The comparison is necessary because of the U.S. sanctions on Russia after its invasion of Ukraine.

Is the U.S. in a cold war with Russia?

Dr. Sanjai Bhagat is the provost professor of finance at the University of Colorado at Boulder's Leeds School of Business.

Congress denying Russia's most favored nation status, freezing the assets of the Russian Central Bank, and banning imports from Russia are all actions we don't like.

He said that we may be in the early stages of a Cold War or a cold conflict.

'A bigger version of what's going on with Iran'

Dr. David Bearce is an associate professor of political science and international affairs at the University of Colorado at Boulder.

After World War II, there isn't much of an economic relationship to stop, which is exactly what sanctions are.

During the Cold War, sanctions were applied to the USSR. We had export controls. We did not buy anything from the Soviet economy, but they were not making anything we wanted anyway.

The Cold War was not an economic stalemate. We hadn't stopped trading with the Soviet Union because we weren't trading with them much before the Cold War.

He says not now. Western Europe and the US both import oil from Russia, even though the U.S. doesn't have a major economic relationship with Russia.

The current economic situation is more dire than that of the Cold War era and the U.S. and European sanctions have the potential to damage Russia in ways that Cold War sanctions never did.

The danger goes both ways.

If gas prices are not going up in the U.S., then there is no way that U.S. sanctions and policy will affect Russia. The Russian people don't rise up if the oligarchs don't move against Putin.

The economic tensions between Russia and the Ukraine are similar to those of the U.S. and Iran.

The JCPOA, the Obama administration's Iranian nuclear deal, came about because of the exclusion of Iranian banks from SWIFT.

This is the reason why people talk about the exclusion from SWIFT as a nuclear option. It was clear that it had effects on Iran that were greater than the sanctions before it, and that was enough to bring Iran to the negotiating table to produce the JCPOA.

Iran and Russia are now like each other because they are both petrol economies. They are both petrol economies, but they are also being sanctioned by the West.

If you want to look for the best analogy for what is happening with Russia and Iran, it is a bigger version of what is happening with Iran.

A 'second Russian Revolution'?

The situation in Russia is being played out in three different ways.

  • The oligarchs feel pain as their yachts are confiscated and their bank accounts are frozen. They withdraw support from Putin, and Putin changes course in Ukraine.
  • The Russian people feel the economic pain being imposed on them because of Putin's invasion of Ukraine. "They say, 'To hell with this,' and you get a mass uprising in Moscow and St. Petersburg and other places. Let's call this the second Russian Revolution. And that takes out the Putin regime."
  • Neither scenario. "Sanctions ... do a lot of damage to the Russian economy. People suffer, but they don't produce a mass uprising. A little like Tiananmen Square, some people rise up, but the Russian military sends out tanks and puts it down. The oligarchs are not happy, but they flee to Monaco or Italy or wherever, and they feel a little bit less rich, but they don't have any way to put direct pressure on Putin. Therefore, Putin remains in power—and, presumably, the invasion and occupation of Ukraine remains in place."

The first and second options are not likely to happen in the next couple of years.

The Russian state is prepared to send out the tanks against their own people.

The third option is more likely for the next couple of years, with sanctions increasing in intensity and the Russian economy suffering.

There may be occasional protests in places like Moscow, but they don't mean regime change in Russia. The occupation of Ukraine will continue. The Russian military will have to fight a counterinsurgency, but they did that in Afghanistan for a decade.

After the Russians have had enough of being excluded from the West, their soccer team not being allowed to participate in the World Cup, and not being able to get iPhones, option two is more realistic in five to 10 years.

Produce your own oil or 'let them hold you hostage'

An easing of oil production regulations by the Biden administration is what Bhagat thinks should happen next.

He said that the US is blessed with a lot of oil and natural gas. They know how to get it out. We may have enough left over to help out some of our European allies who don't have to rely on Russian oil and Middle Eastern oil.

You can either buy oil and gas from Russia and let them hold you hostage for doing whatever they want you to do, or you can give them a pass on military adventures.

You don't.

There are always tradeoffs in life. It would be nice if we didn't have to import oil from Russia. Iran, Venezuela, Russia are some of the people you don't want to deal with.

Another harsh reality of this brave new world is that military spending will have to increase not via taxation, but perhaps by slowing the rate of spending increase on mandatory expenditures like Social Security and Medicare.

The current episode in Ukraine has shown the importance of a strong military, he said. We are living in a world that is dangerous. We want people to be more friendly, more responsible, and more peaceful. We would like that.

What we like and what the world is not the same thing.