Ukraine/Crimea Crisis Can Harm U.S. and World Economies

posted by Ida B. Wells IV @ 7:00 AM
March 10, 2014

ukaine-peopleThose reporting on U.S.EU-Russian tensions in the Ukraine seldom dwell on what the economic costs would be if the situation is not soon resolved. The United States has good reason to want Russia to back off its military aggression in Ukraine and the Crimea. Failure to do so will cost the U.S. and Europe great economic loss.

Tyler Allen of warns: “Although the United States will likely remain unaffected in the short term, a prolonged or growing crisis could lead to long-term economic consequences, including trade sanctions and spikes in commodity prices.”

Ukraine and Crimea export 10% to 17% of global wheat and coarse grain production. “Fears that grain exports from the region could be interrupted caused agricultural commodity prices to spike.”

In ‘Ukraine and U.S. Economics: The Fiscal Consequences of Conflict Between Russia and Ukraine,’ Allen adds: “Russia is a growing market and supply chain partner for the US automotive, aerospace and energy sectors.

“Last year, US auto manufacturers exported $1.2 billion worth of goods to Russia, according to the United States International Trade Commission (ITC). General Motors, the largest auto manufacturer in the United States, sold 258,000 vehicles in Russia, giving it a 9.1% share of the total market in the country.”

In ‘5 Reasons War in Ukraine Should Worry You,’ Rich Smith lists the many ways Russia’s invasion in Ukraine can economic-repercussionseventually affect world economic markets, including: 1) Oil companies: Royal Dutch Shell, Chevron and Exxon, have $ 10 billion exploration agreements with Ukraine––disruption would affect gas prices; 2) Steelmakers: ArcelorMittal has one of the largest steel mills in Europe;

3) Consumer Goods: “Any number of consumer goods count Ukraine as an important market. Western purveyors of detergent, toothpaste, food goods, and so on, all operate within Ukraine, and many own subsidiaries in the country.

4) Military Suppliers: In order for Ukraine to strengthen its military weaknesses, it will eventually have to acquire better weapons; and that would call for: 5) Airplane Makers: Smith advises “Ukraine is an important market for foreign commercial aircraft. Ukraine International Airlines has four Boeing 737-900s on order. UTair-Ukraine is an even bigger customer––and has 40 Boeing new 737s on order.” A cancellation would greatly affect the U.S. economy.

Danny Vinik adds in ‘The Crisis in Ukraine Could Hurt Your Wallet:’ “. . . the chance of an armed conflict in Ukraine is growing by the hour. If that happens, there would be economic costs that could ripple across the global economy—and even cause higher gas prices and plane fares in the U.S.”

He and other economists explain the European Union would sustain even greater losses in crude oil and natural gas as the EU imports 85% of these fuels from Russia. “But prices are set by the global market. Any supply shocks in Europe that send prices higher will have ripple effects that raise gas prices in the United States.” Vinik writes that such prospects already affect economic markets.

This blog’s sister site, speaks continually of the pending World War III. But there is more than one type of war. Now it appears that the world is indeed headed for an all-out economic war.

As phrases often embedded in Christian Word puzzles say, now is the time to pray and to: “Fight the good fight of faith, lay hold on eternal life, whereunto thou art also called . . . (1 Timothy 6: 12).” A believer’s faithful prayer changes things.

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