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THE INFLUENCE INTERNATIONAL SANCTIONS ON ECONOMY OF RUSSIAN FEDERATION

Toivo Tanning, doctoral candidate

Tallinn School of Economics, Estonia

Championship participant: the National Research Analytics Championship - "Estonia";

the Open European-Asian Research Analytics Championship;

This publication aims are at analyzing the influence and the effects of international sanctions and partial boycott on Russian economy. The focus is energy trade between the EU and Russia. Energy security is always one of the most important problems for the EU. Russia is the EU largest energy suppliers. With regard to acute political and economic situation in Eastern Europe, with the EU and Russia on mutual economic partial blockade, has become very topical, what is the position of energy in the European countries. What are the prospects for a partial boycott of resources? What you can expect from Russia? How are you doing Russian foreign trade and business? Have it has affected the sanctions or boycott? That's what we look at to September 2015.

Keywords: European Union, Russia, sanctions, energy, foreign trade.

 

Methodology,definitions and theoretical foundations are given in earlier publications of the author [1]. Next,let's see the EU and Russia economic development, the growth by GDP.

 

Fig. 1.GDP growth of Russia, % change year over year [2, 3]

Country comparisons, Russia is seventh worldwide economy.It economic stagnation was in 2000 and a great crisis in 2009 (GDP = -7.8%). Russian economy (GDP) almost stopped in 2014 (+ 0.6%) and decreases strongly in 2015 year, but the EU and US economy continues to grow. [2, 3]

International trade of European Union

Next see the foreign trade, with an emphasis on energy resources. In 2011 was total EU import from Russia 201.3, in 2012. 215.1(record), 2013. 207.0 and 2014 181.3 billon EUR.

SinceRussiaban imposed an EU exports of food products, then will be its impact in recent months. Total extra-EU28 exports was in Jan-Sep 2015 1331.4 billon EUR. It growth was 6%. Extra-EU28 exports food & drink goods were in Jan-Sep 2015 83.2 billon EUR (+6%). [4]

Table 1.

Extra-EU27 imports trade, by product group. Million EUR [5]

 

2002

2008

2009

2012

2013

2014

Food, drinks

58,124

80,820

73,755

92,994

93,418

98,498

Raw materials

44,543

75,542

47,534

81,102

76,391

73,279

Mineral fuels

149,112

458,038

298,445

547,113

497,293

442,360

 

The biggest fall of EU-28 imports of mineral fuels was in 2009 year – 34.8%. But in 2013 decline was 9.1% and in 2014 11.0%. Extra-EU28 trade balance of mineral fuels shows, that the money outflow from the EU is high, particularly in Russia (2014 = 135,394 million EUR) and Norway (2014 = 44,525 million EUR). In 2002 - 2013 it has risen four times in Russia. [6]

Table 2.

Extra-EU28 trade imports of mineral fuels. Million EUR. [7]

 

2002

2008

2009

2010

2011

2012

2013

2014

Russia

39,267

126,064

89,002

121,298

153,495

164,369

160,606

136,183

Norway

24,782

56,379

37,603

44,821

54,807

55,721

49,612

47,087

 

In 2014 was share of mineral fuels imports of Russia 30.7% (2013=32.2%), Norway 10.6% (9.9%), Algeria 6.4% (6.3%), Nigeria 6.1% (5.5%), Saudi Arabia 5.5% (5%) and Kazakhstan 5.0% (4.4%). Share was of CIS 39.3%, OPEC 29.0% and Africa countries 20.6%. [7]

The EU energy security, especially in times of crisis, it is important imports of mineral fuels. The key here is Russia,whichis partialblockade.Now is the important information latest months.

Fig. 2. Total extra EU-28 import mineral fuels and petroleum [8, 9]

Fig. 3. Total extra EU-28 import mineral fuels and petroleum from Russia [8, 9]

Trend linesshow, that decrease the extra EU-28 import mineral fuels and petroleumis legitimate. It also shows a simple rectilinear graph. Conclusion - sincethe spring of 2014, imports of mineral fuels compared to the same month last yearhave decreased substantially.

External trade of the Russia

Table 3.

