On Monday January 31st, Boeing released a statement saying that the U.S.-Russian tensions over Ukraine create an “adverse climate” for their business. Due to the ongoing conflict, the U.S. and Europe are threatening economic sanctions on Russia – sanctions that will disrupt Boeing’s supply chain for titanium and therefore, their ability to produce aircraft. Despite the economic consequences of sanctions, the U.S. government aims to prevent violence in Ukraine and they value a peaceful solution over a potential war.
Since December 2021, Russia has demanded a new security arrangement in Europe, one that would allow them to expand their sphere of influence. For example, Russia is asking that Ukraine never be admitted to NATO. The U.S. and Europe are refusing to give in to the demands; in response Russia lined up 100,000 troops at the Ukrainian border. Despite Russia denying any plan to invade, troops are a show of force and foreshadow future military conflict, which the U.S. is trying to prevent.
The White House released a statement by President Biden on Monday January 31st, emphasizing his desire to prevent military conflict in Eastern Europe. “If Russia is sincere about addressing our respective security concerns through dialogue, the United States and our Allies and partners will continue to engage in good faith,” Biden said. “If instead Russia chooses to walk away from diplomacy and attack Ukraine, Russia will bear the responsibility, and it will face swift and severe consequences.”
Biden prefers a diplomatic approach with open dialogue, rather than military action. In hopes of encouraging Russia to pull away their troops, the U.S. is threatening economic sanctions, a nonviolent act. However, Biden’s focus on a peaceful solution may hurt U.S. companies and global supply chains. Boeing is especially concerned about their 25-year-long partnership with VSMPO-AVISMA, a Russian company that supplies U.S. aircraft producers with titanium. Since Boeing is a global aerospace company, if their production is slowed due to supply chain troubles, the globe will feel the effects. Further, Boeing is not the only U.S. company that relies on Russian companies for aircraft supplies; the entire U.S. aircraft industry will be affected negatively if these economic sanctions are put in place.
Luckily, these companies are not yet in complete disaster mode. In 2014, the U.S. sanctioned Russia for annexing Crimea from Ukraine, which disrupted access to metals needed for aircraft. The aircraft industry realized the consequences of relying on one Russian company for supplies, and have since diversified their sourcing. The pandemic also decreased the rates at which aircraft were made, giving companies an opportunity to stockpile titanium supplies. According to Reuters, on Wednesday January 26th, Boeing Chief Executive David Calhoun said that the company is “protected for quite a while, but not forever.”
Until Wednesday February 2nd, there was no military action on behalf of the U.S. or Europe – they maintained a peaceful approach. In the weeks Russian troops were at the border, French President Emmanuel Macron and British Prime Minister Boris Johnson made diplomatic efforts to arrive at a resolution. Unfortunately, Russia did not budge. According to the New York Times, on Wednesday the U.S. deployed troops to the border in case Russia invades Ukraine. John F. Kirby, the U.S. Pentagon Press Secretary, commented on the deployment, emphasizing its defensive nature with the goal of protecting NATO allies, and reassuring it is not an offensive move.
As tension builds, aircraft companies are growing concerned about their business models. The choice between economy and peace in this situation is tough, something the U.S. is grappling with. If the U.S. sanctions Russia, the supply chain for titanium and other metals will be interrupted, creating a challenging business climate for the aircraft industry. However, the U.S. is thinking long-term towards the prevention of a violent escalation in Ukraine – therefore they are focusing on arriving at a peaceful, non-military solution.
