American security experts expect Russian hackers to attack voting systems and stir up trouble in the final days before the midterm elections on Nov. 8. That would fit the pattern of aggressive Russian interference that marred the 2016 presidential election and has continued in various forms ever since.
But Russia is influencing the 2022 midterms more overtly, through its war in Ukraine and the corresponding disruptions to global food and energy markets. As Americans finalize their voting decisions, inflation has become a top concern, and for good reason: Prices are increasing at an average pace of 8.2% per year, considerably more than incomes are rising. A surge in the cost of staples such as food and rent leaves many Americans with no way to offset their declining purchasing power.
When voters struggle, they blame incumbents, which is why President Biden and his fellow Democrats face long odds of keeping control of Congress in November. Democrats appeared to be gaining momentum at the end of the summer, as gas prices fell, Congress passed popular legislation and many voters grew disgusted with the rightward lurch of the Supreme Court. But voters also seemed to hope inflation would dissipate quickly, which it hasn’t. Polls now suggest Republicans are solid favorites to win the House, with decent odds of taking the Senate, as well.
Inflation has no single cause, and some Biden critics want voters to think of the Democrats’ 2021 stimulus bill as the main trigger of higher prices. But Russian acts of aggression, both military and economic, are probably the biggest factors pushing food and energy prices higher.
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“Ranging from higher oil prices to a global food crisis all the way through to the imminent threat of energy security in Europe, the conflict has certainly taken its toll,” Moody’s Analytics economists wrote in a recent report on global commodity markets. “Higher oil and gas prices have dealt a huge blow to purchasing power in major developed nations such as the U.S. and Germany, pushing them to the brink of recession.”
Ukraine is thousands of miles from the United States, and America’s economy is far more protected from Russia’s war than European nations that need Russian energy, or developing nations with little financial cushion. But the United States also participates in global markets, and when prices go up anywhere, they typically go up everywhere.
'Maximum damage for the West'
The Russian war against Ukraine has pushed prices up in several ways. Ukraine is a major grain exporter, and Russia has interdicted some of that trade, causing shortages and higher prices. Strict sanctions imposed on Russia by the United States and Ukraine’s other allies have caused further shortages, even though those sanctions aim to exempt staples such as food.
Then there’s Russia’s oil and natural gas, which accounts for more than 10% of global production. Russia has used that leverage to starve Europe of desperately needed natural gas, and keep oil markets tight. Russian ally Saudi Arabia seems to be helping, by imposing a cut in oil production on the OPEC+ oil cartel. That has helped Russia earn a windfall in oil revenue, while consuming nations have to pay more.
This is not mere collateral damage, the unintended economic consequence of military action. Russian President Vladimir Putin actually practices what strategists call “hybrid war”—a military war on the battlefield coupled with nonmilitary efforts to harm anyone opposing him, and weaken their resolve.
“Russia is in a hybrid war with the collective West,” Tatiana Mitrova, a research fellow at Columbia University, said during an Oct. 12 energy forum. “In the West, people do not actually understand that they are at war with Russia. But one goal of this war is to wage maximum damage for the West.”
President Biden is an obvious target for Putin, given that the United States is the leading donor of military gear and other types of aid to Ukraine. Putin famously meddled in the 2016 presidential campaign on Donald Trump’s behalf not because Putin is a closet Republican, but because Trump’s opponent, Hillary Clinton, was a Russia hawk. Putin had reason to think Trump’s approach to Russia would be softer. Trump’s endorsement of Putin’s views on the very topic of meddling in foreign elections proved Putin to be right.
Can Putin harm Biden? That’s arguable. World energy markets were already tight before Russia invaded Ukraine on Feb. 24, because of a global economy rebounding from the COVID downturn and capacity cutbacks in the energy sector stemming from deep losses in 2020. Russia’s Ukraine invasion spooked markets and pushed oil prices up by about 35%. But Biden clapped back by releasing oil from the US reserve. Oil prices now are slightly lower than they were before Russia invaded. US gasoline prices have retreated from summer highs, but they’re still about 10% higher than before the invasion. So American voters may have some lingering anxiety that they take out on incumbent Democrats on Nov. 8.
Another coming shock is a surge in heat and electricity prices this winter. That has everything to do with Putin’s energy war and an acute shortage of gas in Europe, now that Russia has pulled the plug. US natural gas prices haven’t surged as much as they have elsewhere, but we’re not immune to those price hikes, either. Higher utility bills won’t hit with full force until after the election, however.
Energy is a key component in many manufactured and processed goods, including food. That’s one explanation for grocery costs that are up 13% during the last year. There’s also a global shortage of fertilizer, because Russia and Belarus (also subject to certain sanctions, as a Russia ally) produce key components. Fertilizer accounts for nearly 20% of a typical American farm’s operating costs, and near-record prices raise the retail price of food. So does the higher cost of energy for farm equipment and transportation.
Food inflation may be a bigger problem for Biden now than gasoline costs. Soaring gas prices during the spring directly correlated with a decline in Biden’s approval rating, which then recovered as gas prices fell. But the average family only spends about 3% of its budget on gas. Food is about 12% of total spending, or four times as much as gas. That 13% hike in food costs means many families are struggling to pay for something they can’t do without.
Biden’s approval rating has been around 43% since early September. For Democrats to keep control of Congress, Biden’s approval rating probably needs to be 50% or higher. It’s not going to get there by early November. That’s not all because of Putin, but he’s a factor: Inflation would be lower if there were no war in Ukraine, perhaps a lot lower. That’s true everywhere, but for the next couple of weeks, a key target of Putin’s hybrid war will be the American election system.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Twitter at @rickjnewman
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