Effects of the sanctions on business

1. Effects of the sanctions on business

In Russia and The Netherlands
Practical project introduction
Kom verder. Saxion.
Jacques Bazen,
Saxion University of Applied Sciences

2. Overview of the session

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Overview of the session
• Development of Trade
• Consequences of sanctions for The Netherlands
• And for Russia?

3. Historical overview

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Historical overview
Trade relations between Soviet Union and the
Netherlands exist already for a long time.
But: trade volumes were pretty low, as with the
rest of the world.
Changed because of Globalization and trade
liberalization.

4. And then…

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And then…
There were the sanctions:
https://www.youtube.com/watch?v=mz80tY-YFaA

5. Problems of trade in the last few years

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Problems of trade in the last few years
Миллиарды
Trade relations between NL and RU
25
20
15
10
5
0
2008
2009
2010
2011
Import to NL
2012
Export from NL
2013
2014
2015

6. Trade

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Trade
Trade relations between NL and RU
Total import and export to/from The
Миллиарды
Миллиарды
Netherlands
500
400
25
20
15
300
10
200
5
100
0
0
2008
2008
2009
2010
Import to NL
2011
2012
2013
Export from NL
2014
2009
2010
2011
2012
2013
2015
Import to NL
Export from NL
2014
2015

7. Trade

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Trade
Trade consists of both goods and services (services
you could describe as goods that you can’t touch)
Next to that there are also foreign investments
First of all let’s look at Goods

8. Goods import export

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Goods import export
Goods import / export
25
20
15
10
5
0
2008
2009
2010
2011
Import
2012
Export
2013
2014
2015

9. Goods import / export

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Goods import / export
Does this mean that imports and exports go down
a lot?
First of all…what are the most important goods
that we as Dutch buy from Russia?

10. Mineral fuels - Value

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Mineral fuels - Value
Миллиарды
Import value of mineral fuels in NL
120
100
80
60
40
20
0
2010
2011
2012
From all the world
2013
From Russia
2014
2015

11. Mineral fuels - Volume

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Mineral fuels - Volume
Миллиарды
Volume of imported mineral fuels in NL
180
160
140
120
100
80
60
40
20
0
2010
2011
2012
From all over the world
2013
From Russia
2014
2015

12. Goods import / export

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Goods import / export
Conclusion:
It is not the sanctions that decrease Russian export
values to The Netherlands the most, it is the low
oil price!

13. Service sector

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Service sector
Another way of earning money is to provide
services abroad, for example: transport, financial
services or payment of royalties.
Is there (indirect) influence of the sanctions on
this?

14. Services import / export

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Services import / export
Export of services:
Services between NL and RU
Dutch companies
providing services to
Russian companies
1600
1400
1200
Import of services:
Russian companies
providing services to
Dutch companies
1000
800
600
400
200
0
2003
2004
2005
2006
2007
2008
Import of services
2009
2010
2011
Export of services
2012
2013
2014
2015

15. Services import / export

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Services import / export
Main service sector involved: Professional services
That means management support services, legal
services, trade related services, business consultancy,
IT related services.
Import of these services to NL decreased…if the weak
Ruble would play a role, it would have likely increased.
(These services would have become cheaper!)
Could it be the (indirect) effect of the sanctions?

16. Business trips & Tourism

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Business trips & Tourism
Money spent on business trips between NL
Money spent on private trips between NL and
and RU
RU
20
30
25
15
20
10
15
10
5
5
0
0
2014 I 2014 II 2014 III 2014 IV 2015 I 2015 II 2015 III 2015 IV 2016 I 2016 II
Money spent in Russia by Dutch
Money spent in NL by Russians
2014 I 2014 II 2014 III 2014 IV 2015 I 2015 II 2015 III 2015 IV 2016 I 2016 II
Money spent in Russia by Dutch
Money spent in NL by Russians

