FDI under Sanctions: Russia, Belarus, Iran

In the world of growing number of sanctions, Russia, Belarus and Iran are leading economies that have been sanctioned. Sanctions impact directly and indirectly on FDI of the three countries. The purpose of the paper is to research the impact of sanctions on FDI inflows and outflows in Russia, Belarus and Iran. An attempt is made to carry out an analysis for all three countries in accordance with the following logic: the scale of sanctions and FDI flows, the importance of FDI for the national economy, the reaction of foreign and national MNCs. The time scale covers the entire period of economic sanctions. The article tests the hypothesis that sanctions have a significant short-term and less significant long-term impact on FDI flows. The authors conclude that their hypothesis was generally supported. The exceptions were the prolonged Iran-Iraq War and the slow post-war economic liberalization in Iran, as well as the second wave of sanctions against Russia, which began in 2022. In Belarus and Iran, the recovery of FDI inflows was significantly facilitated by investments from friendly countries but in Russia the decline in FDI inflows was not offset by inflows from friendly countries due to the large size of the Russian economy. FDI outflows in Belarus and Iran are relatively small and irregular to draw conclusions, in Russia the volume of FDI outflows had almost recovered by the end of the first wave (2014–2021), during the second wave it fell almost to zero and showed signs of a slight recovery only in the fourth year (2025).