THE IMPACT OF THE RUSSIAN-UKRAINE WAR ON INTERNATIONAL TRADE

CHAPTER ONE

INTRODUCTION

1.1 Background of the study

Following weeks of international concern about Russian President Vladimir Putin’s intentions toward Ukrainian President, Russian forces have invaded Ukraine from multiple directions (Poroshenko, 2022). Russia recently recognized the independence of the entire Donbas region in eastern Ukraine, implying at first that Russia’s ambitions were limited to the independence of Poroshenko’s eastern provinces (2022). Russia, on the other hand, responded by sending troops into Ukraine from multiple directions and launching a full-fledged invasion of the country. Russian threats to Ukrainian sovereignty, according to Kriesberg, are nothing new (2022). Russia has attempted to sway Ukraine’s internal and diplomatic policies since the country’s inception. Russia opposes stronger ties between Ukraine and the European Union, as well as Ukraine joining NATO outright, according to Kriesberg (2022). Ukraine’s Kriesberg’s ten-year quest for closer ties with the EU came to an end in 2014, when Russia invaded Crimea (2022). Russia also supported separatist movements in the eastern provinces of Donetsk and Luhansk, resulting in nearly a third of the territory declaring independence from Ukraine. Poroshenko, greetings (2022). With the assistance of France and Germany, the separatist factions signed the Minsk Protocol shortly after its formation in order to restore peace in the region and reintegrate the breakaway republics into Ukraine in exchange for local elections and decentralization. Poroshenko, greetings (2022). The conditions of the Minsk Protocol were never met. Putin’s goals are clear: he wants to take over Ukraine and keep it under Russian control indefinitely, preventing it from strengthening economic ties with Russia. joining the EU or NATO Poroshenko, (2022). (2022). Ukraine will pay a high humanitarian and economic price for Russia’s aggression. The immediate international response has been to tighten existing sanctions by restricting Russian individuals and businesses’ ability to engage in commercial transactions with the rest of the world. Russia has faced international sanctions since its invasion of Crimea in 2014. Sanctions imposed by the United States, the European Union, and other countries have resulted in travel bans, asset freezes, and restrictions on imports and exports in various industries. Dreger,(2021). Russian banks and several oil and gas companies have been severely restricted from accessing US and other foreign financial markets. The United States has attempted to penalize construction firms and even warships.

in recent years, which has hampered the construction of the two new pipelines Russia is building to transport gas to Europe Mamonov (2022).

The European Union gets its gas from a variety of places, with pipeline gas from Russia, Norway, and the Netherlands meeting the vast majority of the continent’s needs. There are also pipeline supplies from North Africa and the ability to obtain liquefied natural gas from the global market. Due to geographical proximity and an extensive pipeline network, the EU has become overly reliant on Russian supplies, with Russia accounting for more than a third of EU gas consumption Mamonov (2022). The EU also imports roughly a quarter of its oil from Russia, relying once again on a network of oil pipelines. Pricing pressures as economic activity increased, as well as localized factors such as a maintenance-related outage in Norway. However, by the end of the year, pricing concerns had shifted to the flow of Russian gas Tuzova (2022). These concerns were realized in December 2021, when Russia temporarily ceased supplying gas through one of the key pipelines, causing European gas prices to skyrocket. While this was a brief period during which certain pricing aspects of the European gas market, rather than any deliberate stoppage by Russia, are likely to have played a key role in causing this increase, there have been strong signals of decreased flow from Russia for several months Dreger (2021). In recent weeks, the EU has attempted to compensate by raising interest rates.

Imports of LNG. European gas prices have skyrocketed since the invasion began. The recent increase in gas prices has had a significant impact on eurozone inflation. Mamonov,(2022).

1.2 Problem description

Following Russia’s invasion of Ukraine by air, land, and sea, global financial and energy markets were jolted, causing oil prices to rise and financial instruments to plummet, according to Mamonov (2022). Given that the utilities sub-basket accounts for 32.6 percent of core inflation, they expect core inflation to rise in the near term, weighing on headline inflation, especially given the ongoing shortage caused by contaminated fuel import Tuzova (2022). Similarly, with significant Russian food imports, such as wheat, there are concerns about food inflation if tensions persist Tuzova (2022). When President Vladimir Putin called his opponents and other world leaders on their bluff and declared a full-scale military campaign in Ukraine, tensions soared across the globe, from Europe to Asia to Africa. Stone (2022). (2022). The global economy was also shaken, resulting in unprecedented losses for investors globally and across investment clusters. Stone(2022). The forex and cryptocurrency markets, which are open 24 hours a day, were the first to be hit. According to Stone, as global markets fell, bitcoin, the most popular cryptocurrency, fell nearly 10% in a few hours, resulting in the liquidation of over $72 million in long bets in the early hours of the day (2022). Because of this, total crypto futures position holders lost $242 million.

