Trump’s energy and trade policies may hurt Russia more than Western sanctions do, Moscow analysts say

Putin on Trump's victory: "In no way did we influence the elections in the USA." (Image: Sergey Elkin / Svoboda)

Putin on Trump's victory: "In no way did we influence the elections in the USA." (Image: Sergey Elkin / Svoboda) 

2016/11/11 • Analysis & Opinion, Politics

Even though Vladimir Putin hopes that Donald Trump will end the sanctions regime against Russia, the president-elect’s proclaimed 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.”

And the Moscow journalist says that Andrey Kostin of the government-owned 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 December, 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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Edited by: A. N.

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  • Vlad Pufagtinenko

    A good news story.

    • Fortranz

      “- Even though Vladimir Putin hopes that Donald Trump will end the sanctions regime against Russia, the president-elect’s proclaimed 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. -”

      I’m not sure that this analysis is good news:

      1. The US will unlikely “end the sanctions regime against Russia” because of European resistance to this idea. If they US does this there would no longer be any leverage against Russia tacking back all of the former USSR territories of East Europe.

      2. The US Congress and Senate will block any “commitment to protectionism” that Trump has proposed simply because if they proceed as he has campaigned on the US would find its way into numerous trade wars around the world. [notably with China]

      3. “an expansion in US production of oil and gas and a re-industrialization of America.” Expansion of US oil and gas will only be felt by the US domestic economy and is unlikely to have much effect on international markets. Re- industrialization of the US economy by the measures that Trump proposes will further fuel trade wars and is not even practical or likely given what Trump has said he will do.

      If Trump’s economic miracle’s can be realized than they “may have the most negative consequences for the Russian economy,” , however, given that they will most likely lead to a serious trade war(s), as they are currently proposed, this instability in the world economy would likely only benefit Russia and the BRICS.

      • zorbatheturk

        Trump yugely increasing the size of the US Navy and armed forces is unlikely to please the Chicoms. Trump has got Beijing worried – very worried.

  • Turtler

    Pretty much this.

    Even if Trump wanted to kiss arse with Putin so badly (and I don’t deny he’s whitewashed the Kremlin Kunt far more than any justification), ultimately he’s the leader of the US. The US benefits by keeping free trade abroad, low energy costs, and international peace. Putin’s Kremlin benefits by enslaving Eastern Europe high energy costs, and international conflict.

    Ultimately there are going to be issues where both Cannot possibly be happy.

    • Fortranz

      “- Ultimately there are going to be issues where both Cannot possibly be happy.-”

      What issues do you think Trump wouldn’t be happy with Putin on?

      • Turtler

        “What issues do you think Trump wouldn’t be happy with Putin on?”

        Let’s start with the economics. For whatever else can be said about Trump, he likes the idea of hugely profitable trade deals for the US, even if it means putting other peoples’ faces in red hot coals. Since fossil fuels and natural gases are extremely profitable trade commodities it’s likely he would seek to do that. Especially if the US exports can sell in bulk and undercut the sales of OPEC and other traditional exporters.

        in contrast, Russia’s a traditional oil and gas exporter. Putin’s been funding his regime for years using gas proceeds and has used Gazprom to dick around with Europe. So he benefits from higher gas prices and less rival supplies.

        So I doubt he would be happy with the US Fracking and oil obom growing larger while Trump would. So that is one conflict already.

        Secondly, Putin and Trump are egotists who want to dominate and be number one. They also happen to be in control of two major powers (in Trump’s soon to be case THE Dominant Power). Thing with Number One is… it can only number one.

        So if Putin wants his way (as he will) on-say- Assad or Iran and Trump wants his, there is going to be conflict.

        And I could go on. But does that help get started?

        • Fortranz

          Read my post to Vlad Pufagtinenko and see what your economic assessment is then.

          • Turtler

            Alright,, I’ll be willing to check.

  • cowboybob

    If the Ukraine wants to get on the good side of the new Emperor of the world, they better stop the hate talk against him.