWVLQFUHDVH86'ELOOLRQ
Note: We assume that, in the absence of sanctions, asset accumulation by the banking sector would correspond
WRWKHDYHUDJHOHYHOGXULQJWKHSHULRGEHWZHHQWKHVHFRQGDQGIRXUWKTXDUWHUVRI86'ELOOLRQ
Source:$XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
376 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
debt. In terms of foreign exchange cash, we also considered the effects of the un-
FHUWDLQW\GXULQJWKH¿UVWKDOIRI
The analysis of these valuations demonstrates that the volume of transactions was
GUDPDWLFDOO\UHGXFHGIRUDOOLWHPVFRQQHFWHGZLWKJURVVFDSLWDOLQÀRZ7KHWRWDOFDO-
FXODWHGDQQXDOGHFUHDVHLQJURVVIRUHLJQFDSLWDOLQÀRZZDV86'ELOOLRQLQ
Table 5
$FWXDODQGFDOFXODWHGFDSLWDOÀRZVIRU86'ELOOLRQ
Sector 3Q 2014 Calculated value
for 3Q 2014
Estimated effect
of the sanctions
(in annual terms)
Federal government –3.9 2.3 –24.8
Liabilities –3.9 2.3 –24.8
$VVHWV
Banks 21.7 2.6 –12.2
Liabilities –8.2 3.7 –38.9
$VVHWV 29.9 –1.1 26.7
Other sectors (without cash
foreign currency)
–15.3 0.9 –63.0
Direct investment –12.6 –6.6 –24.0
Liabilities –1.1 7.7 –35.2
$VVHWV –11.7 –14.3 10.4
Loans –2.7 7.5 –39.1
Liabilities –2.7 7.5 –39.1
Cash foreign currency –1.8 –1.7 –16.0
Total 0.7 4.1 –116.8
Liabilities –15.9 21.2 –138.0
$VVHWV 16.6 –17.1 21.1
Source:$XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
Table 6
$FWXDODQGFDOFXODWHGFDSLWDOÀRZVIRUWKHVDQFWLRQ\HDU86'ELOOLRQ
Sector $YHUDJHIRU
3Q 2014,
1Q 2015 and
2Q 2015
$YHUDJH
calculated values
for the above
TXDUWHUV
Estimated effects
of the sanctions
during
the sanction year
Federal government –3.1 1.7 –12.4
Liabilities –3.1 1.7 –12.4
$VVHWV
Banks 3.6 1.5 –10.0
Liabilities –9.2 2.6 –47.2
$VVHWV 12.8 –1.1 37.2
Other sectors (without cash
foreign currency)
–10.3 0.1 –41.2
Direct investment –6.5 –4.9 –6.0
Liabilities 1.2 5.8 –18.0
$VVHWV –7.7 –10.7 12.0
Loans –3.8 5.0 –35.2
Liabilities –3.8 5.0 –35.2
Cash foreign currency 1.4 –7.6 –8.0
Total –8.4 –4.3 –71.6
Liabilities –14.9 5.1 –112.8
$VVHWV 6.5 –19.4 41.2
Source:$XWKRUV¶FDOFXODWLRQVEDVHGRQGDWDIURP%DQNRI5XVVLD
377
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
ZKLFKZDVHTXDOWRRIWKH*'3$SSUR[LPDWHO\RIWKLVGURSLVDWWULEXWHG
to the banking sector, 18% to the reduction in public sector liabilities and 54% to
WKHQRQ¿QDQFLDOVHFWRU7KXV WKHDFWXDO UHGXFWLRQ LQIRUHLJQFDSLWDOLQÀRZ KDV IDU
exceeded the direct effects of the lending restrictions on public banks and companies.
7KHUHGXFWLRQVLQIRUHLJQ FDSLWDO LQÀRZZHUHSDUWO\ RIIVHW LH E\ E\
DGHFUHDVHLQWKHRXWÀRZRIFDSLWDOPDLQO\IURPWKHEDQNLQJVHFWRU:HHVWLPD
ted the net effect of the sanctions for 2014 as a whole (after taking into account
WKHDFWLRQVRIEXVLQHVVHVDVDQDFFHOHUDWHGFDSLWDORXWÀRZRI86'ELOOLRQLQ
annual terms (6.2% of the GDP).
7KHHVWLPDWHVDUHVOLJKWO\ORZHUIRUWKHVDQFWLRQ\HDUDV7DEOHVKRZV+RZHYHU
this result is largely explained by methodological factors: as noted above, the down-
JUDGLQJRI5XVVLD¶VFUHGLWUDWLQJGXULQJWKH¿UVWTXDUWHURIDQGWKHRYHUVKRRW-
LQJRIWKHH[FKDQJH UDWH GXULQJ WKHIRXUWK TXDUWHURIPDNHLWGLI¿FXOWWRHV-
timate the effects of the sanctions on “public sector liabilities” and “cash foreign
FXUUHQF\´GXULQJWKH¿UVWKDOIRI7KHHVWLPDWHVSURYLGHGIRUWKHPLQ7DEOH
only correspond to the second half of 2014, which is why the data in Table 4 can
be understood on the whole as the minimum estimate for the impact of the sanc-
WLRQV7KXVWKHGHFUHDVHLQWKHIRUHLJQFDSLWDOLQÀRZZDV86'ELOOLRQGXU-
LQJ WKHVDQFWLRQ \HDU ZKLFK HTXDOV  RI  *'3 $SSUR[LPDWHO\  RI
this reduction is attributable to the banking sector, 11% to the drop in public sector
OLDELOLWLHVDQG WRWKHQRQ¿QDQFLDOVHFWRU7KHRIIVHWWKURXJK GHFUHDVHGFDSL-
WDORXWÀRZJUHZRYHUWLPHDQGUHDFKHGRQDYHUDJHGXULQJWKHVDQFWLRQ\HDU
The net effect of the sanctions (including reactions by Russian investors) is esti-
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4. Evaluation of the sanctions’ effects in the medium-term
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(oil prices) and internal (GDP dynamics) factors that, in turn, depend on oil prices
and sanctions. Therefore, estimates of the medium-term impact of the sanctions
cannot be obtained independently: instead, step-by-step scenario calculations are
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PLQHWKHLQÀRZDQGRXWÀRZRIIRUHLJQFDSLWDO
4.1. Scenario assumptions
We considered several combinations of oil price dynamics and the effects of
sanctions from 2015 through 2017 (see Table 7). For 2014, annual average oil
SULFHVHTXDODFWXDOSULFHV86'SHUEDUUHOLQDOOVFHQDULRV
Table 7
%DVLFSDUDPHWHUVRIIRUHFDVWVFHQDULRV
Scenario
No.
