Matt Iglesias is Great post We discuss how U.S. energy policy often operates at contradictory objectives: the administration may want to reduce energy exports from hostile countries like Russia, Iran, and Venezuela, but not enough to hurt the global economy, and the administration may want to limit new domestic energy production to combat global warming, but not enough to hurt the economy.
Yglesias points out that a win-win policy adjustment would be to relax domestic energy restrictions to increase production by X barrels per day, while at the same time tightening sanctions enough to offset the increase in U.S. production. This would be a clever way to tighten sanctions without major consequences for either the environment or the global economy. (To be sure, such policies always have second-order effects, but they would largely offset the first-order effects.)
I don’t have a particularly revolutionary suggestion, but I would like to point out a similar problem of conflicting goals. Within Sanctions regime. Experience has shown that sanctions can be easily circumvented. The New York TimesRussia has found a way to export oil to countries like China and India.
(As an aside, if you follow some sections of the American media, you may not know that it was India that extended an economic helping hand to Russia.)
On the other hand, sanctions Some Sanctions also prevent technology transfer for the development of new fields, so Iran’s oil exports will likely be lower than they would be in an unconstrained market.
Suppose that Russian energy sanctions, for example, only slightly reduced production. Less than 10%In that case, the most effective way to deprive Russia of war funds would be to significantly reduce world oil prices, but sanctions against Iran and Venezuela would tend to raise world oil prices, which would boost the Russian economy.
Of course, there are no easy answers in the event of such a conflict, but we can make some conditional observations: if Russia’s invasion of Ukraine is the biggest geopolitical threat, then the case for sanctions against other oil-producing countries weakens somewhat.
In summary, when foreign policymakers consider actions against an adversary, it is important to consider how those actions will indirectly affect global markets for commodities such as oil, and how those actions may affect the actions of other adversaries. Because the global economy is highly interconnected, foreign policy conflicts cannot be analyzed in isolation.
