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on Confederation of Independent States |
| By: | Becker, Torbjörn; Egorov, Konstantin; García-Herrero, Alicia; Klein, Matthew C.; Korhonen, Iikka; Ribakova, Elina; Risinger, Lucas; Schularick, Moritz |
| Abstract: | The contours of a genuine economic endgame are coming into view for Russia. The economy has not collapsed, but the structural foundations have eroded fast. Economic growth has come to a standstill and fiscal buffers are largely exhausted. Higher oil prices as a result of the war in the gulf will likely only bring temporary fiscal effects, as Ukrainian "drone sanctions" have been effective in reducing export volumes. • Russia's current macro stance is not sustainable. High interest rates are stifling the economy, while loose fiscal policy and quasi-fiscal operations are propping up the defense sector. The Q1 2026 budget deficit exceeded the full-year target in just three months. The choice now is between fiscal consolidation or monetary accommodation resulting in even higher inflation. Going forward, export revenues from the sale of raw materials remain the decisive variable for the economic outlook: With fiscal buffers spent, Russia's war capacity is more than ever directly coupled to hydrocarbon export income. • The war has made Moscow increasingly dependent on China. While both countries have derived tangible benefits from the partnership, it is not a coalition of equals, but an increasingly unbalanced arrangement in which China is accumulating structural advantages. Chinanowaccountsfor35 %ofRussia'stotaltradeand76%oftheincrease in its supply of banned critical military components. On its own exports of raw materials, Russia accepts deep discounts as a captive supplier with no alternative buyers. • China also plays the key role when it comes to supplying Russia with sanctioned products, especially the products most likely to contain so-called critical military components. China supplies more than 60% of all critical components while the remaining non-sanctioning countries within the top 10 together amount to only 15%. • Domestically, Russia's full-scale war against Ukraine has led to greater convergence of wages and incomes. Many poorer regions have benefited from a much higher budget for military procurement as well as higher salaries paid for those willing to sign up for the military. However, fiscal stress is mounting at the regional level too. More than two-thirds of Russia's 89 regions ran budget deficits by autumn 2025. • With Russia's economic weaknesses at a critical point, the window of opportunity for consequential Western action is open. Europe's task is to have the tools in place to convert economic pressure into a durable change in Russia's strategic calculus. The past months have shown that enforcement of the sanction regime makes a real difference and more must be done with respect to monitoring of the shadow fleet and the imposition of secondary sanctions. Export controls must be tightened with a particular focus on the role of Chinese firms, potentially linking access to the European market to compliance with export controls. Europe should also use its asymmetric negotiating position and impose a tariff on the remaining trade with Russia. The revenues from this Ukraine Support Tariff could be used to support Ukraine. |
| Abstract: | Vier Jahre nach Beginn der Vollinvasion der Ukraine zeichnet sich die Möglichkeit eines wirtschaftlichen Kollaps Russlands immer deutlicher ab. Bisher ist die russische Wirtschaft nicht zusammengebrochen, aber ihre Grundlagen erodieren schneller, als die offiziellen Statistiken erkennen lassen. Die Wirtschaft schrumpfte im ersten Quartal 2026 um 0, 3%, obwohl die Staatsausgaben im März 2026 im Jahresvergleich um 44% stiegen. Die Wachstumsprognose der Regierung für 2026 wurde auf 0, 4% zusammengestrichen, und selbst diese Zahl könnte sich angesichts vermehrter Anzeichen von Arbeitskräftemangel und Lieferengpässen als zu optimistisch erweisen. Es bestehen ernsthafte Zweifel an der Genauigkeit der offiziellen Wachstumszahlen. Sollte die Inflation, wie vielfach vermutet, zu niedrig ausgewiesen sein, wäre das reale Wirtschaftswachstum noch niedriger. Die zivilen und die militärischen Teile der russischen Wirtschaft sind zunehmend entkoppelt: Die Rüstungsindustrie wächst auf Kosten eines stagnierenden zivilen Sektors, bei nahezu zum Erliegen gekommenen Anlageinvestitionen außerhalb militärischer Prioritäten und einem Außenhandelsvolumen auf dem niedrigsten Stand seit fünfzehn Jahren. Auch dies führt dazu, dass die offiziellen Zahlen den Zustand der produktiven Wirtschaft erheblich überbewerten. Das Gesamtbild ist das einer Wirtschaft, die an die Grenzen ihrer Produktionskapazität stößt. Gleichzeitig wachsen die Risiken für die Stabilität des Finanzsystems: Die rasche Kreditexpansion in rüstungsrelevanten Sektoren, schwache Unternehmensbilanzen und der wachsende Druck auf das Bankenkapital führen zu einer Verschlechterung der Vermögensqualität im Finanzsystem. Die Beiträge in diesem Band, verfasst von führenden Ökonominnen und Ökonomen mit fundierter Kenntnis der russischen Wirtschaft, zeichnen ein klares Bild: Russlands fiskalische und finanzielle Reserven sind weitgehend aufgebraucht; die asymmetrische Abhängigkeit von China vertieft sich zu Bedingungen, die bereits heute erhebliche Kosten verursachen und künftig noch größere nach sich ziehen dürften; und die Exporteinnahmen bleiben die mit Abstand wichtigste Variable dafür, wie lange der Kreml seinen Angriffskrieg weiterführen kann. All diese Beobachtungen beschreiben die Wirtschaft Russlands im Endstadium- und damit eine günstige Gelegenheit für den Westen, wirkungsvolle Maßnahmen zu ergreifen. Europa muss die richtigen Instrumente einsetzen, um durch wirtschaftlichen Druck nachhaltig das strategische Kalkül Russlands zu beeinflussen. |
