Latin America Now a Business Player in Eastern European Dispute

The trickledown effect of the Ukraine-Russian conflict may not have shown up fully in monthly economic growth statistics, but it seems to be paving the way for a shakeup, especially for trade. As the European Union and the United States continue to levy sanctions on Russia for its perceived (yet not proven) role in the growing unrest in Ukraine, several Latin American nations, at the protest of EU leaders, seem to be preparing to fill the trade void.

The EU publicly announced plans to meet with several South American nations, notably Latin powerhouses Brazil and Chile, in the hopes that such nations will not directly help Russia avoid the pain of the EU/US sanctions amid allegations of defiance and sovereign violations. The problem is that there is money to be made as a result of Russia becoming an increasingly sizable trading partner, so much so that Ecuador’s president bluntly noted that it doesn’t need US or EU permission to become more active in trade with Russia. Argentina, which has a long past of not allowing conflicts in Europe affect business decisions, has also noted a keen interest in the monetary opportunity and an unsurprising disinterest in worrying about how the US and EU leadership view the move.

Meanwhile, the growth outlook in Germany appears ready to sour at a rapid pace even as the latest round of statistics showed strength in what is undeniably Europe’s standard-bearing economy—and perhaps for good reason. The German economy depends heavily on exports, and Russia has been among its most important destinations for the goods its companies produce. Russia also has been providing nearly half of all energy/fuel Germany imports, which has the potential to become a massive issue once winter months arrive. It will be doubly apparent if Germany does not experience a second consecutive historically mild winter. If “as Germany goes, so goes Europe” is held with any regard, the conflict and international political gamesmanship could threaten what has been a long-awaited rebound in the European growth trajectory.

- Brian Shappell, CBA, CICP, NACM staff writer

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