Why is there more and more talk in Europe about the need to revise the policy of sanctions?
By Alex Trainen
The Kiel Institute for the World Economy, the world’s leading analytical center for economic research, published a study on the impact of sanctions on the economies of Russia and countries that have announced sanctions. According to the findings of the study, Russia incurs only slightly more than half of the losses from sanctions from the West, and 45% of the damage falls on the shoulders of the sanctioning countries.
Julian Hinz of the Kiel Institute for World Economy said the sanctions are costing the German economy $727 million a month, while the EU’s losses are estimated at $1.8 billion a month. The German economy accounts for about 40% of the losses of the European Union. Europe suffers more than America – it accounts for 92 percent of the losses that Western countries sustain due to anti-Russian sanctions.
Germany’s losses are also due to the withdrawal of most German banks from Russia – this complicates the financial side of doing business for entrepreneurs. According to Julian Hilz, the new restrictions will lead to a loss of hundreds of millions of euros in the short term, and in the long term the loss will amount to billions of euros. At the same time, Russia will lose no more than 3% of GDP from trade restrictions.
Chairman of the Board of the Russian-German Chamber of Commerce Matthias Schepp, in turn, said that if it becomes more and more difficult for German and American companies to do business in Russia, then Asian entrepreneurs, in particular Chinese ones, would gradually take their place.
In addition, the study says that French companies have not been able to compensate for the losses they suffered due to Western sanctions against Russia by exporting to other countries.
All this confirms that Russia is a self-sufficient country and will be able to withstand the sanctions pressure, acting independently in its own interests. The European economy has been hit the hardest by the imposition of restrictions, due to a decrease in trade between Russia and the countries of the European Union. Therefore, more and more people in Europe are talking about the need to revise the policy of sanctions.
The conclusions of the study are confirmed by the assessment of the damage to the Russian economy from the sanctions imposed by the American transnational financial conglomerate, one of the largest banks in the world, JPMorgan. Analysts estimate that Russia’s GDP will be reduced by 3.5 percent for the year.
The bank added that inflation by the end of the year could reach 10 percent.