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With 150,000 Russian troops hovering over Ukraine’s border and US officials warning that a major invasion could happen any day, President Biden signaled to the American public that he, too, might feel the effects if Russia chooses to invade.
“If Russia decides to invade, that will have consequences here too at home. But the American people understand that defending democracy and freedom is never without a cost,” President Biden said. He said in a speech on Tuesday. “I won’t pretend this would be painless.”
Russia says it is not preparing for an invasion, and it is not certain that Russian President Vladimir Putin will decide to do so. World leaders continue Diplomatic talks This week in a high-stakes attempt to avoid this outcome.
However, the prospect of an invasion has raised the specter of consequences – sanctions, counter-sanctions, energy supply issues and refugee flows – that can be felt beyond Ukraine’s borders.
Here’s what you need to know.
The US has promised tough sanctions if Russia invades – and Russia could retaliate
“If Russia advances, we will rally the world and oppose its aggression. The United States and our allies and partners around the world stand ready to impose strong sanctions and export controls,” Biden said on Tuesday.
These sanctions could include restrictions on major Russian banks that would significantly affect Russia’s ability to conduct international business. Severe US sanctions could raise prices for ordinary Russians or cause the Russian currency or markets to crash.
Since the United States does not depend much on trade with Russia, it is somewhat insulated from direct consequences. Europe is more directly affected. But some sectors of the American economy depend on very specific Russian exports, primarily raw goods.
“The basis of sanctions is to hurt the other person more than your own interests. But that doesn’t mean there won’t be some collateral damage,” said Doug Riedeker, partner at International Capital Strategies.
Energy prices can go up
Russia is one of the largest exporters of oil and natural gas, especially to Europe. As a result, officials have reportedly shied away from imposing tough sanctions on Russian energy exports.
But there are other ways the energy market can be disrupted.
First, Russia could choose to cut or restrict oil and gas exports to Europe in retaliation for sanctions. Approximately 40% of natural gas The ones used by the European Union come from Russia – and no European country imports more than Germany, a major ally of the United States.
Even if Russia chooses not to restrict exports, supplies could be affected by the conflict in Ukraine because many pipelines run through the country, carrying gas from Russia to Europe. “They could simply be victims of a military invasion,” Riedeker said.
Either way, if Europe’s natural gas supplies are compressed, it could cause energy prices – which were already on the rise – to rise even further. And although the United States imports relatively little oil from Russia, oil prices are determined by the world market, which means that domestic prices may rise anyway. Biden on Tuesday promised to work with Congress to address the “price effect at the pump.”
Other industries, from food to automobiles, may also be affected
Russia is a major exporter of rare earth metals and heavy metals – such as Titanium used in aircraft. Russia supplies about a third of the world’s palladium metal, a rare metal used in catalytic converters, and its price has risen. soared in recent weeks due to fears of conflict.
A major conflict in Ukraine would also disrupt Ukrainian industries. Ukraine is a major exporter of neonwhich is used in the manufacture of semiconductors.
As a result, US officials have warned various sectors to prepare for supply chain disruptions, including the semiconductor and aerospace industries.
Fertilizers are produced in large quantities both in Ukraine and in Russia. Disruptions in these exports will mostly affect agriculture in Europe, but food prices around the world may rise as a result.
The shock to international stability may hit global markets
Besides sanctions and counter-sanctions, global financial markets are likely to have a negative reaction to the European military invasion on a scale not seen since World War II.
Americans with exposure to the stock market — such as those with 401(k) and other retirement accounts — can feel the effect, although it is likely to be short-lived.
“Markets are basically not ready for a ground war in Europe in the 21st century,” said Riedeker. “It’s something people haven’t thought of.”
The US stock market has already been Unusually fickle In recent weeks, due to inflation, possible moves by the Federal Reserve and a possible conflict in Ukraine.
Historically, the market rebounded relatively quickly after geopolitical events. Analysts say that’s more likely today as well.
But if the Great Russian invasion and subsequent conflict cause long-term disruption to energy and other export markets, investors can rethink this conventional wisdom.
“You’re likely to be at a point where we’re not only looking at the prospect of Russia’s invasion of Ukraine and sanctions and countermeasures, but you’re also looking at the rise of China that doesn’t necessarily agree with the American perspective on the world anyway,” Riedeker said. “Are we looking at a point where some of the major buildings that people take for granted should be reassessed?”
Russia may respond with disruptive cyber-attacks on US targets
Another way Russia can respond to US sanctions is through it cafe attack and influence campaigns.
Various federal agencies, including the Department of the Treasury and the Department of Homeland Security, have warned of potential cyber attacks on targets such as major banks and power grid operators. And just last week, US cybersecurity officials conducted a tabletop exercise to make sure federal agencies were prepared for a possible Russian response, Washington Post mentioned.
“They warned everyone about Russia’s very specific tactics about potentially launching attacks on critical infrastructure,” Katerina Sedova, a researcher at Georgetown University’s Center for Security and Emerging Technology, told NPR.
Russian cyber attacks Ukraine has been targeted relentlessly in recent yearsincluding attacks on the capital’s power grid in Kiev in 2015 and 2016. But a major escalation could shift the focus to American targets.
Sedova referred to a Russian state-backed attack on IT software company SolarWinds and The ransomware attack that shut down the colony pipeline for six days As examples of how major Russian cyberattacks could disrupt U.S. operations. (The Biden administration said so Do “I don’t think the Russian government is involvedIn the pipeline attack.)
She said power grids, hospitals and local governments could all be targets.
For now, Sedova said she is more concerned about more subtle attacks — such as influence campaigns aimed at “sowing discord between us and our allies in our resolve” to act jointly against Russia.
“Often, cyber operations go hand in hand with leverage,” she said. “They aim to change the decision-making process, to change policy in that direction, and to change public opinion.”
A major invasion likely to lead to a refugee crisis
US officials and humanitarian agencies have warned that a full-blown Russian invasion could result in as many as 1 million to 5 million refugees fleeing Ukraine.
“It will be a continent-wide humanitarian catastrophe as millions of refugees seek protection in neighboring European countries,” said Agnès Callamard, Secretary General of Amnesty International. He said last month in the statement.
Poland, which shares a border with Ukraine and already has more than a million Ukrainians, is likely to receive the largest number of refugees. Over the weekend, Poland’s Interior Minister Mariusz Kaminski said his country has been Preparing for the “refugee influx” from Ukraine.
The US military says thousands of soldiers deployed to Poland this month are ready to assist in a large-scale evacuation.
“Helping with the evacuation flow is something they can do, and they can do very well,” Defense Department spokesman John Kirby said this week.
On a larger scale, Europe’s refugee crisis will not be contained – the US will likely see refugees seeking asylum as well.
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