Abstract
The paper examines the history of economic sanctions against the Russian Federation by Europe and the United States of America. Negative and positive effects of sanctions on the development of the Russian economy are investigated. The prospects for the development of the Russian economy under international sanctions are explored. The current directions of Russian economic policy aimed at reducing the negative impact of sanctions are considered. Economic sanctions are restrictive economic measures applied by a country or group of countries to another country to force the governments of sanctioned countries to change their policies. These sanctions consist of complete or partial bans on exports and imports of goods, and may also take the form of restrictions on financial transactions, including investment and international settlements. In today’s conditions, the Russian Government is actively implementing an import substitution program for various types of economic activity, and the Central Bank is also preparing scenarios for the development of the Russian economy in order to anticipate possible threats and consequences. In general, economic sanctions against Russia in 2014-2016 can be characterized as a desire to reduce the level of Russia’s influence on the world economic and political system, that is, the use of economic methods to achieve political goals.
Table of Contents
introduction…………………………………………………………………………3
CHAPTER 1. THEORETICAL ASPECTS OF THE STUDY OF ECONOMIC SANCTIONS………………………………………………………………………………………8
1.1. The concept and essence of economic sanctions……………………………………..8
1.2. Goals, principles and objectives of trade and economic sanctions………………….17
1.3.History of trade and economic sanctions against the USSR and the Russian Federation in 1917-2013…………………………………………………………………………21
CHAPTER 2. ANALYSIS OF THE IMPACT OF SANCTIONS IMPOSED BY WESTERN EUROPEAN STATES ON RUSSIA’S ECONOMIC DEVELOPMENT………….25
2.1.Chronology of application of anti-Russian sanctions in 2014-2016…………………25
2.2. Impact of sanctions on Russia’s trade and economic relations………………………38
2.3. Impact of sanctions on the main sectors of Russia’s economy………………………40
CHAPTER 3. PROSPECTS FOR RUSSIAN ECONOMY UNDER SANCTIONS……45
3.1.Import substitution as a restorative measure for Russian economy under sanctions…45
3.2 The main directions of export development up to 2030……………………………..51
CONCLUSION…………………………………………………………………………..58
BIBLIOGRAPHY………………………………………………………………………..60
APPENDIX………………………………………………………………………………63
INTRODUCTION
Relevance of the topic. The relevance of the topic of the study lies in the fact that today economic sanctions are an important tool of foreign policy and international diplomacy. They can have a long-term impact, and the economy does not feel their full effect immediately, but after a certain period of time. Many negative consequences (lower GDP growth rates, loss of jobs and opportunities for the development of the business sector) are revealed only over time. Moreover, the lifting of sanctions is slower than their introduction. In today’s world, there is a growing trend toward the use of economic sanctions.
This is mainly due to the globalization of international economic processes, which are characterized by an increasing degree of integration of both markets for goods and services and capital markets. At the moment, the stable and sustainable position of the state is determined mainly by the level of development of its economy. In this regard, the termination or restriction of economic relations can have serious consequences for the normal functioning of the state. Political and economic events that have recently taken place in the world have had an ambiguous effect on the economy of Russia.
Our country has entered a new economic reality, which is associated with the development of interstate integration and the launch of the Eurasian Economic Union on January 1, 2015. Eurasian Economic Union, Russia’s membership in the World Trade Organization, and, among other things, the imposition of anti-Russian economic sanctions by certain Western countries and the adoption of counter-protective measures on our part. The United States and the European Union have imposed three sets of sanctions on Russia, which consist of restricting access to long-term Western loans for major banks, including companies in the energy and defense sectors.
Russia’s cooperation with American and European companies in deepwater, Arctic and shale oil production projects was banned, and an embargo was imposed on exports to Russia of technologies for such projects, including equipment for horizontal drilling and hydraulic fracturing. It is forbidden to supply Russia with dual-use technologies that can be used in defense production. Western sanctions are mainly aimed at painful points of the Russian economy, namely, numerous structural deficiencies, inconsistencies and irregularities, which have accumulated as a result of errors in economic policy and have seriously weakened the resilience of the domestic economy to external threats. Thus, the study of trends and directions of development of Russia’s economy under sanctions of Western European countries has not only theoretical, but also practical importance.
