Published On: Tue, Aug 5th, 2014

Obama: Don’t Worry, Russia Doesn’t Make Anything

obama putin

The President of the United States has assured us that we need not worry about the Russia-Ukraine crisis. Because aside from vodka and those Russian dolls that are identical but different sizes and layered within each other, oddly allegorical of world crises (well, he didn’t even mention those two items), “Russia doesn’t make anything.”

It isn’t even worth mentioning how he then rattled off a list of the country’s social problems, as if it should inspire contempt rather than compassion; “Immigrants aren’t rushing (pun intended?) to Moscow in search of opportunity. The life expectancy of the Russian male is about 60 years old. The population is shrinking.”

President Obama must know this, but Russia is the third largest oil producer and the second largest natural gas producer in the world. With war raging on several fronts in the Middle East, this isn’t the time to be entirely dependent on oil producing nations in the Middle East that have their own civil unrest to cope with. In addition, if the Europeans make good on their intentions to impose sanctions on Russia for its behavior in the Ukraine and the downing of a Malaysian airplane, Putin may retaliate by cutting off natural gas to Europe.

So the Americans shrug their shoulders and say “big deal.”  It is a big deal for American companies that trade in Europe. A strong dollar might be fantastic if you are American taking a trip to Venice, but a strong dollar can be a disaster for companies that do business in Europe. Added to that, the trend of tax inversion as more companies place their headquarters in tax havens like Ireland might create a stronger tie between the economy of Europe and that of America. These American companies located overseas will have to rely on sky-high natural gas prices and other inflated commodities as the result of sanctions and Russian retaliations, and these expensive raw costs will eat into profits.

In the U.S., natural gas is cheap and abundant, and notoriously difficult to export. There is currently only one major natural gas export channel in the United States, and it will be difficult to come to the aid of our friends and trading partners in Europe should Putin cut off the gas. If we could, it would be great for our own economy and for our reputation in the world, but natural gas export infrastructure wasn’t built in a day.

Obama must know that Russians make things, or at least, drill for things, but see, we are in America, and that doesn’t affect us directly, right? Looking at one item we are certain Obama knows the Russians do make, the layered Russian doll, we can see the doll teaches us that things are not so simple. The dolls of nations are layered, interdependent, and the least obvious relationships are often the most central.

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