Evading Sanctions

Abstract

At least 26% of pre-war EU exports of sanctioned products still reach Russia. We document the mechanisms and magnitude of evasion and develop a quantitative trade model with endogenous transshipment. We find that the export bans increased trade costs by only about 27% on average, pre-war trade costs predict which countries become transshipment hubs but understate the cost of evasion, and closing just five transshipment hubs reduces imports by an additional 10 percentage points.