The war in Ukraine has crossed the 100 days. Up to now there is not a clear winner. Russia is controlling some 20% of Ukrainian territory. Yet the war is not coming to an end. When the USA and the European Union offered help to Ukraine they are just prolonging the war. They should stop interfering in this war and find other effective ways; including powerful diplomacy to discourage any future invasion. We have already seen some of the devastating effects that the Ukraine crisis has caused. The war needs to come to an end. Otherwise, we will see some really damaging disruptions. The longer it lasts the more severe will be its impact on lives and livelihoods. As we can already see some major disruptions, it would be enlightening to identify them more precisely.
1. Pushing people of low-and-middle income into poverty.
We have seen how PRICES have been increasing rapidly well above the usual level. The price and availability of basic essentials, mainly food, is a major concern. The effects are worldwide. The low-income people and the poor are feeling the effects more acutely. They were already struggling to meet their needs and now with soaring prices they are more at risk. The United Nations’ Food and Agriculture Office has raised the alarm that food prices might rise by as much as an alarming 45% in 2022. As most of us spend more on essentials, many could fall into poverty and consequently enlarge the gap between rich and poor. Rising prices has eclipsed COVID-19 as the main worry throughout the world.
2. Fuel becoming more and more expensive.
When Europe boycotts Russian supply of gas and oil, we have seen what happens to prices: they reach record-level high. B.P and Shell have voluntarily cut back operations in Russia. This has resulted in oil and gas prices rising steadily for month since the beginning of the war. People around the world have been feeling the disastrous effects and will continue to feel the consequences for years to come. This is because OPEC countries are unwilling to increase their production with a view to ensure that prices remain high so as to increase their revenues and make up for the losses they suffered during the Covid era when prices were very low. Also the demand for oil and gas has quickly reached the pre-pandemic period whereas supply is not following. Cost of transportation, locally and internationally, will move higher.
3. A most probable Food Crisis.
We all know that Russia and Ukraine supply a third of the world’s ammonia and potassium, which are essential ingredients in fertilizer. Regarding wheat and barley, they supply 30% globally. Added to that, they also supply 65% of sunflower seed oil and 15% of corn. As soon as the war started, there was a 20% increase in the price of fertilizers and several food commodities. What does this mean: higher prices or shortages. While these two countries are at war, what will happen when we know that the farmers there have been inoperational? The challenges will certainly be severe.
4. Currency Depreciation.
This war has hit many currencies hard, including our Mauritian Rupee. In many countries, the national banks have had to intervene frequently to halt depreciation and in some cases appreciation, as in the case of the Swiss National Bank. Price increases of the magnitude we are witnessing will continually push many countries to be the victims of other ramifications of the war; including slowdown in production, diminished capacity for exports, galloping inflation, social unrest, poor morale of the population after the covid-19 depressive effects…and currency depreciation.
5. Other foreseeable disruptions.
As the war persists, many disruptions are gathering force and are reshaping industries, economies and democracies. We should all know by now that this war is devastating lives and livelihood, also it is disturbing markets. It will definitely leave behind a major humanitarian crisis: 5.6 million refugees; the highest in Europe since World War II, and 7.7 million having left their home to find shelter elsewhere in the country. The death toll is keeping on raising. The race for critical industrial materials, equipment and commodities will keep on intensifying. Supply chains are being reconfigured. The impacts on financial systems remain unpredictable. Spending on defense will keep rising as all nations are budgeting to spend more on defense. The war has undeniably increased economic volatility. Mainly because volatility in energy sources and prices is causing dramatic effects in many economies. Finally, one of the most important aftershocks is that Democracy will be in retreat. V-Dem; a Swedish research institute that measures democracy globally, has announced that democratic indicators have dropped over the past 10 years.
There are so many disruptions that are affecting and will affect each of us, our family, our business organisations and our country. That is why the war has to come to an end. Angus Roxburgh of The Guardian rightly remarked that “Further arming Ukraine will only destroy it. The West must act to end this war now”. Former U.S Secretary of state Henry.A. Kissinger is also of the opinion that the war should be stopped (in a declaration published by Washington Post). And the Ukrainian president himself is of the opinion that “diplomacy, not military victory can end Russia’s war on his country”-as reported by Ukrainian Presidential Press Service/Reuters in Aljazeera. And may be Russia has already realised all the bad possible outcomes of this war. That is why it is time we all show real efforts to stop this war.