Economic War and Lost Opportunity

Yesterday, a few hours after the U.S. and European Union imposed financial, energy and military sanctions against Russia, the Kremlin announced its decision to ban imports of European and American food products — meat, dairy, fruits, vegetables and fish, among others — and warned about expanding its reprisals to include a ban on flights over its territory, as well as possible defensive measures in the auto, aeronautic and shipbuilding industries.

Whether we like it or not, the abovementioned decision is a reciprocal and proportional response to the isolation crusade undertaken by Brussels and Washington against Moscow. These actions are the result of tensions between both blocs over the civil war in Ukraine, which stemmed, it should be remembered, from the Euromaidan rebellion — a cause that was decidedly supported by the West.

Thus, what began as a tug-of-war in the current political order has turned into a serious matter with severe consequences for the national economies of each side. This situation allows one to ponder the existence of a real counterweight to the West — Russia; it is reminiscent of the Cold War era, except that now the mutual threat is not the possibility of starting a nuclear war, but that of fuelling an escalation in economic sanctions with potentially devastating effects for the respective populations, especially those with lower incomes.

Beyond these undesirable consequences, the phenomenon described above is undeniably interesting. This is because it calls into question one of the most optimistic perspectives on globalization: that the deepening of economic interdependence among the world’s nations would end up reducing conflicts between them, since it would reinforce relationships of mutual necessity. The reality, however, is that this economic interdependence is being used as a source of pressure and even hostility by powers such as the U.S. and Russia.

In contrast to the concerns that this situation creates among the world’s hegemons, it represents a window of opportunity for emerging markets in Latin America, Africa and Asia, to the extent that one of the foreseeable effects of the abovementioned bans and sanctions is the opening and diversification of a huge market such as Russia’s. It is no coincidence that Moscow has already initiated negotiations with diplomats from various Latin American countries with the purpose of finding substitutes for European Union and U.S. food products. Exports to Russia in that sector reached $15.8 and $1.3 billion last year, respectively.

Finally, these circumstances force us to reflect on the role of Mexico, which could benefit from the situation, like other emerging economies, if it had a strategy for market diversification, such as that adopted years ago by other nations in the hemisphere. However, the economic war between Russia and the West coincides with our country’s double-sided submissiveness to the U.S.: both politically, which is shown in the tepidness with which the Mexican government tends to react to its northern neighbor’s authorities, and economically, which is reflected in the fact that the vast majority of our country’s exports end up in the American market.

To summarize, the opportunity presented by the current geopolitical crisis finds our country in a vulnerable and dependent position, which is the result of governmental determination to conduct national politics and the economy under the precepts dictated by Washington.