President Joe Biden’s administration officials admit that sanctions against Russia inadvertently caused economic suffering to the United States, Bloomberg said.
Following the current war in Ukraine, the United States banned the import of Russian oil, banned American companies from doing business with Russian powers, and imposed sanctions on dozens of people.
At the time, the Biden administration predicted that the impact of these sanctions on the United States would be minimal–if that could ensure that they did not affect US food and energy security, Bloomberg said.
But rising energy and food costs in the US have become the two main drivers of inflation, which this month is at its highest level in 40 years.
According to Bloomberg, Treasury Secretary Janet Yellen privately believes that the price increase is partly the result of what the market called unexpected “self-sanctioning”, referring to the complete abandonment of Russia by US companies to minimize the risk of violating US regulations. Yellen said on June 7 that she was “wrong” in saying the inflationary pressures would end.
In an attempt to combat economic uncertainty, the Biden administration has been quietly encouraging some US agricultural and shipping companies to buy and ship more Russian fertilizers, Bloomberg said.
In late May, the Treasury Department also extended the license so that US companies could continue to do business with Russia until September 30—as long as it was not with sanctioned entities, so that the US could continue to receive taxes, fees, and import duties.
Some Biden administration officials also worry that sanctions against Russia are not stopping the war in Ukraine, and instead are exacerbating inflation, aggravating food insecurity and punishing ordinary Russians, Bloomberg said.
US officials were initially impressed that many large companies such as BP and McDonald’s have pulled out of Russia, but are now worried about domino effects such as supply chain bottlenecks, Bloomberg said.