Scenario
code
Scenario description 2LOSULFHVIRU±
USD per barrel
Sanctions
1% %DVHOLQHZLWKRXWVDQFWLRQV ²² No
2%6 %DVHOLQHZLWKVDQFWLRQV ²² Ye s
3 S Shock without sanctions ²² No
4 SS Shock with sanctions ²² Ye s
378 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
The baseline scenario corresponds to the hypothetical version in which oil prices
remain stable and no sanctions are imposed. The second scenario is a combination
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ODUWRWKH¿UVWWZREXWZLWKORZRLOSULFHVFRUUHVSRQGLQJDVQRWHGWRWKHPHGLXP
WHUPIRUHFDVWIRUVRFLDODQGHFRQRPLFGHYHORSPHQWRI2FWREHU$FRPSDUL-
VRQRIWKH%DQG%6VFHQDULRVVKRZVWKHHIIHFWRIWKHVDQFWLRQVZLWKKLJKRLOSULFHV
DQGWKH6DQG66YHUVLRQVVKRZWKHLUFRQVHTXHQFHVZLWKORZRLOSULFHV6LPLODUO\
DFRPSDULVRQ RI WKHLQGLFDWRUV LQ WKH6DQG %66 DQG %6 VFHQDULRV \LHOGV HVWL-
mates for the effect of falling oil prices without and with the sanctions.
%HORZZHOLVWWKHRWKHUDVVXPSWLRQVXVHGLQIRUPXODWLQJWKHVFHQDULRV
x $OO¿QDQFLDOVDQFWLRQVDUHHIIHFWLYHWKURXJKRXWWKHIRUHFDVWSHULRG:HFDQQRW
rule out the possibility that they (particularly those imposed by the EU) will be
OLIWHGVRRQHU+RZHYHULWLVLPSRUWDQWWRXQGHUVWDQGKRZORQJWKHLUHIIHFWZLOO
extend if they remain.
x )RUWKHQRQ¿QDQFLDOVHFWRULQDOOVFHQDULRVZHDVVXPHGGHRIIVKRULQJZKHWKHU
resulting from the sanctions or from anti-offshore government policies): accu-
mulation of other assets is not 9.6% of export revenues (as it was in 2010 through
EXWRQO\ZKLFKFRUUHVSRQGVWRWKHDYHUDJHYDOXHIRUWKHWKLUGTXDU-
WHURIDQGWKH¿UVWDQGVHFRQGTXDUWHUVRI
x ,QWHUPV RI ¿VFDO SROLF\ZH DVVXPHG WKDWWKHH[SHQGLWXUHV LQWKH%DQG %6
scenarios are consistent with the initial version of the budget for 2015 through
2017, as adopted in December 2014;7 for the S and SS scenarios, the 2015
H[SHQGLWXUHV DUH WDNHQ IURP WKHPRGL¿HG YHUVLRQ DGRSWHG LQ $SULO 8
DQG¿QDOO\IRU  DQGWKH\DUHWDNHQIURPWKHEXGJHW ELOOIRU
through 2018.9 The same assumptions concern the changes in the volumes of
the Reserve Fund.
x $OWKRXJKWKH*XLGHOLQHVIRUWKH6LQJOH6WDWH0RQHWDU\3ROLF\LQDQGIRU
2016 and 201710 LQGLFDWH WKDW WKH%DQN RI 5XVVLD VKRXOG HQJDJH LQ IRUHLJQ
exchange interventions in response to increases or expenditures of the Reserve
Fund, such actions have not yet been observed in practice. Moreover, during
WKHVHFRQGTXDUWHU RI WKH%DQNRI5XVVLDSXUFKDVHGIRUHLJQFXUUHQFLHV
DJDLQVWDEDFNGURS RI 5HVHUYH)XQGVSHQGLQJ2XUFDOFXODWLRQVXVHDQLQWHU-
PHGLDWHVFHQDULREHWZHHQWKH*XLGHOLQHVDQGSUDFWLFH7KH%DQNRI5XVVLDLV
not making foreign exchange interventions in response to transactions involv-
ing Russia’s sovereign wealth funds.
x $QXPEHU RI H[SHUWV H[SUHVVHG WKHRSLQLRQ WKDW WKHVDQFWLRQV LPSRVHG RQ
Russia encouraged a “preventive” reduction in the foreign debt, while other
countries only faced a sharp deterioration in foreign borrowing conditions in
2015, against the backdrop of an expected increase in the U.S. Federal Funds
rate (in terms of the scenarios considered, this would have meant an “addition”
WR WKHQHW FDSLWDO RXWÀRZ IURP  WKURXJK  LQ ERWK WKH%DQG 6VFH-
QDULRV$V QRWHG DERYHZHFRXOG QRW ¿QGDVLJQL¿FDQWFRUUHODWLRQ EHWZHHQ
WKH86PRQHWDU\SROLF\UDWHDQGWKHLQÀRZRIFDSLWDOLQWR5XVVLD7KXVWKLV
7
http://www.kremlin.ru/acts/bank/39268.
