Threat of sanctions could have prevented war in Ukraine, according to study

The researchers conducted a "counterfactual" experiment using computer-based modeling, the Swiss National Science Foundation (SNSF) announced on Tuesday. A virtual world was created to serve as a comparison to the real world. The study was led by Mathias Thoenig from the University of Lausanne and published by the Center for Economic Policy Research.

The model compared the actual course of events with a hypothetical scenario. In this scenario, the West would have threatened Russia with sanctions as early as 2021 when Russian troops deployed on the Ukrainian border. The simulated measures included restricting access to international financial services and export bans on sensitive technologies.

The analysis was intended to show whether such a threat could have changed Moscow's strategic calculations. Historical information on international conflicts and detailed information on global value chains served as the data basis.

A paradoxical effect of decoupling

The study was based on the theory of "soft trade", according to which close trade relations reduce the risk of war as the potential losses increase for all sides. Economic sanctions used these links to increase the costs of war for an aggressor.

The simulations showed that the annexation of Crimea in 2014 had a significant impact on tensions. Ukraine then began to reduce its trade dependency on Russia and align its economy more strongly with Europe. However, this strategy had a paradoxical effect: the weaker economic relations between the two countries also reduced the potential losses that Russia risked in the event of a war. According to the study, a credible threat of severe sanctions could have made it clear to Russia's rulers that the economic price of an escalation would nevertheless be high.