Spillover: The global ramifications of the war in Ukraine

For more than 15 years, Russian President Vladimir Putin has been working to undermine the liberal international order, building an increasingly personalistic autocracy at home, while waging wars and subverting democracy and the rule of law internationally. All this, and weeks of preparation along Ukraine's border, culminated in the 24 February invasion that will have long-lasting and widespread ramifications for the global order.

The interdependence of global economies, and companies’ extended exposure that results, means that insulation from developments occurring on the other side of the globe is no longer a guarantee. As Russia’s invasion of Ukraine has unfolded, we have seen a wide range of knock-on effects for Russia, Ukraine, Europe and the rest of the world. From the closing of European and North American airspace, to the estimated 4 million refugees fleeing the conflict, the increasing isolation of Russia from the world economy, and the rises in food and fuel prices, it is clear that war has a price beyond the battlefield.

Now, while the world’s attention is rightly focused on the fighting on the streets of Kyiv and Putin’s intentions in eastern Europe, we look at some of the global political and economic ramifications of this conflict.

AFRICA

The newly consolidated Mali junta’s alignment with Russia is perhaps the most overt recent example of increased ties with Russia in Africa, but it is not the only one. Of the 35 countries that abstained in the UN vote to condemn Russia’s invasion of Ukraine, 17 were from Africa, including Angola, Mali, Mozambique, Namibia, Senegal, South Africa, Sudan, Uganda, Zimbabwe to name a few. In fact, Russia has been aggressively pursuing its strategic objectives in Africa for decades. In contrast to another key player on the continent, China, who has prioritised large (infrastructure) investments resulting in state-level influence, Russia has sought to leverage personal ties across asymmetrical engagements, prioritising relationships with Africa’s elites, propping up embattled incumbents or seeking to support new military stakeholders amid post-coup transitions. Available avenues to achieve this extend to covert security support, ‘weapons-for-resource’ deals, and perhaps even election interference, to gain favour and increased influence. For example, Moscow has propped up Faustin-Archange Touadéra in the Central African Republic, Lt. General Abdel Fattah Al Burhan in Sudan, and Colonel Assimi Goïta in Mali, leaders who are all increasingly unpopular domestically but can offer Russia attractive concessions in key economic sectors in return for military and intelligence support.

These Russian ties will not only be destabilising for citizens, resulting in the continuation of illegitimate governments, but bring with them associated corruption and reputational risks for commercial players. And, depending on the trajectory of the Ukraine conflict, being on the wrong side of history could have additional implications around sanctions and associated commercial disruptions in African countries and, by corollary, those operating there.

Meanwhile, the consequence on the price of food staples will be felt in African and Asian markets, including countries such as Sudan, Nigeria, Tanzania, Kenya, and South Africa, themselves vulnerable to outbreaks of unrest driven by socio-economic challenges.

MIDDLE EAST

Perhaps the most immediate concern of the Ukraine conflict in the Middle East will be that of wheat supplies with longer term food security implications. Russia accounts for almost 30% of the word’s exports of wheat and barley, a large part destined for Turkey and Egypt, and while some importers had already moved away from their reliance on Russian grain, countries such as Lebanon sourcing Ukrainian supply are also facing severe disruption. For countries like Egypt already confronting the unpopular challenge of reducing bread subsidies, higher wheat prices will force their hand and could prompt widespread protests. And, although some countries could diversify their supplies by trading with Western companies, transportation delays will cause a severe shortage that could aggravate food security issues.

Politically, many Middle Eastern states have had to walk a fine line regarding condemning the conflict. For countries like Egypt, Libya and even Saudi Arabia and the UAE, security and trade deals, including over oil supplies, have muted governments’ ability to overtly condemn Russia’s actions. While there have been no major political realignments in the region as yet, Middle East countries continue to hedge their bets between the West and Russia. But, in the long term, sustained sanctions against Russia will prove challenging for countries such as Egypt, Saudi Arabia, and the UAE, which have recently sought to diversifying their defence industries and increase collaboration with Russia. Meanwhile, the conflict will shine a new light on Russia’s role in both Syria and Libya, where elusive but necessary cooperation between the US and Russia is increasingly important to bringing stability to these regions. But, with such cooperation increasingly unlikely, these arenas may become only more divisive over time.

Russia is indeed embedded in Syria, but the country will also need to lean more on ties with Iran and Turkey to combat international economic isolation. The latter will prove to be an increasingly important stakeholder given Turkey’s influence over the Black Sea, and the cosying up of Russia to a new group of potential allies will bring with it new divisions in the global order.

AMERICAS

Canada and the US, both founding members of NATO, have actively pursued sanctions and other punitive measures against Russia. They have also sent significant shipments of military equipment and other aid to support Ukraine. However, both have made it clear that as NATO countries they will not engage Russia militarily, nor will they impose a no-fly zone over Ukraine – both steps would run a high risk of escalating the conflict. While North America is insulated to some extent from at least the more direct ramifications of the conflict, the effect of the sanctions and related measures will contribute to increased consumer uncertainty, a rise in food and oil prices, and potential supply chain issues across a range of sectors.

All the major economies of Latin America, including Brazil, Mexico, Argentina, Chile and Peru, voted to reprimand Russia’s invasion in the United Nations General Assembly, while five countries including Cuba and Nicaragua abstained. Venezuela chose not to cast a vote at all. The messages were somewhat more mixed below the surface, with both Mexico and Brazil equivocating over the imposition of sanctions, for example. Historic ties with Russia and the Soviet Union may explain some of Latin America’s positioning, but the importance of Russia as a source of key imports such as fertiliser and oil may hint at more pragmatic explanations for some Latin American countries’ hesitancy to condemn Russia’s actions outright.

ASIA-PACIFIC

Russia’s relationships with countries in the Asia-Pacific region are a mixed bag. Some countries such as Japan, South Korea and Australia have, unsurprisingly, condemned Russia’s aggression. Their historically close ties with the US, both in terms of security issues and trade, mean that any other response was never on the table. In contrast, Pakistani Prime Minister Imran Khan’s visit to Moscow on the first day of the invasion spoke volumes, and Pakistan chose to abstain from the UN vote on the invasion. India has faced pressure to condemn Russia’s actions, but it has equally close ties both with Russia and the West, and it has chosen to toe a careful line in not wanting to alienate either. China has also faced direct calls from Western leaders to reject Russia’s aggression but has so far refused to be drawn into taking a firm position either way, stressing the importance of sovereignty on the one hand, while pointing to the legitimacy of Russia’s security concerns on the other. With the increasing impact of sanctions on its economy, Russia will increasingly look to China to cushion the blow. Given the relatively small size of the Russian economy when compared to the EU and US – along with the prospect of Western sanctions imposed on those seen to be cooperating with Russia – China may decide against any deepening solidarity with the Russian cause.