External trade of the Russia. Billion USD [10]

 

2000

2005

2008

2009

2013

2014

2015 IQ

2015 IIQ

2015 8M

Export

103.1

240.0

467.6

301.7

523.3

496.7

89.5

91.1

233.6

Import

33.9

123.8

267.1

167.3

341.3

308.0

45.2

48.1

127.0

 

In total exports of Russia in 2014 for the other countries: the Netherlands - 13.7%, China - 7.5%, Germany - 7.5%, Italy - 7.2%, Turkey - 4.9%, Japan - 4.0%, Republic of Korea - 3.7%, Poland - 3.2%, United Kingdom - 2.3%, Finland - 2.3%, USA - 2.1%, Belgium - 1.9% and France - 1.5%. In total imports: from China - 17.8%, Germany - 11.5%, USA - 6.5%, Italy - 4.4%, Japan - 3.8%, France - 3.8%, Republic of Korea - 3.2%, United Kingdom - 2.7%, Poland - 2.5%, Turkey - 2.3%, the Netherlands - 1.8%, Czech Republic - 1.7% and Finland - 1.6%. [11]

Share of turnover of Russia stayedin Jan - Aug 2015 compared to Jan - Aug 2014 in %: total 65.7; other countries 65.9 (share of total turnover 87.6%); EU 61.1 (share 45.7%); Italy 64.4 (6.2%); Germany 65.5 (8.7%); Netherlands 58.9 (8.7%); France 58.0 (2.1%); Finland 57.5 (1.8%); China 70.2 (11.7%); South Korea 64.8 (3.4%); United States 70.9 (4.1%), Japan 68.7 (4.0%) and Turkey 78.1 (4.7%). CIS countries was total only 64.4% (share 12.4%): Belarus 64.5 (4.6%); Kazakhstan 76.2 (3.1%) and Ukraine 44.3 (2.8%). [12]

Chare (% of total) in 2014 of Russian exports of mineral products was 70.5%. [13] Exports of the Russia to other countries chare (%) in 2014 of Russian exports were mineral products 74.1% from total exports and of imports were machinery, equipment and transport means 47.6%. [14]

Table 4.

Exports of the Russia. Billion USD [10]

 

2000

2008

2009

2010

2011

2012

2013

2014

2015 8M 

Total

103.1

467.6

301.7

397.1

516.7

524.7

526.4

496.7

233.6

other countries

89.3

397.9

254.9

337.5

437.3

445.5

452.9

428.6

201.9

CIS countries

13.8

69.7

46.8

59.6

79.4

79.2

73.5

68.1

31.7

 

Fig. 4.Total and with far abroad countries export and import of Russia, thousand USD [13]

In 2014 export of Russia was 87.2% to other countries and only 12.8% to CIS countries. [10] In August2015 were the Russian exports and imports compared to beginning months of 2014 nearly two times less. The trend iscontinuesdecline of export.

Table 5.

External trade of the Russia, billion USD [11]

 

Oct2014

Nov14

Dec14

Jan2015

Feb15

Mar15

Apr15

May15

Jun15

Jul15

Aug15

Turnover

68,4

59,8

62,9

40,1

44,8

49,9

46,8

46,9

46,4

44,7

41,9

Export

41,5

36,8

38,4

27,7

29,2

32,6

30,5

30,6

30,0

27,7

25,3

Import

26,8

23,1

24,5

12,4

15,6

17,3

16,3

15,5

16,4

17,0

16,6

 

Fig. 5. External trade of the Russia, compared to the same period of the previous year [11]

 

Table 6.

Basic Exports from Russia to Other Countries, 2015 [12]

 

IQ

8M

 

Million USD

% 2014

% of total

Million USD

% 2014

% of total

Exports:

90153

73,5

100

234542

68,4

100

fuel-energy goods:

58956

66,4

65,4

152084

62,1

64,8

  crude oil

22726

58,5

25,2

63013

57,4

26,9

  natural gas

11483

65,0

12,7

28189

69,4

12,0

 

The sharp decline in food imports is caused Russian boycotts of Western goods, which especially painfully affected EU countries. So stayed in Jan - Aug 2015 share of Russian imports compared to Jan - Aug 2014: fresh and frozen meat 69.9%; fresh and frozen poultry meat 55.4%; frozen and fresh fish 57.4%; cheese and curd 52.3%; butter 64.8% and so forth. [12]

