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OP-ED: AGRICULTURE WOULD PAY FOR RUSSIAN SANCTIONS
Farm Equipment Manufacturers Association (FEMA) reports:

If Russian President Vladimir Putin wanted to attract attention and demonstrate his hubris, he certainly succeeded by orchestrating a bizarre, quasi-anonymous takeover of Crimea in February and then denying he had done so. His methods, motives and arguable madness are worthy of a Shakespearean history play.

As the drama continues to unfold, fellow world leaders take their places onstage, and the audience can only guess what will transpire before the curtain falls on the final act.

Secretary of State John Kerry warned on CBS's "Face the Nation" that other members of the Group of Eight industrialized nations and other countries were prepared to "isolate Russia economically" if Moscow does not back down. "There are a broad array of options that are available, not just to the United States, but to our allies. There are visa bans, there are asset freezes, there's isolation with respect to trade and investment."

This statement, among others, prompted a debate regarding the best way to respond to Russian military aggression in the Ukraine, its neighbor and the country to which the Crimean peninsula officially belongs.

Economic sanctions may sound good in theory, but they prove ineffective in actual practice. They didn't bring down Fidel Castro when imposed against Cuba, and they didn't bring about regime change when imposed against Iran.

In 1980, after the Soviet Union invaded Afghanistan, President Jimmy Carter retaliated by stopping U.S. grain sales to Moscow. The boycott did not halt Soviet aggression; Russian troops remained in Afghanistan for another nine years, and when they did leave, it was not due to the grain embargo. The Kremlin simply bought wheat elsewhere (including from Ukraine), and American farmers suffered because their prices dropped and sales slumped. The following year, President Ronald Reagan lifted the ban.

If the current administration fails to learn from history and instead repeats it by imposing such sanctions as a ban on exports of grain and other commodities to Russia, the greatest casualties likely will be American business and agricultural interests.

The former Soviet Republic was an $11.2 billion market for the United States last year, with American farmers exporting $329 million worth of meat and poultry, $195 million worth of nuts and $157 million worth of soybeans, Commerce Department statistics show. However, Russia's main trading partner, largest export market and the third-largest importer of Russian goods is the European Union, according to the European Commission. The EU also is the No. 1 investor in Russia's economy, accounting for three-quarters of foreign direct investment in the country.

Therefore, any economic sanctions against Russia must be imposed by both the United States and the EU, which is a vital customer for Russian natural gas and metals, in order to amount to more than a mere "slap in the face," said Charles Movit, a senior economist at IHS Global Insight. And we have no guarantee that the EU will cooperate.

Russia has 9% of the world's arable land and is one of the world's top wheat producers. Ukraine, known as "the breadbasket of Europe" is expected to be the third-largest exporter of corn this year, and it has already shipped most of its corn for the year, said David Miller, director of research and commodity services for the Iowa Farm Bureau.

Miller worries that large Ukrainian farm enterprises may not get credit from lenders to buy seed, fertilizer and equipment for the spring planting season. About 160 large enterprises farm at least half the land in Ukraine, he said. Their funding comes primarily from lenders in Kiev, the capital; Russia; and Western Europe.

In 2013, a shift in the value of the euro to the U.S. dollar led to a decrease in U.S. grain exports to Ukraine. As a result, Ukrainians ordered less farm machinery and construction equipment, said Patricia Cook, director of the U.S. Department of Commerce's Commercial Service in Iowa.

In this case, the sound and fury of an embargo are sure to signify something-financial losses for U.S. farmers and manufacturers.


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