For a market-based response to the annexation of Crimea

DIW Weekly Report 16/17 / 2014, p. 416

One week after Russia began its military invasion of the Crimean peninsula, President Putin declared that Russia was not planning an annexation. Two weeks later, Crimea was annexed by Russia. Since then, Putin can no longer credibly assure that he will not repeat the action elsewhere. And since then, the West cannot simply leave Russia’s actions unanswered. Initial reactions also include economic sanctions. However, the effects of classic sanctions, for example on foreign trade, are uncertain and take time, while the costs and loss of prosperity for the imposing states are felt immediately. Different economic relations with Russia lead to different losses of prosperity in the case of sanctions imposed in unison and therefore hinder a common stance by the West.

A sustainable response by the West must also include Gazprom.

Link DIW Weekly Report 16/17 / 2014 (pdf | 1,4 MB)

 

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