Harvard economist for world sanctions: Russia's economy is only gas and oil

Russia's economy is a very insignificant “in the global economy, except for oil and gas”, Jason Furman, former Harvard economist and former President Barack Obama's adviser, told New York Times. The “is essentially a large fuel station,” he said.

His comments come as the West prepares serious sanctions on Russia if it invades Ukraine. While they have the potential to throw the entire Russian economy into chaos, these measures could also echo to further damage the US, Europe and the rest of the world, while struggling with inflation and rising energy prices, a waved effect the West hopes to ease.

On Monday, Moscow declared the independence of Ukraine's two breakaway regions and sent troops there, escalating the prospect of a major war. President Joe Biden has already ordered sanctions against separatist Donnetsk and Luhansk regions, preventing American citizens from engaging in any export, import or new investment in these areas.

Despite Russia's size and wealth in early classes, its economy is more equal to Brazil than with countries like Germany, France and Great Britain, according to the World Bank's latest nominal GDP data. According to the World Bank, its economy is weaker than that of Italy and South Korea, two countries with less than half of Russia's population.

But as Furman notes, Russia's oil and gas exports are important to the world.

The European Union imports about 80% of the natural gas it uses, according to the US Energy Information Administration, and Russia accounts for 41% of natural gas imports and 27% of oil imports to the continent, according to Eurostat.

Accompanied with energy prices in the EU rising to the price of 20 euros to 180 euros per megawatts over the past year, the disappearance of those gas and oil imports could bring disaster to the region and the global economy connected. Meanwhile, in the US, gas prices have reached the highest level of seven years, climbing to about $3.50 per gallons, while inflation rises to the highest rate in 40 years to 7.5%.

On the other hand, Ukraine has also been a major grain supplier to other regions, sending 40% of grain and corn exports to the Middle East and Africa, The Times reported.

In response to a possible food crisis in those regions, US Agriculture Secretary Tom Wilsack said Saturday that American farmers would increase production and “will intervene and help our partners”, the Associated Press reported.

Ukraine represents 12% of all grain exports to the world and is estimated to provide 16% of global corn exports this year, the AP reported. Wilsack told the media he believed American consumers would be largely intact, but Europeans would face “another history”.

“You need to look at the background this is coming against,” told The Times Gregory Daco, chief economist for the consulting firm EY-Parthenon. “There is high inflation, tense supply chains and uncertainty about what the central banks will do and how persistent the price hikes are. ”

*Material prepared by the SCAN portal. The republic can only be done against quoting the original authorship and source.