FORTUNE -- It's the economies, stupid.
Russian President Vladimir Putin signed legislation officially annexing Crimea on Tuesday, in blatant disregard of threats of economic sanctions that President Barack Obama announced over the weekend. And while some have considered the events in Ukraine the result of geopolitical posturing (Arizona Senator John McCain, for instance, has blamed Russia's actions on the Obama administration's "disturbing lack of realism" on foreign policy.), economics and trade offer a much clearer view of the situation.
Put simply, Russia and the U.S. are free to antagonize each other because they have very little to lose economically from deteriorated relations. According to analysis from Carl Weinberg of High Frequency Economics, trade ties between the U.S. and Russia are minuscule:
U.S. goods exports to Russia totaled just $11 billion in 2013, equivalent to less than 0.1% of U.S. GDP. U.S. goods imports from Russia totaled $27 billion, just under 0.2% of U.S. GDP.
The direct financial linkages between the United States and Russia are also small. According to [the Treasury Department] Russians hold $139 billion in U.S. Treasury securities and virtually no U.S. corporate bonds or equities -- at least directly. Russian direct investment in the United States also appears minimal. In the other direction, U.S. residents hold $70 billion in long-term securities and $14 billion in direct investment in Russia.
Meanwhile, the European Union is far more reliant on Russia for its economic health, as much of the E.U.'s supply of natural gas comes from Russian gas fields. This may explain why the E.U. has been less forceful than the U.S. in its sanctions announced this weekend.
By contrast, take a look at the United States' economic relationship with China. Unlike Russia, China is a very lucrative source for U.S. exports -- it constitutes a $300 billion market for U.S. firms if you combine both exports and sales in China by firms with U.S. investment, according to the Congressional Research Service. Total trade between China and the U.S. reached more than half a trillion dollars in 2013, a significant chunk of both countries' total economic output.
These statistics also help explain why China -- which often sides with Russia on questions brought to the United Nations Security Council -- abstained from a vote to condemn Russia's actions in Eastern Europe.
Foreigners continued to buy American in May.
Overseas investors bought $45 billion worth of U.S. stocks and bonds, the government said Monday in its monthly Treasury International Capital report. That's up from $31 billion in April and above the $40 billion net purchase forecast by economists.
Among the big purchasers, as usual, were China, whose official stock of U.S. Treasury holdings rose by $7 billion to a globe-topping $1.16 trillion, and Japan, MOREColin Barr - Jul 18, 2011 9:36 AM ET
China's exports are resilient, even as its biggest overseas markets, including Europe, falter. But a faster appreciation of the yuan won't necessarily slow that down.
FORTUNE -- China's closely watched trade surplus swelled to $22.3 billion in June, hitting a seven-month high amid troubles in some of the country's biggest overseas markets. Chinese exports rose 17.9% compared with the same period a year ago even as high unemployment in the U.S. MORENin-Hai Tseng, Writer - Jul 12, 2011 12:51 PM ET
China's holdings of U.S. government debt inched lower for the fifth straight month.
But America's biggest foreign creditor continued to hold $1.14 trillion of Treasury securities through official channels as of March – 26% more than Japan, the second-biggest lender to the United States.
And with China struggling with its own economic ills, such as slowing growth and persistent inflation, the idea of China dumping its dollar holdings seems more remote than MOREColin Barr - May 16, 2011 9:49 AM ET
As Europe's debt crisis unravels, leaders in the most troubled parts of the region have found an unlikely savior: China. Why its investments in Spain, Greece and Portugal are so smart.
Just as billionaire investor Warren Buffett swooped into the rescue when General Electric (GE) and Goldman Sachs (GS) found themselves battered during the height of the financial crisis, Greece, Portugal and Spain have found a vote of confidence from China MORENin-Hai Tseng, Writer - Jan 7, 2011 10:50 AM ET
The Republicans now have a platform to voice their positions on economic policy, even if their bills never land on President Obama's desk. Here's how they'll likely approach the hotly debated issues.
With the midterm elections behind us, the stage is now set for the 2012 presidential election. Like Democrats, Republicans on the campaign trail spent much of the time touting job creation. But now that the GOP dominates the MORENin-Hai Tseng, Writer - Nov 3, 2010 12:08 PM ET
Members of both parties are using China as a scapegoat for America's economic woes. But China is a key trade partner for many of these states, which is going unnoticed in the sometimes xenophobic attack ads.
With midterm elections only days away, a spate of political ads has emerged that treats China like an economic plague. Though polls show that the Democrats risk losing control of the House of Representatives, it MORENin-Hai Tseng, Writer - Oct 29, 2010 12:38 PM ET
Foreign funds flooded into the United States at the fastest clip since March, as U.S. trading partners sought to prop up the tumbling dollar.
Net foreign purchases of U.S. long-term securities hit $137 billion in August, Treasury said. That approaches the sum purchased in the previous three months and is the highest level since March's $159 billion.
China added 2% to its official U.S. Treasury holdings during the month. China's MOREColin Barr - Oct 18, 2010 10:13 AM ET
Global tensions are rising, and the weapon of choice is currency.
Brazil's finance minister has spoken flatly of an "international currency war." U.S. Treasury Secretary Tim Geithner was less inflammatory but warned in a speech this week that countries acting to make their currencies cheaper could lead to a "damaging dynamic."
Everybody wants export powerhouse China to let the yuan rise, but Premier Wen Jiabao lashed out this week, saying a rapid increase could cause a destabilizing MOREColin Barr - Oct 8, 2010 10:44 AM ET
There are some big macroeconomic signs that a U.S. stock market crash could be coming, but it's important to keep an eye on how October surprises play out around the globe.
By Keith R. McCullough, contributor
Lately there seems to have been an almost perfect storm of economic and political warning signs -- both domestic and global -- that point me towards one conclusion: the stock market is due for a crash. MOREOct 4, 2010 12:56 PM ET
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