Russian-Ukranian War and The Impact on Global Economy

INTRODUCTION

Background

            The beginning of the problems between Russia and Ukraine can be seen since Ukraine declared its independence in 1991. As a satellite state of Russia, Ukraine gets a lot of influence from oligarchs, politicians, and plutocrats from Russia. The corrupt and inefficient Ukrainian government led the Ukrainian people to carry out a revolution called the Orange Revolution held in Kiev. The Orange Revolution lasted from 2004 to 2005 and aimed to deny all forms of Russian political influence in Ukraine.

            Tensions between Russia and Ukraine have increased due to ethnic, religious, and linguistic differences in Ukrainian society. The recognition of the people of the provinces of Donetsk, Luhansk, and Crimea as part of the Russian state became the beginning of the conflict among the people of Ukraine. This was responded quickly by the Ukrainian government by making efforts to Ukrainize. These include forcing the use of the Ukrainian language in the Luhansk, Donetsk, and Crimea regions aimed at preventing Russian hegemony through cultural channels. 

This effort is supported by the creation of a new law that requires the use of the Ukrainian language in the public life of the Ukrainian people. The existence of discriminatory laws has led to an increase in separatism in Eastern Ukraine. They consider that Eastern Ukraine is a victim of discrimination from Ukrainization efforts. This is one of President Vladimir Putin's motivations for invading Ukraine, namely to protect ethnic Russians in Ukraine.

The opening of the Russia-Ukraine conflict was marked by the annexation of the Crimean Peninsula by Russia in 2014 followed by Russian involvement in separatist movements in Luhansk and Donetsk. Ukraine's response to this by asking to become part of NATO has created a new source of problems that prolong the Russia-Ukraine conflict. Various efforts to resolve the conflict have been made but an agreement between the two countries was still not established. Until in 2021, Ukraine under Zelensky's leadership asked the United States to join NATO. This led to the invasion carried out by Russia on February 24, 2022 until now.

Purpose

This resume aims to provide an overview and understanding of the impact of the war between Russia and Ukraine on the sustainability of the global economy. Through this resume, readers are expected to better understand the complexity of the economic impact of the Russia-Ukraine War and realize the importance of peace.

DISCUSSION

            The war between Russia and Ukraine has shocked global politics and international markets bringing a new challenge to the world: the global economic crisis. Russia and Ukraine, respectively, are important actors in international trade. On the one hand Russia is a supplier of oil and gas energy, on the other hand Ukraine is a supplier of wheat, food and fertilizer. As a major supplier of minerals and metals, a war between the two would certainly greatly disrupt the flow of global metal and mineral supplies. With the increase in prices of these goods, it will certainly add to global inflationary pressures which are still in the recovery stage due to the COVID-19 pandemic. 

This disruption is in the form of rising prices and supply shortages that will have an impact on countries in the world.

            Countries in Europe can be said to be direct victims of the Russia-Ukraine war. A recent report from the United Nations International Labour Organization (ILO) estimated that as of November 2022, the war has caused 2.4 million Ukrainians to lose their jobs and put unprecedented pressure on the country's social welfare system. This certainly affects the world food supply where Ukraine is one of the largest food suppliers in the world.

Europe is a major consumer and relies heavily on natural gas. Oil and gas gains recorded Brent North Sea crude oil, the international benchmark, reached a price of US$ 90 per barrel in February 2022. On March 7, 2022 the price jumped to US$ 139.13, close to a 14-year high and the price remains highly volatile.

 Gas prices have also skyrocketed, with European reference Dutch TTF surging to an all-time high of 345 euros on March 7, 2022. The price increase triggered inflation in every country in Europe and slowed the recovery of the previous disaster, the COVID-19 pandemic. In response, Europe took a number of energy rescues, one of which was to release emergency oil shells. Other measures such as vehicle speed restrictions, WFH, invitations to use bicycles to the public were also carried out to reduce energy use.

Although not as big as Europe, Asia has also been affected by the war between Russia and Ukraine. The impact can be seen from soaring commodity prices, supply chain disruptions, and inflation which will reduce people's purchasing power in the Asian region. The disruptions are due to rising oil and natural gas prices, which the Asian region is an energy importer.

In addition to energy problems, food is also a problem due to the Russia-Ukraine war. Since the outbreak of the war, the price of cereals and cooking oil has also increased. The FAO also said that there has been an increase in the number of malnourished people by 8 to 13 million people between this year and next.

CONCLUSION

            The conflict between Russia and Ukraine has had a broad and significant impact on the economy, especially the global supply chain. Trade disruptions and instability in energy markets are causing uncertainty in international supply chains. Economic aspects such as distribution, production, transportation, and investment have been affected.

            The existence of disruptions in transportation routes, infrastructure, and logistics flows causes delays in international distribution which is one of the causes of supply chain instability. In addition, the decrease in production capacity also results in a scarcity of goods which can make the price of goods soar higher.

            To deal with this situation, it is very important to find a peaceful solution so that economic stability both in conflict areas and the world can be maintained. In addition, adaptation to global economic conditions needs to be carried out to maintain national interests and world economic stability.

Artikel ini sebagai salah satu syarat Tugas II Mata Kuliah Teori Hubungan Internasional dengan Dosen Pengampu: Fadlan Muzakki, S IP., M.Phil., LLM.