Uncertainty Hits U.S., Russian, Ukraine Markets
The political and military uncertainty of the Russian occupation of Crimea is wreaking havoc on the region's economy, evidenced by a 12 percent plunge in Russia's stock market and the skyrocketing price of oil—one of the country's chief exports—on Monday.
Ukraine's economy is also took a hit when the country stopped exporting two of its key commodities—wheat and corn—the prices of which both jumped, as well.
Ukraine is the world's sixth largest corn grower, and the country's in need of its crop may find supplies in the American Midwest.
"We have the corn and can fill the demand. And so, we're where preparation meets opportunity," said Tiffin corn farmer Steve Swenka.
While it is a potential boon for Iowa farmers, it could cut into the profits of others.
"I've never been so concerned in my life about this type of situation and the effect on the financial markets. I've never been so concerned," said University of Iowa associate professor of finance Art Durnev.
Durnev is Russian, has family and friends in both Ukraine and Russia, and studies the intersection of foreign affairs and finance. Chevron, British Petroleum, McDonald's and PepsiCo all saw stock prices drop because they all have stakes in Russia and Ukraine. Americans should not underestimate the size of the markets the countries control, Durnev said.
"We are facing this absolutely tremendous economic uncertainty in that part of the world," he said.
Farm equipment manufacturer John Deere has assembly plants in Russia and frequently sends employees back-and-forth between countries.
"And now their entire operation in Russia might be shut down just because of those trade sanction, so that cannot be good news for anyone," he said.
Durnev is hopeful international sanctions will help to deescalate Russian President Vladimir Putin's strong-arming in Crimea, but he is reserved in that outlook.
"I feel very sad, because I'm actually what they call the last Cold War generation, because I went through the breakdown of the Soviet Union," Durnev said.
Durnev is hopeful the short-term economic impact will be minimal. He does not think the United States or Europe would resort to military intervention.