Are European sanctions on Russia working?

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21 June 2020

EU extends measures for six months, accusing Moscow of violating Ukraine ceasefire deal.

The conflict in eastern Ukraine is sometimes called Europe's forgotten war. German Chancellor Angela Merkel says the European Union has no choice but to extend sanctions against Russia's energy, financial and arms sectors until next January.

It follows worsening relations between Germany and Russia. Moscow is accused of ordering a murder in Berlin and conducting cyberattacks on the German government. So, are the sanctions working? "Yes, the sanctions stop the aggressor and they should be kept", says Prof. Olexiy Haran, Research Director, DIF.

Haran stresses that many observers credit sanctions with a collapse in foreign direct investment — from an annual average of $54.5bn between 2011 and 2013 to $19.2bn between 2015 and 2018 — as a major factor.
Sanctions have knocked 6 percent off Russia's GDP in 2014 - 2018, a Bloomberg report noted recently. 

Independent studies suggest real GDP growth was just 1.2 per cent last year and will be around 1.6 per cent this year and 1.8 per cent in 2021. That compares with 3.8 per cent in 2012, and Mr Putin has ordered his government to find ways to raise it.