Despite having similar stories of conception, post-Soviet Eurasian states (including Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan) have varied widely in their transition to independence, their ability to create successful democratic institutions, and the protections provided for the political rights and civil liberties of their citizens. As is the case with Russia, many of the post-Soviet states’ transitions to democracy were never fully realized, and many began to slide back towards authoritarianism – in some cases, even after adopting more liberal policies and democratic institutions following independence. By 1998, Russia had reversed many of its democratic policies and began obstructing political parties, canceling gubernatorial elections, and adopting tight restrictions on freedom of press and assembly. By 2004, Russia had reestablished itself as strongly authoritarian under President Vladamir Putin, and many of the surrounding non-Baltic post-Soviet states followed suit. The coinciding backslide of democracy in Russia and the surrounding states begs the question of if and how Russia may be impacting the political development of other developing nations, specifically post-Soviet Eurasian states.  

Russia, however, is not the only autocratic superpower in the region that may be impacting the political development of new/developing nation-states. According to data from the World Bank and The Observatory of Economic Complexity, since 1989, China’s GDP has grown at an average of 9% per year, and their global exports have increase from $330 billion in 2000 to $2.65 trillion in 2020, meaning they have far surpassed Russia in terms of economic power. China is far from a model democracy, having one of the most repressive governments in Asia and providing minimal political rights and civil liberties compared to other states with comparable GDP. Over the past two decades, China has made both explicit power-moves in terms of establishing regional hegemony in Taiwan and Hong Kong, as well as implicit power-moves through financial projects such as their “Belt and Road Initiative”, establishing trade networks, and the purchasing of foreign debts. Thus, it is possible that, in addition to Russia, China has played a significant role in the global shift towards autocracy in the last two decades.

Thus, the underlying question driving my research is: How have Autocratic Superpowers contributed to the global backslide of democracy and human rights over the last two decades? As Human Rights literature and International Development literature have proven, states with representative governments, strong institutions, and high levels of personal freedoms tend to have lower numbers of human rights violations, are less likely to deal with political violence / uprisings, and generally provide a greater standard of living for their citizens. Therefore, it logically follows that the global backslide of democracy and democratic values have coincided with a global backslide of respect and protection of individuals’ rights. In this paper, I will explore whether dependence on authoritarian super-powers (particularly Russia and China) for trade and economic growth has led to a deterioration of political rights and civil liberties for citizens in developing states. To do so, I will focus specifically on the case of post-Soviet Eurasian states. 

Spencer Chrein is a 2023 Political Science graduate from Washington University in St. Louis and a 2023 Fall Intern at the Washington International Trade Association. 

To read the full thesis, click here.

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Overview

Following Russia’s invasion of Ukraine in February 2022, the United States formed a coalition with 37 allies and partners that imposed sanctions and export controls to limit Russia’s access to foreign goods and technology and erode its ability to sustain the war. U.S. sanctions have immobilized Russian Central Bank assets and targeted thousands of individuals and entities. U.S. export controls were imposed to “choke off exports of technologies and other items that support Russia’s defense industrial base . . . and to degrade Russia’s military capabilities and ability to project power.” Export controls include bans or restrictions on products for military end use or to military end users, bans on exports of certain foreign-origin items like semiconductors produced with U.S. advanced technologies, tools, and software, and restrictions on exports of luxury goods to impose costs on Russian oligarchs. In addition, many multinational companies closed their Russian plants or stopped exports to Russia. 

The combination of these actions by the United States and its partners has isolated Russia from the global economy and degraded Russia’s military capabilities. However, despite an initial decline in overall Russian imports, Russia continues to have access to some dual-use technologies, such as semiconductors, through increased trade with countries like China. Looking specifically through the lens of trade statistics, this report examines the impacts of government measures and company actions on Russia’s ability to access foreign goods and technologies, including those that could support and sustain the Russian government’s war efforts.

The report examines: (1) overall trends in Russia’s imports to determine the extent to which Russia can import goods generally and (2) Russia’s imports of select goods (integrated circuits, smartphones, appliances, passenger vehicles, and vehicle parts) directly impacted by export controls or firm exits to assess in more depth the impact of these measures.

This report finds that the United States, its allies, and the private sector need to continue to stay ahead of Russia’s efforts to adapt to government measures and shift to new supply chain networks to access important goods and technologies, including by shifting import sources and importing goods directly or through transshipment points in some postSoviet states. This can be done through enhanced coordination, additional resources, and further strengthening enforcement efforts. 

Key findings: Overall import trends

Prewar imports and inventories were high: Russian imports substantially increased prior to the invasion of Ukraine. As a result, Russia entered the war with strong inventory levels for some products, such as certain consumer goods. There was also significant growth in integrated circuit (“IC”) imports in late 2021, though inventory data for ICs are not available. The strong inventory may have mitigated some of the initial impact of export controls.

Russian imports rebounded by the fall of 2022: Russian imports declined sharply in March and April 2022, and in April 2022 were 43 percent below the prewar median level (figure ES1). Russian imports then rebounded, exceeding median monthly prewar imports by September 2022. In the most recent three-month period, August to October 2022, combined imports were 1 percent lower than in the same period in 2019 and 11 percent lower than in the same period in 2021. 

Many countries have significantly curtailed exports to Russia: EU exports to Russia declined by $4.6 billion (52 percent) from October 2021 to October 2022, though the EU was the second largest supplier to Russia in October 2022 ($4.2 billion in exports). U.S. and UK exports each declined by $0.4 billion (85 and 89 percent, respectively) and Ukraine and Japan’s exports each declined by $0.3 billion (100 and 41 percent, respectively).

