An AWOS analysis published in the “GeoTrade” magazine estimated the commercial value of the different types of Italian and Russian goods subject to export and import bans following the sanctions introduced by the EU since February 2022.
The sanctions launched by the European Union against the Russian Federation have generated restrictions on 44.4% of trade between Italy and Russia, for a value of approximately 10 billion euros. Over half of the trade between the two countries (55.6%) is still free, i.e. not subject to restrictions on the basis of European regulations, for a value of over 12 billion euros. As regards the most sensitive issue, namely the impact of the restrictions on Italian exports, the nominal value of the listed goods reaches a maximum value of 4 billion. However, the real impact in 2022 is estimated not to have exceeded 1 billion euros, while for 2023 it should be below 2 billion.
These and other data emerge from a study on the effects of the sanctions against Russia on the Italian economy published in the fourth issue of GeoTrade (Rubbettino), the quarterly journal of geopolitics and foreign trade of the AWOS – A World of Sanctions association, which is presented today in Rome on the occasion of the conference “After the sanctions against Russia: for an Italian policy on international economic restrictions”.
The AWOS study examined the customs codes and the categories of products whose export and import is prohibited following the EU restrictive measures. For each of these codes, the commercial value was researched using Istat data on Italian foreign trade in 2019 as a reference, the first year not affected by the effects of the pandemic. In 2019, total Italian exports to Russia amounted to around 9.1 billion euros, 2.5% of Italy’s total exports to the world, while imports from Russia amounted to 13.7 billion, with a total trade of 22.8 billion.
Specifically, the AWOS analysis highlights the following aspects.
The maximum potential restrictive effect of the sanctions on Italy-Russia trade is 10 billion
The 2019 trade equivalent of all the import and export restrictions contained in the EU sanctions packages launched in 2022 (which updated regulation 833/2014) is around 10.1 billion euros. It follows that over half of Italy’s trade with Russia, around 55.6%, is still represented by goods in free trade, while goods listed, blocked or subjected to restrictions of various types are the 44.4%.
The sanctions weigh equally on exports and imports, but the effects for the Italian economy are calculated on exports.
Restrictions on imports and exports are essentially the same, with about 55% of export goods still in free trade and 56.2% of import goods. The value of the listed export goods amounts to a 2019 equivalent value of 4.1 billion, while for imported goods it is equal to 6 billion. However, only the effects on exports should be calculated as a potential cost for the Italian economy, while for imports they become a cost only to the extent that they produce an increase in the prices of imported goods.
The commercial equivalent of the export blocked by the sanctions is 1.9 billion a year.
Not all of the 4.1 billion worth of goods subject to restrictions in EU packages are actually blocked, due to the presence of broad derogation criteria and forms of price caps (for example for luxury goods). Taking as a reference only the values of the actually current restrictions – i.e. those already in force and for which no significant derogations have been included – the estimated value of the goods blocked on Italian exports to Russia is equal to approximately 1.9 billion euros per year compared with the value of goods exported in 2019. However, only a part of these 1.9 billion, around 1 billion, actually affected Italian exports during 2022, as the restrictions almost exclusively concerned the second half of the year and entered into force after a derogation period.
The real value of the 2022 import sanctions is less than 400 million.
As far as imports are concerned, in order to estimate the real equivalent value of the impact of goods subject to restrictions, it is advisable not to calculate the value of crude oil and petroleum products (approximately 5 billion euro), which will produce marginal effects for 2022, given that the prohibition of imports from Russia started on December 5th. This leads to a current value of the listed imports of around 680 million in value over the 12 months of 2019, the impact of which on 2022 is unlikely to have exceeded 400 million. The maximum potential contractionary effect of the restrictions on Italian imports from Russia that could occur in 2023 amounts to approximately 6 billion euros. However, the contraction effect is not equivalent to the cost for the Italian economy, since the latter can be estimated only to the extent that the contraction produces a real increase in the price of goods imported from alternative markets. An increase which, as regards the most important item of restricted import goods – namely oil – will be significantly mitigated by the introduction of the price cap set by the European Union.
Values of the assets listed in the EU sanctions packages towards Russia:
AWOS is the first Italian project that integrates investigations into export controls, geopolitical risk analysis and forecast monitoring of sanctioning regimes into a public-private platform. Association based in Verona, it promotes among institutions and companies – through a network of experts, content and events – knowledge of the complex world of economic and financial sanctions, EU and non-EU, and of the dynamics that influence geopolitical risk. AWOS has a Scientific Committee made up of authoritative experts in the Export Controls field, university professors and institutional representatives.
GeoTrade, a specialized quarterly paper magazine, is a unique editorial project on the Italian market, dedicated to the increasingly topical issue of the impact of geopolitics and state decisions on the economic world through restrictions and trade wars. The magazine is focused on geopolitical events and scenarios that determine the different forms of restrictive measures (towards subjects and products), embargoes and Pase risk, economic and financial sanctions, export control and trade compliance (rules of release for consumption , compliance and product safety).
Sanctions against Russia: 44% of trade with Italy under restriction