Economic & security fallouts of Russia’s invasion of Ukraine
Col (r) Ikram Ullah Khan
With Russia’s precipitous military adventure on Ukraine, the US and its allies have experienced a blitzkrieg sort of military offensive by Russia which has seriously undermined the US’ image as a super power. It has put the US and the West in a predicament as to what to do to save Ukraine without entering into a direct military conflict with Russia. It has posed an embarrassing situation for the US and its Western allies and they find themselves in a spin as to how to make an honourable exit out of it.
Although the US was expecting Russia’s invasion of Ukraine sometime during the twilight days of March or in the beginning of April, it didn’t visualize even in its wild dream that the invasion would come overnight and that they would be caught off guard. Russia has proved to the world that it has the capability to baffle the US and its allies and can take their intelligence agencies for a sleigh ride.
Ukraine, a tiny power and a bone of contention between Russia and the West badly sandwiched between the two, bears the brunt of Russian invasion with the US and its NATO allies standing aside as mere spectators not inclined to go beyond a certain point. The US and its allies are trapped between the hammer and the anvil as they have the grim realization that coming to Ukraine’s rescue with direct military might may lead to Third World War having the potential to turn into a nuclear holocaust which the world can ill afford. The West needs to realize that Putin has burnt his boats and seems prepared to take on the US and its allies with every kind of military might at his disposal including nuclear weapons which he has already put on high alert. Both sides need to see reason and regain wisdom to overcome the crisis which has the potential to engulf the entire globe.
The world’s response to Russia’s war on Ukraine has so far remained somewhat lukewarm and has come mainly in the shape of condemnation from the US and its Western allies besides a sweeping range of economic sanctions aimed at isolating Moscow and crippling it economically which they think would bring Russia to its knees and compel it to pull back its forces thus saving the neck of Ukraine. In a way, the US and the West have used economic sanctions as a weapon to cow Russia into ending the war. The West has also imposed biting export restrictions on key technologies that have now become contraband items to be exported to Russia. Besides, it has spurred an exodus of global firms from Russia which will further exacerbate Russia’s economic woes.
It merits a mention here that before resorting to economic sanctions against Russia, the US had convened UN Security Council meeting to pass a resolution against Russian invasion of Ukraine which was vetoed by Russia. After having failed to achieve a breakthrough in UN Security Council, the US called UN General Assembly meeting to condemn Russian aggression where 141 countries voted in favour of the resolution, 5 against and 35 countries including China, India and Pakistan abstained. Since General Assembly resolution has no binding effect, it was no more than a mere formality.
As for the economic fallouts from the Russian invasion of Ukraine, according to world’s leading economists, it will be stagflationary in that it will noticeably reduce global economic growth and steeply raise global inflation over the next year. The Initiative for Global Markets (IGM), a research centre at the University of Chicago Booth School of Business in the United States which has been regularly polling some of the world’s top economic experts in Europe and the US to elicit their views, when invited to express their views on the potential economic impact of Russia’s invasion of Ukraine on global economy expressed their views saying that sweeping economic sanctions imposed on Russia will lead to a deep economic recession with far-reaching consequences for European economies. They are of the view that protracted Russia-Ukraine conflict will have a crippling impact not only on European economy but global economies too.
Reacting to Western economic sanctions President Putin has termed them as “declaration of war” which the West should be ready to face the consequences. He is quoted as saying: “These sanctions that are being imposed are akin to a declaration of war but thank God it has not come to that.” He warned the US and its Western allies that any attempt to impose a no-fly zone in Ukraine would be tantamount to crossing the red line and entering the war with disastrous consequences for the world. President Putin is hell-bent on demilitarization and de-nazification of Ukraine so that it remains neutral and gives firm and guaranteed commitment to not join NATO in addition to putting an end to the extermination of Russian speaking pro-Russia Ukrainians living in the Eastern part of Ukraine which Russia accuses it of doing so at the behest of the Western powers. Moreover, it wants Ukraine to recognize Crimea as Russian territory. This is the minimum which Putin wants in order to go back to pre-24 February position.
The Russian invasion of Ukraine has forced people to leave the country in droves creating a mass exodus and spillover of refugees into neighbouring countries. However, Ukraine seems well-entrenched to fight back to preserve its sovereignty with the help of US and the West. How far it succeeds is hard to predict. But one thing is certain that the US and its Western allies are determined to bleed Russia to the last drop without crossing the red line. Russia has started feeling the heat of economic sanctions with the fallout of war making its first appearance in the form of a steep fall of Russian currency “ruble”. People are seen in a state of stampede to withdraw money from banks, and Russian stock market has nosedived. So the situation seems ominous for Russian economy without which it would be hard for Russia to continue with a winning war for long. Putin is walking a tightrope. Even a modicum of error on his part may help the West turn the tables on him.
Moreover, due to drastic cut in oil and gas supply, the already corona-battered global economy is staggering and feeling the catastrophic impact of skyrocketing prices of these two most important items of daily use that has made the life of both rich and poor alike hard to live.
Lastly, making a slight departure from the topic under discussion though it makes relevance when viewed from the perspective of inequitable treatment meted out to different countries by the US and its allies, it’s unfortunate to see the double standard exhibited by the US and the West when they hasten to condemn Russian aggression on Ukraine and take punitive measures in the shape of imposing stringent economic sanctions on Russia without wasting time but look the other way when it comes to Indian atrocities on the people of occupied Kashmir who are struggling for their right of self-determination.