On the 100th day of the Ukraine war, Russia controls one-fifth of Ukraine’s land. Its impact is being felt well beyond the theatre of war. Surging food and fuel prices are having a global impact, including in India. What then is the likely endgame?
The Economist weekly explains that the NATO allies are split into two camps. The “Peace” group seeks an early ceasefire and negotiations. Favouring this are Germany, Italy, proposing a four-track plan for a political settlement, and France, arguing that any deal must not humiliate Russian president Vladimir Putin. The other camp is the “Justice” group which wants to extract a cost from Russia. Countries like Poland which borders Russia support this tougher line as they fear that compromise would only embolden Putin to resume military operations after regrouping and rearming. Elder statesman Henry Kissinger and the New York Times, support the cease-fire and talk approach.
Russian political scientist Andrey Kortunov reasons in The Economist weekly that only three outcomes were possible, with variegated geopolitical impacts. One is the defeat of Russia implying that its forces were pushed back to their positions on February 24 when the Russian attack began. This could make the world unipolar again as the US then would have the upper hand even over China. The second scenario is a settlement resulting in both Russia and Ukraine accepting partial success. Finally, a drawn-out war with a shifting frontline and sporadic hostilities. The US and its NATO allies would keep pumping in arms to keep Ukrainian forces from collapsing. Russia will be bled with incremental loss of men and material. Russia is reportedly facing the replacement of the most modern equipment being hit by western sanctions and a consequent shortage of crucial components like chips.
So far, Russian oil revenues are keeping the economy afloat. Recently held OPEC Plus meeting on oil output assumes importance. A decision to increase output by fifty per cent above the normal increase softened the crude price temporarily. It was justified due to the lifting of Chinese Covid-19 lockdowns and the likelihood of a spurt in demand. In reality, it appears that the US President Joe Biden may have decided to end his boycott of Saudi Crown Prince Mohammed bin Salman. Some reports speculate him visiting Saudi Arabia on the eve of the six-nation Gulf Coordination Council (GCC) summit. That would enable him to meet other rulers, especially Mohammed bin Zayed, who has just assumed the presidency of the United Arab Emirates (UAE), after his brother’s demise. The two nations with surplus capacity to pump more oil are Saudi Arabia and UAE. In order to wean away European Union (EU) countries from Russian oil, alternative supply sources have to be made available.
Iran is another possible source of more oil and gas but the hurdle is the Iranian nuclear deal. President Donald Trump had wrecked the Joint Comprehensive Programme of Action (JCPOA), which was the acronym for the Iranian nuclear agreement. It cannot be revived without Russian consent, which is being withheld. On the other hand, the Iranians are unhappy that Russia is undercutting their gas sales to Afghanistan, Iraq, Pakistan, and Turkey by offering heavy discounts. Joseph Borrell, foreign policy head of the EU, claimed on May 13 tangible progress towards reviving the Vienna talks to finalise the nuclear deal. That may be difficult so long as the Ukraine war persists.
Another pressure point used by Russia is to dislocate the export of grains from Ukraine by blockading ports. In 2021, Ukraine exported 20 million tons of wheat to 82 nations. Despite calls from the United Nations to allow the movement of huge stocks of wheat in silos in Ukraine, Russia has insisted that first the sanctions against it must be withdrawn. This is simple blackmail in the face of likely grave food shortages in the developing world.
Consequently, the world faces food and fuel price escalation. The US, the world's biggest economy, fears recession. The last two times the US faced it was in 2007-09 and then the one caused by Covid in 2020. The US Federal Reserve Board is expected to raise interest rates by a steep 2.5 percentage points by the end of 2022. A balance would have to be maintained to ensure the enthusiasm to curb inflation does not kill growth. A shallow recession may arrive by the end of 2024.
The year 2024 would see parliamentary elections in India by mid-year and the US presidential election in November. Tough economic conditions can cause political upheavals. The return of Donald Trump as president would be the greatest irony as his “pal” Putin would have created the conditions for it through his war with Ukraine. In India, the BJP may get re-elected despite difficult economic conditions but may be tempted to deepen the communal divide even further. Thus, the impact of the Ukraine war would continue to be felt globally for quite some time to come.
(The writer is former secretary, Ministry of External Affairs)
