Wanna Buy a Yacht… or Some Plywood?

As the first mega-yacht seized from Russian oligarchs, the 236-foot Axioma that once belonged to Russian steel billionaire Dmitry Pumpyansky, was parked for auction at Gibraltar, ordinary Russian goods were still flowing to NATO powers. Big time. In addition to the natural gas piped to Germany and other NATO members, the United States is importing about a billion dollars a month worth of some pretty ordinary Russian products. In short, as the United States funds billions of dollars of military and humanitarian aid to Ukraine to support its defensive response to a Russian invasion, Americans are truly offsetting that effort and thus supporting Putin’s war.

We may be importing less, and many US brands – from Starbucks to McDonalds – have ceased Russian operation, but the value of continuing US purchases is still staggering. Some of those purchases are strategic. Some are not. In an article publishing on August 26th and written by Juliet Linderman and Martha Mendoza, the Associated Press “found that more than 3,600 shipments of wood, metals, rubber and other goods have arrived at U.S. ports from Russia since Russian forces rolled into Ukraine in late February. That’s a significant drop from the same period in 2021, when about 6,000 shipments arrived, but it still adds up to more than $1 billion worth of commerce a month.

“In reality, no one involved expected trade to drag to a halt after the invasion. Banning imports of certain items would probably do more harm to those sectors in the U.S. than in Russia… ‘When we impose sanctions, it could disrupt global trade. So our job is to think about which sanctions deliver the most impact while also allowing global trade to work,’ Ambassador Jim O’Brien, who heads the State Department’s Office of Sanctions Coordination, told the Associated Press.” When it comes to imports like titanium (an essential ingredient in military manufactures) and rare earths (necessary in sophisticated electronics and large-capacity batteries), the United States seems beholden to Russia and China, a very ironic reality.

Some of those exports are easily traceable; some get lost in the complex world of global trade. Some, we just need. Our sanctions are still working, but… While the level of trade is not considered particularly significant – the United States and Russia were never serious trading partners (unlike our relationship with China) – it seems galling that such trade continues.

“On a hot, humid day this summer, a container ship pulled into the Port of Baltimore loaded with sheets of plywood, aluminum rods and radioactive material — all sourced from the fields, forests and factories of Russia… President Biden promised to ‘inflict pain’ on and deal ‘a crushing blow’ to Russia through trade restrictions on commodities such as vodka, diamonds and gasoline in the wake of Moscow’s invasion of Ukraine six months ago. But hundreds of other types of unsanctioned goods worth billions of dollars, including those found on the ship bound for Baltimore from St. Petersburg, Russia, continue to flow into U.S. ports…

“In some cases, the origin of products shipped out of Russian ports can be difficult to discern. U.S. energy companies are continuing to import oil from Kazakhstan through Russian ports, even though that oil is sometimes mixed with Russian fuel. Trade experts warn that Russian suppliers are unreliable, and opaque corporate structures of most major Russian companies make it difficult to determine whether they have ties to the government.

”‘It is a general rule: When you have sanctions, you’ll have all kinds of murky schemes and illicit trade,’ said Russian economist Konstantin Sonin, who teaches at the University of Chicago. ‘Still, sanctions make sense because even though you cannot kill 100% of revenues, you can reduce them.’” AP. This complex nexus of mutual dependence is both difficult to acccept… and definitely uncomfortable. Not only is the moral issue questionable, but the ability of our enemies to squeeze us hard with materials we need from them is scary.

I’m Peter Dekom, and if only this trading interconnectivity could stop international conflicts, perhaps…