Analysis of Trade Flows in the Eurasian Region

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This paper examines the impact of sanctions on trade dynamics in the Eurasian region, highlighting the rise of exports to CCA3 countries and the decline in Russia's export share. The study emphasizes the significance of the increased exports to CCA3 and the implications for Russia's imports from different regions. Despite some limitations in data quality, the researchers believe that valuable insights can still be derived to understand the shifting trade patterns in the region.

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Comments on "The Eurasian roundabout: Trade flows into Russia through the Caucasus & Central Asia Iikka Korhonen Bank of Finland Institute for Emerging Economies (BOFIT), Bank of Finland

What does the paper do? Documents how the share of CCA3 (Armenia, Kazakhstan and Kyrgyz Republic all members of the Eurasian Economic Union) in the exports of the EU and the US has increased, while the share of Russia in the exports has collapsed as the sanctions have kicked in Shows how the export increase to CCA3 is statistically significant in goods that have been sanctioned by the EU (also in similar goods) Shows that exports of sanctioned (or similar) goods from China and T rkiey to Russia also increased Very nice and concise paper on a very important topic | Public | BOF/FIN-FSA-UNRESTRICTED 22.6.2023 2

Some further notes on the data etc. Offical customs data, does not cover smuggling HS6 product group level data, so no product level data (sometimes sanctions have not been very clear on the exact HS codes etc.) Does this make the paper less important? No. We are economists, and while more detailed data would be nice we can also reach some conclusions with less than perfect data. We can get a pretty good sense of direction and of the order of magnitude. We can always debate the details, obviously increased exports to CCA3 account for a small fraction of the drop in direct trade. | Public | BOF/FIN-FSA-UNRESTRICTED 22.6.2023 3

Some comments on the regressions Being able to distinguish between sanctions related to luxury goods, industrial/transport capacity and dual-use and military technologies is very valuable (although some more descriptive statistics e.g. on the value of their exports pre-invasion etc. Would be valuable) In addition to CCA3, also Georgia is subjected to more detailed analysis why this country and not some others (Mongolia and Azerbaidzan are mentioned) although interaction terms with Georgia usually are not statistically significant (and exports of similar goods to Georgia declined) | Public | BOF/FIN-FSA-UNRESTRICTED 22.6.2023 4

increased exports to CCA3 account for a small fraction of the drop in direct trade. This is good to hear, but it would be nice to see some summary statistics on Russia s total imports in certain product categories from the EU/US/UK and CCA3/China/T rkiye If/when there are differences in product categories (even at the very aggregate level of luxury goods etc.) what do they tell us of the policy priorities of Putin s administration? | Public | BOF/FIN-FSA-UNRESTRICTED 22.6.2023 5

Data ends December 2022 so I find it easy to suggest more analysis Do the stipulations of the 10th sanctions package relating to transit trade via Russia have an effect? Trying to stop sanctions avoidance whack-a-mole? If we see that exports from some countries to Russia decline, do other countries take their place? | Public | BOF/FIN-FSA-UNRESTRICTED 22.6.2023 6