Russian imports from several countries significantly increased, led by China: A few countries increased exports well above prewar levels, including China, Belarus, Turkey, Kazakhstan, Kyrgyzstan, Armenia, and Uzbekistan. Exports from many other countries rebounded from their spring 2022 lows, and some post-Soviet states increased their transshipments of goods produced by multinational firms that no longer export the goods directly to Russia. 

To read the full report, please click here.

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At the core of the EU’s response is the RePowerEU scheme, which aims to address all three concerns simultaneously. Announced in mid-May, RePowerEU, along with existing components of the European Green Deal, presents a generational opportunity for businesses across the Atlantic to engage with European governments, from the EU to the local level, to build a new energy ecosystem, rooted in energy independence and renewables. At the core of the package is a contradiction: the need to support short-term investment in fossil fuels to mitigate rising prices and the effects of sanctions and the need to speed up long-term investment in renewables. The extent to which the package leans towards the former or latter will likely be the subject of much debate as it turns to implementation.

Members of the European Parliament (MEPs) have already expressed their discontent with the European Commission’s proposal to include financing for new oil and liquefied natural gas (LNG) infrastructure. The package is also tangled in a debate in the European Parliament over reforms to the EU’s Emissions Trading System (ETS), a sort of cap-and-trade scheme, with criticism of the Commission’s plan to fund RePowerEU by selling more carbon credits. While the proceeds would be mostly used to fund new renewable energy projects, the effective outcome would be to increase Europe’s total carbon emissions in the short run.

To read the full report by the Albright Stonebridge Group, please click here.

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To read the full report by the Rhodium Group, please click here.

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Initially, debates waged as to the scope, severity, and efficacy of the first round of sanctions on Russia. However, with the latest round of actions—selected banks being removed from the global financial messaging system SWIFT and restrictive measures being imposed on the Russian Central Bank (CBR)—the commitment of members of the international community is clear. Understanding the impact of these actions, however, is key. The bottom line is that these sanctions will have a significant impact on Russia’s overall economy, and average Russians are already feeling the cost. The sanctions target Russia’s domestic financial system, causing bank runs and forcing Russia’s central bank to continue hiking rates and/or to use its foreign exchange reserves. Furthermore, we believe that the CBR will have to institute strict capital controls and possibly declare a bank holiday as bank runs accelerate and demand for foreign exchange continues to rise sharply. As a result, we anticipate seeing negative growth in an economy that has already been hindered by increasing isolationism.

Even though we are seeing some of the most serious sanctions imposed on a country in recent history, there is still an escalation ladder and, if necessary, the United States and others can continue scaling up sanctions. These could include removing energy transactions-related exceptions from sanctions against the Russian banking system, shutting down further Euro-based transactions, and prohibiting transactions in the secondary market for existing Russian debt.

This paper will systematically look at additional sanctions that have been or could be imposed on Russia in several key areas: global payments systems, access to the U.S. Dollar, sovereign debt, hydrocarbon exports, and export controls. Equally important, it will not only analyze the effects of these latest sanctions on the Russian economy but also the broader implications for international financial markets. For example, one of the biggest impacts on the global economy is likely to be on trade. While details on how the new sanctions affect energy are still emerging, we do know that sanctions on its central bank will make it more difficult for Russia to export energy and other commodities. As a result, we may see commodity prices surge.

Sanctions are the pre-eminent tool of economic statecraft, and President Biden and other world leaders have made it clear that these sanctions were only a first step, leaving the door open for further escalation should Russian aggression continue. In the coming days we will see limits placed on so called “golden passports,” the launch of a transatlantic task force so that today’s financial sanctions are enforced and not circumvented, and a battle will be waged against “disinformation and other forms of hybrid warfare.” In other words, we have yet to reach the top of the ladder.

To read the full report by the Institute of International Finance, please click here.

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The European Union (EU), the United Kingdom (UK), and the United States (USA) have sought in recent months to discourage Russia from sending military forces into Ukraine. Diplomatic missions have been complemented by promises of military support and training for the government in Kyiv. Whether these steps persuade the Russian government to stand down their troops down remains to be seen.

Current developments have unwelcome echoes to the annexation of Crimea undertaken by Russia during the first quarter of 2014, which many have observed was the first of its kind in Western Europe since the conclusion of World War II. After that annexation, steps were taken by Western governments to offer economic support to Ukraine, often in the form of better market access. Was that trade policy support sustained? Or was policy incoherent—with lofty diplomatic objectives undermined by below-the-radar screen trade policy interventions that impaired Ukrainian access to Western markets? The purpose of this note is to address these questions. But first it is worth remembering the defence-related consequences of overseas market access.

Without well-equipped and sufficiently trained armed forces, a nation’s foreign adversaries are less likely to be deterred from military action. Having the tax base to afford effective national defence forces is key and export revenues that result in economic growth help in this regard.1 Improved and secure access to the markets of allies is especially important when export sales to other markets and production facilities are lost due to earlier hostile acts by neighbouring nations.

In recent years we’ve been told that economic security is national security, claims that have been rightly derided when they were advanced by Trump Administration officials. However, such arguments may be of greater relevance in the Ukrainian context. For sure, Ukrainian prosperity is not the sole responsibility of Western governments, but a prosperous Ukraine that can defend itself is evidently in the Western interest.

To read the full report from the Global Trade Alert, please click here. 

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