The War Spares No One

“Nothing is more barbarous than war. Nothing is more cruel…Nothing is more pitiful than a nation being swept along by fools.” - Daisaku Ikeda

As the unreasonable invasion of Ukraine by Russia continues, the world helplessly watches the crises worsen by the day. The war in Ukraine has become a part of the already packed timeline of 21st century disruptions. With the global economy just recovering from the humanitarian catastrophe caused by the COVID-19 pandemic, the conflict between Russia and Ukraine has delivered a second shock to the world in two years. Lingering supply bottlenecks, decelerating economic recovery due to the pandemic, and diminishing economic support have flared up due to the spillovers of the war.

Since the global economy is highly interdependent, even changes in isolated economies can create and set off chain reactions. Both Ukraine and Russia are important sources of supply of various commodities for the world. Russia constitutes 25% of the world’s natural gas exports. It’s also a major source of metals and fertilizers. Ukraine, on the other hand, is a supplier of commodities like wheat, corn, barley, and sunflower oil.

Higher prices for goods and commodities like food and energy have pushed up inflation further. Within just a few days of the conflict in Ukraine, oil prices have soared globally. Gas prices have also skyrocketed. Commodities like nickel and aluminum, massively produced in Russia, have also gone north. In order to convey their disapproval of the war, the United States, Canada, and Britain have announced Russian oil bans. More than a hundred firms have suspended operations in Ukraine and many others like Ikea, Coca-Cola, Mcdonald’s, Amazon, and Netflix have already exited Russia due to the numerous sanctions, political pressure and public opinion. However, due to Germany’s heavy dependence on Moscow’s gas supplies, the EU has avoided sanctions on the energy sector of Russia.

Russia and Ukraine, the breadbaskets for the world, together account for 30 percent of the global wheat exports. The war has extended beyond Ukraine and has caused a hurricane of hunger and destroyed the global food system. The war has potentially destroyed Ukraine’s harvest season, disrupted infrastructure, stores, shops, and production. The shipments from the Black Sea, from where 90% of Ukraine’s grains are exported, have been stalled. Automotives, electronics, and other high-value goods bore a major brunt of the irregularities in the trade corridor between Europe and Asia.

The war has also caused the markets to become highly volatile as Moscow’s stock exchange remained closed for three weeks due to the war. With the Rouble collapsing and $300 billion of Russia’s foreign currency being frozen, western sanctions have completely paralysed the Russian banking and financial system. As warned by the IMF, World Bank and European Bank for Reconstruction and Development (EBRD) in a joint statement, the entire global economy is bearing the repurcussions in the form of trade disruptions, rising inflation, and slower growth.

In a nutshell, the impacts of the Ukraine-Russia war have unfolded in three areas. Firstly, higher prices for commodities like food and energy have pushed up inflation further. Secondly, neighboring economies are struggling with disrupted trade, supply chains, and remittances along with a surge in refugee flows. And thirdly, decreased business confidence and investor reluctance will weigh harshly on asset prices.

Three months into the war and thousands of lives have been lost, millions of livelihoods destroyed, and homes shattered. In the long term, the war may basically change the global, economic, and geopolitical order. As the energy trade shifts, payment networks fragment, countries have a re-look at their reserve currency holdings, and supply chains reconfigure, this may further lead to development of new economic zones especially for trade and technology.

As American futurist Dr. Hazel Henderson had offered a vision of a win-win world. To usher in such an age, people must have strength, they must grow, they must be filled with hope, and they must unite. This is the only way we can overcome this humanitarian crisis.