In what may be a testing-the-waters kind of move, the U.S. Allows Transactions for Russian Import Permits.

The U.S. Treasury Department issued a license allowing transactions that enable Americans to get licenses from Russian security services to import certain technology items into Russia.

Export-control experts said the license, issued Thursday by Treasury’s Office of Foreign Assets Control, was “limited in scope” and was issued to resolve “unintended consequences” of the sanctions imposed in December on the Federal Security Service, or FSB, following allegations of meddling in the U.S. presidential election. Despite a storm of tweets that the license was evidence of President Donald Trump easing U.S. sanctions on Russia, experts said this license was merely a technical cleanup.

Trade Tweets

Trade Consensus Opinions

The consensus opinion is this is no big deal. If this is all the further it goes, I would agree.

But why will it stop here?

It’s clear Trump wants better relations with Russia and so do many politicians in Europe who are increasingly aware the sanctions failed.

Spotlight on the Ruble

ruble-usd-2017-02-02

Sanction Failure Reality

The sanctions backfired as they nearly always do. Both the US and Russia lost, with Russia losing much more.

The main loser was neither Russia nor the US, but rather the EU.

Russia was a major purchaser of fruits and vegetables from Southern Europe, and those farmers suffered badly as fruit rotted and prices plunged. Germany which exported technology to Russia, also suffered.

Finally, the sanctions caused Russians to rally around Putin. His popularity rose at home.

The sooner the sanctions come off, the better the world will be. Crimea is not going to be a part of Ukraine ever again, and arguably should not have been given to Ukraine in the first place.

It was US intervention in the region that created this mess. Chalk up another pair of lessons not learned: on meddling and on sanctions.

Mike “Mish” Shedlock