Dr. Rick Franza is the Dean of the Hull College of Business who discusses a different, timely business topic each Monday in this column. This week, we take a look at how our national security policy has to involve our economic policy. The interview has been edited for clarity and impact.
ABD: When we think of national security, we generally think about the military. But what is the economy’s role in protecting us?
Rick: Our national security policy and our economic policy have to be intertwined. You’ve got to have an arsenal of different options. Some will be economic, some diplomatic, some military. And you have to exhibit a willingness to use them.
It’s not just limited to wartime. It involves tariffs, partnerships, and trade deals. Certain countries have certain natural resources and we’d like access to them, so you have to have some level of relationship with them. Economics plays a part in our relationship with other countries. It’s the essence of national security.
ABD: What is the value of economic sanctions against Russia at this time?
Rick: We’re attempting to manage our national security and that of our allies by impacting Russia economically. There’s less fear of escalation with economic sanctions. If we squeeze hard enough, they’ll either fold or back off, or it will escalate with an economic response.
ABD: What would an economic response from Russia look like?
Rick: They export some things to us that are necessary, but their economic strike might be more cyber-related. It’s probably already happening.
ABD: Won’t these economic sanctions, especially in cutting off oil imports, hurt our economy too?
Rick: We are self-inflicting some impact by limiting imports from Russia. The truth is that if you’re going to inflict these economic measures on another country, you’ll inflict some on yourself as well.
ABD: Now we’re talking about importing oil from other countries, including some run by dictators who are unfriendly toward the United States. Is that a good idea?
Rick: It’s a slippery slope. Anytime you become dependent on anything from another country, they have the option of cutting us off. Energy independence was important for us. Both sides of the political aisle act like oil is a 0-1 choice; either we’re oil-dependent or we’re not. But we have to be self-sufficient in oil and gradually make the transition to more energy-responsible options.
Of course, we’re never fully self-sufficient in things that come out of the land. In agricultural products, we have more than anyone else, but in other elements, like lithium, we’re dependent on other countries. But we need to be as independent in as many ways as we can.
ABD: Everyone is focused on Russia right now, but what about China?
Rick: The next logical point of concern is China. Their labor is cheaper there than anywhere else. If something happens there and they decide to cause problems, they could. Even if we’re not friends with them, there’s a mutual need – we need the cheaper products and they need our demand.
Economic sanctions can work in Russia because our economy is so much stronger than theirs. With China, it will be a different story.
ABD: What lessons can we learn from this?
Rick: The big lesson is that we can’t be isolationists in wartime or peacetime. It just doesn’t work because the world is interdependent. It’s much more nuanced. Everyone wants to make this out to be an easy decision, but it isn’t. There are a lot of moving parts. If somebody comes up with a simple solution, don’t buy it.