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What are the stakes for the global economy, the price of oil as war looms in Ukraine? All you need to know

Is Vladimir Putin planning an invasion of Ukraine, as evidenced by Russian forces massing on the country’s borders? Is he trying to force concessions on his neighbor and the West, or is he bluffing? Putin’s motives are unknown to anyone. His own foreign minister seemed to be kept in the dark. However, if violence is ready to break out, the world must be aware of the stakes.

However, if current media reports and Western claims are to be believed, Russia is likely to attack Ukraine simultaneously on several fronts, including the northeast, Donbass and Crimea, relying on its vast land, sea and air forces. Belarusian ground troops, backed by aircraft, could lead a rapid advance south to capture Kyiv, the Ukrainian capital, it seems. In principle, the surrounded Ukrainian army would be forced to surrender.

Chances of Russian invasion of Ukraine?

According to media reports, Putin may be planning a full-scale invasion, with Russian forces pushing deep into Ukraine in order to seize the capital Kyiv and overthrow the government. Or he could try to acquire more land in eastern Ukraine, laying the groundwork for a corridor linking Russia with Crimea, the Ukrainian peninsula that Putin seized in 2014. On the other hand , he could be looking for a minor conflict in which Russia “rescues” Kremlin-backed separatists in Donbass, Ukraine’s eastern territory, from alleged Ukrainian atrocities while simultaneously degrading Ukrainian military forces.

Putin has the initiative, so it is natural to conclude that he has the upper hand. In fact, he could make risky decisions. Large-scale conflict carries enormous dangers. However, a smaller battle that reduces these risks may not be enough to stop Ukraine’s westward movement. And if a small war fails to bring the government in Kiev to its knees, Putin could find himself embroiled in a larger conflict. A full-fledged Russian invasion would be the biggest European conflict since the 1940s. Hundreds of thousands of people could flee, creating a huge humanitarian and refugee crisis in Europe. Atrocities using chemical weapons and gross violations of human rights, such as those observed in Syria, cannot be ruled out. UK officials predict ‘horrendous’ suffering.

What’s at stake?

The main objective would be for the Ukrainian government in Kyiv to quickly capitulate and its elected leaders to be “neutralised”. Russia would target the presidential palace, parliament, ministries, media and Maidan Nezalezhnosti, the symbolic site of pro-democracy uprisings in Ukraine. The United States predicts that artillery, missile and bomb fire, as well as ground clashes, could kill 50,000 civilians, a figure that could be conservative if the conflict continues. The Russians would not only lose lives, especially in the event of a long-lasting insurgency, but they would also be responsible for the deaths of thousands of Ukrainians, other Slavs with whom many had family ties.

According to analysts, Russia could opt for a smaller and less risky operation in eastern Ukraine and the Donbass, declaring the independence of the pro-Moscow breakaway republics there, as it did in Georgia in 2008. It could also try to conquer the major ports. Mariupol on the Sea of ​​Azov and Odessa on the Black Sea, as well as the construction of a “land bridge” to Crimea. Yes, the Ukrainian armed forces will not be defeated easily, according to the media. Civilians can choose to join the fight. While the United States and the United Kingdom have not ruled out arming resistance fighters, as was the case during the Soviet occupation of Afghanistan. British ministers predict a protracted “quagmire” in which Russia will suffer major losses. In such a case, the Russian public could turn against Putin.

Impact of the invasion on Russia

Putin aspires to create an institutionally weak and dependent Ukraine, obedient to his orders and disconnected from the West, like Belarus. It is likely to install pro-Russian politicians in Kiev while suppressing opponents and rigging elections (as in Russia). Officials in the United States believe the Kremlin has compiled a list of public figures targeted for detention or killing. Following an invasion, unprecedented, seemingly groundbreaking US and European sanctions will be imposed. They include sanctions against Russian banks, companies, exports, loans and technology transfers, as well as diplomatic isolation and the targeting of Putin’s personal wealth and that of his oligarch friends. The Nord Stream 2 gas pipeline linking Russia to Germany has already been suspended indefinitely.