In Jan – Aug 2015 the major part of Russian exports were fuels and energy products (64.8%) and other raw materials. Share of machinery, equipment and transport means was very small (6.3%). It is vital for Russia fuel and raw materials exports. In Jan – Aug 2015 the major imports part of Russia was machinery, equipment and transport means (43.8%). Itdecreased by56.1%. [12]

In 2000 was Russian average export prices of crude oil 175 USD per ton, in 2012 754 USD per ton and in 2014 493 USD per ton. Russian average export prices of natural gas was in 2000 85.9, but in 2013 342 USD per 1000 m3. From 2000 to 2013 increased price of petroleum products 4.1 times. In August 2014 was average export price of the Russian oil 349.9 USD / ton. [13]

Very high price increase of raw material, particular crude oil price rise is strongly increased volumes of Russian export financing. Thus, the cash flow the country and its economic rise.

Fig. 6. Monthly Basket oil price of OPEC, Mar 2014 – Nov 2015 [14]

 

Yearly Basket oil price: 2002=24.36; 2003=28.10; 2012=109.45; 2013=105.87; 2014=96.29; 2015 (09 Nov) =51.72 USD/barrel. Oil price of OPEC were in Jun-14 (max) 107.89, in Jan-15 44.38, in 15 June 60.17, in 25 Aug 40.47 (min) and in 09 Nov 42.13 USD/barrel. [14] More than twice the decrease in oil prices in the world market highly effective for the Russian economy.

Currency exchange rates EUR/ RUB were in 01 Jan 2013 40.24, in 01 Sep 2014 48.98, in 16 Dec 2014 (max) 91.52 and in 30 May 2015 66.00; USD / RUB was in 30 May 2015 52.97.

Exchange rate in 14 Nov 2015 was EUR/ RUB ↑71,8184 and USD / RUB ↑66,6343. [15]

Fig. 7. Currency exchange rates EUR / RUB and USD / RUB [15]

More than twice the decline in the exchange rate of the rouble against the euro and the USD severely weakened the Russian economy.

Discussion & Conclusions

  • §  Russian economy (GDP) almost stopped in 2014 (+0.6%) and decreases strongly in 2015 years. Russian economy (GDP) almost stopped in 2014 (+ 0.6%) and decreases strongly in 2015 year (QIII 2015=-4.1%), but the EU and US economy continues to grow.
  • §  The EU energy security is important imports of mineral fuels. The key here is Russia.
  • §  The biggest fall of EU-28 imports of mineral fuels was in 2009 year – 34.8%. But in 2013 decline was 9.1% and in 2014 11.0% compared to the previous year.
  • §  In 2014 was EU share of mineral fuels imports of Russia 30.7%, Norway 10.6%, Algeria 6.4%, Nigeria 6.1%, Saudi Arabia 5.5% and Kazakhstan 5.0%. Share of CIS was 39.3%.
  • §  Extra-EU28 exports food & drink goods grow in Jan-Sep 2015 6%.  
  • §  The major part of Russian exports account for fuels and other raw materials. Share of machinery, equipment and transport means is very small.
  • §  In August2015 were the Russian exports and imports compared to beginning months of 2014 nearly two times less. The export decline continues.
  • §  In Jan - Sep 2015decreased EU28 exports to Russia 30% and imports from Russia 27%, extra-EU28 imports energy 26% and imports of mineral fuels of EU-28 32.7%.
  • §  In Jan - Aug2015 were Russiantotal exports68.4% and fuel-energy goods exports62.1% compared to the same period of the previous year.
  • §  In 2014 export of Russia was 87.2% to other countries and only 12.8% to CIS countries.
  • §  In Jan - Aug2015external trade (turnover) of Russia were with other (non-CIS) countries only 65.9%, with EU 61.1% and with CIS 64.4% to the corresponding period of the previous year.
  • §  More than twice the decline in the exchange rate of the rouble against the euro and the USD and twice falling oil prices on the world market severely weakened the Russian economy.
  • §  Consequently, the EU and Russia business need each other. Disturbances of commerce and boycotts resonate both badly.