8
KWWSZZZPLQ¿QUXUXGRFXPHQW"LGB 
9
KWWSDVR]GGXPDJRYUXPDLQQVI6SUDYND1HZ"2SHQ$JHQW51 .
10 http://cbr.ru/publ/ondkp/on_2015(2016-2017).pdf.
379
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
HIIHFWLVQRWLQFOXGHGLQWKHFDOFXODWLRQVDOWKRXJKLWPD\EHFRPHVLJQL¿FDQWWR
some extent in 2016 and 2017.
4.2. Calculations for 2015 through 2017
7DEOHDQG7DEOHFRQWDLQWKHPDLQIRUHFDVWVREWDLQHGIURPWKHFDSLWDOLQÀRZ
FDOFXODWLRQV2IFRXUVHWKH\DUHVRPHZKDWQRWLRQDOEHFDXVHLQWKHFDVHRIRWKHU
DFWLRQVE\EDQNVQRQ¿QDQFLDOFRPSDQLHVDQGPRQHWDU\DXWKRULWLHVWKHSDUWLFX-
ODULQGLFDWRUV PD\ EHGLIIHUHQW+RZHYHUZHFRQVLGHUHG WKDW WKHPDJQLWXGHRI
the impact (determined by comparing the scenarios) seemed plausible.
The EEG model on which the calculations are based is built upon econometric
(including cointegrating) estimates of the relationships between the basic macro-
HFRQRPLFDQG ¿VFDOYDULDEOHVIURPWKURXJK DQGWKHPDFURHFRQRPLF
identities connecting them. In particular, we can obtain estimates for the im-
SDFWRIWKHEDODQFHRISD\PHQWVVKRFNVIRUHLJQ WUDGH DQG ¿QDQFLDO VKRFNVRQ
WKHFRPSRQHQWVRI*'3WKHH[FKDQJHUDWH&3,DQG¿VFDOUHYHQXHV
7KHVHUHVXOWVVKRZWKDWWKHFDSLWDOLQÀRZORVVHVDUHRQWKHZKROHDSSUR[LPDWHO\
USD 160–170 billion over the period under review. Table 10 shows that these losses
are approximately 2.5 times lower than the total losses from decreasing oil prices
(by the end of the period, the losses from low oil prices are 4 times higher than
WKHORVVHVIURPVDQFWLRQVDOWKRXJKWKHORVVHVIRUWKHFXUUHQWDFFRXQWDQG¿QDQFLDO
account can only be compared notionally. It should also be noted that the impact of
WKHVDQFWLRQVRQFDSLWDOÀRZVLVDOPRVWLGHQWLFDODWKLJKRUORZRLOSULFHV
Table 8
7KHIXOOHVWLPDWHGLPSDFWRIWKHVDQFWLRQVRQFDSLWDOÀRZVDWKLJKRLOSULFHV86'ELOOLRQ
+ 2015 2016 2017 Total for
2014–2017
*URVVFDSLWDOLQÀRZWRWDO –69.0 –84.8 –57.9 –64.3 –276.0
Debt liabilities –39.0 –67.3 –33.8 –44.0 –184.1
Foreign direct investment –17.6 –17.5 –24.1 –20.3 –79.5
General government liabilities –12.4 –12.4
*URVVFDSLWDORXWÀRZ –10.6 –46.2 –26.4 –31.1 –114.3
Net effect from the sanctions –58.4 –38.6 –31.5 –33.2 –161.7
For reference: net effect from
the sanctions as a percentage of GDP
–2.9 –1.8 –1.4 –1.5 –1.9
Source: +HUHLQDIWHUDXWKRUV¶FDOFXODWLRQV
Table 9
)XOOHVWLPDWHGLPSDFWRIWKHVDQFWLRQVRQFDSLWDOÀRZVDWORZRLOSULFHV86'ELOOLRQ
+ 2015 2016 2017 Total for
2014–2017
*URVVFDSLWDOLQÀRZWRWDO –68.8 –89.4 –58.0 –65.3 –281.5
Debt liabilities –39.0 –67.3 –33.8 –44.0 –184.1
Foreign direct investment –17.6 –22.1 –24.2 –21.3 –85.2
General government liabilities –12.4 –12.4
*URVVFDSLWDORXWÀRZ –10.6 –45.6 –26.1 –30.9 –113.2
Net effect from the sanctions –58.2 –43.8 –31.7 –34.4 –168.1
For reference: net effect from
the sanctions as a percentage of GDP
–2.9 –3.3 –2.4 –2.4 –2.8
380 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
7KHQHW HIIHFW RI WKHVDQFWLRQV FRQVLVWV RI DUHGXFHG FDSLWDO LQÀRZ RI URXJKO\
86'ELOOLRQDQGDUHGXFWLRQLQFDSLWDORXWÀRZWKDWSDUWLDOO\RIIVHWVWKHUHGXFHG
LQÀRZE\ DSSUR[LPDWHO\7ZRWKLUGVRIWKHGHFUHDVHLQJURVVFDSLWDOLQÀRZ
LVDVVRFLDWHGZLWKUHGXFWLRQVLQGHEW¿QDQFLQJ+RZHYHUORVVHVLQWKLVDUHDLQFOXGH
direct effects (through borrowing by banks and companies affected by the sanctions)
as well as indirect effects related to the rest of the borrowers. If we notionally as-
