Sanction Evasion: The case of Russia’s counter-sanctions

Sammanfattning: Sanction evasion can hamper the effect of international sanctions. This paper aims to establish whether the Russian sent counter-sanctions were evaded by the Western countries by using non-sanctioned countries as transit routes for the sanctioned products. This question is analysed by estimating a gravity equation of trade by applying Pseudo-Poisson Maximum Likelihood and Ordinary Least Squares estimators in a difference-in-differences setup. The data covers all yearly trade flows between all 221 world exporters and importers for the period 2012–2016. The results suggest that on average, trade from sanctioned countries was diverted to nonsanctioned countries, but not further to Russia through these countries. Furthermore, exports in sanctioned products to Russia’s neighbouring countries decreased from the Western countries, while the trade from the non-sanctioned neighbouring countries to Russia increased. In conclusion, no large-scale sanction evasion was present in the two years post-sanction imposition.