Tit-for-tat trade war with Russia will hurt many but achieve little

Trade wars always end in tears, and the escalation of the dispute between Russia and the West will be no different. An ever larger number of innocent parties will be hurt by the fallout, and nothing meaningful will be achieved.

The latest intensification by Russia will be no different: it decided to ban the import of fruit, vegetables, meat, fish, milk and dairy foods from America, the EU, Australia, Canada and Norway in retaliation for the earlier sanctions on Russian banks.

Ordinary Russian consumers will suffer: they will have to spend more money on inferior food products that they wouldn’t have chosen under free trade. European farmers and food companies will lose out, having to say goodbye to potentially vital revenues. Jobs will be lost. Yet to what effect? How will any of this change anything? It certainly won’t prevent the massing of Russian troops near the Ukrainian border, or the horrendous plight of the refugees fleeing fighting in the south-eastern part of the country.

There is room for the use of sanctions in international relations. Combined with other policies, they can sometimes work by forcing change on despotic governments. Of course, restrictions on the sale of military material are justified – though in Russia’s case, the French are still proceeding with their contracts. Francois Hollande’s defence industry is fine, but food makers in eastern Europe will be hurt hard, which makes an even greater mockery of this whole affair.

The current tit-for-tat will impoverish the world, rather than making it any more peaceful. It will undermine the liberal order, damage globalisation and fragment the world economy, increasing the chances of a wider breakdown in relations. Tyler Cowen, the George Mason University professor, wonders whether Putin is signalling to Russians that they need to get used to siege conditions. Whatever is happening here, it isn’t good news.

allister.heath@telegraph.co.uk

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