| Keywords: | Russland Wirtschaft, Russland Sanktionen, Kriegswirtschaft, Russland China Handel, Rohstoffabhängigkeit, Ukraine Krieg, Exportkontrollen, Staatsfinanzen Russland |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkrp:342497 |
| By: | Sinikka Parviainen; William Pyle |
| Abstract: | Measuring politically sensitive attitudes in authoritarian settings is difficult because expressions of political support may reflect repression and social pressure as much as genuine belief. We propose a complementary approach: using responses to questions that are not themselves politically sensitive to provide indirect evidence about politically sensitive attitudes. Using subjective well-being (SWB), we ask whether within-person changes in life satisfaction, after accounting for changes in material and personal circumstances, can provide evidence of incorporation into a wartime national project. Drawing on more than a decade of panel data from the Russian Longitudinal Monitoring Survey (2013--2024), we find that life satisfaction rises significantly following Russia's 2022 invasion of Ukraine. Gains are initially larger among ethnic Russians and smaller in Moscow and St. Petersburg, consistently larger in military-industrial regions, and sharply lower among those nearest the front. This theoretically patterned heterogeneity is difficult to reconcile with generalized social-desirability bias and is consistent with differentiated wartime incorporation. By 2024, rising non-response and attenuating subgroup differences suggest that the informational value of SWB may deteriorate over time. |
| Keywords: | subjective well-being, rally-round-the-flag, Russia-Ukraine war, preference falsification, authoritarian public opinion, social desirability bias |
| JEL: | C8 D7 F5 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12898 |
| By: | Avdeenko, Alexandra; Kaiser, Maximilian; Kis-Katos, Krisztina; Reher, Leonie |
| Abstract: | The full-scale Russian invasion of Ukraine in February 2022 posed a dilemma for many international brands: withdraw from the Russian market for reputational concerns or stay to make profits. We study this trade-off using novel, detailed in- formation on customer transactions of 95 global brands from 1, 774 webshops that act as intermediaries. Using DiD specifications, we compare the weekly performance of brand-specific purchases of Russian and non-Russian customers before and after February 24, 2022. We document an immediate drop in sales of global brands to Russian customers by about 19%, accompanied by increases in the average price of these products by about 29%, resulting in stable revenues from the Russian market. Given that none of the scrutinized brands faced direct sanctions, the e-commerce decline likely results from reputation concerns. Our results support this interpreta- tion as especially brands under less public scrutiny see revenue increases in Russia. This provides immediate policy insights for the effective design of sanctions. |
| Keywords: | Russia |
| JEL: | D12 H32 F51 L81 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:19215 |
| By: | Ahmed, Shaker; Davydov, Denis; Solanko, Laura |
| Abstract: | Geopolitical conflicts force multinational enterprises to make difficult choices between protecting their operations in a host country and preserving their standing among stakeholders at home, even when formal sanctions do not require firms to exit. Whether to remain in a conflict-affected market is also often an ethical decision. Using panel data on more than 8, 000 listed European firms from 2010 to 2024, we compare corporate outcomes following Russia's 2014 annexation of Crimea and its 2022 full-scale invasion of Ukraine. We find that the 2014 shock produced little change in operating performance and modest deleveraging among firms with a Russian market presence, compared to those without. After 2022, firms that remained in Russia experienced stronger sales and employment growth than firms that completed their exit, without corresponding improvements in profitability or changes in leverage. Stayers experienced a larger post-2022 increase in media-based ethical scrutiny, whereas firms that completed their exit experienced a larger increase in idiosyncratic volatility. These findings suggest that corporate decisions to withdraw from an aggressor state are not necessarily associated with a consolidated profitability penalty, while decisions to stay may entail greater ethical scrutiny. |
| Keywords: | Business strategy, Self-sanctions, Reputational risk, European firms, Russia |
| JEL: | D22 F51 L2 M14 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:343073 |
| By: | Wolff, Guntram B.; Binder, Johannes; Morgan, Thomas |
