Significant economic and international security shifts are under way following Russia’s invasion of Ukraine.
ANU National Security College
While the outcome of Russia’s war on the people of Ukraine is unpredictable, the invasion has already generated three transformative shifts that will fundamentally alter our world well into the 21st century. These shifts include the decisive end of the post-Cold War ‘peace dividend’, the acceleration of economic deglobalisation, and the war’s destitution of both Russia and Ukraine.
Firstly, since the collapse of the Soviet Union and the end of the Cold War in the early 1990s, Western countries have capitalised on a so-called ‘peace dividend’. NATO members reduced the portion of GDP they spent on developing new military technologies and maintaining large forces in readiness for war.
The United States (US) and its allies were more selective about when and where they deployed military force and Western nations directed more national wealth to key social services, infrastructure and tax reductions.
The possibility of maintaining this peace dividend has well and truly ended with the war in Ukraine. Russia’s brazen invasion of a free European country has forced NATO members, long reluctant to increase military spending, to face the reality that they will need to bolster their conventional military forces and invest with the US in new strategic deterrence, such as nuclear and hypersonic weaponry.
The seemingly sudden way Russia lunged at Ukraine forced strategists to accept there may be little to no strategic warning of the aggression of states like Russia and China. Western military forces must be on a higher level of readiness and, most importantly for Australia, the decades-long acquisition timeframes for submarines, ships and space capabilities will have to be shortened.
“These changes threaten to make our world poorer, less connected and more prone to violence.”
Secondly, the West’s mobilisation of economic warfare against Russia has accelerated the shift to a much more de-globalised world.
The COVID-19 pandemic had already exposed the frailties of relying on global supply chains before economic sanctions on Russian businesses and individuals, and the exodus of foreign firms and investment from Russia, effectively severed the world’s 12th largest economy from the international market.
Russia may never recover economically, and China and other rivals of Western power will be looking to avoid such crippling Western economic statecraft. Countries including Britain, Germany and the US are now also seeking options to obtain energy independence from Russian fossil fuels and minerals.
Finally, regardless of which nation ‘wins’ the war, both Russia and Ukraine will emerge economically crippled and will take years to be rehabilitated.
When Western nations choose to ease measures, Russia’s economic isolation will not be undone overnight. Even though official sanctions can be lifted relatively quickly, the return of foreign businesses and investment to Russia may never reach previous levels.
Large portions of Ukraine’s population have been displaced, its major cities bombarded and its supporting infrastructure destroyed. As a significant source of Europe’s food supply, reconstructing Ukraine will be an enduring focus for European Union (EU) members for many years, and they may soon welcome Ukraine into the EU proper.
Depending on the character of the government following this war, many firms may decide the sovereign risk of doing business in Russia is too high. The result may be a poorer and dislocated Russia; financially and politically indebted to a handful of external clients such as China and India.
Adjusting to these shifts and resolving their more destabilising effects will be a preoccupation of the international community for decades. These changes threaten to make our world poorer, less connected and more prone to violence. But this future can be avoided if nations are willing to exercise constructive, collective leadership.
In the swift and unified international response to the invasion of Ukraine we glimpsed the capacity of many nations to act decisively to safeguard the principles of sovereignty and freedom upon which a better future can be realised.
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