3rd Ariel Political Economy Conference 2022

Denis Ivanov, a Senior Research Fellow at ICSID, spoke at the annual Ariel Political Economy Conference at Ariel University (Israel). He presented the report “Public Reaction on Trade Sanctions in a Democratic Context: Evidence from Moldovan Wine Embargo”.

Abstract. Economic, and in particular trade sanctions are frequently used as a foreign policy tool. However, not enough is known on how these sanctions affect popular opinion: do people blame their government for the suffering inflicted by sanctions, or they rally ‘round the flag in defiance of foreign attempts to influence actions of their governments? Research of this problem is particularly exacerbated by the fact that sanctions are typically imposed on autocracies, which might bias media coverage of the sanctions, rig elections, and forbid independent polling, thus making empirical identification of the sanctions effect nearly impossible. In this paper, I study a case of Russia imposing trade sanctions on a democratic post-Soviet country. In 2006, Russia banned import of wines from Moldova, which has been widely perceived as an attempt to punish Moldovan government for its increasingly pro-European course. Russia was the single largest consumer of Moldovan wines, amounting to 75 percent of export in 2005, thus making economic impact of sanctions sufficient. Combining data from the national and local elections results by almost nine hundred Moldovan communes since 1994 and the governmental register of wine regions, I show that, following the embargo, vote share or the Party of Communists, the major pro-Russian political force in Moldova at the moment, decreased by 2 percentage points in wine-producing communes. The effect is driven mostly by communes with the highest share of the ethnic majority, thus providing suggestive evidence in favor the rally ‘round the flag hypothesis. This implies that the wine embargo was not efficient in bolstering pro-Russian political forces in Moldova.