 

References:

  • 1. Tanning, Lembo; Tanning, Toivo. (2015). Energy Trade Between Russia and the European Union. International Journal of Energy Policy and Management. American Association for Science and Technology, USA, 1(2), 43 – 52.
  • 2. GDP growth of Russia. Main indicators External economic activities.   Federal State Statistics
  • 3. News Release 199/2015 - 13 November 2015. Eurostat http://ec.europa.eu/eurostat/
  • 4. News Release 198/2015 - 13 November 2015. Eurostat http://ec.europa.eu/eurostat/
  • 5. Extra-EU27 trade by product group. Code: tet00061. Eurostat   Last update: 03.11.2015
  • 6. Extra-EU28 trade by main partners. Code: tet00035. Eurostat. Last update: 03.11.2015
  • 7. Extra-EU28 trade of mineral fuels, lubricants and related materials (SITC 3), by main partners. Code: tet00032. Eurostat. Last update: 03.11.2015
  • 8. EU28 trade by SITC product group. Code: ext_st_eu28sitc. Eurostat. Last update: 15-10-2015
  • 9. Imports of goods - mineral fuels, lubricants and related materials. Code: teiet140. Eurostat. Last update: 03.11.2015 
  • 10. Export and import of the Russian Federation. Federal State Statistics of Russian Federation    
  • 11. External trade of the Russian Federation with other countries (at actual prices; mln. US dollars)
  • 12. Basic Exports from Russia to Other Countries. 3 November 2015
  • 13. Average export prices for basic products. Federal State Statistics of Russian Federation. 2015
  • 14. OPEC Basket Price. 14 November 2015 http://www.opec.org/opec_web/en/data_graphs/40.htm
  • 15. Central Bank of Russia http://www.cbr.ru/ 15 November 2015
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Your rating: None Average: 7.3 (11 votes)
Comments: 14

Kazbekov Beket

Уважаемый Тойво Таннинг! Ваша работа «Влияние международных санкций на экономику РФ» представляет большой научный и практический интерес не только для Российской Федерации, но и для других стран СНГ. Отмеченные в Вашем исследовании негативное влияние двух факторов: падение курса рубля ( более чем вдвое снижение курса рубля по отношению к евро и к доллару США) и в два раза падение цен на нефть на мировом рынке действительно ослабили российскую экономику. Но эти факторы являющиеся следствиями тенденций сложившихся на мировом валютном рынке и мировом нефтяном рынке действовали еще до введения санкций. Что касается санкций включая продуктовое эмбарго, то в Вашем анализе их влияние на состояние российской экономики отдельно не выделено, особенно в той части когда Россия форсированно осуществляет импортозамещение и переориентируется на другие рынки. Тем не менее Ваш вывод: «Следовательно, ЕС и России бизнес нуждаются друг в друге. Нарушения торговли и бойкоты резонировать и плохо» необходимо признать обоснованным. Beket

Kondratyeva Svetlana

Какое оригинальное, действительно с научной новизной исследование!

Toivo Tanning

Dear Svetlana Pavlikova and Marina Buzilova, dear colleagues! Thank you for your comment and high rating. I wish you success and personal well-being. Sincerely, Toivo Tanning

Kondratyeva Svetlana

Какое оригинальное, действительно с научной новизной исследование!

Toivo Tanning

Dear Svetlana Pavlikova and Marina Buzilova, dear colleagues! Thank you for your comment and high rating. I wish you success and personal well-being. For best salutatory, Toivo Tanning

Chiladze George Bidzinovich

Interesting scientific research to-date scientific theme. I wish every success to the author. Sincerely, Prof.G.B.Chiladze

Toivo Tanning

Very respected professor George George! Thank you for your comment and high rating. For best salutatory, Toivo Tanning

Korolev Evgenie Sergeevich

Уважаемый Тойво Таннинг, указанные выводы данной работы настолько верны, что с ними не представляется возможности спорить. Очень хорошо, что научное сообщество понимает объективную реальность лучше чем политики. Надеюсь, что ваша работа приобретёт большую значимость и станет опорой для появления новых направлений развития каждой страны.