to liquidations, as meme and altcoin prices plummeted 10% to 35% in a wild slide Stone (2022). Global stock markets were not spared the carnage, with the Moscow Stock Exchange, as predicted, leading the losers’ chart, with nearly 50% of capitalization wiped out as a result of asset dumping panic across Europe and the rest of the world (2022). As a result, the impact of the Russian-Ukraine conflict on global commerce must be investigated.

1.3 The study’s purpose

The study’s overarching goal is to assess the impact of the Russian-Ukraine conflict on international trade. The specific goals are as follows:

i. Investigate the causes of the Russian-Ukraine conflict.

ii. To assess the impact of the Russian-Ukraine war on European security.

trade.

iii. To investigate the global implications of the Russian-Ukraine conflict.

1.3 Research Issues

The following study questions have been prepared:

i. What are the causes of the Russian-Ukraine conflict?

ii. How has the Russian-Ukraine conflict affected European trade?

iii. What are the global implications of the Russian-Ukraine conflict?

1.4 Importance of the research

This study will examine the impact of the Russian-Ukraine war on international trade; thus, the international community will be exposed to the need to improve and find alternative supply to commodities that affect them the most.

The study will be significant to the academic community because it will add to the existing literature on the subject.

The impact of the Russian-Ukraine war.

1.5 The study’s scope

This research will look into the causes of the Russian-Ukraine conflict. The research will also assess the impact of the Russian-Ukrainian conflict on European trade. Finally, the study will look into the global implications of the Russian-Ukraine conflict.

1.7 Methodology of Research

Research methodology is concerned with the various methods or approaches used by the researcher to carry out the research, as well as the instrument used to collect data. There are several research methodologies that can be used to answer the research questions. The historical research methodology will be used in this study to collect data and relevant information, and the study will use a descriptive data collection method. This will entail the

Materials gathered from secondary sources, such as books, journal articles, magazines, internet sources, international and national conference proceedings, published and unpublished articles.

1.8 Research Organization

The research was divided into five chapters. The first chapter provided background information for the study as well as an overview of the work. It included a statement of the study’s problem, the objectives of the study, and the scope within which the research was conducted. The first chapter also includes an outline of how the work is organized. The study’s second chapter examined the factors that contributed to the Russian-Ukraine conflict. The third chapter examined the impact of the Russian-Ukraine war on European trade. The fourth chapter examines the global implications of the Russian-Ukraine conflict.

Chapter five is a summary of the major findings, with recommendations and the study’s conclusion.

REFERENCES

D. P. Ahn and R. D. Ludema (2020). The economics of targeted sanctions: the sword and the shield. and dealt with international financial sanctions. Discussion Paper DP16075 of the CEPR.

C. Dreger, K. A. Kholodilin, D. Ulbricht, and J. Fidrmuc (2021). The impact of economic sanctions and rising oil prices on Russia’s ruble. 295-308 in Journal of Comparative Economics, 44(2).

Louis Kriesberg and Bruce Dayton, W. (2022). “Conflict Resolution Through Mediation.” 217-247 in L. Kriesberg and B. Dayton’s Constructive Conflicts: From Escalation to Resolution. Rowman & Littlefield Publishers

M. Mamonov, A. Pestova, and S. Ongena (2022). “What is the difference between crime and punishment?” European Economic Review, 130, 103587.

Poroshenko,

“Presidential Debate: “The Conflict over Ukraine and European Security,” P. (2022). Munich Security Conference, https://www.securityconference.de/en/medialibrary/video/presidential-debate-ukraine-and-european-security/

security/filter/video/?tx dreipctvmediacenter mediacenter%5Bvenue%5D=16&cHash=3042b 11bcc2bdaff03c6ec8468699b63&cHash=3042b 11bcc2bdaff03c6ec8468699b63

M. Stone (2022). The Russian security market’s reaction to economic sanctions: policy effectiveness and transmission. United States Department of State, http://2009-2017.state.gov/e/oce/rls/papers/262748.htm.

Tuzova, Y., and F. Qayum (2022). The impact of the global oil glut and sanctions on Putin’s Russia. European Economic Review, 130, 103587, Energy Policy.

 

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