Embargo Research Articles

The Geoeconomics of the Single Market for Financial Services

AbstractWe discuss the geoeconomics of the Single Market in financial services in the European Union (EU). We examine three case studies that concern the EU and other major jurisdictions and that range from incipient geoeconomic use to outward weaponisation of the Single Market in finance. These cases are (1) the post‐2008 crisis transatlantic tug of war, whereby the EU leveraged its Single Market vis‐à‐vis the United States, seeking to set the rules for global finance; (2) the Brexit negotiations, when the EU acted as a bloc against the United Kingdom and successfully safeguarded the integrity of the Single Market; and (3) the fulsome war in Ukraine, during which the EU ‘weaponised’ its Single Market through the adoption of financial sanctions against Russia. We argue that a combination of external and internal factors accounts for this pattern: the evolution of the international economic and political system, in particular, the increasing challenges to the liberal international order, and intra‐EU developments, namely, the EU's ability to deploy its Single Market geoeconomically.

Role of labor migrants from Central Asia in the socio-economic development of Russia in the context of new global challenges

The article studies history of migration among the countries of Central Asia and Russia, the factors and scale of emigration to Russia against the background of sanctions from the European Union and the USA, and migrants’ contribution to the economic and demographic development of the state. Migration processes from Central Asia to Russia have a long history dating back to Soviet times. After the collapse of the Soviet Union, migration took on unimaginable proportions and became one of the most important factors affecting economic and political life in both Central Asia and Russia. Labor migration began in the late 1990s and peaked in 2014. During their stay in Russia, migrants faced various crises. They have always played a significant role in the socio-economic development of the country. Although migration has always had both positive and negative consequences for the host countries, from an economic point of view it has rather a positive impact on the host countries’ economies. After February 2022 Western countries have imposed new economic and political sanctions against Russia, which have affected the situation and orientation of migrant workers from Central Asian countries. Some migrants have started to look for other emigration channels, while the majority are still focused on Russia. Compared with previous crises, the migrant workers’ role in Russia’s economic and demographic development has increased now against the background of new sanctions.

Economic sanctions and sovereign debt default

This paper analyzes the effect of US economic sanctions on sovereign debt default across 118 developing countries from 1980 to 2018. We use entropy balancing method, and provide robust evidence that US sanctions increase sovereign debt default in the targeted states. This finding withstands several robustness tests, including alternative specifications and databases, and alternative estimation methods. The results also reveal some heterogeneity depending on the type of sanctions (for example, trade versus financial sanctions), on whether they are imposed unilaterally or multilaterally, on the severity of the sanctions, on the geographical distance from the United States, the time since sanctions were imposed, and some structural characteristics. In addition, we find that the development of cryptocurrencies reduces the effect of sanctions, and that failed sanctions have a greater effect on default. The compositon effect based on the type of debt in default shows that the effect of US sanctions is only observed on the default on external debt and not on that of internal debt. Next, we identify three main channels through which sanctions trigger sovereign risk; namely economic growth contraction, the occurrence of banking crisis and reduced access to international financial market. Finally, we explore the effect of other sanctions, notably those of the European Union and the United Nations, and find that these sanctions also raise the probability of sovereign debt default.

Rebalancing agri-food trade flows due to Russian import ban: the case of direct neighbors

In recent years, research on trade rebalancing in agri-food supply chains has gained prominence due to trade sanctions, supply chain disruptions, and vulnerabilities exposed by pandemics and conflicts. This study focuses on the recalibration of agri-food trade dynamics, using the 2014 Russian import ban as a case study. The ban significantly altered the structure of agri-food export destinations for affected countries, particularly those sharing a border with Russia (e.g., Poland, Finland, Estonia, Latvia, Lithuania). Employing a cross-section regression model and structural break tests, we assess the trade rebalancing process. Our findings reveal short-term trade rebalancing effects, primarily observed in product groups not traditionally considered main trade specializations. There is evidence that significant part of the lost trade was redirected to EU28 or EAEU countries and end up in the common trade areas of these countries. Furthermore, we argue that the Russian import ban initiated a long-term structural shift in export patterns for non-traditionally traded banned products, while rebalancing for traditionally traded products was significantly quicker.