| Abstract: | * This report is built on an update of the Kiel Military Procurement Tracker, covering the UK, Poland and Germany up to January 2026. We show that orders have grown rapidly in frequency, size and number since the start of Russia's full-scale invasion of Ukraine. In 2025, German military procurement reached roughly €85 bn and dominates overall European military procurement, compared with about €25 bn in the UK and €21 bn in Poland. But is Germany also leading in innovation? * Defence strategies differ across the three countries. Germany's defence strategy is endorsed only by the defence minister and remains disappointing at both the strategic and the military-technological level. Reflections on Germany's contribution to European defence outside a US-led NATO are absent. While only partially public, reflection on lessons from changing warfare are limited and do not translate into a priority strategy. The UK's strategy review as well as Poland's defence strategy each carry the prime minister's backing and argue for lessons from Ukraine to be translated into an ambitious agenda. * We measure the shift toward the new warfare paradigm in our unique procurement dataset. Based on an LLM-assisted classification of all 736 procurement orders in the dataset, only about 12% of spending is dedicated to new-paradigm systems. In Germany, absolute spending on this category has stagnated over 2020 to 2026 while its share has fallen distinctively. The UK has raised absolute spending but seen its share stagnate; only Poland has increased both the absolute amount and the share of procurement devoted to new-paradigm equipment. * Germany, despite the highest spending levels in Europe, shows the slowest transformation of the three, possibly reflecting the absence of top-level political leadership. A re-orientation of Germany's procurement strategy is needed to prioritise early technological change. An update of military and training doctrines would be the necessary complement. Failing to learn the lessons may well mean that credible deterrence capabilities are not achieved or at excessively high costs. * We also show that across all three countries, the data confirm a strong home bias in procurement, with purchases from global suppliers falling sharply in 2025. Genuinely pan-European procurement remains extremely limited, pointing to fragmented industrial bases rather than a coordinated European rearmament effort. * Moreover, we show that expected delivery timelines at the time of ordering are long: Where final delivery dates are specified, they typically fluctuate between two and four years across all three countries. In Germany, however, a growing share of orders is placed without any reported specified delivery date, a trend not observed in the UK or Poland. |
| Keywords: | Defence, Armament, Weapon industry, Procurement, Germany, Europe, Russia |
| JEL: | H41 H56 H57 H60 L64 N44 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkrp:342469 |
| By: | Beata Borosak (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Olga Pindyuk (The Vienna Institute for International Economic Studies, wiiw); Robert Stehrer (The Vienna Institute for International Economic Studies, wiiw); Juliane Unger |
| Abstract: | FDI in Central, East and Southeast Europe Editorial insight It will become important to upgrade the quality of FDI inflows by Robert Stehrer The CESEE region has experienced a sustained decline in FDI inflows, making the quality of the remaining investment more critical than ever. Attracting FDI that drives technology and knowledge transfer, upgrades skills, deepens integration into higher value-added segments of global value chains, and generates R&D and innovation spillovers will be an important element, on which a new growth model must be built. Chart of the month Global trade and FDI in 2025 globalisation is not ending yet by Branimir Jovanović Recent rumours of globalisation’s demise have been greatly exaggerated. Despite the war in Ukraine, geopolitical fragmentation and Trump’s tariffs, the 2025 data on global trade and FDI tell a more nuanced story globalisation may have plateaued, but has not gone into reverse. FDI in CESEE The downward trend continues by Olga Pindyuk In 2025, FDI inflows fell in most CESEE countries, both in absolute numbers and as a share of GDP. Romania emerged as one of the region’s prime investment destinations, while in Kazakhstan FDI inflows turned sharply negative. The latest data on greenfield project announcements indicate that investor sentiment is continuing to deteriorate, suggesting a further weakening of investment flows into the region in the near future. Important exceptions to this are metals and renewable energy. Macro snapshot Reinvested earnings dominate CESEE FDI, while dividends paint a fuller picture by Beata Borosak The newly published preliminary data on FDI trends in 2025 suggest that across most of CESEE established foreign investors continued to reinvest part of their income in equity, supporting FDI inflows especially in EU-CEE countries, even as dividend outflows remained high. This points to continued investor engagement, but also to substantial dividend distribution in many economies. Country in focus Why has FDI in Poland been declining of late? by Juliane Unger Poland’s FDI boom, driven by a one-off repositioning of supply chains following Russia’s invasion of Ukraine, proved short lived inflows have since been falling. While existing investors remain profitable and committed, new investment is being held back by rising labour costs, geopolitical uncertainty and global tariff volatility. Meanwhile, defence spending continues to rise and is increasingly shaping Poland’s economic landscape. |
