War Economics – New global economic order under construction

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Ukraine, Europe and Russia

Russia’s invasion of Ukraine has led to a crisis that will have far fetched impact and believe it or not, the impact would be felt more in Russia than in Ukraine. Though Ukraine will not become a NATO or EU member, it will receive the aid and support that it needs to stand up once again, against Russia. This is because the best way to avoid a war with neighbours is to build a wall that separates them. Ukraine is a wall between Russia and Europe and to protect their interests, European Union would do everything that it can, without directly engaging in war with Russia. While a direct engagement will lead to a catastrophic world war with no end, Europe’s dependence on Russia for fuel and energy is another major reason. Sanctions levied by European Union cannot last in the long term as it is heavily dependent on Russia. However, this war has made Europe realise that they need to boost their defences to fight Russia and become economically independent before they test their defences. Meanwhile, Russia would be partially depleted by the end of this war – militarily as well as economically, as a result of its own doing. While the military and political damage are repairable, Russia was never economically powerful and is taking another harsh blow with this war. Yes, the dominance that Russia is establishing in the ‘Black Sea’ region would be helpful both strategically and economically, however, it will take a long time to reap its benefits.

The United States and China

“Energy can neither be created nor destroyed. It merely transfers from one form to another.” Money is no different from energy. It only changes form and exchanges hands. Russia is spending its defence and military to destroy Ukraine, and while doing so, the money that is invested in the same is now changing its form and exchanging hands. Who will earn from the destruction? The United States and China. War brings more business for the United States and leads the world in the military while for China it brings the global economy at its doorsteps. It is well-known that the United States is the largest exporter of weapons and its industry benefits the most from wars in Afghanistan, India and Pakistan, Russia-Ukraine, etc. While it may not be supplying the weapons directly, the fear that this war has installed will result in increased defence spending across the world – Germany has already announced, most others would join soon enough. However, Russia and the world are realising more than ever the need to move away from US dollars, and make their financial system less dependent, if not independent of the United States. As long as US dollars maintain their supremacy, the United States will remain the undisputed global superpower. China can challenge the United States, as it has already built its economy that sustains without the United States, in fact, it is increasingly making the world dependent on it. In these desperate times, China is the only option available to Russia to bring its economy back up and running, and thus, China is set to become the global mediator for trade, especially for Russia, aligning with its long-standing strategy of maintaining economic supremacy rather than political.

India and other developing nations

When a new economic order is being established, it is a chance for those who are deprived of it, to grab the opportunity and make the most of it. With Russia out of the equation, the oil-producing countries in the middle east would enjoy more power than before, until the sanctions are in place. The global disruption of supply chain and economic activities provides the opportunity for India and other developing nations to rise to the occasion and make the most of it. When the United States placed various restrictions on imports from China, many Indian industries benefitted from the same, as it received the opportunity to export goods that previously Chinese companies dominated. India needs to become the global manufacturing hub, and with its relatively young population, it seems possible, if the Government policy-making remains in the right direction. India is walking on a thin wall between the United States and Russia, and so far, it has balanced them well, benefitting from both the worlds.

Conclusions

The civil wars in Yemen, Syria and Libya, war initiated by the United States in Iraq and Afghanistan, the conflicts in Somalia, the Democratic Republic of Congo, and now eastern Ukraine – there’s one common feature of every major conflict of the twenty-first century – they are all proxy wars. The United States and Europe on one side, Russia and China on the other side, have already destroyed Korea, Vietnam, Afghanistan, Syria, and now Ukraine, in their proxy wars. It’s time that the world understands, that it is in their best interest, to stay diplomatic and solve issues bilaterally, rather than involving the superpowers and being destroyed in their proxy wars. The new proxy war in Ukraine is establishing a new economic order and as you keep tabs, don’t forget to re-evaluate your opportunities, in the new world.

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