Matt Yglesias has one excellent post discussing how U.S. energy policy is often mutually beneficial. Many in the administration want to reduce energy exports from adversaries such as Russia, Iran and Venezuela, but not so much as to damage the global economy. The government may also want to limit new domestic energy production to tackle global warming, but not as much as to hurt the economy.
Yglesias points out that a possible win-win policy adjustment would relax domestic energy regulations enough to increase production by X barrels per day, while tightening sanctions enough to offset the U.S. production increase. It’s a smart way to tighten sanctions without any significant impact on the environment or the global economy. (Although this type of policy always has second-order effects, the first-order effects would largely compensate for this.)
I don’t have anything that innovative to offer, but I want to point out a similar problem of conflicting objectives inside the sanctions regime. We have learned from experience that sanctions are often easy to circumvent. According to the NYTRussia has found ways to export oil to places like China and India.
[As an aside, if you rely on certain parts of the American media you might not know that it was India that threw Russian the financial lifeline.]
On the other hand, there are sanctions some effect, and Iranian oil exports are likely to be lower than they would be in an unrestricted market, especially as sanctions also hinder technology transfer for the development of new oil fields.
Let’s assume that the sanctions against Russian energy could only reduce production by a small amount, for example less than 10%. In that case, a significantly lower global oil price would be the most effective technique to deprive Russia of money to finance its war. But the sanctions on Iran and Venezuela tend to increase global oil prices, boosting the Russian economy.
When these kinds of conflicts arise, there are obviously no easy answers. But we can make some conditional observations. If Russia’s invasion of Ukraine is the biggest geopolitical threat, the case for sanctions against other oil producers becomes somewhat weaker.
In summary, when the foreign policy establishment considers actions against one of our adversaries, it is important to consider how the actions might indirectly affect the global market for a commodity like oil, and thus how these actions may affect the behavior of our other will influence opponents. opponents. Foreign policy conflicts cannot be analyzed in isolation because the global economy is highly interconnected.