So far, U.S. President Joe Biden doesn’t plan to send troops to Ukraine in the wake of a Russian invasion of the sovereign nation. However, the invasion abroad will still have consequences in America.
These include: rising oil prices and other goods exported from Russia, costs for sending aid to the Ukraine, a need for preemptive measures against potential cyberattacks and increased concerns about the world’s two largest nuclear powers – the U.S. and Russia – at odds.
Before Russia launched an invasion of the Ukraine late Wednesday, White House Press Secretary Jen Psaki spoke to reporters about sanctions placed on Russia’s banks and the Nord Stream 2 pipeline and more as the country amassed troops at the Ukrainian border. Biden and G7 allies are expected to discuss further sanctions Thursday.
Economic impact
Stocks began to fall this week as tensions mounted between Russia and Ukraine.
“What we did was we used our most powerful sanctions tool to target two major state-owned Russian banks for the first time; that is the significance,” Psaki said of the sanctions in place for Russia as of Wednesday afternoon.
“These banks can no longer — what it means is they can no longer make any transactions with the United States or Europe, and their assets in the financial system will be frozen.”
Economic sanctions on Russia could cut off that country from resources, Psaki explained.
“The sanctions that we announced yesterday will not have an impact on the American people,” she said.
However, the Kremlin has vowed countersanctions in response.
“Well, we’ve seen those threats or those reports, but I don’t have anything to provide or assess from here,” said Psaki of potential countersanctions.
“The world economy does depend on global energy. How does the world sanction Russia's economy without Russia saying, 'We're going to take the next step for you and not export any more energy’?” asked Patrick DeHaan, head of petroleum analysis at GasBuddy, according to CBS News. “If Russia's economy is going down the tubes, they're going to take the global economy with it.”
Oil prices have already surged in response to the invasion, hitting an eight year high this week. As of Thursday, the average price for a gallon of gas in the U.S. was more than $3.50, according to AAA.
“What we’re seeing in the market is an anticipation of a further invasion by [Russian] President [Vladimir] Putin,” said Psaki. “And what we’re trying to do and focus on is take every step we can, working around the world with our counterparts and partners, to minimize the impact on the global energy market.”
Psaki said releasing more oil from the Strategic Petroleum Reserve is an option for keeping prices down.
Apart from supplying a large amount of crude oil, Russia produces nearly half the world’s supply of palladium, a key element of microchips used in cars and other electronics. It also produces, platinum, nickel and aluminum.
A microchip shortage has already been impacting the automotive industry, with GM announcing just days ago that they would temporarily drop heated seats in response. COVID-19 pandemic-related supply chain issues have left other industries struggling and have contributed to inflation in the U.S.
Other exports from Russia and Ukraine that could be impacted by the conflict are wheat, barley and other grains sent to Central Asia and the Middle East.
“Disruptions in commodities could send global food prices higher, putting pressure on U.S. consumers,” said CBS News.
Ukraine is also Europe’s top producer of uranium and has vast deposits of titanium, manganese, iron and mercury, said a report from Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Aid to Ukraine
“We have provided them an extensive amount of financial assistance, including recently announcing $1 billion in sovereign — I mean in loan guarantees,” said Psaki Wednesday of the aid the U.S. has sent Ukraine. “And that is something we are open to building upon.”
She said Congress will discuss further aid.
After the fall of the Soviet Union, Ukraine broke off from Russia and has expressed interest in joining the North Atlantic Treaty Organization, which was founded in opposition of the Soviet Union. Putin is opposed to Ukraine joining NATO and has demanded that other ex-Soviet states that are in the organization pull back, according to CNN.
Since Ukraine is not in the organization, the U.S. is not expected to send troops to fight Russia directly, which Psaki confirmed Wednesday.
However, CNN said “it is almost certain that Washington will have to send troops back to bolster its European allies and to bases they began to leave 30 years ago.”
The nearby nations of Latvia, Lithuania and Estonia are NATO members and the U.S. is treaty-bound to defend them.
In a statement issued Thursday from the office of U.S. Secretary of State Antony Blinken, he and Secretary of Defense Lloyd J. Austin III “discussed further steps to ensure the security of Allied territory, especially on NATO’s Eastern Flank.”
Blinken said the U.S. is committed to Article 5 of the treaty, which states that “collective defense means that an attack against one Ally is considered as an attack against all Allies.”
“There is also the possibility of a U.S.-funded insurgency in Ukraine, raising the risky prospect of a new proxy war between Washington and Moscow,” said CNN.
Going forward
A CBS poll from earlier this month shows that most people in the U.S. want the country to stay out of war with Russia and Ukraine, but White House officials said U.S. action is important for protecting democracy.
“We make national security decisions based on what’s best for our country’s national security, not on the latest polling,” Psaki said Wednesday. “And if you step back, what, hopefully, the American people will see and have seen is that while Russia has sought to divide our allies and the American people, the President has sought to revitalize our partnerships and alliances and unite our country. He’s standing up for our national security interests and bedrock democratic values against the aggression of a dictator threatening to further invade a sovereign country.”
Experts warn that a war between Russia and Ukraine has the potential to expand.
According to CNN, Putin’s attack on Ukraine is “another challenge to America's global power and the concept of a free and democratic world that multiplies its influence,” that includes rising power in China. At the same time, former President Donald Trump, who still has a following in the U.S. called Putin a “genius” this week and continues to cast doubt on the 2020 U.S. election with no evidence.
Additionally, U.S. businesses should be prepared for cyberattacks, said Psaki.
Although she said there is “no current threat as it relates to cyber here,” Psaki also said “we anticipate that there could be continuing threats in the future, and what we need private sector companies to do is harden their cybersecurity capabilities now. Now is the time to do it.”
Despite new challenges from the U.S. related to the Russia-Ukraine conflict, she said Biden still plans to announce a new Supreme Court pick by the end of the month.
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