Evading Sanctions

21.09.2026 14:15 – 15:30

GTDW@IEE

(jointly with: Lisa Scheckenhofer, David Torun and Joschka Wanner)


Abstract:

The sanctions imposed on Russia in 2022 are the mostextensive in modern history, yet at least 26% of pre-war EU exports ofsanctioned products continued to reach Russia through third-countryintermediaries. Standard quantitative trade frameworks, however, assume fullenforcement and cannot quantify the consequences of evasion. Combining Russiantransaction-level customs records with a new granular dataset on EU exportbans, we document the mechanisms and magnitude of sanctions evasion and developa quantitative trade model with endogenous transshipment to assess itsconsequences. Our analysis yields three main insights. First, we estimate thatthe export bans increased effective trade costs from the EU to Russia by about27% on average, well below the prohibitive levels implied by full enforcement.This observed level of evasion reduces Russia’s real income loss by 22% relativeto the full-enforcement scenario. Second, pre-war trade costs predict whichcountries become transshipment hubs but understate the true cost of evasion:when evasion costs consist only of the additional trade cost from rerouting,Russia’s real income loss falls to just 45% of the full-enforcement level. Thisimplies that the sanctioning coalition created substantial additional barriersbeyond the costs of rerouting itself. Third, closing just five transshipmenthubs in the model reduces imports by an additional 10 percentage points andincreases Russia’s welfare losses by 22%.

Biography: https://feodorateti.github.io/

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