Toivo Tanning

Уважаемый Евгений Королев! Спасибо Вам за положительный отзыв и высокую оценку! Желаю Вам успехов в дальнейших исследованиях. С уважением Тойво Taннинг

Lyudmila Moroz

Уважаемый господин Тойво Таннинг, у Вас, как всегда, глубокий и содержательный анализ! Желаю дальнейших успехов. С уважением, Л.Мороз

Toivo Tanning

Уважаемая Людмила Мороз. Спасибо Вам за высокую оценку моей работы и позитивный комментарий к ней. Желаю Вам творческих успехов и личного благополучия. С уважением Тойво Taннинг

Korotkova Tatyana

Уважаемый, Солярии Тойво! Ваше исследование очень глубокое и объективное. Выводы правильные и корректные. Желаю удачи. Т.Л.

Toivo Tanning

THE INFLUENCE INTERNATIONAL SANCTIONS ON ECONOMY OF RUSSIAN FEDERATION

Toivo Tanning

Уважаемая профессор Татьяна Короткова! Благодарю Вас за благожелательный комментарий. С уважением, Тойво Taннинг.
Comments: 14

Kazbekov Beket

Уважаемый Тойво Таннинг! Ваша работа «Влияние международных санкций на экономику РФ» представляет большой научный и практический интерес не только для Российской Федерации, но и для других стран СНГ. Отмеченные в Вашем исследовании негативное влияние двух факторов: падение курса рубля ( более чем вдвое снижение курса рубля по отношению к евро и к доллару США) и в два раза падение цен на нефть на мировом рынке действительно ослабили российскую экономику. Но эти факторы являющиеся следствиями тенденций сложившихся на мировом валютном рынке и мировом нефтяном рынке действовали еще до введения санкций. Что касается санкций включая продуктовое эмбарго, то в Вашем анализе их влияние на состояние российской экономики отдельно не выделено, особенно в той части когда Россия форсированно осуществляет импортозамещение и переориентируется на другие рынки. Тем не менее Ваш вывод: «Следовательно, ЕС и России бизнес нуждаются друг в друге. Нарушения торговли и бойкоты резонировать и плохо» необходимо признать обоснованным. Beket

Kondratyeva Svetlana

Какое оригинальное, действительно с научной новизной исследование!

Toivo Tanning

Dear Svetlana Pavlikova and Marina Buzilova, dear colleagues! Thank you for your comment and high rating. I wish you success and personal well-being. Sincerely, Toivo Tanning

Kondratyeva Svetlana

Какое оригинальное, действительно с научной новизной исследование!

Toivo Tanning

Dear Svetlana Pavlikova and Marina Buzilova, dear colleagues! Thank you for your comment and high rating. I wish you success and personal well-being. For best salutatory, Toivo Tanning

Chiladze George Bidzinovich

Interesting scientific research to-date scientific theme. I wish every success to the author. Sincerely, Prof.G.B.Chiladze

Toivo Tanning

Very respected professor George George! Thank you for your comment and high rating. For best salutatory, Toivo Tanning

Korolev Evgenie Sergeevich

Уважаемый Тойво Таннинг, указанные выводы данной работы настолько верны, что с ними не представляется возможности спорить. Очень хорошо, что научное сообщество понимает объективную реальность лучше чем политики. Надеюсь, что ваша работа приобретёт большую значимость и станет опорой для появления новых направлений развития каждой страны.

Toivo Tanning

Уважаемый Евгений Королев! Спасибо Вам за положительный отзыв и высокую оценку! Желаю Вам успехов в дальнейших исследованиях. С уважением Тойво Taннинг

Lyudmila Moroz

Уважаемый господин Тойво Таннинг, у Вас, как всегда, глубокий и содержательный анализ! Желаю дальнейших успехов. С уважением, Л.Мороз

Toivo Tanning

Уважаемая Людмила Мороз. Спасибо Вам за высокую оценку моей работы и позитивный комментарий к ней. Желаю Вам творческих успехов и личного благополучия. С уважением Тойво Taннинг

Korotkova Tatyana

Уважаемый, Солярии Тойво! Ваше исследование очень глубокое и объективное. Выводы правильные и корректные. Желаю удачи. Т.Л.

Toivo Tanning

THE INFLUENCE INTERNATIONAL SANCTIONS ON ECONOMY OF RUSSIAN FEDERATION

Toivo Tanning

Уважаемая профессор Татьяна Короткова! Благодарю Вас за благожелательный комментарий. С уважением, Тойво Taннинг.
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