How Do Sanctions Against Russia Affect Americans?
Shortly after beginning its invasion of Ukraine, Russia clinched the title of the world’s most sanctioned nation, even bypassing long-isolated countries like Iran, North Korea and Syria. Of course, the newly imposed economic measures are meant to specifically hold Russia accountable, but…could Americans feel some of the burn? Here’s everything you need to know.
What sanctions have been imposed on Russia so far?
The United States initially responded to Russian President Vladimir Putin’s attack with sanctions against Russian financial institutions, the sale of sovereign debt abroad, and Russian oligarchs and their family members, including those who “have personally benefited from Kremlin politics,” Biden announced last month.
And following pressure from Congress, Biden also recently announced a ban on the import of Russian oil and gas, a decision he conceded will have a profoundly negative effect on the price of fuel in the United States “We will not participate not to subsidize Putin’s war,” Biden noted in announcing the embargo. But “defending freedom will be expensive,” he noted. The United States and its allies have also decided to cut off a significant part of Russian high-tech imports.
In addition, the United States decided last week to revoke Russia’s “most favored nation” trade status and ban the import of Russian alcohol, seafood and diamonds. Lifting trade classification downgrades Russia as a trading partner and makes possible new tariffs and economic retaliation, CNBC Explain.
As for the American allies, they have mostly followed suit – the United Kingdom and the European Union have decided to ban the shipment of luxury goods to Russia, with the United Kingdom also imposing a 35% tax. on certain imports. from Russia, including vodka. Russian flights have been banned from US, UK, European and Canadian airspace, and the UK and EU have joined the US in targeting wealthy business leaders believed to be close to Putin and his cronies.
On oil and gas, the UK will phase out Russian oil by the end of 2022, as the EU (which receives a quarter of its oil and 40% of its gas from Russia, for BBC News), decided to “switch to alternative supplies and make Europe independent of Russian energy ‘well before 2030′” BBC News writing. Germany, meanwhile, has shut down the Nord Stream 2 gas pipeline, which is intended to deliver Russian gas to Europe.
Speaking of oil and gas, what about pump prices?
They soar. Probably for several reasons, beyond Putin.
For starters, there’s the post-pandemic gas demand. When COVID-19 first turned our lives upside down and locked us inside our homes, “the typical driver cut his driving in half,” CBS News writing. As a result, fuel prices dropped to an average of just $1.94 per gallon in April 2020. As the world slowly recovered, however, Americans got back on the roads again and prices started to rise.
Meanwhile, during the early days of the virus, OPEC and other oil-producing nations like Russia cut output by an “unprecedented 10 million barrels,” according to CBS News; that’s 10 percent of the global supply. But when demand was slowly revived, the world’s oil producers were too slow to respond to the moment.
This, of course, brings us to Putin’s misguided attempt to redraw the world map with his invasion of Ukraine – as if prices hadn’t already gone up for the other aforementioned reasons. Although the United States imports less than 10% of its oil and gas from Russia, any sanctions imposed by the United States – such as Biden’s recently announced ban on oil and gas from Moscow – have an effect. deep effect in the world oil market. Therefore, an increase in prices at home.
“When the United States issues sanctions, it has wide ramifications for Russia’s ability to export oil,” Patrick De Haan, head of oil analysis for price-tracking firm GasBuddy, told CBS. News. “We don’t import a lot, but somebody else does and we make it difficult for Russian oil to get to the world market, and prices react to that.”
As for when prices could come back down, experts warn that costs will remain high for weeks or even months.
“Inflation will pick up in March and April as the ripple effects of the Russian-Ukrainian war push prices even higher at supermarkets, gas pumps and on utility bills,” he said. Bill Adams, chief economist of Comerica Bank, in a report, by CBS News. Maybe we can all drive slower.
What about food prices?
Same before Putin launched his assault on Ukraine, world food prices were at their high point since 2011 and the Americans were fighting frustrating levels of inflation at the grocery store. Now, however, given the dozens of countries that depend on supplies of wheat, corn and vegetable oil from Russia and Ukraine, experts fear that Putin’s crusade could drive up world prices even further. “Hunger rates are rising significantly around the world, and a major driver of hunger is man-made conflict,” noted Steve Taravella, senior spokesperson for the United Nations World Food Programme.
American Bakers President Robb MacKie said The Washington Post that consumers are likely to see a price increase for any product containing grain. Wells Fargo’s chief agricultural economist, Michael Swanson, surmised that “Ukrainian crops will not be planted, or far from what they usually plant. And Russian crops will be planted but will be embargoed in many markets” .
“It’s not something that will be resolved in weeks or months,” he added.
Soaring energy prices are also inflating food prices.
What are the other disadvantages of sanctions?
Well, aside from the resulting financial pressure on the United States, Russia still has the power to fight back. For example, on Tuesday night the Kremlin sanctioned a number of top US officials, including President Biden and former Secretary of State Hillary Clinton. Although the measure is largely symbolic, given that those listed apparently have no business ties to Russia, it prohibits those affected from traveling to Moscow, for example.
Sanctions also risk irritating Putin to the point that he further away aggravates the conflict, war on the rocks suggests. Maybe he’s adopting different strategies, or maybe he’s finding a better way to target the West economically.
On a more personal level, retaliatory measures against Russia – although an important element in ending a war without entering it directly – also have a chilling effect on humanitarian relations, perhaps inciting the Kremlin to use Americans in Russia as bargaining chips. For example, US officials are currently working behind the scenes to release WNBA star Brittney Griner from Russian custody, where she has been held since February 17. But his family, his agents, his team and the government chose to investigate the situation. under the radar, “a stance that Russian-US relations experts and people familiar with the matter say is strategic, likely dictated by a crisis communications company,” the To post Remarks. Given the strained relations between the United States and Russia, which the sanctions are only exacerbating, the last thing Griner needs is to be treated like a political pawn.
The athlete, who played for years for a Russian basketball team during the WNBA offseason, has been accused of trying to smuggle hash oil into the country, though experts fear that she could not have been charged with the crime given her public profile as black. , American gay and activist, the To post Remarks.
“I can’t say definitively that she didn’t [do the crime]”said Daniel Fried, former United States Ambassador to Poland, “but the first thought I had when I read [the arrest] does it look like [the Russians] take an American hostage.”
Do the sanctions work?
The sanctions imposed on Russia should certainly change daily life in Moscow, but whether or not they change the course of the invasion remains to be seen.
Hundreds of international companies like Apple, Coca-Cola and Goldman Sachs have left the country over business and ethical issues, while the ruble in the meantime dips in value. The country’s stock market has yet to open and the government may not pay its obligations. But still, even with the consequences, Putin can just go on undisturbed.
“Did the sanctions induce Putin to make a deal? Yes,” said former Obama administration sanctions policy chief Edward Fishman. Axios. “But is this incentive strong enough for Putin to end the war? It’s doubtful.”