VXPHWKDWWKHVHWZRFRPSRQHQWVDUHURXJKO\HTXDOWKHQWKHWRWDOUHGXFWLRQLQJURVV
FDSLWDOLQÀRZLVDSSUR[LPDWHO\WKUHHWLPHVWKDWRIWKHGLUHFWHIIHFWVRIWKHVDQFWLRQV
7KHLQFUHDVHGRXWÀRZ RIFDSLWDO VORZV GRZQ GRPHVWLF GHPDQG$VDUHVXOW
JLYHQORZ RLOSULFHV LQWKHVFHQDULR ZLWK VDQFWLRQV JURVV ¿[HG FDSLWDO LQYHVW-
ment is, on average, 3.5% lower than in the scenario without sanctions from 2014
through 2017, while retail sales turnover is 2.6% lower (these calculations, in
accordance with the estimates earlier obtained by the Economic Expert Group,
DVVXPHD¿VFDOPXOWLSOLHU YDOXH RI+RZHYHUWKHLPSDFWRI WKHVDQFWLRQV
RQLQYHVWPHQWJURZWKUDWHVLVPRVWO\OLPLWHGWRDQG$V)LJVKRZV
falling oil prices have a more profound impact on investment (mainly due to pro-
GXFHUV¶UHGXFHGSUR¿WVZKLFKDUHWKHPDLQVRXUFHRIVDYLQJV,QYHVWPHQWGURSV
PRVWVLJQL¿FDQWO\LQDOWKRXJKE\WKHLPSDFWRIFKHDSRLOLVSUDFWLFDOO\
eliminated. The comparison of investment forecasts as of the end of the period in
TXHVWLRQIRUHDFKVFHQDULRFKDUDFWHUL]LQJWKHDFFXPXODWHGHIIHFWVRIH[RJHQRXV
shocks) demonstrates that the sanctions reduced investment by 5% on the whole
throughout the period, whereas falling oil prices reduced investment by 24%.
7KHLQFUHDVHGFDSLWDORXWÀRZQDWXUDOO\DQGSUHGLFWDEO\EULQJVGRZQWKHUXEOHH[-
change rate (see Fig. 12). Thus, according to our estimates, the sanctions increased
Fig 11. Impact of shocks on (a) investment growth rates (p.p.) and (b) investment volume (%).
Table 10
$QHYDOXDWLRQRIWKHHIIHFWVRIWKHVDQFWLRQVDQGIDOOLQJRLOSULFHVRQEDODQFHRISD\PHQWVLQGLFDWRUV
(USD billion).
2014 2015 2016 2017 Total
&KDQJHVLQQHWFDSLWDOLQÀRZDVDUHVXOWRI
the sanctions
–58 –44 –32 –34 –168
2LODQGJDVH[SRUWYDOXH 0 –122 –141 –135 –398
Note: 7KLV DQGVXEVHTXHQWWDEOHV DQG¿JXUHVVKRZ WKHHIIHFWVIURP WKHVDQFWLRQVXQOHVVRWKHUZLVH VWDWHGDW
low oil prices and the effects from falling oil prices with sanctions.
381
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
the exchange rate of the USD by approximately 6 rubles in 2015. This effect declines
RYHUWLPHDVJUHDWHURXWÀRZRIFDSLWDOLVDVVRFLDWHGZLWKLPSURYHGQHWIRUHLJQDVVHWV
and, accordingly, improved balance of investment income (thus, by 2017, the impact
of the sanctions on the annual average USD rate is estimated at as low as 2 rubles).
$ ZHDNHU UXEOH SURYLGHV FHUWDLQ VXSSRUW WR QHW H[SRUWV WKXV WKHLPSRUWV LQ
WKH%6 VFHQDULR LQ  WKURXJK  DUH RQ DYHUDJH ORZHU WKDQ LQ WKHEDVH-
OLQH VFHQDULR % E\  ZKHUHDV LQ WKH66 VFHQDULR WKH\ DUH  ORZHU WKDQ
in the shock scenario (S). Nevertheless, the effects from reduced domestic demand
prevail, as expected, and the GDP in scenarios without the sanctions is higher than in
scenarios with the sanctions (see Fig. 13). Notably, the effect of both shocks remains
VLJQL¿FDQW WKURXJKRXW WKHSHULRG XQGHU UHYLHZ DW ± SS IRU WKHVDQFWLRQV DQG
–1.1 p.p. for falling oil prices). GDP losses that have accumulated over the period
DPRXQWWRIRUWKH¿UVWVKRFNDQGIRUWKHVHFRQGVKRFN7KXVWKHDQQXDO
DYHUDJHHVWLPDWHG*'3ORVVHVGXHWRWKH¿QDQFLDOVDQFWLRQV±SSDUHFORVH
to the results obtained by Sinyakov et al. (2015) (0.5–0.6 p.p.) and, to the best of
our judgment, are lower than the vaguely formulated IMF estimates (according to
which, the effect would “initially” be 1.0–1.5 p.p. and 9 p.p. “in the medium-term”).
