Ukraine war and Pakistan

by Abdul Rehman

Our world is a complex system where the addition of a single new variable can lead to consequences, the breadth of which cannot be predicted by any person or algorithm. In this globalised world, any interstate war has a ripple effect far and wide. The Russian invasion of Ukraine has jolted global commodity and energy markets. In addition to oil prices approaching their highest levels since 2008, with Brent crude touching $124/bbl at one-point, global food prices have also risen to alarming levels. This needs foremost attention from policymakers as it can wreak havoc for ordinary people across the world, especially in South Asia.

The Russian invasion of Ukraine disrupted the supply-chain network on a grand scale which led to a global price hike of oil. Russia is the world’s largest exporter of oil to global markets and the second-largest crude oil exporter behind Saudi Arabia. Similarly, more than a quarter of the world’s wheat exports come from Russia and Ukraine. Sanctioning of Russian items by the western powers has deep impacts, especially on the developing economies of South Asia.

In her article ‘How the Ukraine War Will Impact Asian Order’, Manjari Chatterjee Miller argues that if the conflict prolongs it will economically, politically, and diplomatically, change the Asian order. Some of these changes have already taken place. The most obvious short-term impact is on the economy. Oil, wheat, and corn prices have skyrocketed. Moreover, more than 600 multinational companies (MNCs) have divested from Russia resulting in “de-globalisation,” proving that it is apparently possible to economically decouple as the West has done from Russia.

Brigitta Schuchert, writes in her article, “What Does the Ukraine Crisis Mean for Nuclear Norms?” Putin’s declaration of “severe consequences for those who may intervene” is unprecedented and challenged the established nuclear norms. Failure of a swift takeover of Ukraine has put Putin to the brink. Cornered and trapped Putin in a war of attrition is a dangerous force to reckon with. She further argues that this whole fiasco exposed the sheer fragility of the nuclear norms.

In the article, “Denasification, Disinformation, and how (Pseudo) Authoritarian States Justify War”, Sunaina Danziger argues that Putin’s false claims of “Denazification” can provide a window of opportunity to the authoritarian practices of the South Asian states, especially to the BJP in India. Modi regime is also on a similar track to suppress Indian Muslims and Kashmiris through disinformation and propaganda tools which Putin is using to justify its inhumane actions in Ukraine.

While pointing out the cost of the Russia-Ukraine crisis for Pakistan, Dr. Muhammad Abdul Kalam in his article “A Crises in the making”, noted, Pakistan has maintained limited commercial links with both Russia and Ukraine in the past. The value of commercial activity with Russia in 2021 was $711 million, comprising $537 million in Russian imports. Similarly, in 2021, Pakistan-Ukraine trade relations were valued at $800 million, with Pakistan acquiring $739 million in imports. As a result, the crisis would have a direct impact on Pakistan’s wheat imports, which come from Ukraine and accounted for 39% of the country’s total imported wheat in the previous year. However, Pakistan’s direct trade costs with Russia and Ukraine are projected to be outweighed by the crisis’s indirect costs in terms of global energy and commodity supply chains.

In an interview, Chief Economist at Nomura, Sonal Verma argued that although Russia and Ukraine contribute to such a small percentage of Asia’s overall commerce, the immediate economic impact will be low. However, the repercussions will be more indirect, with higher commodity prices and perhaps slower exports, especially if European economies, which are major trade partners, experience a harsher recession. Even though overall imports from Russia and Ukraine are minimal, there is a strong reliance on these two economies for food (cooking oil, grain), coal, fertilisers, industrial metals, and gases, which can cause supply chain disruptions in industries such as car and semiconductor manufacturing. Rising oil prices are negative terms of trade shock since most Asian economies outside of Japan are net oil importers.

It is now the ninth month of the conflict and still, the end of the conflict is nowhere to be seen. The prolonged nature of conflict has given a fatal blow to the global economy which is already in shackles due to the pandemic. Unexpectedly, Ukraine has shown great resilience and fought back well. On the other hand, Putin, who was expecting a blitzkrieg victory over the Ukrainians, is looking frustrated and cornered.

In this globalised world, a single change in a variable can bring a domino effect. The underdeveloped and developing states were the worst affected by such phenomena since they have the least resources and energy to accommodate themselves accordingly to abrupt changes in the international system. The Ukraine-Russia conflict has affected nearly every nuke and corner of the globe, but the scope of this article restricts the author to the potential impacts of the conflict on South Asia.

Starting from system-level analysis, the first impact of the conflict is the push toward deglobalisation. Economic sanctions, trade embargoes, and mercantilist policies of various states pushed the world toward protectionism and deglobalisation. It also deteriorated the nuclear norms. Putin’s threat of using nuclear arms against those who interrupted his offensive has lowered the nuclear threshold. This will have far and wide consequences. The use of propaganda and misinformation by Putin wrapped in the terminology of “Denazification”, is a purely authoritarian way of crushing minorities. BJP in India is also using the same technique to malign Indian Muslims and Kashmiris under the shadowy term of “Deradicalisation”. Injustice anywhere is a threat to justice everywhere. Unjust means of Putin provided the window of opportunity for Modi’s BJP to come hard on Indian Muslims and Kashmiris.

Coming to the state-level analysis, the Russia-Ukraine conflict has a very negative impact on Pakistan’s economy. Pakistan imported 39% of its wheat for domestic use from Ukraine last year. Since wheat is the basic ingredient of Pakistan’s food habits, this conflict has endangered Pakistan’s food security. It may also derail initiatives under consideration between Russia and Pakistan as part of the cooperation roadmap 2021-26. This will affect the modernisation of helicopters, the upgradation of railway networks, the maintenance of aircraft, support for metallurgy, and the power sector.

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