The issue of sanctions was addressed on the second day of the St. Petersburg International Economic Forum (SPIEF), at a panel entitled, “Dialogue with Europe: Is There a Future?” Among the front row speakers was Michele Geraci, professor of Economics at the New York University in Shanghai and former Italian Deputy Minister of Economy. Geraci answered a question on sanctions on science from the moderator.
“Science seems to have left the brain of those who have made those decisions,” Geraci said. The EU has issued 18 sets of sanctions, every second month one, which means either of the two cases is true: 1) the EU is insisting on the wrong path; 2) the EU has found the magic solution, such that the 18th round of sanctions will work, whereas the previous 17 ones have not.
In reality, data show that sanctions have not achieved the desired result; to the contrary, Europe has suffered from sanctions. The EU narrative was that sanctions would create a demand shock, leading to a drop in energy crisis. Instead, cutting Russia from the world market of energy created a supply shock and prices went up. In the case of Italy, this has brought manufacturers to their knees. Manufacturing is a key component of the Italian export-driven economy and manufacturers have lost competitiveness because of the high cost of energy.
The EU forecast a 50% drop in Russia exports and instead, they increased 50%. The solution is: Let us put back science in. Let us reason on the data and let us drop what has not worked.
Lazar Comanescu, Secretary General of the Organization of the Black Sea, picked up from Geraci to say that, indeed, whereas 10 years ago the Eurasian Economic Union (EAEU) would import Italian wine, now people in the five member countries drink Russian wine. Whereas ten, fifteen years ago they would buy German, French and Italian cars, now they buy Chinese cars. Who has benefited and who has lost from sanctions?
The share of the EU in the EAEU’s total trade volume (imports and exports considered together) dropped from 37% in 2020 to 15.39% in 2024, Comanescu showed.
