Economic Impact of Russia-Ukraine War

Russia and Ukraine, the two biggest countries of Europe, have gone into war against each other. Most European countries, and some American countries including US and Canada, have imposed heavy economic sanctions on Russia, while helping Ukraine to stand up in the war. The economic impact of the Russia-Ukraine war is expected to reach almost every country in the globe and at a large scale as much as the World Wars.

Russia and Ukraine control most of the Black Sea oil and natural gas reserves around the world. The Black Sea region contains one of the biggest oil reserves around the world. These oil reserves were the cause of Hitler invaded Soviet Union during the Second World War. Additionally, most agricultural products like wheat and edible sunflower oil are grown by these two countries. Economic sanctions against invading Russia means that cheap wheat and oil is no longer available to European and other NATO countries. They now have to import wheat and oil from other countries far across the globe, resulting in increasing logistics and importing costs. However, most countries, which have imposed economic sanctions against Russia, are ready to face consequences of a slowing economy.

India has sided with neither Ukraine, nor Russia in the war, nor has it imposed any economic sanctions against any of the two countries. But some products like sunflower oil, wheat, and fuel are likely to see inflation in upcoming days. Ukraine in times of food and oil shortages, simply can not afford to export anything. Its resources have been seriously depleted due to the war and is in urgent need of humanitarian aid from other countries. But in the long term, no country will be as severely hampered as Russia. Cutting off Russian banks from the main international payment Gateway, SWIFT, is expected to severely hamper the Russian economy. It may have an impact in India also, as financial transactions between Indian and Russian banks have abruptly come to a halt. Already, the Russian ruble has fallen to a historic low of 30% below its value before the war.

Russia has already been excluded from participating in FIFA, UEFA, Olympics, hockey, skating and other sports. Belarus, having aided Russian troops in invading Kyiv, also faces such exclusions in various sports fields. Google, Facebook, and other big IT companies have already blocked access to Russian users. In coming days, Russia may face bans in the fields of film, cultural activities, television broadcasts, use of global apps and IT services, and international co-operational, political, and economic integration summits.

Written by – Himadri Paul