By Prof. Gulshan Sachdeva
After initial disruptions by the Ukraine war, the global economy is slowly adjusting. But as the war prolongs, uncertainty in energy markets and geopolitical fragmentations are likely to persist for years
Although the war in Ukraine is approaching its one-year anniversary, there are no clear winners. In a continuing stalemate, both sides are apparently preparing for major new offences. The United Nations has recorded about 19,000 civilian casualties in Ukraine in the last one year: about 7,200 killed and 11,800 injured.
Ukraine’s Devastation
About half of Ukraine’s energy infrastructure is destroyed. Around 40 percent of its housing buildings are badly damaged. Its overall economic decline in 2022 was more than 30 percent. There are wide variations in the number of military casualties. A few western estimates put the figure between 200,000 and 300,000 combined military casualties from both sides.
At one point, Russia was in control of about 25 percent of Ukrainian territory. Since then, Kyiv has been able to reclaim significant territory. Still, about 17 percent of its land is under Russian control. The Ukrainian counter offensive has been facilitated through huge western support.
The EU and its Member States have provided 67 billion euros ($72 billion) in military, financial and humanitarian support to Ukraine since the war began. Similarly, the United States has given nearly $50 billion in assistance, including substantial weapons and equipment. Now eleven countries, including the United States and Germany have agreed to send tanks to Ukraine.
Resilient EU, Russia
The war has clearly derailed expected post-pandemic robust recovery in the world economy. Due to energy, food and inflation crises, the global economy may not even touch three percent growth in 2023. After initial disruption, most major economies are stabilising. But any further escalation and geopolitical tensions may worsen the situation.
Luckily, the EU economy has been able to avoid the anticipated recession. Through various policy measures, It has escaped fourth quarter contraction. The growth in the EU 2022 is now estimated at 3.5 percent in 2022 and projected to expand by 0.8 percent in 2023 and 1.6 percent in 2024.
Despite unprecedented sanctions, Russia has also remained more resilient than western expectations. Earlier, many expected that the Russian economy would be down by 10 to 15 percent in 2022. The latest IMF projection indicates that last year, it was down only by 2 percent and expected to grow marginally in 2023. Russia was able to profit from high energy prices diverted its oil to Asian markets. The economic sanctions seem to have limited impact on President Putin’s war calculations so far.
Because of huge dependence on Russian fossil fuels, the EU spent most of 2022 in tackling its energy crisis. Through RePowerEU plan, it aims to reduce Russian dependence through diversification, energy savings and accelerating renewals. Although the EU has done well so far, readjustments are going to be costly. To shield consumers from rising energy prices, the European nations have provided 768 billion euros to its consumers. This included 265 billion euros by Germany and 103 billion euros by Britain.
Struggling Multilateralism, NATO Revival
The war has once again shown the ineffectiveness of the institutions of global governance. In 2022, the UN Security Council held fifty meetings on Ukraine. Because of direct involvement of a permanent member in the conflict, almost no agreement was possible. These frequent meetings also did not lead to any supportive diplomatic effort to resolve the crisis. Because of excessive focus on Ukraine, many other issues including the situation in Afghanistan did not get sufficient attention at global institutions.
The war has also strengthened the transatlantic alliance and American leadership. Possible NATO expansion towards Ukraine was perhaps one of the main reasons for the war. But the war has resulted in neutral Finland and Sweden also bidding for joining the organisation. NATO, which was experiencing brain death as per French President Emmanuel Macron, has again become the main pillar of European collective security.
India’s Chessboard Moves
As a result of the Ukraine war Indian foreign policy seems to have asserted its strategic autonomy. Apart from traditional Indian dependence on Russian weapons, Moscow has also become India’s top oil supplier. Although the current situation is dynamic, these changes may have implications not just for India-Russia ties but also for the Eurasian geopolitics.
Both Russia and the West would like to see India on their side, particularly when it is holding the G20 presidency. Beyond this, India’s role in the conflict is likely to be limited. Being big geopolitical players, both the United States and Russia have the capabilities to deal their matters directly. But so long as Russia and Ukraine continue to have maximalist negotiating positions; and the West continues with plans for a ‘strategic Russian defeat’, an early end of the conflict is unlikely.
Originally published: Money Control, February 22, 2023. https://www.moneycontrol.com/news/opinion/russia-ukraine-war-one-year-no-end-in-sight-key-actors-strategic-goals-in-play-10121651.html
Posted in SIS Blog with the authorization of the author.
Gulshan Sachdeva is Professor at the Centre for European Studies and Coordinator, Jean Monnet Centre of Excellence, Jawaharlal Nehru University.