| Keywords: | FDI inflows, global value chains, R&D, global trade, global FDI, globalisation, greenfield investment, reinvested earnings, dividend outflows, defence spending |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:wii:mpaper:mr:2026-05 |
| By: | Brinkmann, Johannes (Department of Economics and CAGE, University of Warwick); Datta, Nikhil (Department of Economics and CAGE, University of Warwick and CEP, London School of Economics) |
| Abstract: | Large supply shocks often raise concerns that retailers exploit rising costs to increase markups. We study the oil-price shock following Russia's invasion of Ukraine using wholesale fuel prices, near-universe daily retail prices across Great Britain, and more than 200 million precisely geolocated searches from a major fuel-price comparison platform. Despite fuel prices rising by 37% over the preceding 21 months with essentially no change in search, the abrupt post invasion increase triggered a more than twentyfold surge in daily search while retail margins contracted sharply. An event-study design shows that this shock-induced search increase causally reduced retail prices and margins, with 95th- versus 5th-percentile exposure implying an 8% margin reduction at the peak. The implied loss to retailer margins peaked at £5.2 million per week, around £650 per station. We rationalise these findings with a model in which large, rapid price increases raise consumer attention and price sensitivity, intensifying competition and compressing margins. More broadly, supply shocks can therefore change not only firms' costs but also the demand conditions governing how those costs are passed through. Consistent with the model's additional predictions, pass-through is approximately complete and symmetric before the invasion, but lower and temporarily exhibits a pronounced rockets-and-feathers pattern afterwards |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:821 |
| By: | Brenner, János; Furkert, Matthias; Gebekken, Norbert; Hartz, Andrea; Kandora, Carsten; Klee, Andreas; Krings, Susanne; Kurth, Detlef; Priebs, Axel; Starnofsky, Caroline |
| Abstract: | Russia's annexation of Crimea in 2014 and its war of aggression against Ukraine since 2022 have been instrumental in bringing national and collective defence and civil protection back into the public and political spotlight. It is clear that a great deal of catching up is required in both the military and civilian sectors, not least in terms of strengthening societal and spatial resilience. With their core competence in shaping spatial structures and developments at all levels, spatial planning and spatial planning policy must also contribute to strengthening the resilience of the state, the economy and society. This position paper highlights the importance of securing and strengthening resilient spatial structures through spatial planning and development, and outlines the options (and necessities) for action at all levels of spatial planning. It argues that the inclusion of resilience in spatial planning instruments and spatial planning policy should be mandatory and that traditional maxims, such as the bundling of infrastructure, must be reconsidered. The position paper formulates numerous recommendations that the federal states and regional planning organisations should incorporate into their respective plans to support national and collective defence and civil protection. Finally, it calls on actors in the fields of spatial planning, national and collective defence and civil protection to engage in continual dialogue and exchange. |
| Keywords: | Resilience, National and collective defence, Civil protection, Military conflicts, Spatial planning |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:arlpos:343075 |
| By: | Emek Basker; Fariha Kamal |
| Abstract: | National-security restrictions on exports constrain exporters' market access, but empirical evidence on their domestic costs is limited. We leverage data on export transactions that includes the product classifications used to administer U.S. export controls to document a doubling in the share of U.S. exports subject to controls between 2010 and 2024 and a skewed firm-size distribution among firms that export controlled products. We then exploit the 2014 U.S. restriction on exports to Russia as a natural experiment to examine the impact of export controls on firm-level outcomes. These controls not only reduced U.S. firms' probability of exporting targeted goods to Russia but also had indirect effects: they reduced affected firms' exports of other products and to other destinations and lowered affected firms' average payroll. Our findings imply that the domestic costs of export controls extend beyond direct restrictions. |
| Keywords: | Sanctions, Export Controls, U.S.-Russia Trade |
| JEL: | F51 F13 F14 F23 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-50 |
| By: | Matthes, Jürgen |
