The Russia-Ukraine war entered another phase after Vladimir Putin decided to step up the invasion and “demilitarize” the Donetsk and Luhansk (known collectively as Donbas), and “recognize” the independence of the “separatist republics”.
Running theories are that Putin is against the idea of Ukraine becoming part of the North Atlantic Treaty Organization (NATO) and is trying to prevent that from happening. Analysts also talk about a potential dream to recover the Soviet Empire. Exactly why he launched his invasion last week is unclear, but some analysts mention the impact that two years of lockdown might have had on the mental state of the Russian president.
According to a Kremlin statement after a phone call between French President Emmanuel Macron and his Russian counterpart Putin reiterated its condition for a potential resolution of the conflict: the “recognition of Russian sovereignty over Crimea, completion of the demilitarization of the country”, “denazification of the Ukrainian state and guarantee of its neutral status”. Right now, his most immediate plan is to encircle Kyiv and force it to surrender, sending a signal to the international community.
First and foremost, we are facing a human rights crisis and a humanitarian crisis. So far over one million people have fled Ukraine, mainly travelling to Hungary, Slovakia, Romania and Poland, and according to the United Nations High Commissioner for Refugees (UNHCR), one and a half million civilians are internally displaced within Ukraine.
But the conflict will also affect the global order and will have major consequences on the world’s economy, slowing the Covid-19 recovery.
On Thursday, financial markets reacted quickly to the news of the invasion and are still volatile. The price of oil rose (as of Wednesday, 3 March) to above $110 a barrel. The pressures on oil prices could have severe restrictions on global exports. The sanctions imposed by NATO will also impact Russia’s economic growth, but the will to isolate the country will have major repercussions on Europe, the United Kingdom and the United States. The war in Ukraine could mean lower profits from people in the West, causing turmoil in the banking sector all over the world.
Russia is a major producer of commodities mainly oil and natural gas. Since the decline of Europe’s domestic gas production (dropping 9% between the years 2014 and 2015, according to the European Commission), dependance on Russia has increased. According to Eurostat, in 2019, “almost two-thirds of the extra-EU’s crude oil imports came from Russia” (27%), and about 10% of the oil supply globally. Roberta Metsola, President of the European Parliament, has said Europe had to learn to stop its oil dependance on Russia. The surge in global prices is likely to damage living standards in some European countries.
German Chancellor Olaf Scholz announced the suspension of the Nord Stream 2 gas pipeline project, a move that will likely impact European citizens.
The consequences will be felt on the prices of raw materials and the banking system. Russia’s economic isolation after the exclusion of several banks from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) will harm Russian banks ‘ability to operate globally and will complicate the economy’s management.
The costs might hit your home, your travel (especially air travel), or car prices.
Russia also produces large quantities of metals, whileUkraine is the first producer of corn in the world. As of Tuesday night, wheat prices rose nearly 5%. As both Russia and Ukraine are global suppliers, prices are likely to further increase.
Some media outlets will not be found in Europe following a decision announced by Ursula Von Der Leyen a media regulation move that does not fall within the competence of the EU.
Another pressing question is whether the war might spill to other parts of Europe.