LEGAL REGULATION OF ECONOMIC LIABILITY ACCORDING TO THE LEGISLATION OF UKRAINE

The article analyzes legislative acts that are the basis of economic and legal responsibility. Attention is focused on the fact that issues of economic and legal responsibility are regulated both by codified acts: The Economic Code of Ukraine, the Civil Code of Ukraine, and special laws. The Economic Code of Ukraine has a section “Liability for offenses in the field of business”, which regulates relations regarding compensation for losses in the field of business; reveal the concepts, sizes, types and procedure of applying fines, operational-economic sanctions and administrative-economic sanctions. The Civil Code of Ukraine contains a number of chapters and articles devoted to compensation for damages; compensation for moral damage; protection of property rights; penalty, withholding, etc. as a form of economic and legal liability. The Code of Ukraine on Administrative Offenses regulates the general procedure for prosecution for offenses in the field of business. Special legislation of Ukraine regulates certain areas of economic activity and liability for violation of its norms, for example: liability for offenses in the field of urban planning; responsibility for untimely fulfillment of monetary obligations; responsibility in the field of public procurement; responsibility for the use of low-quality and dangerous products; responsibility for violation of banking norms; responsibility for violations in the field of consumer rights protection; responsibility for violation of license terms of economic activity, etc. Key words: legal regulation, legal responsibility, administrative and economic sanctions, licensing of economic activity, public procurement, offense, fine, penalty, reparation, detention, operational and economic sanctions, economic competition.

Developing ukrainian enterprises using neural networks

The article explores the features of using neural networks for the development of Ukrainian enterprises. It examines the theoretical foundations of neural networks, their history, types, and examples of application in various industries. Special attention is given to analyzing the factors influencing enterprise development, such as technological innovations, economic conditions, organizational changes, competition level, and market conditions. It is shown that technological progress is a key factor in the development of enterprises in the modern world. The current state of development of Ukrainian enterprises is investigated in the context of adapting to new economic conditions, particularly during the war. The war in Ukraine significantly affects the economy, including the business sector. Internal challenges include political instability, economic reforms, workforce shortages due to mobilization, power outages, and the need for modernization of production facilities. External factors include global competition, the influence of international markets, and economic sanctions. Despite the challenging conditions, Ukrainian enterprises have growth opportunities through the implementation of the latest technologies, such as neural networks. The main challenges and opportunities for Ukrainian business are analyzed, and the directions for using neural networks for enterprise development are proposed for each development factor, considering the specifics of business operations in Ukraine. Specific examples of successful implementation of neural networks in the banking sector (PrivatBank), IT companies (SoftServe), and the agro-industrial complex (MHP) are provided. The article analyzes the advantages and disadvantages of using neural networks, such as increased efficiency, forecasting accuracy, service personalization, risk reduction, and challenges related to high costs, integration complexity, lack of qualified personnel, and data quality dependency. The prospects for enterprise development using neural networks are considered: productivity improvement, product and service quality enhancement, efficient resource management, risk reduction, innovative development, market adaptation, and resilience support. It is proven that the use of neural networks has significant potential for transforming enterprises, making them more efficient, flexible, and innovative.

Strategy for national economic security in the context of trade wars and economic sanctions

Strategy for national economic security in the context of trade wars and economic sanctions

Non-Traditional Finance and the Infrastructural Imagination of Geoeconomic Hegemony: The Case of Russia’s War in Ukraine

Abstract Against the background of the war waged by Russia against Ukraine, this paper addresses the role of non-traditional financial infrastructures in geopolitical struggles that are conducted by geoeconomic means. Non-traditional finance (in the following: NTF),1 like cryptocurrencies, crypto exchanges, and related services, promises to provide financial security—for instance, in terms of payments—outside of traditional financial infrastructures. NTF gains geopolitical significance in the wake of the US and EU-led financial sanctions against Russian institutions and individuals. The paper investigates this potentially new role of NTF through a theoretical and conceptual architecture that views hegemony, including geopolitical hegemony, from a social-theoretical standpoint: Hegemony is conceptualized as the result of “articulations”—that is, contingent interrelations encompassing both linkages and distinctions—between heterogeneous elements in which the respective role and function of those elements is re-defined through the articulation. With regard to the emerging role of NTF in geopolitical conflicts, the question is how political perceptions of geopolitical conflict and agency are iterated in terms of non-traditional financial infrastructures, and how, in turn, those infrastructures are articulated with respect to their political weight. The paper empirically analyzes the ways in which NTF agents and organizations have been addressed as geopolitical factors in the war confrontation between Russia and Ukraine by political institutions (focusing on the United States, the EU, Russia, and Ukraine), and how they understand their role themselves. Findings show that NTF, in spite of its rising prominence, use, and promise of autonomy, has effectively been articulated as an infrastructure whose concerns with financial and payment security must be subordinated to considerations of political security and international supremacy. In that articulation, Western, Russian, and Ukrainian governments significantly differ with respect to the ways they deploy an infrastructural imagination to define their interests and their views on NTF in the conflict.