Ultra-rich Russians, including Putin himself, may be banned from spending and saving abroad. Ordinary Russians would face a declining standard of living, which has steadily declined over the past seven years. The subjugation of Ukraine would also have a strategic cost for Russia. Every country in its sphere of influence should rethink its security calculations. The defenses of NATO’s eastern members would be strengthened. Additionally, both Sweden and Finland are considering joining the alliance.

However, the economic repercussions of a conflict, at least in the short term, would be bearable for Putin. Its central bank has $600 billion in reserves, which should be enough to withstand the sanctions. But, as Putin understands better than anyone, political achievements in Ukraine could easily be overshadowed by failures at home, where his fate will ultimately be decided. Perhaps he will then begin with a less grandiose invasion. A small war, on the other hand, could lead to many deaths and be difficult to contain.

The penalties would be less severe, but they would still be unpleasant. Russia’s estrangement from the West would continue to accelerate. Moreover, if the Kyiv administration remained autonomous, it would only intensify its aspirations to join the West. Even Russian-speakers in eastern Ukraine no longer want closer relations with Moscow, thanks to Putin’s actions over the past eight years. The next few weeks will determine Putin’s decision, and the stakes should not be underestimated.

What effect would the invasion have on a global scale?

Russia has threatened to block the flow of piped gas to Europe. Even if there were no cuts, it was expected to spend $1 trillion on energy in 2022, more than double what it did in 2019. Prices for other goods would also be affected by war. Oil prices are already skyrocketing. Russia is the world’s largest wheat exporter, followed by Ukraine. Russia is a major supplier of metals, and even a minor upheaval could drive commodity prices higher in today’s tight markets.

Instability in the global economy and stock markets will also worsen. The cost of energy will continue to rise. Staple food supplies to African and Asian countries that depend on Ukraine, which will be the world’s fifth-largest wheat exporter by 2020, could be affected. China’s support for Putin could heighten tensions between the two countries. More defensive NATO deployments on Russia’s borders could increase the likelihood of a Europe-wide conflict.

A successful invasion of Ukraine would also set a destabilizing political precedent. The convention that governments do not redraw the borders of other countries by force of arms has long strengthened the world order. When Iraq captured Kuwait in 1990, it was expelled by an international coalition led by the United States. Putin, who wields nuclear weapons, has already got away with the annexation of Crimea; if he takes over more of Ukraine, it’s hard to see him suddenly deciding that it’s time to make peace with NATO.

More than likely, he would continue, aided by the newly established presence of Russian forces in Belarus, to investigate NATO’s collective security pact, which states that an attack on one member is an attack on all. Not only would he love the opportunity to weaken America’s ties with Europe, but he’s learned to rely on the demonization of an adversary abroad to justify his authoritarian control over his territory. . Other potential attackers would be aware of the situation. The chances of China attacking Taiwan would almost certainly increase. The Iranian and Syrian regimes would come to the conclusion that they can resort to violence with impunity. More contested borders in the world would be disputed if the force was right.

With so much at stake, the West should take three steps: deter, keep talking, and prepare. To discourage Putin, Western nations, especially Germany, should stop dithering, present a united front and state unequivocally that they are ready to pay the price for imposing sanctions on Russia, as well as help determined Ukrainians to oppose an occupying army.

Meanwhile, diplomats should keep talking, seek common ground on issues like arms control, and push for a face-saving concession that Putin and his captive media can spin as they please. Moreover, Europe should prepare for the next crisis by stating unequivocally that its energy transition would reduce its dependence on Russian gas by using storage, diversification and nuclear.

The gap between the interests of a country and those of its leader has rarely been so clear. Better, closer and peaceful relations with the West would benefit Russia. Such ties might be possible if Putin did not behave in such a deplorable way. Only benefits from conflict because he can tell the Russians that they are under attack and need a strongman to protect them. Even the most cunning strongman can make a mistake. If the invasion of Ukraine turns into a bloodbath or makes Russians poorer, angrier and more eager for change, that could be Putin’s undoing. Even if only for himself, he should declare victory over the fictitious threat Russia faces in Ukraine and then back down.

(With agency contributions)

Image: AP