As the world’s attention is riveted on the unfolding humanitarian disaster in Ukraine and all are wondering when it will end, innocent people are dying by the day.
The figures vary greatly depending on the source. According to Ukrainian government sources, 2,000 Ukrainian civilians, 1,500 Ukrainian fighters, and 498 fighters on the Russian side died during the first ten days of the war. The toll is four times that high according to US sources.
As the war continues and the casualties mount, the figures will continue to conflict. Like such statistical estimates everywhere, they cannot express the magnitude of the suffering and the irreparable losses to the victims’ families and the loved ones who survive. This is not to mention the millions of displaced persons and refugees who have fled the bombing and are now homeless and dependent on humanitarian relief.
To date, $2.6 billion are being collected towards this end thanks to urgent appeals from the UN secretary-general.
The Soviet leader Joseph Stalin once famously said that “a million deaths are a statistic, while a single death is a tragedy.” During World War II, when he was premier of the former Soviet Union, his country lost 27 million civilians and soldiers out of the 70 to 80 million lives that were lost in that war. The death toll came to three per cent of the world’s population at the time. The numbers were in the tens of millions; so, too, were the human tragedies that cannot be reduced to statistics.
The history of the two world wars in the last century also tells us that contagious diseases and epidemics followed both. The war in Ukraine has struck at a time when the world and the global economy has already been battered by a succession of crises since 2008 including a pandemic. No sooner did it surface from one wave than it reeled beneath the next.
Now we have a brutal war for which there is no excuse whatsoever, regardless of the explanations, as convincing or as absurd as they may be. This is the largest war in Europe since the end of World War II. It is the most dangerous in terms of its potential repercussions on what remains of a world order that was born from lessons gleaned from the scourge of war and the efforts to build on the benefits of peace.
Out of the worst misfortunes comes humour, says an Arabic proverb. Some have quipped that the Ukraine war, which has shifted humanity’s attention from one day to the next, should earn Russian President Vladimir Putin the Nobel Prize in Medicine for his achievement in definitively putting a stop to the Covid-19 pandemic, or at least to talking about it.
But before we get carried away, it is best to remember that Covid-19 and its variants remain a severe health hazard. It has infected around 450 million people since the World Health Organisation (WHO) classified it as a pandemic in March 2020. More than six million people have died from the disease, which continues to hover over people’s heads.
Especially in Africa and Asia, many countries do not have sufficient access to vaccines and treatments and still have to practise social-distancing and lockdowns.
Meanwhile, the economic impacts of the war in Ukraine have already been manifold.
First, there are soaring prices. Before the Ukraine crisis, 44 per cent of the developed economies and 71 per cent of the developing economies were experiencing over a five per cent rise in inflation rates. Now, with hikes in energy and food prices (especially wheat) and increased shipping and insurance costs, inflation will grow more acute, especially in the developing countries.
Second, there are declines in economic growth and employment rates. These will depend on how long the war lasts and its impact on Europe’s supply of Russian gas, which exceeds 50 per cent of the total energy consumption in some European countries. With further declines in economic growth, Europe might fall into a recession. Global growth currently stands at round 4.4 per cent, down from 5.9 per cent last year, and it could deteriorate further.
Third, there are potential incremental interest rate hikes that may not on their own mitigate, the inflation caused by the disruption on the production/supply side. Combined with the possibility of declining growth and the resurgence of fears of stagflation, these could lead to a revision of current monetary policies. In other words, the world’s major central banks will continue the current trend of raising interest rates but not at the same pace or by the same amounts as they had planned before the war. Policymakers will tend to prefer measures to stimulate the supply/production side than to curb the demand side
Fourth, international trade will see a resurgence in the demand to diversify sources of imports, restructure global supply lines, and limit dependence on basic commodities, especially energy in the light of the high geopolitical risks. This will accelerate investment in alternative energy sources as national security considerations add to cost/benefit incentives. In addition, some European countries may revise their policies regarding closing down nuclear power plants, as some countries did following the Fukushima disaster caused by the tsunami that struck Japan in 2011.
Fifth, rising inflation, declining growth, and the high costs of borrowing will increase the likelihood of defaults. In previous discussions in this column, I have spoken of the “fourth global debt wave.” The economic fallout from the Ukraine war will aggravate the already existing problems hampering debt management, such as deficiencies in the systems for settling and restructuring debt, especially given the high tensions and sharp polarisation triggered by the current war, as well as trade disputes between traditional and emergent economic powers.
Sixth, national budgets will be burdened with additional allocations for military and defence spending and cyber-security. Several European countries have already announced plans to increase defence spending to more than two per cent of GDP, which will certainly compound pressures on budgetary resources and priorities.
Seventh, the politicising and weaponising of financial tools and instruments will have consequences, regardless of whether or not one agrees with the declared intention of tightening the economic screws on Russia to end the war. The freeze on the Russian Central Bank’s cash reserves will make other countries rethink the policy of building a dollar reserve as a means to avert the risks of fluctuating balances of payments by keeping assets in dollars. This strategy, predicated on the belief that lower risk and high liquidity will compensate for low returns on dollar assets, has proved a disastrous mistake for Russia, and other countries will have taken heed.
Banning Russia from the Swift payments system, the second time this type of sanction has been used, may accelerate efforts on the part of some central banks to find an alternative system in order to avert some of the technological and political risks they have found in the Swift system.
History tells us that every war must have an end. But the human tragedies live on long after the war in question is consigned to the historical archives. As the Palestinian poet Mahmoud Darwish once wrote:
The war will end,
And the leaders will shake hands,
While that old woman waits for her dead son,
This young woman waits for her dear husband,
And those children wait for their heroic father.
I don’t know who sold the homeland,
But I’ve seen who paid the price.
* An Arabic version of this article appeared on Wednesday in Asharq Al-Awsat.
*A version of this article appears in print in the 10 March, 2022 edition of Al-Ahram Weekly.