It should be noted that the considerable decrease in GDP in response to falling
RLOSULFHVUHÀHFWVWKH³SDVVLYH´DGMXVWPHQWWRVXFKVKRFNVSUHYDLOLQJLQWKH5XVVLDQ
economy. The real depreciation of the ruble due to deteriorating terms of trade
only slightly increased the volume of exports (because they are dominated by
Fig. 12.$QQXDODYHUDJH86'UDWHXQGHUGLIIHUHQWVFHQDULRV58%86'
Fig 13. Impact of shocks on (a) GDP growth (p.p.) and (b) GDP volume (%).
382 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
oil and gas exports which are not particularly sensitive to the exchange rate) (see
*XUYLFK3ULOHSVNL\7KHORZHUUHDOH[FKDQJHUDWHGRHVQRWKDYHDVLJQL¿-
cant effect on the supply of tradable domestic goods to the domestic market (see
%ODQNHWDO 7KXV WKHPDLQ UHDFWLRQWR IDOOLQJ RLOSULFHVZDV GHFUHDVHG
production of non-tradable goods resulting from falling domestic demand.
6FHQDULRVZLWKVDQFWLRQVDUHDOVRFKDUDFWHUL]HGE\KLJKHULQÀDWLRQVHH)LJ
ZKLFKLVUHODWHGWRWKHFRQVHTXHQFHVRIWKHIRRGHPEDUJRWKHHIIHFWRIZKLFKDF-
cording to estimates by E. Gurvich et al. (2014), was 1.2 p.p. in 2014 and 0.8 p.p.
LQDQGWRWKHH[FKDQJHUDWHSDVVWKURXJK+RZHYHUWKHDGGLWLRQDOFRQWUDF-
WLRQ LQ GRPHVWLF GHPDQG XQGHU WKHVFHQDULRV ZLWK VDQFWLRQV UHVWUDLQV LQÀDWLRQ
WRDFHUWDLQH[WHQW7KHLPSDFWRIERWKVKRFNVRQLQÀDWLRQLVPRVWO\FRQ¿QHGWR
2014 and 2015, whereas the combined effect on consumer prices is estimated
at approximately 4% for the sanctions and 8% for falling oil prices. Comparing
the accumulated growth of CPI for 2014 through 2017 reveals that the sanctions
add 5.7 p.p. to it, whereas falling oil prices add 11.0 p.p.
$ ZHDNHU UXEOH DQG KLJKHU LQÀDWLRQ XQGHU WKHVFHQDULRV ZLWK WKH VDQFWLRQV
SURYLGHVXEVWDQWLDOVXSSRUW IRU ¿VFDOUHYHQXHVLQ QRPLQDO WHUPVZKLFKDUH QR
OHVV LPSRUWDQW IRU WKHJRYHUQPHQW WKDQ UHDO UHYHQXHV LQ WKH¿UVW DQG VHFRQG
years after the shocks) (see Fig. 15). Moreover, in 2014 and 2015, as a result of
Fig 14.,PSDFWRIVKRFNVRQDLQÀDWLRQUDWHSSDQGEFRQVXPHUSULFHLQGH[
Fig 15.,PSDFWRIVKRFNVRQ¿VFDOUHYHQXHVLQDQRPLQDODQGEUHDOWHUPVRIWKHOHYHO
383
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
WKHZHDNHUUXEOH WKHVDQFWLRQVHYHQLQFUHDVHGWKHUHDOYDOXHRI ¿VFDOUHYHQXHV
In other words, we are facing a paradox: ,QWKHLULQLWLDO\HDUVWKH¿QDQFLDOVDQF-
tions help the government overcome possibly the most painful consequences of
IDOOLQJRLO SULFHVLH WKHVKDUS UHGXFWLRQLQ ¿VFDO UHYHQXHV, whose real value
falls by almost 20% over two years, mainly due to cheaper oil.
%HFDXVHWKH%DQNRI5XVVLDZLOOQRWLQWHUYHQHLQWKH); PDUNHW IURP 
through 2017, based on the assumptions above, adjusting the balance of pay-
PHQWV WR WKHLQFUHDVH LQ WKHQHW FDSLWDO RXWÀRZ FDXVHG E\ WKHVDQFWLRQV ERLOV
down to a mirroring increase in the current account. It consists of three main
components: increased exports due to the stimulating effects of the weaker ruble;
lower imports (also due to the overall contraction of domestic demand); and im-
proved balance of investment income. The results presented in Table 11 showing
the relative contribution of these components (i.e., comparing scenarios with
ERWKKLJKDQGORZRLOSULFHVFRQ¿UPWKHSRLQWSURYHQSUHYLRXVO\VHH*XUYLFK
and Prilepskiy, 2013) that imports play a considerably more important role in
adjusting to external shocks than exports (the so-called “internal” mechanism
RI DGMXVWPHQW SUHYDLOV RYHU WKH³H[WHUQDO´ PHFKDQLVP 7DEOH  DOVR UHÀHFWV
the fact noted above that investment income improves over time under those
scenarios with the sanctions.
%\  DGMXVWPHQW LQ WKHSULPDU\ DQG VHFRQGDU\ LQFRPH EDODQFHV DOPRVW
completely neutralizes the sanctions’ impact on the real exchange rate (see
7DEOH2QWKHRQHKDQGWKLV¿QGLQJUHÀHFWVWKHJHQHUDOUHVXOWRIWKHFDOFXOD-
Table 11
Components of the relative increase in the current account under scenarios with sanctions.
