This time, in Slava Ukraini, we shall examine how Russia has been punished for its uncalled-for actions.
We first must understand that the U.S. isn’t a country that desires war.
Daniel Fried, the former U.S. ambassador to Poland and former State Department coordinator for sanctions policy, pointed out that “America prospers best in a world that is not run by empires but because it is good for our bottom line.” Just look at crowds around the first (now closed) Russian McDonald’s to understand that. Fried pointed out that this strategy goes back to Woodrow Wilson and his vision for the (European) world.
These basic economics are visible in Florida. Tourists often come here and purchase goods for cheaper prices than are offered back home. This happens when the dollar is depreciated compared to a different currency.
When the dollar appreciates, American corporations benefit. They can invest fewer dollars in an enterprise abroad for the same amount of foreign currency. For example, Spirit Airlines, based out of Miramar, Florida, can invest more in a terminal in Bogota for less real money.
This system falls apart when a nation acts unilaterally. In the case of Putin’s War, airlines cannot receive their aircraft back, bonds are rated “junk” by Standard and Poor’s, which means they will likely not be paid back, holdings of international companies may be nationalized in Russia, and patent theft was legalized. Russia has defaulted on its debt. The entire trust-based economic system of transactions collapsed.
Though belatedly, the U.S. is acting accordingly. American sanctions should have been enacted eight years ago when Putin invaded Crimea. Oleh Shamshur, the former deputy foreign minister of Ukraine, said, “Sanctions against [the] Putin regime and massive military assistance to Ukraine have arrived too late after aggression has already started.”
Florida could play a part here. Florida has $300 million invested in Russia. These holdings include Rosneft, a state-run oil and gas company, a veritable cash cow for Russia. Consequently, state Rep. Andrew Learned, D-Brandon, proposed an amendment that would have divested Florida’s pension fund of these Russian investments.
However, Republicans dodged the divestment issue by ruling the amendment out of order on a mere technicality. Florida is behind other states who are divesting themselves of Russian investments, and the federal government, which is leading the sanctions charge.
Sanctions are hitting Russia’s economy like never before, exposing its weaknesses. Putin’s plan of a strong “Fortress Russia” is a miserable failure. Companies from Airbus to Yum Brands have pulled out. The ruble is rubble, so depreciated that interest rates were hiked by 1050 basis points in a day and buying dollars is prohibited. The St. Petersburg Stock Exchange and Moscow Stock Exchanges collapsed before forced closures. Even Putin’s children have been sanctioned.
These actions likely will not affect the “sick mind” in the Kremlin, but these “hellish” sanctions “might influence [the] Russian population and Russian elites, and hopefully make them act,” Shamshur stated.
Who should enact these sanctions? Fried thinks it should be the president. “We don’t need sanctions legislation.”
That said, Congress has taken some action. They have removed Russia’s most-favored-nation trade status (along with that of Russia’s close ally Belarus), putting them in the same category as only two other countries: North Korea and Cuba.
Congress also banned (after President Biden had issued an executive order) the importation and sale of Russian fossil fuels. A massive lend-lease program, the first since World War II, has also been signed into law.
Now, some of these actions pushed up gas prices, including in Florida. Even so, this was initially done with massive support from Americans, who are willing to pay to help the Ukrainian people. An April poll showed a little less than half of Floridians actually wanted more sanctions on Russia.
Energy companies are also taking advantage of this conflict to engage in price gouging. Oil and gas prices increased in tandem but gas prices suspiciously stayed the same when oil prices fell.
Russia is the largest exporter of natural gas, exerting great sway over global markets. Much of this energy goes to Europe. The “current crisis has finally shown to Europeans the danger of overdependence on Russian gas and oil, as it entails unacceptable political costs,” said Shamshur.
A possible solution is for the U.S. to “produce more gas” as Zachary Selden, the former Deputy Secretary General for Policy at the NATO Parliamentary Assembly, says. America is already the largest supplier of liquified natural gas to Europe, sending them 26% of their total supply in 2021.
The U.S. can also “encourage other major exporters of [liquified natural gas] to get to a point where Russian export of gas into the E.U. is not nearly as critical… This is a great opportunity for U.S.-E.U. cooperation [since] they need west to east flow [and] not completely east to west flow,” said Selden.
Florida is an outlier in the energy industry. Most of America gets fossil fuels through pipelines, but Florida, particularly South Florida, gets supplied through tankers that dock at Port Everglades, Port Tampa Bay and Port Miami. This results in higher gas prices than the national average.
Gubernatorial candidate Charlie Christ, D-Florida, long advocated for a moratorium on the state’s gas tax, and with Putin’s price hike, that is exactly what is needed. However, the Florida Legislature, in its seedy machinations, came up with a different idea.
They decided to put a monthlong gas tax moratorium into effect in October, right before the midterm elections, when every seat in the Legislature and statewide office will be up for election. Coincidence? Unlikely.
Ultimately, the global economy will march forward without the evaporating Russian economy. It is up to Putin whether he ends the financial suffering of his people.
In our final installment of the Slava Ukraini series: we will delve into what is happening to Putin’s oligarch friends, examine the militaristic implications of Putin’s War, and send a message to the participants in the conflict.
Until then, Slava Ukraini!
Check out other recent articles from the Florida Political Review here.
Featured image: The competing South Florida Sun Sentinel (top) and Miami Herald (bottom) report on the siege of Mariupol. Photo by Charles Horowitz.