What Led To War Between Ukraine And Russia & It’s Impact On Economy

History has taught us that war has no winner but only losers. The lost lives, homes, and money are all the consequences of this war. Over 5000 lives have been lost since the war has started. The war has also wiped out over 110 billion dollars off the wealth of Russian billionaires. Markets all over the world has witnessed a massive fall amid the selling out of fear. But what led to war between Ukraine and Russia & it’s impact on Economy?

The History : Soviet Union

Until 1991, Ukraine was part of the Soviet Union, A highly centralized union consisting of various republics in the Eurasian region. Soviet Union established itself as a super power. But on December 1st 1991 Ukraine declared itself independent which led to disband of the soviet union days later. Even today, Russian is still the native language of Ukraine with over 29% people speaking Russian.

The Beginning Of Tensions : Crimea Annexation

The tension between the two nations really heated up in 2014 when Vladrim Putin decided to formally take control of Crimea, A small peninsula in the black sea. The status of Crimea has always been disputed. It was given to Ukraine in 1954 by Soviet Union but ever since Ukraine’s independence from the Union it became Autonomous Republic of Crimea.  Crimea due to its very useful strategic location was an important base for Ukraine’s naval force & Russia’s Black Sea fleet.

In February 2014, The Russian troops entered Crimea to take control of the government buildings. A voting was done among the people of Crimea for reuniting with Russia. 90% voted for reuniting with Russia but this vote was boycotted, Ukraine and other countries kept control of Crimea until 18th march 2022.

Russia’s Fear : Ukraine’s alliance with European Union & NATO

Ukraine has been trying to form closer alliance with European Union and NATO. Russia sees this as a economic and strategic threat to its security.

NATO : North Atlantic Treaty Organisation – an alliance between 12 countries including US, France, and the UK. This military alliance was originally formed after the second world war to stop Russia’s expansion to Europe.

Russia is concerned that Western countries are forming an alliance on Russia’s borders to intrude their border. Ukraine’s inclusion in NATO would be a huge setback for Russia, Ukraine would be eligible for support from external members if attacked. Putin wants to re-establish control over the former soviet union countries. The demand from Russia is to stop Ukraine from joining NATO and become a part of Russian empire. As the war between Ukraine and Russia grows each day there is a huge loss of lives.

Impact on Global Economy

The countries that depend on Russia and Ukraine’s rich supply of wheat, nickel, energy and other staples will see a huge spike in price.

Let’s throw in a fact, 1 out of every 10 barrel of oil exported in the world is from Russia. Because of this the price of brent crude oil has risen past 100USD per barrel for the first time since 2014 due to the supply fear. Russia’s oil supply keeps the factories running in most part of the world.

While the Europe gets over 40% of natural gas and over 25% oil from Russia is likely to face a huge price rise.

Russia & Ukraine are the world's largest suppliers of wheat accounting for over 26%

More than half of the World's sunflower seeds and cottonseed oil comes from Russia & Ukraine combined.

There is also a likelihood of a shortage of aluminum, palladium, and nickel in the world. pic.twitter.com/w76JXA3Xo7

— Sanely rich (@SanelyRich) March 1, 2022

There is also a likelihood of shortage of aluminium, palladium and nickel in the world.

Palladium Shortage : Palladium is a metal used to create mobile phones, which can disrupt the global mobile phone market massively. A market already suffering from semi conductor chips shortage.

Nickel Shortage : A metal used to make electric car batteries that are in huge demand lately.

What does it mean for India?

• India’s export could suffer massively from this as Ukraine is India’s fifth largest export destination. While India is massively dependent on Ukraine for sunflower oil.
• India’s pharmaceutical export could take a big hit as Ukraine is third largest exporter of India’s pharma. Companies like, Dr. Reddy, Emcure and sun pharma have their offices in Ukraine.
• The biggest concern for India is the rise in crude oil prices which has crossed over 100USD/barrel which could have massive repercussion on India’s economy.As we finish looking at what led to war between Ukraine and Russia & it’s impact on Economy..