Feb. 15, 2022, the world stood still when Russian tanks first crossed the border into Ukraine, beginning the Russo-Ukrainian war. As the rest of the world started wondering what would happen, businesses and governments began preparing for economic impacts.
The war has impacted international business in so many ways. Ukraine is known as the breadbasket of Europe. Ukraine and Russia accounted for 25% and 19% of the world’s corn and wheat shipments respectively. These nations’ conflict has caused food prices to soar and could result in a possible food crisis. The faraway Republic of the Congo relies on these shipments because its population consumes 67% of wheat imported from the Black Sea.
Russia is the third-largest energy producer in the world, and the crude oil and gas industry is their primary source of revenue. Russia’s primary consumers came from the Western powers, mainly Germany and France, accounting for 50% of the European Union’s (EU) oil imports. There was also the construction of two oil pipelines connecting Russia and the EU. With the war continuing, the EU has placed several sanctions on Russia’s exports, which have led to more demand than supply, causing an oil crisis in many countries and the inflation of prices in several others. The need to conserve oil will hold back several other industries from producing the full capability of their economies. Germany’s primary industries are machinery and automotive, thus impacting their requirements for business.
The significant implication of the war has been the sanctions and the consequences those sanctions have placed on the global economy. This has resulted in several vital relations being cut, and other ties began to form. This has internationalized businesses that used to be mostly internal to Europe. The rise of the BRICS (Brazil, Russia, India, China and South Africa), all identified as rising powers, has begun challenging the capacity of the G-7 (U.S.A, Canada, France, Germany, Italy, Japan and the UK). According to the International Monetary Fund, the BRICS have already begun to overtake the G-7 portion of the global economy, which could decrease the influence the G-7 may hold to shorten the war period.
With the sanctions in place from the allies of these countries, BRICS has created their deals. China and Russia have more than a billion-dollar deal regarding oil, and Russia has now become China’s second-largest exporter of oil to China. BRICS nations have also begun dropping the U.S. dollar as the common currency, favoring their money and reducing its value in the international business world.
War has a cost on everything: humanitarian, economic and spiritual. The war that no one believed ever thought would happen regrettably happened, and now we, as everyday people, must try to understand the shifting tides accompanying these changes. Though the war hasn’t affected us here at home too much, it is impacting our allies and friends we depend on for many things. War can create industry and grow an economy, but it can also hinder natural growth all at the cost of lives and materials.
