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Sanctions and Public Opinion: The Case of the Russia-Ukraine Gas Disputes

Discussion Papers

No.652

by William SEITZ, Andrea PRESBITERO, Alberto ZAZZARO
March 2017

ABSTRACT

Economic sanctions usually fail, sometimes even provoking the opposite of the intended outcome. Why are sanctions so often ineffective? One prominent view is that sanctions generate popular support for the targeted government; an outcome referred to as the rally-around-the-flag effect. But despite substantial anecdotal evidence, the lack of suitable data gathered during sanction events has prevented direct study of the rally-around-the-flag effect. We address this gap using a panel household survey in Ukraine that collected data on political and economic preferences before and after a major trade dispute with the Russian Federation. The dispute led to a cut in gas exports to Ukraine and dramatically increasing gas prices for consumers. Our findings show that people more directly affected by the sharp increase in gas prices were substantially more likely to change their political views in a "pro-Western" direction and in support of a more open democratic system. We identify a similar effect regarding economic policies, leading to more than a doubling in the likelihood of supporting liberal market views. Suggestive but less conclusive evidence also suggests that Ukrainians who were more directly affected by the dispute were more likely to support joining the European Union.

Keywords: Sanctions, Gas Dispute, Russia, Ukraine, Rally-Around-the-Flag
JEL classification: F13, F51


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