2015 2016 2017
+LJKRLOSULFHV±86'ELOOLRQ 38.6 31.5 33.2
including (%)
Exports of goods and services 10.9 6.2 4.3
Imports of goods and services 60.8 39.5 32.1
%DODQFHRISULPDU\DQGVHFRQGDU\LQFRPH 28.3 54.3 63.6
Low oil prices (4–3), USD billion 43.8 31.7 34.4
including (%)
Exports of goods and services 12.4 7.2 4.7
Imports of goods and services 47.3 39.4 36.5
%DODQFHRISULPDU\DQGVHFRQGDU\LQFRPH 40.3 53.3 58.9
Tab le 12
0HGLXPWHUPFRQVHTXHQFHVRI¿QDQFLDOVDQFWLRQVDQGRLOVKRFNVHVWLPDWHGFKDQJHVLQPDFURHFRQRPLF
DQG¿VFDOYDULDEOHVIRU
Variable/shock Sanctions Falling oil prices
with high
oil prices
with low
oil prices
without
sanctions
with
sanctions
Fixed capital investment –3.2 –5.0 –22.6 –24.1
Retail sales turnover –2.4 –3.7 –17.1 –18.2
GDP volume –1.5 –2.4 –7.1 –8.0
Consumer prices at the end of the period 3.1 4.1 7.1 8.1
Real ruble exchange rate against the USD –0.5 –0.3 26.9 –26.8
1RPLQDO¿VFDOUHYHQXHV 1.1 1.2 –13.1 –13.0
5HDO¿VFDOUHYHQXHV –1.2 –2.0 –18.9 –19.5
384 (*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
tions, i.e., that the medium-term effects of the sanction shock are weaker than
WKRVH RI WKHRLO SULFH VKRFN 2Q WKHRWKHU KDQG LW PHDQV WKDW WKHFRPSDUDWLYH
GDP gain from the dynamics of net exports in scenarios with the sanctions will
also be close to zero by 2017, and over the longer term, low oil prices are a sig-
QL¿FDQWO\PRUHLPSRUWDQW IDFWRU LQ LQFUHDVLQJ H[WHUQDO FRPSHWLWLYHQHVV DQG HQ-
couraging import substitution than the sanctions.
$V QRWHG DERYH WKHHIIHFW RI WKH¿QDQFLDO VDQFWLRQV RQ QHW FDSLWDO LQÀRZ
GRHVQRWGHSHQGRQRLOSULFHV+RZHYHUFRPSDULQJPDFURHFRQRPLFLQGLFDWRUV
XQGHUGLIIHUHQWVFHQDULRVVKRZVWKDWWKHVDQFWLRQVKDYHDVLJQL¿FDQWO\VWURQJHU
impact on economic development at low oil prices than at high oil prices (see
Table 12). Similarly, the sanctions aggravate the impact of falling oil prices
on the economy. This “synergy” emerges because similar reductions (in USD
WHUPVLQFDSLWDOLQÀRZLQWKHVFHQDULRZLWKORZRLOSULFHVEHFRPHFRQVLGHUDEO\
larger as a percentage of the GDP components (investment, consumption, etc.),
which can be illustrated by a comparison between the bottom lines of Table 8
and Table 9.
5. Conclusion
%DVHGRQWKHUHVXOWVRI WKHTXDQWLWDWLYH HYDOXDWLRQRIWKHHIIHFWVRIWKHVDQF-
tions, we draw several conclusions.
x $VLGHIURP WKHLU GLUHFW HIIHFWV LH OLPLWHG IRUHLJQ ERUURZLQJRSSRUWXQLWLHV
for banks and companies in the fuel and energy and military-industrial sectors
WKDWDUHSXEOLFO\KHOGWKH¿QDQFLDOVDQFWLRQVhave considerable indirect effects
on the Russian economy in the form of decreasing foreign direct investment,
fewer borrowing opportunities for companies and banks not directly targeted
E\ WKHVDQFWLRQV DQG ORZHU FDSLWDO LQÀRZ LQWR WKHJRYHUQPHQW GHEW PDUNHW
These indirect effects roughly triple the direct effects of the sanctions.
x The consequences of the sanctions are to a large extent (by approximately 40%)
RIIVHWE\GHFUHDVHG5XVVLDQFDSLWDORXWÀRZ$VDUHVXOWWKHWRWDODGGLWLRQDOQHW
FDSLWDORXWÀRZUHODWHGWRWKHVDQFWLRQVFDQEHHVWLPDWHGDW86'ELOOLRQLQ
2014 and USD 160–170 billion over the period from 2014 through 2017.
x 7KHVDQFWLRQVDJDLQVW 5XVVLD DUHTXLWH SDLQIXO IRU real sector indicators: by
DFFRXQWLQJIRUWKHLU¿QDQFLDOFRPSRQHQWDORQHZLOO\LHOGORVVHVRI
of pre-crisis GDP by 2017 (when oil prices are approximately USD 50 per
barrel), with a simultaneous reduction in investment and consumption.
x Nevertheless, the drop in oil prices had a much larger effect on the Russian
economy. Indeed, according to our estimates, the drop in prices leads to GDP
losses of 8.5 p.p. cumulatively from 2014 through 2017.