Literature review. To date, this issue remains relevant and important, so various aspects of the application of sanctions have received considerable research attention. International economic sanctions in the framework of domestic international legal science have not been subjected to a thorough comprehensive study. At this stage of the study of economic sanctions, the analysis of anti-Russian measures is reflected in scientific articles by European and American researchers.
Researchers in their works consider the viability of the Russian state in 7 different conditions, analyze financial losses from the anti-Russian sanctions and the annexation of Crimea, give a classification of sanctions imposed against Russia by the European Union and the United States, study the institutional conditions for achieving the effectiveness of the forced import substitution strategy.
The experts also address the topic of relations with various countries in the international arena: they consider the directions of modernization of domestic logistics systems that ensure the transit of goods between China and the European Union in conditions of economic sanctions. Since Russia has been actively cooperating with the West for many years, scientific papers consider the emerging prospects for reorienting the economy to Southeast Asia, topical issues of relations between Russia and the EU countries in the field of trade and energy cooperation.
Sanctions are also considered as one of the main elements of the American foreign policy, the prerequisites for the creation and practice of restrictive measures in Europe are studied. Despite the considerable interest in various aspects of the topic of this study, the issues of the legal nature of economic sanctions, their main causes and objectives, their impact on trade and economic relations are still open, not fully explored and are of considerable interest for further research.
Research object and subject. The object of the study is the economy of the Russian Federation. The subject of the study is the process of development of the economy of the Russian Federation in the context of sanctions of Western Europe.
Aims and objectives.
The purpose of the study is to analyze the main trends and directions of development of the economy of the Russian Federation in the context of sanctions of the countries of Western Europe. 8 To achieve the goal, it is necessary to solve the following tasks:
1) to identify the nature and essence of economic sanctions;
2) to consider the history of trade and economic sanctions against the USSR and the Russian Federation in 1917-2013;
3) study the chronology and essence of sanctions imposed on Russia by Western European countries and determine their impact on trade and economic relations of Russia;
4) to analyze the impact of sanctions on the main sectors of the economy of the Russian Federation;
5) to identify the prospects of Russia’s development in the context of sanctions by Western European countries.
Methodology.
The normative-legal basis of the study is the Order of the Government of the Russian Federation of 14.10.2003 No. 1493-r “On the concept of development of the state financial (guarantee) support for exports of industrial products in the Russian Federation”, the Decree of the President of the Russian Federation of 06.08.2014 No. 560 “On application of certain special economic measures to ensure security of the Russian Federation”, the Government Decree of the Russian Federation of 15.04.2014 No. 328 “On approval of the state program of the Russian Federation “Industry Development and Enhancement of the Industrial and Economic Security”.
The empirical basis of the study consists of articles from the Internet, reflecting the chronology of events related to the process of imposing sanctions by the European Union and the United States, as well as the Draft of the Ministry of Economic Development of the Russian Federation of 30.01.2015 “On Approval of the Main directions of export development for the period until 2030”, which contains a system analysis of the export sphere of the Russian Federation, trends of its change with regard to internal and external 9 development factors, and also identifies perspective industry and geographical priorities of Russian
The works of famous researchers dealing with the problems of sanctions and their impact on foreign economic activity were used in the work. In the process of writing the thesis a complex of measures of scientific knowledge was used, including: system approach, analysis of numerical data, method of comparison and analogy, as well as generalization, etc. Scientific novelty of the research lies in the fact that the author conducted a comprehensive study of the development of the economy of the Russian Federation in the context of sanctions of Western European countries from the perspective of their impact on various sectors of the economy.
The effectiveness of promising areas that are aimed at import substitution and export support in the Russian Federation was assessed.
Results and findings.