Do the U.S. and Europe financial sanctions help promote RMB internationalization?

ABSTRACT In recent years, the United States and European countries have implemented widespread and enhanced financial sanctions across multiple nations. However, there exists no consensus on whether these sanctions will accelerate de-dollarization or contribute to the Renminbi internationalization(RMBI). This study empirically investigates the impact of financial sanctions imposed by the United States and European countries on other nations’ use of Renminbi (RMB). We use data on RMB cross-border trade settlement in 149 countries spanning from 2009 to 2021 as a proxy for RMBI. Our findings indicate that increasing levels of financial sanctions exert a significant positive influence on the RMBI of sanctioned countries, especially in nations heavily reliant on China for bilateral trade. These effects persist even amid China facing financial sanctions due to the Sino-US trade conflict.

Study Protocol for Investigating the Impact of Economic Sanctions on Public Health and Healthcare Systems in Iran: A National and Sub-national Analysis from 2000 to 2020

: The economic sanctions imposed on Iran in recent decades have impacted the country's healthcare system and the health of its people. However, there has not been a thorough examination of the full scope and changes in these effects over time. Therefore, we designed a mixed-methods study, comprising a parallel quantitative analysis and qualitative study. The quantitative part assesses the effects of sanctions on public health and the healthcare system using 28 indicators, i.e., macroeconomic, healthcare resources, and health outcomes indicators at both national and sub-national levels from 2000 to 2020. The analyses will include descriptive analysis, change point regression analysis, and mediation analysis, performed using R software. The concurrent qualitative study aims to explore the pathways of the sanction effects by considering the perceptions of both patients and health policymakers. The perceptions and experiences of patients regarding living with and dealing with the long- and short-term health implications of sanctions, and the experiences of health policymakers regarding the effects of sanctions on the healthcare system will be analyzed. This study will provide comprehensive and evidence-informed recommendations for global health policymakers to support countries under economic sanctions to protect and promote the human right to health and well-being.

Towards the recalibration of US dollar’s international dominance

PurposeThis paper aims to examine the impact of United States (US) financial sanctions on the international dominance of the US dollar.Design/methodology/approachThe survival analysis technique, which incorporates survival and hazard probabilities to determine the probability of central banks' reserve recalibration, is adopted for analysis.FindingsThe result shows that the probability of central banks recalibrating the dollar share of their official reserve currencies would increase by 60% for every ten additional financial sanctions by the United States. This could imply that more sanctions might have unintended consequences on the international reserve currency dominance of the US dollar.Originality/valueTo the best of the authors’ knowledge, this study may be a novel attempt to use survival analysis to examine the impact of financial sanctions on the US dollar’s international reserve currency dominance.

Implications Of Economic Sanctions On Potential Crude Oil And Natural Gas Prices For Russia Violations

International sanctions are still an important diplomatic instrument used by international organizations such as the United Nations (UN) or a group of countries to target sanctions. One of the existing international sanctions is economic sanctions, which have already been applied to Russia. Economic sanctions against Russia as a consequence of the illegal annexation of Crimea and for under mining territorial integrity of Ukraine. It is believed that the imposition of economic sanctions against Russia will trigger an escalation of the price of crude oil and natural gas on the global market because Russia is ranked as the largest supplier of crude oil and natural gas in the world. The research method used is normative juridical with comparative approach by comparing how economic sanctions have an impact on the Russian economy before and after they are implemented. We argued that the inflation is becoming scarce on the global market while for Russia this case causes increase inflation due to Russia losing most of its shares in international markets.

