Russian President Vladimir Putin thought it was a conflict that would last for a few days, which has become a conflict for nearly four months with no end in sight, and a vague outcome. Russia’s fear of Ukraine possibly joining the North Atlantic Treaty Organization (NATO) triggered the war, which means the presence of NATO on its border. Interestingly, what is happening as a result of the war is the opposite. With Finland and Sweden officially breaking their long-standing neutrality and asking them to join NATO – and with access to accelerated access – Russian border worries are likely to worsen.
Given these developments, the Russian war on Ukraine is no longer a regional conflict, along with the multipolarity of the world order today.
Europe is commonly called the “Old Continent”. Its dominance among other continents was undeniable until the 19th century. The 20th century witnessed the strong growth of the United States (US), which became the dominant Western superpower, thanks to its thriving economy and military power. The super power of the East was the former Soviet Union (USSR), which opposed the West not only geographically but also theoretically, with controlled communist rule in the East and liberal democracies in the West.
When the USSR erupted in 1989, the fall of the Berlin Wall left the US as the only superpower and self-proclaimed defender of world peace, despite being the leader of the NATO alliance. But China’s strong and steady growth as an economic superpower (and dictator), coupled with the progressive increase in its military spending, has led the US to view this emerging nation of 1.4 billion people as the most dangerous rival in the future. .
Throughout the 21st century, China has continued to increase its world share (with 8-10% gross domestic product or GDP growth), but the US has struggled to see less than half its growth trajectory. The US, therefore, has been forced to rethink its role as the sole custodian of world peace, which for many years has suffered huge costs due to various regional conflicts (as in West Asia). Former President Donald Trump’s withdrawal from Afghanistan is considered a move in this direction.
Europe, historically, has relied on NATO for its security. Many European countries, thanks to decades of peace within the continent, have drastically reduced their military spending due to budgetary constraints.
Three major European countries explain this: Italy and France maintained an active and ready army equipped with aerial and naval fleets, with GDP allocation of 1.5% and 1.9%, respectively, in 2021. Germany has kept its military budget at 1.2% of its GDP over the past decade, down from 1.5% in the previous period (remember that it was completely disarmed after World War II). Moreover, Germany does not have an important role in NATO and is hesitant to supply arms to Ukraine because it is building a stable relationship with Russia, possibly relying on Russian gas. The fact that former German Chancellor Gerhard Schroeder sits on the board of some Russian energy companies, including the giant Rosneft, may have contributed to greater cooperation between the two countries.
At this time of conflict, the US probably wants to rely on the role of a strong economy, such as Germany, to support European military defense with NATO. However, given the possibility of cooperation between Russia and Germany and adding to that equation, the Russia-China vortex could create a strong impediment to competing economically and militarily with the US.
This is why the US is demanding that Germany (and to some extent, other European countries not fully on board) change its attitude toward war, gain greater relevance in NATO, and increase its military spending. The fact that Germany has discontinued certification to operate Nord Stream 2, a natural gas pipeline that runs from Russia to Germany through the Baltic Sea, to double the capacity of the existing pipeline indicates that the European nation is reconsidering. Standing over Ukraine. In addition, German Chancellor Olaf Scholz requested to double the annual military budget by $ 100 billion.
Other European countries have pledged to increase their military budget to 2% or more of their GDP. If such costs occur, in the coming years, NATO’s European bloc could significantly reduce its dependence on the US, which could then begin to focus more on the Indo-Pacific region.
Meanwhile, in the East, China, which has so far supported Russia, is aware of the potential implications for its economy, but has been slowing in recent years due to the tough measures taken by the Xi Jinping government. The epidemic is under control. The world’s second largest economy has seen a significant drop in retail sales and losses in factory production have been below market expectations. China’s National Bureau of Statistics reported that retail sales fell 11.1% in April 2022, a drop from the previous month.
Despite the epidemic, India’s GDP is expected to grow 8% or more in the current financial year, making it the fastest growing economy in the larger countries. If Russia-China cooperation continues, India could become a major reference point for the US, as the latter focuses on the Indo-Pacific. The US is proactively requesting India to stop buying oil from Russia, helping to fill that gap if imports end. Strong cooperation with the US has other benefits – as well as potential risks. India will need to reconsider its stance on Russia and China in the next few months based on how things are going.
Therefore, the Russia-Ukraine conflict is more than a regional conflict. The war is the result of Russia’s struggle to reassert its superpower status if the US-led West stands with its neighbor, Ukraine. The consequences have already been felt in the economies of many countries in different sectors. This adversely affects the growth of the global economy and can restructure the geopolitical landscape, create new blocks, strengthen certain alliances and change the role of certain nations in such alliances.
These changes are profound. The world will never return to a pre-war situation, and the effects of the war will be much deeper than they expected when Putin invades Ukraine on February 24, 2022.
Stefano Pelle is a former MD of Ferrero South Asia, Piaggio Vehicles (owner of Vespa Brand) and Perfetti Van Melle of South Asia, the Middle East and Africa. He is currently conducting his consulting practice in New Delhi and Dubai
The opinions expressed are personal