As Russian missiles rain down relentlessly on Ukraine, the fiercest attack on Europe since the Second World War, the shocks are being felt all over the world. Political polemics apart, the key question that needs to be asked is whether the world can afford a full-blown war and what impact it could have on the people at large. Russia is one of the world’s biggest exporters of oil and gas and foodgrains. The war and the resultant western sanctions are bound to disrupt the economies around the world as societies are still struggling to emerge from the coronavirus pandemic. The human costs are immeasurably huge. The United Nations refugee agency said an estimated one lakh Ukrainians had fled their homes. Thousands were crossing into neighbouring countries, including Romania, Moldova, Poland and Hungary. The military invasion has brought a calamitous end to weeks of fruitless diplomatic efforts by Western leaders to avert war over Russian demands for a redrawing of post-Cold War security arrangements in Europe and preventing Ukraine’s entry into NATO. After denying for months any plan for invasion, Russian President Vladimir Putin has defied international opinion and launched the assault. At this point, nobody knows what his endgame is. He is an inscrutable leader who runs his country with an iron fist and views Ukraine as a puppet of the Western powers. Together with China, he wants to reset the global order and doesn’t mind flaunting his country’s military might.
These are terrifying times for the people of Ukraine and horrifying for the rest of the continent. Ukrainians have already suffered a gruelling eight-year war with Russian proxies. This is not a war that Russia”s population was prepared for either, as the invasion was rubber-stamped by a largely unrepresentative upper house of Parliament. The US, the EU and NATO have failed to deter Putin from launching the attack. Ukraine is now on the verge of becoming a theatre of conflict in a new Cold War. But, the world is now more integrated and interconnected, unlike in the past. As a result, the war on Ukraine will lead to grim consequences across the globe. Crude oil prices are likely to soar in the days ahead as Russia accounts for one in every 10 barrels of oil consumed globally and is the largest supplier of natural gas to Europe. Disruptions in these markets will have adverse consequences on the global economy, affecting both industries and households, dampening the pace of the recovery. For India, which imports around 80% of its crude oil requirement, the impact will be far more serious. The Economic Survey had projected growth for 2022-23 at 8-8.5% assuming crude oil prices to range between $70 and $75 per barrel. Soaring crude prices will increase the inflationary pressure.
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