Energy Strategy as a Tool of Biden’s Diplomacy – The Organization for World Peace

2022-06-25 19:19:27 By : Ms. Yvonne Lin

At the beginning of the week, Biden’s administration released an op-ed penned by the president addressing his strategy for tackling wartime inflation. Specific concerns Biden addressed included ruptured supply chains and the heightened price of goods, from food to gas. The president opened with his own summation of the issues: “The global economy faces serious challenges. Inflation is elevated, exacerbated by Vladimir Putin’s war in Ukraine. Energy markets are in turmoil. Supply chains that haven’t fully healed are causing shortages and price hikes.”

Global unrest is indeed a driver of inflation, price instability, and supply chain failures, but it also affords a convenient scrim for administrations struggling with the same results stemming from unruly foreign policy and domestic mismanagement. The voters’ attention can be effectively drawn away from the faulty domestic policy by dramatic scenes of global unrest like the ones unfolding in Ukraine. And as Brian Deese contends in an interview with the PBS Newshour, war is an economic proposition with economic consequences. Biden’s article asserts the same, locating consequences majorly in the area of energy supply.

Currently, the U.S. government has committed to intervene in Putin’s war machine, imposing energy sanctions that prevent Russia from fueling its efforts through sales of petroleum and gas. The United States has rallied allies to its cause, entreating European nations to follow suit. Brian Deese notes to the PBS Newshour that the United States seeks herein to “boost supply outside of Russia to try to bring a moderating impact on [fuel] prices…[and therefore] Biden is focused on diplomacy, working with oil-producing countries around the world to get other supply onto the market.” Such efforts are as political as they are economical: Biden endeavors to stabilize prices at home while looking for other energy sources as he continues to sanction Russia, the world’s largest petroleum exporter.

What Biden doesn’t address in his article for the Wall Street Journal is the fact that economic tampering has always been an instrument of diplomacy. Biden contends that “the most important thing we can do now to transition from rapid recovery to stable, steady growth is to bring inflation down.” Inflation is the byproduct of specific interventions by governments upon the global marketplace and a domestic consequence of doling out economic reprimands abroad. As Niall Ferguson reminds us in “The Ascent of Money,” inflation is an economic problem; hyperinflation is a political problem. Biden’s administration is going to lengths to reassure Americans that it has developed actionable plans to reduce inflation, which will mitigate the rising cost of goods at home. Meanwhile, the Financial Times reports Biden saying fuel prices “should not hinge on whether a dictator declares war,” directing the arrow of blame for rising prices away from domestic policy and back towards Russian aggressions.

In campaigning for his plan, Biden obfuscates the political source of the same inflation he commits to his public to address. Sanctioning Russian oil is a political as well as economic necessity, per the logic of Biden’s foreign policy agenda. “The price at the pump is elevated in large part because Russian oil, gas, and refining capacity are off the market,” Biden writes for the WSJ. Reasserting the punishment discourse NATO and the West have established to refer to Russia, “We can’t let up on our global effort to punish Mr. Putin for what he’s done,” Biden continues. “We must mitigate these effects for American consumers [which] is why I led the largest release from global oil reserves in history,” he concludes.

It has become par for the course that American political discourse, as its actual policy, assumes that U.S. citizens will accept the pressure of price hikes in the abstract interests of “punishing” competitors, aggressors, and threats to democracy abroad. Biden’s appeal seems designed to draw an equivalence between the interests of his public and his administration’s foreign policy agenda—”My plan would reduce the average family’s annual utility bills,” he writes, “and accelerate our transition from energy produced by autocrats.” Convincing the American public that their interests—and morals—are aligned with a U.S. foreign policy agenda is key to pushing Biden’s plan forward.

Releasing strategic oil reserves will facilitate this effort. Biden said to the Financial Times that the historic move “was designed to lower ‘painful’ petrol prices that were harming the finances of many households.” Financial Times analysis continued to note that “the move comes as political pressure builds on Biden, who has faced criticism and waning approval ratings over surging fuel prices.” The difficulty of balancing stable domestic policy with dynamic responsivity to crises abroad has been a major feature of Biden’s presidency. The release of oil reserves is no exception, and “the administration also called on U.S. oil producers to increase output,” reports the Financial Times. Sanctions abroad come packaged with incentives to domestic wells to increase production. However, “history shows that [Strategic Petroleum Reserve] releases are not particularly effective at controlling [oil] prices,” said Dan Pickering, founder of Pickering Energy Partners, to the Financial Times. “You’re not fixing a structural problem of supply and demand.” Stabilizing global energy markets is the endgame; releasing reserves is a stopgap measure for Biden’s administration, purchasing time for ongoing energy negotiations and also an extension on the patience of Biden’s base at home. Perhaps, also, the moment offers a chance to detach from “autocratic” energy producers and lay a foundation for true and lasting American energy independence.

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