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Coalitions for Sanctions Heighten Costs for Russia but Burden of Implementation Should Be Shared among Member Countries

DIW Weekly Report 8 / 2024, S. 65-72

Sonali Chowdhry, Julian Hinz, Joschka Wanner, Katrin Kamin

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Countries increasingly form alliances to collectively impose sanctions. However, the resulting impact of such coordination remains unclear. Analyzing the 2014 wave of sanctions against Russia over 400,000 simulations with a quantitative trade model, this report demonstrates that multilateral cooperation through coalitions simultaneously reduced domestic welfare losses incurred from sanctions and intensified welfare losses imposed on Russia. Results also reveal significant disparities within the coalition, with Russia sanctions placing relatively high economic costs on Baltic nations that can be mitigated through a burden-sharing program. Hypothetical cooperation by emerging economies like China is also shown to substantially raise the force of sanctions against Russia

Sonali Chowdhry

Research Associate in the Firms and Markets Department

JEL-Classification: F13;F14;F17;F51
Keywords: Sanctions, Alliances, Global value chains