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Trump’s Energy And Trade Policies May Hurt Russia More Than Western Sanctions – OpEd

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Even though Vladimir Putin hopes that Donald Trump will end the sanctions regime against Russia, the president-elect’s commitment to protectionism, an expansion in US production of oil and gas and a re-industrialization of America “may have the most negative consequences for the Russian economy,” according to Moscow analysts.

In today’s “Nezavisimaya gazeta,” journalist Olga Solovyeva notes that the Kremlin and its closest allies are celebrating Trump’s victory because they believe, as presidential advisor Sergey Glazyev put it that “Trump as a pragmatic man will end anti-Russian sanctions which are harming American business” (ng.ru/economics/2016-11-10/1_6854_export.html).

And the Moscow journalist says that Andrey Kostin of the VTB banking group fully shares that optimism and says that he excludes any possibility of unexpected “’black swans’” arising in the relationship between Russia and the United States now that Trump has been elected.

But independent analysts are less sure that Trump’s election will be only a boon for Russia. Aleksey Makarkin, the vice president of the Moscow Center for Political Technologies, says that “Trump’s victory carries with it significant risk for Russia, the full extent of which still must be considered.”

 

First of all, he argues, “there is the risk of the destabilization of the world economy as a result of the trade wars which Trump may start” by his calls for abrogating or renegotiating trade agreements and his focus on rebuilding the American economy by among other things penalizing American firms that move abroad.

Second, Markarkin adds, there is “the risk that oil prices will fall as a result of the lifting of limitations on drilling, a policy change American business has long sought.” If oil prices fall further as a result, the Russian economy will be hurt – and everyone must remember that it has fewer reserves than it did.

And Andrey Koptilov of Moscow’s Synergy University adds a third: Trump’s unpredictability will rile markets and lead investors to put their funds in safe havens, thus reducing their willingness to invest in emerging markets like Russia’s. That will put yet another crimp on Russian economic development.

Koptilov sees other dangers as well. If in Decmeber, the US Federal Reserve raises its base interest rate, that trend of capital flight from emerging markets, including Russia, will only accelerate. And if American actions hurt the Chinese economy, that will hurt Russia’s as well given Russian sales to China.

And a third Moscow analyst, Kirill Yakovenko of Moscow’s Alor Broker Company, argues that Trump’s policies will push down the price of oil and that in turn will cut the earnings of the Russian oil and gas monopolies from foreign sales “by two to three times,” on top of the losses they have already taken.


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Paul Goble

Paul Goble

Paul Goble is a longtime specialist on ethnic and religious questions in Eurasia. Most recently, he was director of research and publications at the Azerbaijan Diplomatic Academy. Earlier, he served as vice dean for the social sciences and humanities at Audentes University in Tallinn and a senior research associate at the EuroCollege of the University of Tartu in Estonia. He has served in various capacities in the U.S. State Department, the Central Intelligence Agency and the International Broadcasting Bureau as well as at the Voice of America and Radio Free Europe/Radio Liberty and at the Carnegie Endowment for International Peace. Mr. Goble maintains the Window on Eurasia blog and can be contacted directly at [email protected] .

3 thoughts on “Trump’s Energy And Trade Policies May Hurt Russia More Than Western Sanctions – OpEd

  • November 11, 2016 at 12:14 pm
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    Paul Goble independent reporter on Russia!!!!! As reliable as the pollsters on America’s Presidential Election!

    Reply
  • November 11, 2016 at 2:07 pm
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    Paul, There will be a Trump-Putin Alliance from Vancouver eastward to Vladivostok that will be a win-win for America and Russia and all the countries of Europe. The only one to suffer is you as a writer.

    Reply
  • November 22, 2016 at 7:39 pm
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    What a laugh from these two comments here. Paul quotes almost entirely from Russian sources but they claim he isn’t a good writer. For the record, since you two are obviously not Russian specialists, Paul has a long and documented record of making correct calls and accurate analysis of Russia.

    Reply

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