Two Obstacles Holding Back Russia-U.S Trade
By: Cameron Deitz, Ru-PAC Expert, & Hunter Cawood, Ru-PAC President/Founder.
The United States and the Russia Federation have been conducting trade since 1992. As of 2018, the U.S. ranked 1st in GDP, while Russia ranked 11th. Currently, the U.S. and Russia’s trade relations are steady. Considering the current state of domestic and global affairs, ongoing commerce has been a mutually beneficial silver lining for both countries. Obviously, the U.S. and Russia are on different sides of the geopolitical spectrum when it comes to a myriad of international and national security issues; yet, economic growth can be something both sides can get behind.
In the first seven months of 2019 U.S. and Russia trade grew to 16.13 billion, a 2.35% increase compared to the same time period last year. That is a good indication of stability. So where do we go from here — and what is holding us back? Several factors that are limiting our trade prospects, but there are at least two that stand out above the rest.
The Media: If you are a casual observer of American mainstream media, you will get the impression that “Putin’s Russia” is a roguish nation whose sole purpose is to undermine the fabric of democracy and the American political system. Since the 2016 election, the mainstream media has gone into overdrive attempting to force-feed this narrative to the American public that there exists some sort of insidious link between Trump, Russian oligarchs, and everyone in between. Their repeated partisan abuse of communication tactics such as framing, agenda-setting, and priming has led to widespread confirmation bias and cognitive dissonance. This amounts to a new age of McCarthyism.
This new era of McCarthyism has brought with it a recrudescence of Russophobia that is now undeniably present in business relations. Russian businesses that work on the United States market are constantly met with Russophobic platitudes that inhibit the exchange of services and goods between the two countries. In fact, a lot of Russian companies have began to hedge against this resurgence of Russophobia by rebranding themselves in ways that downplay their Russian origins. For example, instead of running call centers out of Saint Petersburg or Moscow, Russian companies now move their call centers to places like Prague and Estonia, which is, of course, more costly and means that those costs are passed on to the consumer. All of this points back to the role that the media has played in demonizing Russia and scandalizing the mere appearance of having ties with Russia.
And while the Mueller Report made allegations of Russian interference, any such link regarding Trump was debunked as false. It changed nothing for the American right and left concerning Russia — conservatives continued to play defense and liberals just moved the goalposts.
Now, the media has moved on to potential crimes committed by Trump with Ukraine in a potential quid-pro-quo… case in point. The rabbit hole is never-ending in regards to the media and their endless vendetta against Trump. Nevertheless, the media persists in creating false perceptions of Trump and Russia, alike. The reality is the narrative needs to shift in order for both nations to maximize their trade potential.
Economic Sanctions: Sanctions are outdated and merely help with optics. They function as a policy tool with no meaningful impact on those who are targeted and truly culpable. Instead, they harm average citizens and small businesses. Moreover, they have an approximate 4% success rate. In this new cold war era, Trump should put his best foot forward and gradually minimize the amount of sanctions on Russia. In doing so, this will create the framework for a reenergized trade deal between the U.S. and Russia.
For too long the status quo has been U.S. move — Russia countermove, and vice versa. In the midst of a so-called trade war with China, President Trump and the American economy could benefit from improved relations with Russia — who is China’s biggest trade partner. What could be better than securing a worthwhile trade deal with China’s next-door neighbor? So far, Trump’s primary strategical answer to China has been tariffs. Several bilateral trade deals with nations such as Mexico and Japan have also worked in Trump’s favor economically. But, a deal like this could be close to a checkmate on the world stage.
At the same time, there are signs of goodwill between the United States and Russia. The Kremlin has repeatedly expressed an openness to dialogue and re-engagement with the United States. The United States has likewise expressed a willingness to work together. Earlier in August, Trump expressed a desire to aid Russia in containing the wildfires raging through Russia’s region of Siberia. This gesture was well-received and appreciated by Moscow.
In the end, bad relations negatively impact both American and Russian businesses. How can U.S. and Russia relations improve while promoting both country’s prosperity? Collectively, there needs to be a short-term and long-term approach that balances cooperation and the natural competition that exists between the two nations.
In the short-term, commercial growth can be used as a catalyst for working together. In the long-term, we can expect there to be competitive disagreements regarding international order, which are ideological at their root, that can be addressed cooperatively because of the newfound partnership. Economics is not a natural science, it is a social theory that is reflexive to ideas and perceptions. If the media can objectively promote a positive atmosphere concerning Russia, the American public will begin to have a better and more receptive attitude towards Russia.
Furthermore, if the Trump administration can curtail its use of sanctions while removing existing ones as an act of good faith, the future can be prosperous for the U.S., Russia, and their citizens respectively. Americans need to lose the Russian hysteria. The historical conflict and political norms of the past should not persist into the future when it comes to U.S. and Russia relations.
Cameron Deitz is a political analyst with the Russian Public Affairs Committee. His main interests are international trade, conflict resolution, and national security. Cameron holds a Bachelor of Science in Communication from Dalton State College.