17. Business trips in general

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Business trips in general
International Business trips (mln euro)
1200
Money spent on business trips between NL and RU
18
16
1000
14
800
12
10
600
8
400
6
4
200
2
0
0
2014 I 2014 II 2014 III2014 IV 2015 I 2015 II 2015 III2015 IV 2016 I 2016 II
Money spent abroad by Dutch
Money spent in NL by foreigners
2014 I
2014 II
2014 III 2014 IV
2015 I
Money spent in Russia by Dutch
2015 II
2015 III 2015 IV
2016 I
Money spent in NL by Russians
2016 II

18. Tourism expenses in general

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Tourism expenses in general
Money spent on private trips between NL and RU
Private international trips (mln euro)
6000
30
5000
25
4000
20
3000
15
2000
10
1000
5
0
2014 I 2014 II 2014 III 2014 IV 2015 I 2015 II 2015 III 2015 IV 2016 I 2016 II
Money spent abroad by Dutch
Money spent in NL by foreigners
0
2014 I
2014 II
2014 III 2014 IV
2015 I
Money spent in Russia by Dutch
2015 II
2015 III 2015 IV
2016 I
Money spent in NL by Russians
2016 II

19. What about the EU sanctions?

Kom verder. Saxion.
What about the EU sanctions?

20. EU sanctions

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EU sanctions
At least for The Netherlands: The EU sanctions for
dealing with Russian military companies have
mainly a symbolic “for show” effect.
Trade volumes before the sanctions were already
very low.

21. Russian sanctions

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Russian sanctions
The Russian government used the sanctions to
develop “Import substitution policies”.
That means, to develop the local producers, in
order to shift consumption from imported goods
to home production.
Two problems with import substitution:
1. Do people want it?
2. What about inefficiencies?

22. Effects of the sanctions?

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Effects of the sanctions?
Any effect on Dutch businesses?
Or have they shifted to different markets?

23. Development of bankruptcies in NL

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Development of bankruptcies in NL
Development of bankruptcies in NL (2009 = 100)
140
120
100
80
60
40
20
0
2009
2010
2011
All sectors
2012
2013
Agriculture & Fishery
2014
2015

24. In individual cases: Bankruptcies

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In individual cases: Bankruptcies
Dutch Flower farmers have an
especially hard time…

25. Individual cases: Bankruptcies

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Individual cases: Bankruptcies
Most food exporting companies shifted to different
markets, or shifted into providing technology for
Russian farmers instead of products.

26. Assignment 1

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Assignment 1
Farms in Russia:
- Find out if the production volume, prices and turnover
of the agricultural sector (farms) in Russia increased
because of the import substitution policy.
- Did import of agricultural products come from different
areas than the sanctioned ones? Did export increase?
- Use statistical data on national production and import of
agricultural products
- Interview at least two key players in the transport
sector to learn about changes in production flows.

27. Assignment 2

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Assignment 2
Food processing industry
- Find out if the production volume, prices and turnover
of the food industry in Russia increased because of the
import substitution policy.
- Did import of food products come from different areas
then the sanctioned areas? Did the export increase?
- Use statistical data on national production and import of
agricultural products
- Interview at least two key players in the transport
sector to learn about changes in production flows.

28. Assignment 3

Kom verder. Saxion.
Assignment 3
Tourism industry
- Find out in how far the tourism industry was affected by
the sanctions. Find statistical information about the
development of international tourism from/to Russia.
- Are tourist flows decreasing only to sanctioned areas, or
everywhere, because of the weak ruble / economic crisis.
- Interview at least 3 key players in international tourism, to
learn about the latest developments and if there
are shifting geographical patterns.

29. Assignment 4

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Assignment 4
(International) Professional service industry
- Find out in how far the professional industry was
affected by the sanctions. Find statistical information
about the development of this sector.
- Is the turnover of the international professional service
industry decreasing only to sanctioned areas, or in other
areas as well?
- Interview at least 2 key players in professional services
(eg. KPMG, Ernst & Young or law firms), to learn about
the latest developments.