by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Russian leader Vladimir Putin resembles 20th-century Soviet strongmen in a number of ways, not the least of which is a lack of comprehension of economics. Steve Forbes explains in the latest issue of Forbes magazine.
RUSSIA HAS responded to new sanctions from the U.S. and the EU with a weird, self-defeating retaliatory measure: It is banning for a year a variety of food imports from the offending parties, among them salmon from Norway, apples from Poland, cheeses from Denmark and the Netherlands, pears from Belgium and chicken from the U.S.
But ponder what Moscow just did: It has imposed a trade embargo on itself. Imagine the queasiness, if not outright opposition, that would have arisen had Washington and Brussels declared they were banning food exports to Russia, thereby putting a real crimp in Russian diets and raising the prices of foodstuffs produced inside Russia (with fewer imports, demand for Russian food will go up). Critics would have cried that we were punishing innocent people instead of targeting Vladimir Putin, his oligarchs and their crony banks and companies. Yet Russia has done this to itself. Already the government is readying decrees against “price gouging” and “hoarding.” …
… Moscow has obviously calculated that the affected food producers will raise such a howl that it will force their governments to back down and accept Putin’s aggressive designs on Ukraine, as well as overlook the barbaric shooting down of Malaysia Airlines Flight 17. At the least this will make Western governments think twice before reacting to Putin’s next set of moves to make Ukraine a Russian vassal.
While hurtful to specific companies, Putin’s embargo will barely dent the economies of the EU and will be, at best, a rounding error for the U.S. economy. More to the point, it will hurt Russian consumers far more and discombobulate an already weakening Russian economy.