x 7KHGLIIHUHQFH EHWZHHQ WKHHIIHFWV RI WKHWZR VKRFNV RQ ¿VFDO UHYHQXHV LV
particularly large. $OWKRXJKWKHIDOO LQRLO SULFHV GHFUHDVHVWKHLU UHDOYDOXH
E\ ± E\ ± WKHVDQFWLRQV GHFUHDVH WKHP LQVLJQL¿FDQWO\ E\
1–2%). Moreover, at the beginning of the period, government revenues even
grow in real terms.
x 7KHFRPSDUDWLYHO\ OLPLWHG HIIHFW RI WKH¿QDQFLDO VDQFWLRQV FRPSDUHG ZLWK
the fall in oil prices LVODUJHO\H[SODLQHGE\WKHDFWLYHVHOIDGMXVWPHQWLQWKH¿UVW
FDVHLQSDUWLFXODUWKURXJKUHGXFHGFDSLWDORXWÀRZIURP5XVVLD ZKHUHDVLQ
the second case, there is mainly “passive” adjustment.
385
(*XUYLFK,3ULOHSVNL\5XVVLDQ-RXUQDORI(FRQRPLFVí
x 7KHLPSDFWRIWKH¿QDQFLDOVDQFWLRQVKDVEHHQDJJUDYDWHGE\WKHIDOOLQJRLOSULFHV
EHFDXVHWKHSULFHGURSOHGWRLQFUHDVHGORVVLQFDSLWDOLQÀRZUHODWLYHWR*'3In
particular, when speaking of real sector indicators, i.e., GDP, investment and re-
tail sales, the effect of the sanctions has been increased by more than 50%.
x +RZHYHU ZH VKRXOG QRWH WKHconsiderable ability of the Russian economy to
DGMXVWDVDUHVXOWRIWKHWUDQVLWLRQWRDÀRDWLQJH[FKDQJHUDWHUHJLPH$FFRUGLQJ
WRRXUFDOFXODWLRQVWKHWRWDOQHWFDSLWDOLQÀRZORVVHVGXH WRWKHVDQFWLRQVIURP
2014 through 2017 will amount to 8% of 2013 GDP (with low oil prices), where-
as the accumulated GDP losses (the total difference in output between the S and
SS scenarios from 2014 through 2017) are estimated at 6 p.p. of 2013 GDP.
$FNQRZOHGJHPHQWV
The authors are thankful to an anonymous reviewer for several helpful com-
ments.
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%ODQN$ *XUYLFK(  8O\XNDHY$ ([FKDQJH UDWH DQG FRPSHWLWLYHQHVVRI 5XVVLD¶V
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PRGHOOLQJIRUWRPRUURZ´0HOERXUQH$XVWUDOLD
)UDW]VFKHU0&DSLWDOÀRZVSXVKYHUVXVSXOOIDFWRUVDQGWKHJOREDO¿QDQFLDOFULVLVECB
Working Paper, 1364.
*XUYLFK(3ULOHSVNL\,+RZWRVHFXUHH[WHUQDOVXVWDLQDELOLW\RIWKH5XVVLDQHFRQRP\
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WKHJOREDO¿QDQFLDOF\FOHEHWDPHG"IMF Working Paper, 14/196.
2UORYD1)LQDQFLDOVDQFWLRQV&RQVHTXHQFHVIRU5XVVLD¶VHFRQRP\DQGHFRQRPLFSROLF\
Voprosy Ekonomiki, 12, 54–66 (In Russian).
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the oil shock: The role of large change in relative prices and structural rigidities %DQN RI
5XVVLD:RUNLQJ3DSHU6HULHV1R0RVFRZ%DQNRI5XVVLD,Q5XVVLDQ
6KLURY$<DQWRYVNL\$  3RWDSHQNR 9 (VWLPDWLRQ RI SRWHQWLDO LPSDFWRIVDQFWLRQV
on the economic development of Russia and the EU. Problemy Prognozirovaniya, 4, 3–16
(In Russian).
8O\XNDHY$0DX9 )URPHFRQRPLFFULVLV WR HFRQRPLF JURZWK RU KRZ WRSUHYHQW
the crisis from turning into stagnation. Voprosy Ekonomiki, 4, 5–19 (In Russian).
9HUFXHLO-7KHLPSDFWRIVDQFWLRQVRQWKH5XVVLDQHFRQRP\$VVHVVLQJWKHFRQVHTXHQFHV
RIWKH8NUDLQLDQFRQÀLFW. Note from the Observatoire franco-russe, 9.
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Economic sanctions can be a serious impediment to economic progress, since the export potential of target countries may be adversely affected by the sanctions. Due to the detrimental impacts on the exports of energy products and accordingly its efficiency, in this study, we sought to evaluate the impact of economic sanctions on the export efficiency of energy products of Iran. To fulfill the aim, the determinants of the bilateral exports of energy products from Iran to its ten major energy products' customers are identified using a generalized gravity model and the least-squares dummy variable (LSDV) estimator by adding the dummy for each country from 1997 to 2018 to determine input vectors required for calculating the efficiency changes of the energy products' exports. After identifying the determinants, the Malmquist index is employed to calculate the efficiency changes of bilateral energy exports from 1998 to 2018. Finally, the efficiency changes are analyzed to evaluate the relationship between economic sanctions and the efficiency of bilateral energy exports. Based on the results, an increase in the GDP and CPI of Iran's partners boosts the bilateral energy exports, whereas the effects of Iran's GDP, the geographical distance between Iran and its partners, and sanctions on the bilateral energy exports have been negative. The values of the efficiency changes have also decreased in the years in which economic sanctions imposed on Iran. Because energy exports serve a prominent role in Iran's economy, the government should try to reach international agreements to remove sanctions.
