Blog Post 3

 Russian Autonomy In the Global Economy


The integration of separate national financial systems into one global system has shown that autonomy is one of the greatest forms of power that an actor can have. In the current global economy each nation is reliant on others for their own successes, so when there is a disruption relating to one of the contributors, the entire market is affected. This embedded liberalism within global capitalism has proven its true strength in light of the Russia-Ukraine War. The United States has frozen the U.S. assets that Russia’s central banks currently possesses, their Treasury Department has placed sanctions on Russian banks and their subsidiaries,  and it has expanded restrictions on purchasing Russian debt. These actions were an effort by the U.S. to increase Russia’s economic vulnerability using their relational power. Not only were they using their relational power, but the U.S. also utilized the structural power given to them from the world economy in an attempt to stop Russia from continuing their attack. Cohen states that “autonomy is the key to influence.” The U.S. used these sanctions as a means to hinder Russia’s autonomy, and did so very effectively, resulting in a decrease in influence the country has as a whole. 

Susan Strange mentions that although the embedded liberalism within our economy is extremely beneficial to large financial contributors, it often restricts opportunities for blue collar workers. This can be paralleled with the sanctions the U.S. placed on Russia. Although the sanctions aim is to target top Russian officials, it adversely affects the citizens. After the first three days of the Russia-Ukraine conflict, the Russian ruble lost half of its value. The current value of a Russian Ruble is 0.0094 % of one American dollar. This essentially traps Russian citizens within its borders because they would be unable to support themselves anywhere else in the world due to the drastic and sudden value drop. High power figures such as Putin may no longer have access to some of their major assets, but unlike many of his citizens, the source of his next meal is not one of his concerns. 

It is also mentioned within Strange’s writing that due to technological advancements, communication between nations has been streamlined, further unifying the global market. Communication is necessary for mutual profitability within an international financial system. The U.S. and its allies are moving to inhibit several Russian banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT). If successful, those Russian banks would greatly struggle in trying to move money to other places around the world because they would no longer have a streamlined method of communication. They would be forced to revert back to less effective means of communication such as email and fax. 

Due to the nature of the global economy, it is impossible for Russia to be impacted without the U.S. and its allies also being affected. Recently the price of gas has skyrocketed throughout America. This is partially due to the Sanctions the U.S. placed on Russia. The supply curve illustrates that as the supply of a good decreases, the price of that good increases. Although Russia is not the largest oil, or energy producer in the market, they still are a contributing factor. Last year the US imported 245 million barrels of oil from Russia, making up about 8% of the total oil imported to the US. After the ban on Russian oil was implemented Joe Biden made the statement: “defending freedom is going to cost.” This statement beautifully illustrates the negative effects that a global market introduces for its participants. The US and its allies made the choice to defend what they believe is morally correct, and through this choice they face economic consequences. Once again, these consequences most greatly affect members of society that would be considered blue collar because they may be unable to pay these increased prices. Although it is theorized that the US economy is strong enough to survive this price increase, if prices continue to rise, and the U.S. economy continues its downward trend, the U.S. may need to implement things such as stimulus checks, and tax breaks to get money recirculating within the economy. 



Sources

https://fortune.com/2022/03/15/russian-ruble-expert-opinion-invasion-ukraine-continues/ 


https://www.cfr.org/in-brief/will-international-sanctions-stop-russia-ukraine?gclid=Cj0KCQjw5-WRBhCKARIsAAId9FlCR-fElNwzBsTZm-E62u1QvohTV3LuvrRGJg-pPP53fDJdJQlF5G4aAmB3EALw_wcB  


https://www.nbcchicago.com/news/local/why-are-gas-prices-rising-if-us-doesnt-get-much-oil-from-russia/2779940/

Comments

  1. Max GilbertMarch 30, 2022 at 3:14 PM

    I heavily agree with many of the points you made in this blog post. The way that the global economy is structured has created this ripple effect stemming from the Russia-Ukraine conflict which impacts every major global economic power. I thought the point that you made about how although these sanctions perceivably are impacting the top Russian officials, their government, and Putin himself, the citizens are almost always forgotten about in these case scenarios. Although the sanctions are completely necessary in my opinion, the negative effects they are having on America as a whole (gas prices etc...) are starting to cause a certain level of minor unrest I feel like, and it will be interesting to see how Biden, and the government as a whole are able to create stability.

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  2. Evan GoldsteinApril 4, 2022 at 10:56 AM

    I completely agree with what you wrote. I think that it is important for policy makers to balance American moral principles, with the needs of the average American citizen. I agree that with how the global economy is structured, it impacts every country and person connected to it, with the above example of the American citizen being incredibly important right now. I also agree with Max that while the sanctions are necessary, the strain that they are causing on Americans is incredibly important and needs to be taken into consideration when making future decisions with regards to this conflict. Finally, I think that both your and Max's point about the sanctions affecting the average Russian citizen is incredibly important as the sheer amount of sanctions is causing Russia to be incredibly isolated, which is having a major effect on Russian citizens.

    ReplyDelete

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