Global Business & Economics Program Assistant Director Andrew Chrismer writes for the Huffington Post on the necessity of targeting the Russian black market. 

A sanctions scheme designed to target and limit activity among the shadiest comrades within Russia could inadvertently increase their business opportunities in the well-established black markets operating throughout Europe. In order to effectively implement sanctions against Russia as punishment for its destabilizing actions in Ukraine, the West must first address Russian black markets through tougher enforcement of transparency standards within their own borders and beyond. If the U.S. and EU expect current or future sanctions regimes to be effective in Russia, awareness, education, and enforcement of these transparency standards already agreed upon in international bodies must be taken more seriously. 

Russian black markets are integrated, global, and effective. Illicit outflows from Russia, mostly into the European market, amount to more than $210 billion annually, roughly 46 percent of the country’s annual output on average since 1994. Financial flows into shell companies and shadow banks in the UK, Switzerland, and Cyprus make up much of the illicit market supported by Russia’s elites. Since the fall of the Soviet Union, black markets in Russia have been big business. Trade mispricing, false labeling on shipments, money laundering from public accounts, capital flight, shadow banking operations, and extortion top the list of illicit operations in and out of Russia. Everything from lumber to rocket launchers to drugs to chemicals to people cross the borders of Russia illegally into the European Union and neighboring countries. 

Read the full article here.