Friday, March 29th 2024

Ripple effect of Russia-Ukraine war costs global economy heavily



Jonathan Rao

With the Russia-Ukraine war enters into the third week, there are no signs of its end.  Despite three meetings between Russian and Ukrainian delegation, no substantial breakthrough has been made while the bloodshed and human displacement continues.  The effect of war has already shown up in the rising commodity prices globally, especially crude oil and wheat and there has been logistic disruptions. A mammoth human crisis leading to movement of about two million people from Ukraine is putting pressure on neighboring counties.

India, being the biggest democracy in the world is concerned about things at stake due to Russo-Ukraine war. It is close to both Russia and Ukraine and as a well wisher believes that any dispute between two sovereign nations should be solved through dialogue rather than war. The Prime Minister of India has held talks with the heads of the two warring countries as well as neighbouring countries like Hungary. The Indian response to the war and subsequent abstention from voting on the UN resolution could be seen as a responsible, neutral and human stand on the issue. India made a point before heads of warring countries to make a human corridor to allow civilians to move away from the war ravaged regions along with its own students in Ukraine.  India also sent a very strong message as a responsible nation by facilitating students from neighboring Pakistan and Nepal.

India as the fastest growing economy of the world is concerned about the economic implications of war on the global economy, especially Russia, Ukraine and Europe with whom India has deep ties.  The disruptions in global commodity supply chain, especially crude oil, gas and wheat would not auger well for the nascent global economic recovery post COVID-19. India believes that the two warring countries which share a common history and culture since long should open their windows for fruitful dialogue.

Unlike others, India has neither taken sides nor fallen into the blame game. Although many of the Western countries are blaming Russia for invasion on a sovereign nation, China in his statements blamed NATO for provoking the Russia- Ukraine war.  The blame game often reduces the odds to find a solution to a problem.  It is apparent that underneath the Russia-Ukraine was there is an unmistakable semblance of war for hegemony between the super powers refreshing the memory of cold war.

It is necessary to appreciate Russian concern about the presence of NATO forces in its backyard, but nothing can justify a war. India appreciates Russia’s concerns, but does not approved violent methods to resolve the issues. The efforts of the US and its NATO partners to contain a super power like Russia, howsoever indirectly, alleging that it is arrogant, autocratic and irresponsible power would only lead to vicious circle of arguments and counter-arguments and vitiate the situation.

Indications were given by China, Israel and Turkey for intermediating talks between the two warring countries.  But these countries do not elicit as much trust as mediators.  While China remains aligned with Russia, howsoever, tacitly, Turkey is known to have played on both sides – Russia and the Western allies.  For Israel, it will be very hard to prove that it is neutral between Russia and the US, as it has been an ally of the later for long, especially in the context of geo-politics in the Middle East.

The global economy, which was showing “the green shoots” of economic recovery after the recessionary impact of the Covid pandemic, has come under fresh threat. India is concerned that the ripple effects of a war of this proportion, if continues, can jeopardize the efforts of the world to realize the goals of sustainable development.

The raft of sanctions including exclusion from SWIFT imposed against Russia would not have economic implications for Russia alone, but on all the countries including those in the EU which have close ties with Russia.  Although, the sanctions would significantly disrupt Russia’s ability to receive payments for exports and imports and cripple cross-border financial transactions, the key trading partners of Russia, including European countries, would also face difficulties paying for the imports of Russian oil and gas.

The recent address of American President that people should stand ready to pay the cost for the cause of democracy, as the global commodity prices including crude oil and wheat have touched new highs, is not very reassuring towards solving the problem. The inflationary pressure would make life difficult for poor households globally.

Many of the Asian economies including India import a major part of their energy requirements and a big spike in crude prices would put immense pressure on their balance of payments. Especially, as the Indian economy is being treated by as an engine of global economic recovery post Covid, such a spike would bear heavily on growth and price stability. China also cannot afford to relish as a silent gainer from Russian challenge to the US and its allies in the game of hegemony. Due to its strategic location, Ukraine is very important for China as a gateway to Europe and the European Union, the war would affect supply of minerals and agricultural products both ways. Ukraine is an important hub within the BRI, which Kiev joined in 2017. The Chinese companies working in Ukraine including Beinkew Energy, Xinjiang communications Construction Group and Weldatlantic Group would also register disruption in operations.

*****

you may also like

It's a gross violation of human rights
  • Web Master
  • July 02, 2023
It's a gross violation of human rights
54 Killed in ethnic clashes
  • Web Master
  • May 07, 2023
54 Killed in ethnic clashes
What's next for Suu Kyi's NLD party?
  • Web Master
  • April 01, 2023
What's next for Suu Kyi's NLD party?