Economic sanctions, energy consumption, and CO2 emissions in Iran: a system dynamics model

ABSTRACT Economic sanctions have the potential to affect environmental factors through various channels, including income reduction and constraints on accessing finance and environmentally friendly technologies. This study aims to simulate the energy and environmental consequences resulting from international sanctions in Iran. To achieve this, we develop a System Dynamics model integrating a spectrum of variables spanning economic, social, and environmental dimensions, for the period from 2008 to 2028. Our simulation outcomes indicate that by 2028, sanctions are anticipated to precipitate a notable upsurge in CO2 emissions, ranging from 12.5% to 30% compared to the baseline scenario. The magnitude of this escalation hinges on a variety of factors, including energy intensity and scenarios related to economic growth. According to our findings, prolonging international sanctions could be a major barrier to improving energy intensity and lowering CO2 emissions. Given the potential environmental consequences of sanctions, international communities, particularly sanctioning countries, should consider the environmental impacts of sanctions in their policy-making decisions in order to reduce emissions damage.

The impact of international sanctions on income mobility: Evidence from Iran

AbstractThis article studies the impact of international economic sanctions on income mobility at the Macro level. A series of economic sanctions were imposed on Iran during 2008–2015 and lifted to some extent in 2015. Using some pseudo‐panel datasets, constructed based on 18 household surveys during 2001–2018, we investigate the impact of sanctions on four income mobility measures: directional income movement, positional movement, time dependence, and mobility as an equalizer of longer‐term incomes. The results show that in the sense of directional income mobility, the sanctions are followed by welfare losses for all income groups, with richer groups experiencing larger losses than poorer ones. The rich face income declines that are larger compared to those experienced by the poor, and this causes: first, richer (poorer) groups to face a higher probability of moving downward (upward) in relative terms, thus we see an increase in positional income mobility (and also time dependence) with the sanctions; and second, an increase in mobility in the sense of equalizer of longer‐term incomes. We get the opposite results with the removal of sanctions.

Russia's transition to settlements in national currencies in the context of changes in the world monetary and financial system

Aim. To determine the background and prospects of the Russian Federation's (RF) transition to settlements in national currencies in the context of changes in the world monetary and financial system.Objectives. To analyze the current state of the currency market of the Russian Federation in terms of currency structure and main instruments; to identify the reasons for the transformation of the currency market of the Russian Federation; to characterize the prerequisites for the transition to settlements in national currencies in foreign trade; to assess the prospects of such a transition and its impact on the currency market of the Russian Federation in the context of the latest trends in the development of the global monetary and financial system.Methods. With the help of general methods of scientific cognition, graphical analysis the current state, dynamics and structure of the currency market of the Russian Federation in the conditions of sanctions are considered. In addition, the article assesses the background and prospects of the Russian Federation's transition to settlements in national currencies in view of the new trends in the development of the world monetary and financial system.Results. In 2022, after the economic sanctions against Russia were imposed, the state was forced to accelerate the process of transition to settlements in national currencies with major trading partners, and the domestic currency market underwent a significant transformation. In the conditions of digitalization of the financial sphere and the development of central bank digital currencies (CBDCs) , the introduction of international settlements using the digital ruble seems to be a promising direction.Conclusions. The period after the sanctions against the Russian Federation were imposed (2022) is marked by significant changes in the domestic foreign exchange market, primarily associated with the gradual displacement of world currencies (primarily the dollar) and their replacement by the ruble and renminbi. In general, this trend reflects the state of the RF foreign trade. With the reduction in the volume of the local foreign exchange market and the withdrawal of Western players, the government is taking measures aimed at preserving the potential of the foreign exchange market. A promising direction for international settlements under sanctions is through CBDC. However, the implementation of such a system will take years, during which the financial system of the Russian Federation will have to preserve its potential in isolation from Western financial markets.

Economic sanctions and informal employment

This paper examines how economic sanctions affect the allocation of workers across formal and informal employment. We analyse the case of the unprecedented sanctions imposed on Iran in 2012 and focus on the manufacturing sector. Employing a difference-in-differences approach, we compare the probability of being employed in the informal sector before and after 2012 for workers in industries with different pre-existing exposure to international trade. Our analysis reveals that, following the sanctions, workers in industries with higher trade exposure are significantly more likely to experience informal employment compared to workers in industries with lower trade exposure. These results remain robust when accounting for potential sorting issues by using an instrumental variable approach. Our findings shed light on an important margin of labour market adjustment through which sanctions can affect the economy of the target country.

