Economic Dependency in Conflict

Economic Dependency in Conflict
Beatriz S.

In times of crisis, countries have become aware of the importance of dependence on each other for supplies of goods and energy. With pandemics, wars, and climate change, this dependency not only has negative impacts on the country exporting but also on the country importing as well.

           Seven months ago, Russia initiated its invasion of Ukraine. Countries, including the United States of America, Canada, and the European Union responded by putting economic sanctions against Russia, causing its economy to suffer. European countries got an important share of their gas from Russia, which made these sanctions painful on both sides. The effect is not noticeable in the summer, but as winter approaches, northern European countries have become more concerned about their gas supply. Countries such as Bosnia and Herzegovina, Austria, Germany, and Romania either highly or fully rely on imported gas from Russia.

Now, these countries will face significant “setbacks given trade, investment, and financial links” (Flanagan, Mark). Since the energy cost is higher, significant inflation impacted the countries’ economies. These setbacks can also impact security, as natural gas is mainly used for cooking and heating in houses and schools. In countries with much more aggressive and longer winters, it will be dangerous without gas to heat places where outside temperatures hit the negatives.

But the Russia and Ukraine war has caused collateral damage to the rest of the world, with many less developed countries being directly impacted by the lack of food imports from Ukraine. Ukraine is known for its extensive exports of wheat, maize, barley, and sunflower oil to other countries (The World’s Top Wheat Exporters in 2021). It is estimated that Ukraine exported around 40% of the world’s wheat, but these exports have been interrupted by the war, leaving some heavily dependent countries in desperate times (Ritchie, Hannah). When the war started, Ukraine had its winter crops planted so that it could export more goods once those crops were fully grown, but with the start of the war, those farms were either abandoned due to lack of safety or destroyed due to the bombings and missiles coming from the opposing side. Most of the shipments that Ukraine had ready to ship out, including one containing 16 million tons of maize and 13.5 million tons of wheat, could not be moved out due to Russia’s move to block the harbors (Mahapatra, Richard). Countries such as Egypt, Indonesia, and Bangladesh are the countries that buy the most wheat and maize, meaning that they have been hit directly by this situation.

           

Most less developed countries import from Ukraine because it is cheaper and has low shipping costs. Now that there is a high demand and low stock, prices are going up, destroying the economies of already vulnerable countries. But these are short-term consequences of the war, as specialists believe that next year, 2023, there will be “10 million tons to 43 million tons of global wheat shortage due to the restricted supply from Russia-Ukraine…” (Mahapatra, Richard).

 

In conclusion, although many countries flourished through economic integration, this has created dependencies that create import and strategic problems when there is conflict. If the lesson countries learn from this conflict is to stop trading, then that will set the world back and create poverty around the world. This might be the worse long-term consequence of this war.