To Russia with Love? the Impact of Sanctions on Elections

Michele Valsecchi (New Economic School)
Julian Hinz (European U. Institute; Kiel Center for Globalizati)
Robert Gold (Kiel Institute for the World Economy)

Abstract: Do economic sanctions weaken the support for incumbent governments? To answer this question, we focus on the sanctions imposed on Russia after 2014 and estimate their effect on voting behavior in both presidential and parliamentary elections. For identification, we use cross-regional variation in (pre-determined) trade exposure to sanctioning and non-sanctioning countries and before-after voting data at both regional and district level. The sanctions caused an increase in support for the incumbent. This result is robust to alternative measures of sanction exposure, including a measure of trade loss, i.e., the difference between observed trade flows and counter-factual trade flows computed via a full-general-equilibrium gravity model. Absence of pre-trends, as well as several placebo estimations, supports the validity of the identification assumption. We then explore several potential mechanisms, including propaganda, electoral fraud as well as standard demand-supply effects. Overall, while it is hard to evaluate all the potential motives that sanctioning countries might have had, our results suggest that economic sanctions are not an effective tool for reaching one of their primary goals and can actually backfire.