Tensions between the US and Russia have been high since the World Wars, but now we are facing another standoff. This potential economic crisis is, for once in the past three years, not a problem related to Covid. What's essentially going on is that the Biden administration has been threatening to hit Russia with extremely heavy sanctions. These sanctions would undoubtedly have a significant negative effect on the Russian people themselves, and it is unknown how much of an impact it will have on the European economy. In addition to causing a lot of economic strife, these actions could also add to anti-American propaganda in Russia or cause retaliation by Russia by limiting the global oil/gas supply.
The reason the US would make such threats that could cause problems for our economic problems or add to the resentment between our two countries isn't trivial either. The Biden administration is threatening these sanctions to dissuade Russia from invading Ukraine. At the moment, it is unclear if the US will enact these sanctions even if Russia does go through with it. The government is in a hard position at the moment because the sanctions would have devastating effects, but not following through on the threat might weaken the US's bargaining power with other countries on top of the inherant consequences to Ukraine.
So for the time being we just have to hope that the threat of sanctions will suffice in preventing actions that would lead to the US having to decide if they will enact them or not.
https://www.nytimes.com/2022/01/29/us/politics/russia-sanctions-economy.html
No nation has ever tried to enact broad sanctions against such large financial institutions and on an economy the size of Russia’s. Analysts have been warned of a potential spiral. Russia could retaliate by cutting off natural gas shipments to Europe or by cyber attacking the US. Biden should think if this will cause more harm or good.
ReplyDelete