People start wars for all sorts of reasons. Sometimes they are provoked into war; other times religion or the belief that their nation is superior and they have to prove their belief by force prevails.
All animals, especially the more evolved species, fight each other for resources, mates and territory - a war pretext that one particular human is, just now, exercising.
Russian state leader Vladimir Putin has so far cited their superiority (Ukraine isn't even a country!), religion and territory - the need for a buffer zone against NATO encroachment. The fourth most-often invoked cause of war is economic; one nation attacking another to claim its riches for their own.
Isn't it interesting how. so often, it's what's not said that matters the most?
Nobody could ever accuse Russia of being poor; the latest figures rank this country Number 6 in the world in purchasing power parity. However, other economic indicators like real GDP growth rate and industrial production growth rate put Russia far behind neighbouring Ukraine.
Also, long-running economic and political sanctions and Russia's battle against COVID hasn't helped their economy. But then again, fighting COVID hit virtually every nation's economy, so maybe we shouldn't use that metric as an indicator of overall economic health when trying to determine if Mr Putin launched his attack, at least in part, for economic reasons.
Indeed, it's impossible to divine exactly why he marched on Ukraine and, anyway, there are plenty of pundits far better qualified to expound on those reasons, currently doing just that. Superprof would rather look at the economic fallout of this nightmare operation.
|Spheres of economic destabilisation:|
|- economic impacts of migration|
| - economic impacts of invasion |
|- economic impacts of arms and supplies; logistics and transportation|
|- economic impacts of sanctions|
|- economic impacts of agricultural disruption|
|- economic impacts on the environment|
To be more precise, we'll look at the ones not being talked about much (yet).
Economic Impacts of Migration
In general terms, migration can be economically advantageous, both for the migrants and for the countries that welcome them. People who migrate bring with them a raft of skills and are imbued with a strong desire to earn their place in their new home. They are generally hardworking and law-abiding, and do their level best to not cause the welcoming country any undue costs.
On the contrary, they avidly wish to contribute their fair share, in taxes and by becoming consumers.
Refugees of war present a different migrant ethos. They may have had established careers and productive, settled lives. And then, they were suddenly stripped of every financial and societal advantage they may have had in their home country. Often, they are in shock and grieving everything they left behind. They don't want to move on or start over; they want to go back to the life they had.
Such is the case in Poland right now.
To date, the Polish people and government have accepted the bulk of Ukrainian displaced persons, and they did so with open arms. But that welcome comes with a high price tag. Everyone from the families taking the displaced into their homes and lives to the government budgeting to cover additional expenditures for the millions-strong influx.
Such expenditures include:
- funding for educational resources for Ukrainian children - facilities, teaching materials and teachers
- also, funding for Polish language lessons for adults
- funding for medical care and mental health services
- funding for emergency housing - dormitories for the displaced not taken in by private citizens
- funding for basic necessities: phone SIM cards, personal hygiene kits, public transportation and so on
- funds to incentivize businesses to provide work for displaced Ukrainians (and compensate them for doing so)
- also, child care funds for any displaced person who starts work
- allotments for Polish families offering temporary housing
A large part of the troubles Poland is facing was touched on above: people who don't want to move on. Plenty of other countries have signalled they would be just as generous and accommodating but this distraught population doesn't want to move any farther than they have to from their country's border.
That's certainly understandable but in the meantime, millions of economically unproductive people are stretching Poland's and other welcoming countries' economies uncomfortably tight.
War refugees present a twofold economic hit: the loss of their productivity and the cost of sustaining them until they can become productive again.
This War's Agricultural Impacts
Every war has, to one degree or another, impacted food production. You can't exactly harvest anything if entire fields have been blown up, can you? This war is different from this perspective, too.
Ukraine is known as the world's breadbasket. Its lush, dark, relatively level topography and the fact that 71% of its land is agricultural make this land ideal for growing lots of wheat and other crops to supply the world.
Russia knows this well. Not only from current economic reports but from the time when Ukraine was a part of the Soviet state. Then, it accounted for fully one quarter of Soviet agricultural output. Incidentally, Ukraine's industrial sector was also the vanguard of Soviet production, a fact that lends weight to Mr Putin's war being driven, at least in part, by economic envy.
If this were any other war, the commodities markets would barely ripple. Prosecuting this war in Ukraine, with its diverse agricultural profile and rich, fertile soil - to say nothing of farmers either fleeing or fighting instead of working their land, gives markets cause for instability. And we haven't even mentioned the crops being bombed or burned.
And then, there's scarcity.
Granted, Ukraine only supplies less than 7% of the world's wheat; by far greater is how much corn (9.64%) and seed oil (7.57) they export. Still, despite being in the single digits, these percentages of the global supply represent a significant portion, enough to cause price hikes all over the world.
And that, when post-COVID inflation is spiking everywhere.
Market speculators tremble at the thought of another Dust Bowl episode. The Dust Bowl was a prolonged period of dust storms that affected North America in tandem with the Great Depression. A combination of poor farming practices and severe drought permitted wind erosion, a condition that leaves unprotected soil vulnerable to strong winds.
The Dust Bowl's economic effects were felt for decades afterwards. No wonder markets are quaking.
The Economic Impact of Sanctions
World powers have levied some of the heaviest economic sanctions possible on Russia, with seemingly no effect. There's a good reason for that.
If sanctions will have any impact on Russia, it will be on the Russian people, not on those promoting the war. Ordinary Russian citizens are already contending with a deeply devalued rouble; now, prices for everything are climbing.
Sanctions are laden with unintended consequences, one of them being that the populations affected are generally those in the countries whose governments levy the sanctions, not the sanctioned governments' countries.
Sanctions are a rather complex and often ineffective political tool. You're invited to learn all about them from our companion article.
Environmental Costs' Economic Impact
On February 24, 2022, Vladimir Putin announced that he would 'denazify' Ukraine. Minutes after his 6AM proclamation, explosions were heard in several major Ukrainian cities, including Kyiv. The incursion progressed, more violently and destructively, from there.
Four days later, the Intergovernmental Panel on Climate Change (IPCC) released their direst report yet, laden with assertions of "major inevitable and irreversible climate changes" unless immediate action is taken. Meanwhile, in Australia, entire cities are flooded...
We've read about the human and economic tolls this war is taking but few outlets are talking about the environmental impact of this war or what it would cost to mitigate the damage it's causing to our already overstressed environment.
Those images of burning tanks and exploding buildings make for great news copy but who thinks about all the pollutants being launched into the atmosphere? And the dust particles from crumbling housing blocks and other buildings: who will absorb the medical costs for treating all those cases of lung disease? Who will clean those particles from the air?
The despair goes further. Ukraine's unique biodiversity, from their rich farmland to their protected wetlands and vast forests... All of the natural environmental assets that, in peacetime, could have had greatly contributed to reversing environmental damage are now under attack.
And we haven't even gotten to his threat of using chemical (and nuclear!) weapons yet.
World governments and industry leaders were already baulking at the cost and effort it would have taken to mitigate the worst of the expected climate emergency fallout, as it was reported on February 28th. Over the course of this war, those projected costs have sharply increased.
But by far the most pressing issue is how much this war is adding to the already critical levels of environmental damage. It's likely nobody has had any time to properly measure those effects, let alone turn them into dollars-and-cents data. Indeed, we could hardly measure those cumulative effects while they're still accumulating.
We rest our hopes on the speedy end to this atrocity and swift action by our leaders.
Now, learn everything you need to know about oligarchs: who they are and the role they play in politics and economics.
The platform that connects tutors and students