Opinion – Vinicius Torres Freire: Putin can shoot himself in the head if he stops selling to the West

Vladimir Putin says he will stop selling some products to the United States, Europe and allies, all those who have barred business with his country. Russia may well cause disorder, inflation and even recession and world hunger. After some time, say a year or even two, the rest of the world, especially rich countries, will have sorted themselves out. Russia will be in a dogless wilderness, doomed to lasting impoverishment.

Russia will stop selling what? We won’t know until Thursday, says the government. Thus, it is not possible to make any less speculative account of losses and damages. But you can make a map of the damage.

How can Russia do damage? Cutting sales of energy, strategic metals and food (through an embargo on the sale of grains or fertilizers).

If it cuts sales of strategic metals and food, it can cause problems in industries as varied as vehicles to electronics and food inflation. It loses much less revenue, but responds to the shots of the “West”. The damage would not be essential.

More than 40% of Russian export money comes from energy sales. A significant reduction in oil and gas exports can lead to high inflation, recession and poverty. The European Union imports 37% to 40% of the gas it consumes from Russia; about 24% of oil. Europeans could run out of gas to generate electricity, for industry, without fuel for their vehicles and industry, etc.

If Russia cuts half of its exports of oil and derivatives, a barrel of oil could reach US$ 200 (it started the year at US$ 77 and is in the region of US$ 130), according to calculations by industry analysts. It would be chaos. The price of fuels (such as gasoline and diesel) would double, inflation would skyrocket, interest rates too, with a violent reduction in growth in the rich world and recession in Brazil.

After some time, a year or so, there would be political and market arrangements in the “West.” Soaring prices would encourage fossil fuel production in the United States and even in “green transition” Europe. In the US, there could also be political pressure for production by the “war effort” (in addition to some environmental favors for oil tankers). It would be possible to place Iran and Venezuela on the world market, if OPEC did not prevent the increase in production in these countries. However, OPEC is increasingly tight-lipped between pleasing the Russian cartel ally and the US. Will they side with bankrupt Russia? Yes, they can break the world, as they decided to do in the 1970s.

For starters, Russians would lose meager revenue in dollars, euros, and accepted currencies in commerce and finance; have already lost access to a large part of their international reserves. They could reduce their imports—if they won’t be forced to, as they are being canceled by companies in world trade.

Whatever the reason for the reduction in imports, this immediately means shortages, scarcity of everyday goods and, then, industries and equipment failing, lack of technological updating. Much worse, they would be out of several markets for years, as the “West” would have found some substitutes for Russian products, albeit at worse prices. The “West” would pay more, Russia might not have anything else to sell, for a long time, unless it surrendered to an ugly compromise.

In theory, Russia can shoot back at the “West” without hitting itself in the head, to show that it has reacted. At the limit, you have more to lose. But that was the case from the beginning of the war. It is not impossible, therefore, for the situation to get out of control.