20 votes
Accepted

How do economic sanctions work? How do they not create an arbitrage opportunity?

As the other answer says the sanctions include prohibition on selling to third parties. However, this still creates incentives to cheat on these sanctions. It is not always so easy to determine final ...
1muflon1's user avatar
  • 56.4k
11 votes

How do economic sanctions work? How do they not create an arbitrage opportunity?

The short answer is yes, the impact of sanctions (and other export controls) on the market prices of goods can create an arbitrage opportunity for someone willing to violate or circumvent those ...
ajb's user avatar
  • 211
8 votes
Accepted

What are the reasons for Russian Ruble to strengthen in the past few days?

It’s likely combination of several factors. Some of it it’s because Russia has instituted capital controls (see Reuters). That means that Russians are limited or in some cases even prevented from ...
1muflon1's user avatar
  • 56.4k
7 votes
Accepted

Does Russian Ruble strengthening mean the sanctions did not hurt Russian economy?

No, it does not mean that. Currency value just reflects supply and demand for the currency. It is not a measure of how economy is performing. There can sometimes be some correlation between exchange ...
1muflon1's user avatar
  • 56.4k
4 votes
Accepted

Alternatives to avoid sanctions

You have most of the explanation here - the only missing piece is that as the de facto reserve currency of the world, almost all global trade is conducted in US dollars. Typically what happens is ...
heh's user avatar
  • 1,808
4 votes
Accepted

Why doesn't Russia buy USD to pay its external debt and avoid default?

Because Russia is effectively banned from using dollars. Also, Russia has enough dollars to finance its debt. The reason why Russia might default is that they are not allowed to use their USDs. For ...
1muflon1's user avatar
  • 56.4k
3 votes
Accepted

Which sanction against Russia creates the least side effects on Western economies: SWIFT disconnect or denying selling of government bonds?

SWIFT is basically a communication network that allows bank transitions to happen. This could potentially hurt EU a lot because EU imports 41.1% of natural gas, 26.9% oil and 46.7% coal from Russia (...
1muflon1's user avatar
  • 56.4k
3 votes

Will the value of ruble decrease in the long term if the sanctions against Russia are not lifted?

Many of the usual mechanisms that determine exchange rates are not working at the moment. People only buy the ruble if they must, even if ruble interest rates are high. The ruble is "artificially&...
BrsG's user avatar
  • 1,632
3 votes

Will the value of ruble decrease in the long term if the sanctions against Russia are not lifted?

The exchange rate depends primarily on trade and financial flows and monetary policy. As long Russia will continue to have huge trade surpluses as it has now (see data) and as long as its monetary ...
1muflon1's user avatar
  • 56.4k
3 votes

Why is Russia demanding oil payments in rubles?

If we talk about private companies they would not necessarily have incentive to always buy the Rubble because Rubble is not as stable as dollar. In fact the whole reason why oil and many other ...
1muflon1's user avatar
  • 56.4k
2 votes

Can Autarky be prosperous?

I would like to know, if it is theoretically possible for a country ... to achive economic prosperity (>40,000$ gdp per capita) in the state of complete or near-complete economic isolation By your ...
1muflon1's user avatar
  • 56.4k
2 votes

How do economic sanctions work? How do they not create an arbitrage opportunity?

Sanctions always include prohibition of circumvention, so the Silvonian bullet seller is not allowed to sell to a third party if he has the slightest reason to assume that the third party just acts as ...
VARulle's user avatar
  • 6,805
2 votes

How effective are economic sanctions on Russia?

Some sanctions can be evaded and some others are just political symbolism but overall the sanctions do hurt Russian economy. In January 2022 Russian economy grew at about 6% (see Statista). After the ...
1muflon1's user avatar
  • 56.4k
2 votes
Accepted

What would happen if China were to suddenly stop all trade with the US?

Have any respectable economists made any predictions about the consequences of such a move for the global economy, including the Chinese and the US economies? As far as I can see there is no ...
1muflon1's user avatar
  • 56.4k
2 votes

Why hasn't Lukashenka's regime collapsed, for purely economical reasons?

Sanctions almost never lead to a regime change even when they are economically devastating. An authoritarian regime does not need to be economically successful to stay in power. This is precisely ...
1muflon1's user avatar
  • 56.4k
1 vote

How did the SWIFT ban on Russia affect the Russian economy?

Not all Russian banks were actually banned from Swift just most commercial ones. Swift is the Society for Worldwide Interbank Financial Telecommunication. It is basically a highway for financial ...
1muflon1's user avatar
  • 56.4k
1 vote

How do economic sanctions work? How do they not create an arbitrage opportunity?

Another piece of the puzzle: secondary sanctions Say that Silvonia really wants to prevent bullets from falling into Russian hands. Silvonia can tell the world that anyone caught trading bullets to ...
Zach Lipton's user avatar
1 vote

(How) does Russia benefit if Gazprombank instead of Gazprom gets to keep the euros?

It is a way how to further evade sanctions. The trade is not done in cash and western countries froze Russian central bank assets denominated in USD and EUR (see NBC News). Gazprombank is not ...
1muflon1's user avatar
  • 56.4k
1 vote
Accepted

Why is Russia demanding oil payments in rubles?

EB3112's comment above is very informative. To summarize the article (s)he posted, possible reasons for the move may be: Political theater and not a serious economic proposal. To force the west to ...
user278411's user avatar
1 vote

Do sanctions work?

Economic sanctions typically a ban on trade, possibly limited to certain sectors such as armaments, or with certain exceptions (such as food and medicine)Targeted Sanctions. These tools may include ...
Mike J's user avatar
  • 1,471
1 vote

Are there internationally published sources of trade sanctions?

Try the WTO's Trade Monitoring Database.
Art's user avatar
  • 2,784
1 vote

Why does the EU need a clearing centre to circumvent US sanctions against Iran?

Because the US has threatened to sanction European companies that trade with Iran. Most European companies that are interested in trading in Iran also trade with the US, so would be vulnerable to ...
Dan's user avatar
  • 1,356

Only top scored, non community-wiki answers of a minimum length are eligible