Rethinking Sanctions: Putin’s Peaches

I’ve been considering how to follow up my post about how ministering in Eastern Europe as an American has affected my political views. I realized that I others have probably written about this issue, and also that I’m under no obligation to provide all the answers on this blog (good thing for my wife and family).

But I would like to give just a few examples of how “It’s complicated,” as I mentioned in that post. I’ll start out by posting an email that I sent to a fellow missionary (many years in Chile, now based in the US), about mutual economic sanctions between the EU and Russia. In personal conversations like the one below, I’ve started using the expression “Putin gets his peaches” as shorthand for the unintended consequences of economic sanctions. Perhaps it will catch on, like “Bootleggers and Baptists.” You read it here first…

(26 November, 2014)

Americans have an instinct that “something” should be done, but we don’t always understand the long-run impact of our gov’t’s actions.

Economic sanctions have a very bad track record of affecting political change. Let me expand a little on what I wrote about the Russian sanctions. Back in August, we saw prices plummet on much of the produce, but especially peaches and nectarines (persikai ir nektarinai, as we would say here!). At their lowest, peaches were something like 2.50 LTL per kilo (roughly 44 cents per pound). We rejoiced, because we love produce–especially peaches and nectarines!

But when we watched the news, we discovered the reason for the low prices. Right as peaches and nectarines were being harvested, the Russian gov’t announced a ban on produce imports from the EU. Trucks were stopped at the Ukraine-Russia border and turned around in search of EU buyers. Needless to say, this was bad for farmers and merchants in Southeastern Europe especially, where they rely on exports to Russia (the timing of the ban was no doubt intended to cause maximum disruption). They were forced to redistribute this produce throughout Eastern Europe at dirt-cheap prices. The EU has a fund that bails out farmers in this sort of circumstance, so the wealthiest growers will have access to those taxpayer funds. (UPDATE 01Jan15: I just found this story from August explaining more madness: the EU paid farmers to destroy produce in order to prop up prices–a hilariously bad idea that I thought had been discredited after the Great Depression.)

In the end, who was not harmed by the sanctions? EU consumers, I suppose–although we are all taxpayers to the bailout fund. We bought more produce than we really would have needed at market prices, but I guess that’s nice for us. Putin and his small winning coalition can afford to have their peaches flown in individually, daily, wrapped in velvet cushions, from wherever they want–so they didn’t really suffer. The big-time EU growers will get bailouts. But who was harmed? The EU growers suffered, especially small-time growers without access to the big-time bailouts. The shipping companies lost money because of the inefficiency of going all the way to the border before being turned back to sell at low prices. The middle- and lower-class Russians suffered from higher prices and/or shortages.

When the economy suffers, the currency suffers–as I mentioned in the update. I could go on and on, but you get the gist.

I listened to this media appearance by one of my favorite scholars a while ago, and I recall that I basically agreed with his analysis and prescriptions.

Since I wrote that email, the Russian economy has continued to decline. Some scholars, like this one, argue that the sanctions give Putin a convenient scapegoat for Russia’s problems, which are deep and systemic.

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About Benj

I’m a native North Jerseyan, exiled to the land of Phillies fans…an Old Testament professor and former liturgist…husband to Corrie…father to Daniel and Elizabeth…eldest sibling to three, brother-in-law to Josh and Hannah…uncle to Marshall.
This entry was posted in Culture-Economics-Society, Giffones in Lithuania. Bookmark the permalink.

One Response to Rethinking Sanctions: Putin’s Peaches

  1. Pingback: Best of 2014 | think hard, think well

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