by Mitch Kokai
Senior Political Analyst, John Locke Foundation
As we explore the limits of using economic weapons in the pursuit of national-security goals, one thing should be clear: This is why you don’t use tariffs and other economic weapons to try to accomplish economic goals.
The sanctions put into place after Vladimir Putin’s invasion of Ukraine already are grinding down the Russian economy, and things are going to get much worse for Russia the longer they remain in place. Putin’s Russia is different from Khrushchev’s Russia, because it is a different world economically — in the globalized world, even Lada, the famously independent Soviet-era automaker, has suspended its operations in Russia and put its workers on leave. With Russia isolated economically, the firm cannot get the parts it needs. Many other Russian manufacturers are in the same position or soon will be.
But the United States and the other nations imposing sanctions on Moscow are going to pay a price, too, possibly a very high one. Globalization is a two-way street.
Inflation already was a problem in the United States before the sanctions, and the disruptions in trade probably are going to make that worse, though the dollar currently is being buoyed a little bit by all that capital furtively fleeing Russia and looking for a new home.
Oil prices have hit a 14-year high, and Americans are paying more for gasoline than they are used to or comfortable with. Only fools and professionals (the categories overlap) believe they can predict commodities prices, but it is reasonably likely that the price of oil will stay high, and it may even continue rising. Six months from now, Americans may be looking back nostalgically on the era of $4.50 gasoline.
Russia and Ukraine are two of the world’s great breadbaskets, and the war and the sanctions already have sent grain prices up by almost 80 percent.