| Abstract: | This paper proposes that the EU should build a cooperation platform together with the CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). This platform could be named the Free and Fair and Trade Club (FFTC) - as the emerging EU-CPTPP cooperation is focused on rules-based, free and fair trade. The FFTC would stand for about 30 percent of global GDP and also of global trade. The guiding principle should be open plurilateralism. This entails multiregional voluntary cooperation based on different topical coalitions of the willing that is open for other countries to join when they adhere to the respective rules agreed by (a subset of) FFTC members. The case for the FFTC is reinforced by the fact that the great powers, the US and China, are undermining the rules based international order by employing coercive measures. Against this background, Canadian Prime Minister Mark Carney called for an alliance of middle powers. The FFTC could become a building bloc for such an alliance. Pooling the economic weight of FFTC members' markets would create a power base that can be leveraged in conflicts with the great powers. If successfully coordinated, it could be used on the defensive side in two important ways: First, for mutual protection of FFTC members against a 'divide-et-impera' approach of the great powers. If the latter erect unfair trade barriers or use coercive export restrictions, a NATO-like Article 5 approach could ideally be created: Even if only one FFTC member was targeted by the great powers, all FFTC would stand together by supporting each other or even by coordinating retaliation. The second option would entail protecting FFTC members against unfair market distortions like massive industrial subsidies or an undervalued currency. To this aim, a trade defense measure of one FFTC member would be adopted by all other FFTC members. The FFTC could also be used for more offensive objectives. Preferential trade integration among FFTC members, e.g. in digital trade or E-commerce, would create substantial trade diversion to the detriment of the great powers. In an escalating conflict, it would even be possible to withdraw the WTO's most-favoured nation status of the great powers -creating severe trade diversion also in goods trade.While these far-reaching options are a longer term prospect, they should form part of the strategic thinking of the EU. There are at least ten reasons why the FFTC case should be pursued and furthered by the EU. The EU obtains a stronger lever to strengthen the WTO. The EU can raise the chances of a meaningful reform of the rules-based international trading order. The FFTC can be a platform for a diversified friendshoring strategy on a trusted basis. The FFTC offers opportunities to coordinate on the setting of new product standards. The FFTC can become a counterweight to the great powers and can strengthen the rule of law again.The EU could be in the driving seat in the FFTC. The EU would enlarge its footprint in the Indo-Pacific. The FFTC could be a new player in the new multipolar order and the bipolar hegemonial conflict. The FFTC can limit the divide between industrial countries and developing countries. Via the FFTC the EU could offer alternatives to the US and China for developing countries. Obviously, there is the danger that the great powers intimidate FFTC members and try to prevent them from joining forces. The US security guarantees for Europe and Asia outside China are also an important case in point in this respect. However, it would be against core US strategic interests to yield Asia to China or Europe to Russia. While this is no guarantee in view of the erratic decision making of the current US president, the Trump administration will surely take note if the EU and the CPTPP move closer and discuss the formation of a FFTC because of the economic weight of FFTC members and the entailed power of FFTC coordination. |
| Keywords: | Europäische Union, Wachstum und Konjunktur, Welthandel, Weltwirtschaft |
| JEL: | F5 F13 F15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkpps:343062 |
| By: | Kamalbek Karymshakov (Kyrgyz-Turkish Manas University); Kijin Kim (Asian Development Bank); Dina Azhgaliyeva (Asian Development Bank); Dastan Aseinov (Kyrgyz-Turkish Manas University) |
| Abstract: | Household resilience to extreme weather events depends critically on financial access, yet the role of remittances in shaping expenditure responses to such events remains insufficiently understood. This study examines how remittances are associated with household expenditure patterns under precipitation extremes in the Kyrgyz Republic, using nationally representative panel household survey data (2019–2023). Exploiting exogenous variation in remittance flows generated by historical migration networks and exchange rate movements, the analysis identifies a context-dependent buffering role of remittances. Remittances may help sustain household expenditure during periods of extreme weather, with the strongest protective effects observed among rural and high-altitude communities. However, rural households receiving remittances during excess rainfall episodes appear to reduce their expenditure shares on education and health. The middle-income households exhibit the strongest remittance-climate buffering patterns, while the poorest households show limited ability to leverage remittances for meaningful expenditure reallocation—likely reflecting the insufficiency of remittances relative to the scale of climate-induced losses. |
| Keywords: | remittances;climate risks;Central Asia;Kyrgyz Republic;highland communities;precipitation;drought;weather extremes |
| JEL: | F24 Q54 D14 C23 |
| Date: | 2026–08–24 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:023539 |