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This paper intends to establish conceptual foundations for analyzing the economic dimensions of a territorial military conflict. The Intraregional Trade Disruption from War Simulator (ITDW-Simulator) attempts to estimate the heterogeneous macroeconomic effects of the military conflict. The model suggests two primary indicators and four secondary indicators. The final trade suffocation index (TS-Index) and the final investment desgrowth from war function (w) measure trade disruption's potential impact on international trade patterns and economic development. The agriculture exports, industrial and manufacturing exports, service exports, and FDI flows capture the trade and investment interdependency. The model investigates the impact of the Russo-Ukraine military conflict on the bilateral trade and investment between the Russian Federation and the European Union.
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В представленной монографии рассматриваются вопросы теории перехо-да мирового сообщества к полицентризму, вскрываются причины привер-женности англо-саксонской идеологической концепции мирового порядка монополярности; анализируются перспективы развития глобализации как процесса интернационализации мирового воспроизводственного процесса и как политики переформатирования мирового сообщества под аугменти-ровааную сетевую систему управления; рассмотрены причины сохранения национальной идентичности и государства как института обеспечения без-опасности и развития социума в условиях полицентризма.
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The article aims to determine the level of impact of the financial sector on economic growth. The financial sector’s activities provide financing for business development, provide borrowing opportunities and provide compre-hensive protection when concluding insurance contracts, which in the long run ensures economic growth. It is es-sential to understand which financial sector activities are most significant in economic growth. Borrowing and equity trading have been found to positively impact economic growth, while the market capitalisation of companies has been found to harm economic growth. The results can be used to develop growth plans for financial institutions that pro-mote economic development.
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Drawing heavily on theories about Russia's informal politics, American sanctions were designed to change Russian foreign policy by exploiting political conflict among oligarchs and the state elite; however, after nearly eight years of sanctions, Russian elites seem more united than ever. I propose that Russia's oligarchs—the ruthless self-interested economic elite in Russia's informal political system—might sometimes act as a cohesive oligarchy, particularly when their wealth is threatened from external rather than domestic sources, as has been the case under Western sanctions. Through an in-depth case study on the design and outcome of sanctions, this article seeks to develop a more dynamic theory of Russia's informal politics and explain the apparent cohesion among state and economic elites since 2014 as the result of a politics of wealth defense induced by Western sanctions.
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Le 27 février 2014, des troupes non identifiées envahissent la péninsule de Crimée au sud de l'Ukraine, puis l'Est de l'Ukraine. À la suite d'un référendum contesté, la Crimée est annexée à la Fédération de Russie, alors que la guerre civile fait rage dans les territoires de l'Est du pays. Rapidement, les États-Unis et l'Union européenne prennent des mesures diplomatiques envers la Russie. Après plus de cinq mois de conflit et plusieurs incidents, les Occidentaux optent finalement pour des mesures économiques devant avoir un impact considérable sur l'économie russe. L'objectif poursuivi est ainsi d'amener la Russie à négocier une situation viable pour l'Ukraine. Comme dans tout autre régime de sanctions, la question de l'efficacité se pose. Est-ce que les mesures économiques prises par l'Union européenne sont suffisantes pour initier un changement de politique étrangère en Russie? Après plus de trois ans sous sanctions, l'économie russe a subi d'importants dommages. Ce n'est toutefois pas la première fois que la Russie se retrouve sous sanctions. En 1979, alors que l'URSS – son prédécesseur – envahi l'Afghanistan dans le contexte de la Guerre froide, les États-Unis et plusieurs États de l'Europe de l'Ouest imposent de sévères sanctions à l'URSS. Dès lors, que peut-on tirer de l'analyse de ce régime de sanctions afin de mieux comprendre la réaction actuelle de la Russie ?
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The paper deals with the roots and features of current Russian economic problems, compares 2008—2009 and 2014—2015 crises, factorizes the last one on three main components. The analysis includes the effects of sanctions against Russia on the current economic situation and structural problems that slow economic growth. Special attention is paid to examples of medium-term and long-term steps that can provide sustainable development of Russian economy. © 2015, Russian Presidental Academy of National Economy and Public Administration. All rights reserved.
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Traditionally, psychiatrists and others working in the field of mental health have paid little attention to the content of psychotic experiences. What the voices say or the connections between an individual's unusual beliefs and life history have been dismissed as meaningless or not understandable. Boyle (1992) states that:
Scenarios of development of the Russian economy in the conditions of sanctions and falling oil prices. Report for the Civil Initiatives Committee
  • E Gurvich
Gurvich, E. et al. (2014). Scenarios of development of the Russian economy in the conditions of sanctions and falling oil prices. Report for the Civil Initiatives Committee. Moscow (In Russian).
The Institute of International Finance
  • D C Washington
Washington, DC: The Institute of International Finance. IMF Working Paper, 14/196.
Crimean crisis will cost Russia too. BOFIT Policy Brief, 1. Dynamics of Russia's potential GDP after the oil shock: The role of large change in relative prices and structural rigidities on the economic development of Russia and the EU
  • J Rautava
Rautava, J. (2014). Crimean crisis will cost Russia too. BOFIT Policy Brief, 1. Dynamics of Russia's potential GDP after the oil shock: The role of large change in relative prices and structural rigidities on the economic development of Russia and the EU. Problemy Prognozirovaniya, 4, 3-16 (In Russian).