International Forecaster Weekly

The Evil Empire Strikes Back

Putin has stood up to the NATO powers and hit back on sanctions against Russia with sanctions of his own. And they are meaty sanctions at that. 

James Corbett | August 13, 2014

Russia's move last week to ban food imports from the US, EU, UK, Canada, Australia and other nations is nothing short of stunning. This is not how Putin is “supposed” to act, of course, according to the Washington consensus crew. In the bad old days, an uppity foreign leader could be crushed into submission with some sanctions or a couple of days of strategic bombing (or just the threat of such action).

Realizing he was up against the greatest superpower the world had ever seen, that leader would capitulate, either with some face-saving speech of defiance (as he gave Uncle Sam whatever was asked of him) or, better yet, by taking a golden ticket to some Caribbean nation with a well-lined Swiss bank account to fall back on.

Not anymore. Instead, Putin has stood up to the NATO powers and hit back on sanctions against Russia with sanctions of his own. And they are meaty sanctions at that (excuse the pun). The ban means a $1.4 billion hit to Europe's fruit exporters, a $1.32 billion hit to its cheese producers, a $1.3 billion dollars to its hog farmers, a $1.03 billion hit to its vegetable growers, an $800 million hit to its wine industry. The list goes on and on. And it hits the other countries on the list equally hard; Canada will have to swallow a $563 million loss to its agriculture industry, Australian dairy farmers are going to be losing out on $110 million in exports to the Russian bear and American poultry, nut and soybean producers are going to be feeling the pain to the tune of more than $600 million. The sanctions are sweeping and painful.

The worst part about the entire situation is not just that farmers and agriculture workers are going to suffer as the result of geopolitical issues that are completely beyond their control, but now both sides are so thoroughly backed into a corner that there is no easy face-saving way out of this situation. Barring some sort of complete acquiescence on both sides (“we'll drop our sanctions if you drop yours”), there is only one way for relations to go from here: down.

            Sadly, this is being borne out already by the further division of the world along battle lines that didn't exist a few short years ago. Now the EU is applying diplomatic pressure to Latin America to dissuade them from taking advantage of the situation and filling the void left by the boycotted countries. States will have to decide whether they are on Team Europe or Team Russia. Or is it Team Washington vs, Team Moscow? Or Team NATO vs. Team BRICS?

            As Ukraine continues to simmer, Eastern Europe is still the flashpoint of this conflict between the world's superpower and the emerging powers as represented by Putin. Now every day that there is no new MH17 or similar provocation is a day the world can count itself lucky. The new Cold War has arrived, and it's looking to go hot. People would be best to plan accordingly and pull themselves out of risk assets and into stores of safety. We are in for rocky geopolitical, financial and military times ahead.