Winning: Ukraine War Global Disruptions

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May 4, 2022: The Russian invasion of Ukraine in February 2022 turned a local problem into a conflict with global impact. These were the result of economic disruption caused by the fighting inside Ukraine and unexpectedly severe economic sanctions imposed on Russia. Both nations were key components of the global food, energy and raw materials supply system.

In addition to the sanctions, Russia found that their armed forces were far less effective than they and other nations believed. This had different implications depending on whether you were an ally of Russia or a potential victim. The Russian military was revealed to be ridden with corruption, poor leadership and a government that underestimated how serious those known problems were. Ukraine was the first widespread and intensive heavy use of Russian weapons by Russian troops since the Soviet Union collapsed in 1991. Many of the Ukrainian weapons were similar or even identical to those used by Russia but Ukrainians were more motivated and better prepared for combat than the Russian invaders. Another embarrassing revelation was that the Western weapons Ukrainians used heavily, especially portable anti-tank and anti-aircraft systems, were far more effective than the Russians expected. Russia has long been a major arms exporter and existing and potential customers are revising their purchasing plans. Nations already equipped with a lot of Russian weapons and military gear also have to revise their military plans.

Russia is also a major exporter of fuel, food and raw materials. Russia is the major supplier for some raw materials. Customers can find other suppliers but often at great expense, especially when time is a factor. European nations have become increasingly dependent on Russian oil and natural gas. The Russians assured skeptical European customers that it was in everyone’s interest to honor these energy export deals because Russia had become dependent on tech, manufactured goods and specialized services supplied by their European energy and raw materials customers. The extent of the economic sanctions imposed by the West in response to the Ukraine invasion came as a surprise to Russia. As did the realization that their former European customers could afford to pay the high cost of switching suppliers. The smaller and weaker Russian economy was unable to shield the average Russian from the sanctions economic impact. The Russian government tried to shift the blame to the unreliable foreigners. That excuse was showing its age and more Russians are inclined to blame their own government, the same government that eventually outlawed any public expressions of doubt in the capabilities of government officials.

Foreign trade accounts for about 28 percent of Russian GDP and about half of it has been disrupted by the 2022 sanctions. China is Russia’s largest trading partner and, together with Belarus and a few other nations, continues to trade with Russia. The other half is currently halted by the sanctions with major problems for the Russian economy. The disrupted exports are a more manageable problem for the trading partners involved, which are mainly industrialized nations in the West.

All this degrades future Russian economic prospects. That has a negative impact on Russian allies. These foreign supporters now see their powerful patron as less powerful than believed and now feel desperate or simply afraid. And then there is China, which does not have allies, only trading partners and tribute states. Russia is now moving from trading partner to the lower tribute state status.

China has territorial claims on Russia on or near the Pacific coast. Japan has a dispute with Russia over the ownership of some Pacific Coast islands that Russia took at the end of World War II. Until recently Japan was rather timid in its requests to Russia about these islands. Once it became clear how poorly Russia was doing in Ukraine, Japan has become more open and aggressive about the island dispute and Russian efforts to keep Japanese fishing boats out of areas they have long worked in.

China has, since the 1990s modernized and expanded its armed forces to the point where on paper China has stronger ground, air and naval forces than Russia. Chinese forces have not been in combat since the 1970s and back then found the less numerous but more experienced and motivated Vietnamese surprisingly effective. Russia encountered a similar situation in Ukraine. A major difference between China and Russia is that the Chinese study and learn from their mistakes and the mistakes of others. Russia did not pay attention, especially to what was going on in Ukraine between 2014 and 2022. China has paid attention to how Ukraine prepared and how the West responded. This is important for China because of their efforts to take Taiwan and the South China Sea. Taiwan was also paying attention, especially since 2014 and has increased its preparations to defeat a Chinese attack. Massive sanctions on China would be another matter because China is now the largest trading nation in the world, followed by the U.S. and Germany. These three nations are the only ones with trade exceeding a trillion dollars. Russia was 19th before the sanctions and with the sanctions will be fortunate to remain in the top 30 nations. If China did face the degree of sanctions Russia received, the results would be catastrophic because while the Chinese economy is much larger than Russia’s, it is much more sensitive to major disruptions. While China is still a communist police state, there is greater risk of major internal unrest if the economy is mismanaged. Incurring heavy sanctions is seen as mismanagement.

 


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