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Are Sanctions Really Working to Curtail Exports to Russia? An Insider's Look Using D&B Shipping Insights

A post by Dun and Bradstreet on June 29, 2023

The D&B team read an article recently published in the Wall Street Journal titled: “How Sanctioned Western Goods Are Still Flowing Into Russia.” The Dun & Bradstreet Analytics team dove into the D&B Shipping Insights database which spans over one billion shipments since 2014. Here is what we found:

As the world engages Russia in response to the ongoing tensions with Ukraine, its former territory, the implementation of economic sanctions has been a widely debated topic. Many want to believe sanctions work through invoking the force of law. The result of these political actions would lead to countries reducing their engagement with the Russian economy. If the sanctions had the desired impact, shipments to Russia would decrease.

The good news is that exploring the D&B Shipping Insights archives showed a truly clear picture. Sanctions resulted in shipments declining from over 360,000 unique shipments from one hundred distinct exporting countries in 2021 to less than a projected 35,000 shipments from ten countries in 2023.

This analysis indicates that sanctions do work to isolate a country as a punitive response to undesirable actions.

To further validate the conclusion that sanctions are extremely efficient in reducing the imports to an economy by up to 90%, the team looked at the shipment trends globally starting with 2014 shipments.

The retrospective of global ocean exports revealed that container-based shipments enjoyed a steady year over year increase from 2014 to 2021. During 2021, shipments spiked in line with increased consumer spending on physical products as service and travel options were curtailed as uses of discretionary spending as the world responded to the global COVID-19 pandemic.

Starting in 2021 and projected through the remainder of 2023, it is predicted that global shipments will decline by over 30% from the 2021 peak. The fact that exports to Russia declined by more than 90% in the same period, reenforced the hypothesis that sanctions are an effective deterrent.

As data scientists, the team attempted to falsify their conclusion.

The D&B Analytics group brought in a peer committee and returned one more time to the assumptions in the conclusion, Russia’s receipt of shipments is down so the sanctions work. Could there be another scenario where Russia sees a decline in shipments, but sanctions are still ineffective?

The final review explored by the team explored the patterns of imports and exports building from a regional lens. Delving deeper into the numbers reveals a secret world of economic maneuverings and uncertainties.

The challenge for the D&B analytics team is that with the continued success of global corporations as measured through increasing profits, the demand for the products previously sent to Russia needed to flow somewhere. Where could they have gone instead?

The starting point for this analysis began with understanding which countries were most impacted by the sanctions. This is a selective list of the most significantly impacted exporting countries shows a strong effect of the sanctions on the movement of goods to Russia directly.

But does this mean that sanctions worked? Zooming out to the region, the team discovered an interesting reality. There are some winners in global imports. The former Soviet states showed a split result. One group of countries shows a robust growth of more than 20% increase in imports over the past two years.

Taken as an absolute value, a 20% increase over a twenty-four-month window is not immediately a sign of growth. Placed in the context of a global decline in imports and exports for the same period of 30% or more, it raises some questions.

Returning to the WSJ proposal, the D&B team took a broader lens. Rather than looking at shipments directly to Russia, what if there were intermediary countries that were not part of the global consensus to restrict Russia’s economy?

Additionally, using the -30% as the baseline for organic change, all former Soviet States apart from Moldova, Belarus and Turkmenistan are showing signs off an economic renaissance.

The discussion of the three countries that are excluded from the import boon, it seemed clear why these markets were excluded from the shared benefits. Moldova and Turkmenistan are facing extreme headwinds resulting from a disruption political change, ongoing monetary disruptions of exaggerated inflation and reframing of the value of their natural resources.

Belarus also makes sense to the D&B team. With the strategic relationship and geopolitical support Belarus telegraphed for Russia, the Russian shadow had a material impact on the reputation of Belarus as a free economic partner with rest of the world.

This discovery of the former Soviet states' import activity leads to a significant reduction in confidence in the proposed answer to the question: Do sanctions work?

The team feels it is too early to tell if the transition of shipments is a sign of expansion of global trading partners or more disappointing result of introducing a middle actor to act as a go between for a sanctioned entity.


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