JUDY WOODRUFF: As we have heard, oil prices have largely climbed since Russia's invasion of
Ukraine. That is one key part of the larger economic fallout from the war and from the
tough sanctions that the U.S. and many other countries have imposed on Russia in response.
Our economics correspondent, Paul Solman, looks at the global impact of these moves.
PAUL SOLMAN: Columbia University's Adam Tooze has chronicled the biggest economic
events in recent history, from Nazism to COVID, World War I to the crash of '08.
So, what does the crisis in Ukraine mean for the global economy?
ADAM TOOZE, Columbia University: What we're worrying about is energy,
oil and gas, and the other thing we're worrying about is food.
PAUL SOLMAN: Worrying about soaring prices, since Russia is a key supplier of oil and
gas to much of the world, and, together, Russia and Ukraine export so much of the world's wheat.
ADAM TOOZE: The shock of the war, the prospect of uncertainty
in markets, which, as far as energy were concerned, were already very tight,
and in the Black Sea, through which the grain has to travel,
the actual fact of the shooting war and ships being sunk has led to an interruption in supply.
And then speculators get hold of the story, and the market rises, if you like, anticipating
future shortage. And it's those two effects which are really going to be decisive, not just for the
rich countries of the world, but, in a sense, even more significant for low-income countries.
PAUL SOLMAN: How worried are you?
ADAM TOOZE: I'm seriously concerned about the countries
most disadvantaged, Ethiopia. If you're Egypt, if you're Tanzania, if you're Kenya, the
low-income countries with huge import bills, this is a very, very dangerous situation.
The very worst-case scenario, one we have to contemplate now, is that there will be a flat-
out interruption of supply, so-called stock-out, where countries run out of key fuels, like diesel,
which for low-income countries are vital not just for driving tractors, but for generators,
which are the backup power source when the electricity grid fails.
PAUL SOLMAN: How much of a problem to the world food supply is what's going on now?
ADAM TOOZE: The shock to the world food supply is much more significant than to the world's energy
supply, because Russia and Ukraine together add up to close to 30 percent of wheat supply,
very, very large percentage also of vegetable oils, which are crucial, say, in Indian cuisine.
Sunflower oil, 80 percent of that comes out of the Black Sea region. There is very serious
reason to be concerned about the ability of low-income countries to afford basic foodstuffs
through the autumn, through the fall and into the winter. And it's the Middle East, North Africa,
Sub-Saharan Africa, which is really going to be in the crosshairs here of these pressures.
PAUL SOLMAN: But we're America. What about us?
ADAM TOOZE: America should not, I think, exaggerate the scale of its difficulties.
The shock to the United States will be felt through the oil market, above all.
PAUL SOLMAN: The greater difficulties, says Tooze, are those of the Russian economy,
due to sanctions imposed by the U.S. and its allies.
ADAM TOOZE: The really big bazooka was the announcement of sanctions against
the Russian Central Bank. And this is like nothing we have ever seen before.
We have done sanctions against the Central Bank, the equivalent of the Fed in Russia, we have
done that against Iran. We have done that against Venezuela. But Russia is a far bigger proposition.
It's a G20 country in good standing. It has foreign exchange reserves of $500 billion, at
least, and these are being frozen, effectively, in New York and in the financial centers in Europe.
And that is totally indiscriminate. That is a bludgeoning attack on
the Russian financial system, on the Russian currency. The big question mark really is
whether or not we will move -- and this is a question for the Europeans -- to sanctioning,
blockading, boycotting Russia's export of oil and gas. And that is the open question so far.
PAUL SOLMAN: So far, the E.U., which relies on Russia for gas, oil and coal,
has not sanctioned Russian energy. But Russian oligarchs have been targeted.
ADAM TOOZE: This is popular. You saw the folks in Congress applauding
President Biden as he promised to go after their yachts and so on.
JOE BIDEN, President of the United States: I say
to the Russian oligarchs and the corrupt leaders, no more.
(CHEERING AND APPLAUSE)
ADAM TOOZE: I think we'd like to tell ourselves that the function of the
targeted sanctions on the oligarchs is to make a surgical strike on the inner circle around Putin
that will force, as it were, a change of mind on the part of the Kremlin.
But I think, if you honestly look at the power politics of Russia since the early 2000s,
since the incarceration of the energy baron Khodorkovsky in 2003, that's not really a very
convincing story about how politics is made. If those people had been in charge, Putin would never
have launched his invasion of the Ukraine. This is a policy that doesn't suit their interests.
PAUL SOLMAN: Or, of course, the interests of their mega-yachts.
But what about the rather larger interests of the global trading system?
Are we seeing a lasting reshaping of the world economy?
ADAM TOOZE: We are seeing a lasting reshaping of the world economy, but I think this
war is just part of a broader set of forces that are doing that reconfiguring of globalization.
More fundamental, really, is the antagonism between the United States and China.
What I think we are going to see is globalization in a new key, if you like,
a new mode of globalization, with a new sort of politics, and without some of the,
if you like, cultural aspirations, the promises of convergence and harmony.
All of that, I think, rings pretty hollow at this point.
I mean, the fact of the matter is that, as this war is going on, as Russia is
shelling Ukrainian cities, both Ukrainians and Europeans continue to consume its gas.
So those connections are profoundly resilient. But no one is any longer going to pretend that
that connection is going to create eternal peace between Russia and Western Europe.
PAUL SOLMAN: No, they're not.
For the "PBS NewsHour," Paul Solman.