RELEVANT INTERNATIONAL ECONOMIC CONSIDERATIONS IN THE UKRAINE SHOWDOWN

By COURTENAY BARNETT

A few thoughts recently came to mind and I share here. 

I make my point by reference to the US, Iran, Venezuela and Russia. I start with the US and follow a common thread linking oil and gas to sanctions and the consequences arising therefrom. 

The US is in the privileged position of having the world’s reserve currency and being in control of the financial architecture of the world and therein controlling the SWIFT system. 

So, first to Iran. In 1953 the US CIA assisted by British oil interests overthrew the democratically elected leader of Iran, Mohammad Mosaddegh, in a coup. The Shah of Iran was installed to America’s advantage. The coup occurred because the US and UK were disapproving of the nationalisation of Iranian oil. The Shah proved unpopular and in 1979 there was a new form of government established  in Iran which exists to this day. Following the Iranian revolution sanctions were imposed on Iran which was barred from the SWIFT system. The effect of the sanctions was that Iran could not trade its oil freely on the world market and thus the general impact was to lessen the aggregate of available global oil and negatively impact the price and sales of Iranian oil.  

Next, Venezuela. The election of Hugo Chavez brought change in Venezuela by way of the nationalisation of Venezuela’s oil. The death of Chavez saw Nicholas Maduro being elected. The US response was to reject Maduro’s legitimacy and despite a UN vote of two thirds of the General Assembly acknowledging Maduro’s legitimacy the US still wanted its choice of Juan Guido to be appointed as Venezuelan President. Again, consequences arose of the US imposing sanctions on Venezuela and Venezuela was barred from the SWIFT system. The effect of the sanctions was that Venezuela could not trade its oil freely on the world market and thus the general impact was to lessen the aggregate of available global oil and negatively impact the price and sales of Venezuelan oil. 

And finally, Russia. Russia invaded Ukraine earlier this year. The US response was the imposition of sanctions against Russia. Russia was barred from the SWIFT system. The effect of the sanctions was that Russia could not trade its oil freely on the world market and thus the general impact was to lessen the aggregate of available global oil and negatively impact the price and sales of Russian oil. 

The repetitive similarity is clear in each instance. My point is not about the political rights or wrong of the sanctions but rather leads to the global inflationary consequence of the imposition of such sanctions in the oil market. As a short diversion, I reference Joe Biden’s pronouncement to the people of the United States that the current rates of inflation being experienced in America is due to ‘Putin’s war’ in Ukraine. Additionally, Biden has been urging the European countries to impose sanctions against Russian oil and gas. In both instances he is wrong. The volume of Russian oil bought by the US from Russia amounts to about 3%. So, the impact of sanctions has precious little impact on the sum total of American imported oil and by extension on domestic oil prices in America. By contrast, some European countries are dependent on Russian oil and gas to as high as 40%. The request by Biden, in such a situation then amounts to an invitation for such countries to commit literal ‘economic suicide’. In all of this, again by contrast, I find it particularly interesting that the US does not hesitate to continue normal and quite significant oil purchases from Saudi Arabia while simultaneously making substantial arms sales which the Saudis have been using against Yemeni civilians. But so be it – do as I say – not as I do. 

In the wider scheme of things it seems to me that the available oil and gas which the countries of Iran, Venezuela, Iran and Russia combined, command, constitutes a substantial portion of global oil supplies. Thus, if the aggregate of that oil and gas supply were released and made available on the world market, the consequence, I assume, would be to reduce the cost of energy, which would be a desirable result for the US and the rest of the world. Surely, if Europe, and especially Germany, were thinking in clear and enlightened economic terms then Nordstream 11 and quite affordable Russian oil and gas would be a rational decision for Germany and the rest of Europe to make. So, last but not least,the appeal by the US to moral conduct, principles and pure values seems to me to be laughable, if one but reflects on the number of illegal wars the US has launched – not least in Iraq and bombed Libya to smithereens while still being illegally in Syria and continuing active oil trading with Saudi Arabia. Why, I ask myself, would any rational European leader want to harm the welfare of their own people? Come winter, is it Putin to pay the price – or – will the suffering be felt to greater degree by the mass of the European population? Do the sanctions not actually negatively impact the innocent civilian populations within the sanctioned countries? 

I raise these few points all to say that despite what the mainstream media may preach ( may I say selectively preach and likewise selectively focus on) – there is another reality worthy of consideration when the world’s population at large has to contend with the practical question – how am I to live and survive?  

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Courtenay Barnett is a graduate of London University. His areas of study were economics, political science and international law. He has been a practising lawyer for almost fully forty years, has been arrested for defending his views, and has argued public interest and human rights cases.