Economic effects of the mutual sanctions between Russia and the EU on Finland and Germany

The goal of this thesis is to determine the economic effects of the mutual sanctions between Russia and the EU on Finland and Germany. The Ukraine crisis that began in 2014 changed the economic relationships between the EU and Russia drastically, as the EU implemented sanctions against Russia because of its role in the crisis and consequently Russia implemented counter sanctions against the EU. The research of this thesis will focus on the economies of Finland and Germany and the economic effects the sanctions have on them. In order to assess the long-term effects of the sanctions policy I have laid down several hypotheses, firstly, there is a way back to normal economic and political relationships between the European Union and Russia, secondly it is a possibility that, the EU will put up with the status quo of the Crimea in the near future and thirdly, the European industries affected by the sanctions will not have the same turnover in Russia after the sanctions as before the crisis. To evaluate my research question I have analyzed data from several data bases including Statistics Finland and the Statistisches Bundesamt. The economic impacts of the mutual sanctions on Finland and Germany are hard to specify. The export volumes of both, Finland and Germany to Russia suffered from a huge decline between 2013 and 2016. In percentual terms, the Finnish exports between 2013 and 2019 the declined by31,77%. The German exports to Russia declined by 40% from EUR 35.8 bn in 2013 to EUR 21.5 bn in 2016. The numbers slightly recovered to EUR 26.54 bn in 2019 meaning that between 2013 and 2019 the German export volume to Russia decreased by 25,86%. However, these declines are not solely due to the sanctions as other factors play a role. Russia suffered from the huge decrease in oil prices and consequently the ruble suffered from a loss of worth. This also affects the Russian imports, as they get very expensive. For Finland, the economic impacts of the sanctions in 2019 amounted around 65% of the trade loss between 2013 and 2019. For Germany this looks a little different. There are estimations that the loss due to the sanctions that vary between 20% and 43% of the overall trade losses of Germany with Russia. Other estimations calculate up to EUR 770M a month in trade losses for Germany due to sanctions. All in all, we can say, that the economic sanctions are harmful for Germany and Finland either way