Alberta faces little risk from Russian conflict
May 01, 2014
Russia’s current aggressions in Ukraine are raising concerns about potential trade sanctions. Canada, the United States, and some European countries have imposed diplomatic sanctions and restrictions against certain Russians from entering their countries. Larger trade sanctions could lead to a trade war.
Even so, Alberta is unlikely to suffer any economic consequences. Direct exports from Alberta to Russia climbed from an average of around $50 million per year in the early 1990s to more than $200 million today (see graph). Those figures sound large, but trade with Russia accounted for only 0.2 per cent of our $104 billion in sales abroad last year. Alberta’s exports to Ukraine totalled a mere $25 million.
Alberta’s exports to Russia last year included grading and excavating machinery ($59 million), other machinery and mechanical appliances ($28 million), specialized parts for machinery ($19 million) and—perhaps surprisingly—pet food and animal food preparations ($14 million).
If Russia’s major exports to the rest of the world are curtailed, Alberta would indirectly benefit. Russia is a competitor with Alberta on many similar commodities: oil, natural gas, grains and oilseeds. Limits on Russian supply would push prices higher. In fact, oil prices have already gone up. But political tensions and violence could derail the fragile global economy. The best Alberta can hope for is a peaceful resolution—higher commodity prices or not.
Todd Hirsch • Chief Economist