Negotiation Strategies in International Diplomatic Conflicts in United States

Purpose: The aim of the study was to analyze negotiation strategies in international diplomatic conflicts in United States. Methodology: This study adopted a desk methodology. A desk study research design is commonly known as secondary data collection. This is basically collecting data from existing resources preferably because of its low cost advantage as compared to a field research. Our current study looked into already published studies and reports as the data was easily accessed through online journals and libraries. Findings: Findings on negotiation strategies in U.S. diplomatic conflicts highlight the use of coercive diplomacy, economic sanctions, and multilateral negotiations. These strategies involve bilateral talks, international organizations, and third-party mediation. Leverage, including military power and economic incentives, is employed to advance U.S. interests. Challenges arise from divergent interests and power dynamics. Success requires a balanced approach of assertiveness and flexibility. Unique Contribution to Theory, Practice and Policy: Game theory, constructivism & distributive and integrative bargaining may be used to anchor future studies on the negotiation strategies in international diplomatic conflicts in United States. Provide negotiators with training and resources to enhance their cross-cultural competence, including understanding cultural values, communication styles, and negotiation norms. Invest in the development of mediation and third-party intervention mechanisms to facilitate diplomatic negotiations in international conflicts.

Retorsion: An Underrated Retaliatory Measure Against Malign Cyber Operations

Abstract The articles discusses the application of the concept of retorsion in relation to defensive measures against hostile cyber operations. Retorsion is a concept not regulated by international law, which gives the victim state a high degree of flexibility in its use. However, its limits are formed by the rules of international law (retorsion is an unfriendly act not prohibited by international law). The paper is divided into three main parts. The first part discusses the concept of retorsion in general terms and its relation to cyber operations, the second part defines the relationship between retorsion, countermeasures, plea of necessity and the right of self-defence, and the third part consists of in-depth analysis of states’ practice. The analysis of states’ practices includes both the actual measures that states have taken in response to cyber operations (e.g. expulsion of diplomats, economic sanctions, travel bans) and official statements on the issue that have been published, particularly in the period 2019–2022. Attention is also paid to the possibilities of using retorsion against cyber operations carried out by non-state actors.

The Indo–Russian payments corridor : Exploring and evaluating cross-border payment alternatives

In response to the Russian invasion of Ukraine, western countries have imposed a number of economic sanctions on Russia, including freezing its foreign currency reserves, restricting the flow of trade and cutting off its access to SWIFT. The sharp fall in euro and US dollar denominated transactions has in turn impacted Russia’s trade with India, as it is now harder for the two countries to exchange payments. In this context, this paper explores the messaging, clearing and settlement alternatives available for making/receiving payments between India and Russia. Specifically, the paper examines a rupee–ruble trade arrangement, central bank digital currency, the linkage of faster payment systems and card infrastructures, the Russian System for Transfer of Financial Messages, and bilateral messaging systems. In addition, the authors evaluate various considerations pertaining to these options, as well as the implications, from the perspective of central banks, banks and merchants/customers.

Влияние геополитической напряженности на международное движение капитала

The study examines the impact of geopolitical tensions, which have increased sharply in recent times, on international capital flows. It shows that geopolitical tensions affect cross-border investment flows through three main channels: increased geopolitical risks that encourage international investors to reduce investments in countries with different foreign policies; tighter controls on incoming FDI in many countries to ensure national security; and financial sanctions imposed by Western countries to put pressure on other states. Based on the analysis of investment relations between the United States and China, the contradictions between which are the main source of geopolitical tension in the world, the author confirms the conclusion that the influence of geopolitical factors on capital flows between the countries has increased since the second half of the 2010s. However, the study substantiates that the emerging fragmentation of cross-border capital flows can have not only negative, but also positive consequences for the global economy and finance. The compression of capital flows between the countries of the global North and South may push the latter to establish closer integration ties in the financial sector, create financial infrastructure independent of the West, focused on the needs of developing countries, and accelerate the internationalization of their currencies. As a result, these processes could weaken the dominance of Western countries in the global financial system and facilitate its transition to a more equitable multipolar configuration.