The study found that:
1) The fuel and energy complex will be the engine of growth among other industries. The main sales markets will be East Asia, the Customs Union countries and Eastern Europe, and the increase in export volumes by 2030 will be about $34.44 billion.
2) There is a serious problem in the implementation of the import substitution strategy, in this regard, the necessary measures at the macro and micro levels have been developed, which will increase its effectiveness.
Provisions made for the defense:
1.The analysis of historical aspects of the application of sanctions against the USSR and the Russian Federation in 1917-2013 revealed that these measures are the most frequently used tool of politicians and are introduced as a means of pressure and conflict management.
2. The analysis of the impact of sanctions on trade and economic relations of Russia, as well as on the main sectors of its economy shows their ambiguous impact and the need for structural changes in the domestic economy.
3. The proposed recommendations aimed at the development of import substitution and export stimulation can contribute to the growth of the Russian economy under sanctions, and significantly reduce dependence on Western countries by reorienting the economy to the East, will allow to find important strategic partners and find new markets for products.
CONCLUSION
Economic sanctions are restrictive economic measures applied by a country or group of countries to another country to force the governments of sanctioned countries to change their policies. These sanctions consist of complete or partial bans on exports and imports of goods, and may also take the form of restrictions on financial transactions, including investment and international settlements.
The first Western trade and financial-banking sanctions against Russia began to be applied in 1917. Then the West began to freeze the accounts of the Ministry of Finance of the Russian Empire, and gold, which was placed in a number of foreign banks, was frozen. European banks were also banned from settling export-import transactions of Soviet Russia. To date, threats from the West have not ceased. Thus, in 2014, the events in Ukraine became a catalyst for “decisive” action by the West and the U.S. and the first sanctions were imposed on Russia.
Under the sanctions were companies and industries in which Russia is competitive, such as:
– oil and gas industry; – military-industrial complex;
– nuclear power industry;
– aerospace industry;
– banking sector.
As a result, Russian companies are being withdrawn from the economies of Western countries, making room for the introduction of other companies, and above all, American companies. The sanctions imposed on Russia by Western and EU countries show that in this way the countries want not only to damage the Russian economy, but also to force it out of the market of Western Europe. The imposition of economic sanctions could not but cause retaliation from the Russian government and such countries as the United States, Australia, Canada, Norway and EU countries fell under the embargo.
The main purpose of this decision was not only the need to retaliate, but also to stimulate the economic activity of its own producers. It is impossible to say unequivocally that the sanctions had only a negative impact on the economy of the Russian Federation, it is possible to identify positive aspects. Thus, in 2014-2015, the focus began to be on those problems that have long required a solution:
– Development of own agriculture and fisheries;
– development and expansion of the implementation of own technologies;
– development of the logistics network;
– creation of its own payment system;
– development of relations with Eastern countries.
The introduction of economic sanctions against Russia has greatly increased the relevance of these areas. Their development will allow in the long term not only to change the structure of Russian production, but also to reduce dependence on Western countries, both in terms of supplies and financial support.
In today’s conditions, the Russian Government is actively implementing an import substitution program for various types of economic activity, and the Central Bank is also preparing scenarios for the development of the Russian economy in order to anticipate possible threats and consequences. In general, economic sanctions against Russia in 2014-2016 can be characterized as a desire to reduce the level of Russia’s influence on the world economic and political system, that is, the use of economic methods to achieve political goals.
Of course, the imposed sectoral sanctions were negative, but we can highlight the positive aspects of this situation:
1) Increased exports of technology to countries in the East, Africa and South America. Improvement of technological capabilities of own production.
2) Development of our own meat production, the emergence of new areas;
3) Development of its own fishing industry through the creation of specialized exchanges.
4) Development of own dairy production (during 2014-2015 the share of domestic producers increased from 60% to 90%);
5) There is a real possibility of full compensation of losses by domestic producers through improved logistics.
So, sanctions of a number of Western European countries and retaliatory measures of the Russian Federation have an ambiguous effect on the economy at present. Russia has a significant potential and real opportunities for the stable development of the economy.
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