After the military action by Russia to Eastern Ukraine, EU and U.S. pose economic sanctions on Russia, including measures like suspension of credit finance that supports export to Russia and prohibition of provision of goods, services and technology to Russia’s oil production and energy sector.[1]
It is estimated that, due to the sanctions, Russia economy will suffer a loss of €23 billion in 2014 (1.5% of its GDP) and €75 billion in 2015 (4.8% of its GDP).As for Russian firms, they might suffer up to one trillion US dollars from these sanctions.[2]
This means that although Russia might be able to secure the resources in Crimea, Putin government will have hardly any economic benefit from the annexation due to the economic sanction, as well as the broken trading relationship with major partners like US and EU. But there is still no sign of retreat by Russian army despite the threat of greater sanction.[3] This shows that resources and economic gain might not be the major motive for Putin to annex Crimea.
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1 “Ukraine and Russia Sanctions.” U.S. Department of State. Accessed on November 17, 2014. http://www.state.gov/e/eb/tfs/spi/ukrainerussia/
2 Valentina Pop, “Multi-billion losses expected from Russia sanctions,” Euobserver, July 28, 2014. Accessed on November 17, 2014, http://euobserver.com/economic/125118
3 Valentina Pop, “Multi-billion losses expected from Russia sanctions,” Euobserver, July 28, 2014. Accessed on November 17, 2014, http://euobserver.com/economic/125118
It is estimated that, due to the sanctions, Russia economy will suffer a loss of €23 billion in 2014 (1.5% of its GDP) and €75 billion in 2015 (4.8% of its GDP).As for Russian firms, they might suffer up to one trillion US dollars from these sanctions.[2]
This means that although Russia might be able to secure the resources in Crimea, Putin government will have hardly any economic benefit from the annexation due to the economic sanction, as well as the broken trading relationship with major partners like US and EU. But there is still no sign of retreat by Russian army despite the threat of greater sanction.[3] This shows that resources and economic gain might not be the major motive for Putin to annex Crimea.
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1 “Ukraine and Russia Sanctions.” U.S. Department of State. Accessed on November 17, 2014. http://www.state.gov/e/eb/tfs/spi/ukrainerussia/
2 Valentina Pop, “Multi-billion losses expected from Russia sanctions,” Euobserver, July 28, 2014. Accessed on November 17, 2014, http://euobserver.com/economic/125118
3 Valentina Pop, “Multi-billion losses expected from Russia sanctions,” Euobserver, July 28, 2014. Accessed on November 17, 2014, http://euobserver.com/economic/125118