Ukraine's global fault lines

Escalating war is raising uncertainty all round

The ratcheting up of tensions between Ukraine’s North Atlantic Treaty Organization (NATO) allies and Russia ahead of the first anniversary of Moscow’s “special military operation” in Ukraine has deepened geopolitical rivalries with no visibility of an end to this invasion. In January, NATO responded, after some internal differences, to Russian President Vladimir Putin’s move to mobilise for a spring offensive by sending to Ukraine advanced tanks, US-made Abrams and German-manufactured Leopard 2, armoured fighting vehicles, and long-range missiles. This is in addition to a range of materiel with which the US and Europe have been equipping Ukraine ever since the Russian annexation of the Crimea.

But the week before February 24 added several unknowns. US President Joe Biden’s conspicuous “secret” visit to Kyiv provoked an angry response from

Mr Putin. In his State of the Nation address the next day, he revoked Russian participation in the 2010 New Strategic Arms Reduction Treaty, signed between then US President Barack Obama and his Russian counterpart Dmitry Medvedev, and extended for five years in 2021. Given that Russia has agreed to abide by its restrictions on deployment under the treaty, the immediate practical effect of this repudiation could mean a suspension of the clause allowing each side to conduct up to 18 inspections a year of the other’s sites to ensure compliance. But with Russian ally Iran, which supplied Moscow with drones that took out Ukrainian power distribution systems, admitting it has enriched uranium beyond the level required for civilian use, the threat of nuclear war remains real. The significant new factor is an alteration in China’s stance from its initial ambivalence towards Russia’s invasion. A fallout of the shooting down of its surveillance balloons by the US, Beijing has hinted at arming Russia — a claim it officially denies — even as Chinese President Xi Jinping’s top foreign policy advisor Wang Yi made a high-profile visit following his attendance at the Munich security conference. The prospect of collateral tensions in Taiwan remains a real possibility, as a result.

The immediate consequence of this turmoil is scarcely benign. Barring the US, which is benefiting from oil exports and an expansion of its military-industrial complex, no other significant player has gained. Russia’s economy contracted 2.1 per cent in calendar 2022 and expert estimates suggest it could shrink 0.3 per cent in 2023. Ukraine’s economy, in a shambles pre-invasion, has shrunk 30 per cent. The EU is looking at anaemic growth of 3 per cent in 2022 and 0.5 per cent in 2023. Though India has successfully walked the tightrope between Russia and the US, gaining from cheaper oil imports from Russia, which is now among the country’s top suppliers, the prospect of escalation cannot be viewed with complacency. Rising gas prices, as Europe buys larger quantities from the same Gulf sources that India taps, will impact India’s target of making this “clean” fuel 15 per cent of the energy mix from 6 per cent now. Exports, too, are likely to take a hit if the EU, India’s second-largest trading partner, slips into recession under prolonged tensions. Finally, supplies of defence spares from Russia, on which India is heavily dependent, may also fall by the wayside in the melee. The year ahead, therefore, could be tougher than anyone bargained for.