The Impact of Sanctions by the EU and the USA on the Structure of the Imports and Exports

The geopolitical conflict between Russia and Ukraine that started in March 2014 led to bilateral economic sanctions imposed both by Western countries and by Russia. The resulting tension has affected the foreign economic activity of the Russian Federation. This paper investigates the consequences of imposing sanctions on the part of the EU and US countries on Russia's foreign economic relations, using the intensity index of imposed sanctions, using the vector autoregression method VAR. The analysis revealed that the greatest negative effect on the decline in Russia's trade with foreign countries in consequence of the imposed sanctions was the fall in demand, and, consequently, the decline in the price of oil, since Russia is greatly dependent on the export of natural resources. In addition, the real exchange rate, as well as the ruble, and the euro was significantly affected after the introduction of sanctions. Since 2014, the Russian ruble has significantly depreciated against the euro. In addition, after the introduction of sanctions, there was a significant outflow of capital from the country. It is estimated that the fall in oil prices due to sanctions led to a GDP loss of 8.5% cumulatively from 2014 through 2017. As a result of the current situation, Russia is changing its focus on import substitution, development of its own production and cooperation with the developing regions of Asia.