What happened to SANCTIONS AGAINST RUSSIA? Was that verbal diarrhea from the USA administration to placate and distract curious Americans? Mere propaganda and misinformation? Or, was the USA administration really trying to play hardball with Russia? If the latter, then today’s news suggests that those sanctions have quietly been removed or that the sanctions have been an outright failure. These headlines also suggest that trade BARRIERS, not “Free Trade”, is what makes a country prosperous.
It was announced today, both on the Bloomberg TV channel and on the Bloomberg website, that FORD is going to pump a lot of money into RUSSIA. Is FORD making an end run around the USA-imposed sanctions against Russia? Technically, no. By using its German arm to invest in Russia, (FORD Sollers), a case can be made that it is the German arm doing so and not really what we know as the American icon FORD. I know. I know: questionable reasoning.
It was reported in the article titled, “VW, Ford Open Engine Plants in Russia…”, by Andrey Lemeshko and Yuliya Fedorinova, [Bloomberg.com, September 4, 2015], that “Volkswagen AG and Ford Motor Co. are sticking with long-planned investments…on promises made [to Russia] in order to secure tax advantages and a foothold in the market. Ford’s Russian joint venture…$275 million on a plant in the Tatarstan region, opened on Sept. 3.” [Note: I added bold type and bracketed comment.]
Not only can we question the purpose and clout of USA-imposed sanctions against Russia, but the fact that FORD is investing there in order to be able to sell its car parts there against the spirit of the supposed sanctions is also a questionable action. But, we do know, and so does the USA Administration and every economist out there, that tariffs and import barriers do work to boost a nation’s prosperity. Since Russia has import barriers and tariffs, if FORD wants to prosper in Russia, and it apparently does, it will have to do a head fake around USA-imposed sanctions, if they are still in force, and the German subsidiary, FORD Stoller, may be the “vehicle” with which to do that.
Do import barriers work to helping to grow a domestic economy. Apparently so. It is working for Russia right now. And it worked for America in the past to pull North America out of the Great Depression of the 1930’s. Back then, restricted trade, NOT FREE TRADE, brought immense amounts of foreign capital to the continent to erect plants, buy equipment and hire millions of workers at great wages.
When America championed “Free Trade”, it dismantled those barriers and with that the gates were opened for corporations to move massive plants and investments to overseas locations for cheaper workers and lower regulatory costs. Russia must have been watching the pain that comes from the nonsense of “Free Trade”. Russia retained its import barriers. THOUSANDS of foreign companies have invested operations in Russia and are, thereby, helping Russia to prosper. One country in particular, Germany, has thousands of business subsidiaries located in Russia including VW and, now, FORD Stoller.
We are indeed witnessing the rise of the Russian economy. Who can blame an American icon like FORD for wanting a piece of the action? FORD’s job is to grow. Ford Stollers is merely a “vehicle” with which to achieve that growth.
I am a defender of the USA and I often argue that America has very smart people running the USA. Yet, the many failed international initiatives of this current and of previous administrations does make me scratch my head in wonderment.