Sanctions on Russia, Ukraine put US companies, Boeing in a tough spot

What we’re learning from the crisis in Ukraine is that no country can truly be isolated in today’s global economy.

U.S. foreign policy is really an economic policy, and everyone is tied together. So these sanctions could actually hurt U.S. companies like Boeing.

We’ve reported about how Boeing gets a third of its titanium for the 787 from Russia, and how U.S. sanctions on Russia could impact the company’s supply chain, but the company is also getting pressure from the White House to skip a major economic forum in Russia in two weeks to avoid giving President Vladimir Putin any opportunities for propaganda.

“The optics of this look really awful, if we have big U.S. CEO’s going over there to a conference,” said CBS business analyst Jill Schlesinger.

The last thing the White House wants is to have pictures of President Putin smiling and hanging out with the heads of the top U.S. companies.

Many of the CEOs now say they will honor the White House’s request and skip the event. Others are waiting a little longer before deciding on their plans.

“I don’t think anyone looks at Vladimir Putin and thinks, ‘Oh this is a guy that I really want to do business with,'” said Schelesigner. “They are mostly holding their noses and doing business there.”

So U.S. companies are stuck between irritating the White House or standing up President Putin, a guy who takes notes and could make doing business in his country difficult for these companies.

The New York Times reports the CEO of Pepsi really struggled with this decision. The company made $5 billion in Russia last year. It doesn’t want to jeopardize its bottom line, but the CEO eventually decided to stay home.

Andrew Kutchins is a Russia expert for the Center for Strategic and International Studies.

“These sectoral sanctions could possibly be interpreted by Mr. Putin as an act of war,” he said. “I think we better be aware of our own vulnerabilities because we can be damn sure that he will be coming back at us very, very, very hard.”

Schlesigner said it’s clear that Russia needs the U.S. and its economic power more than the U.S. needs Russia, but this is a dangerous game to be playing. “It’s like mutually-assured financial and economic destruction,” she said.

In an era where the U.S. is buying military helicopters from Russia and the U.S. does $27 billion a year in business there, there will be some blowback from this situation.

That blowback could hurt U.S. companies, like Boeing, as they try to expand their operations in Russia.