Of late, the world media has been awash with Russia-Ukraine war, which is being blamed for all the current economic and financial crises across the globe. This is for obvious reason. Skyrocketing fuel oil, natural gas and food prices, instability in the global financial market, you name it, the Ukraine war has a hand in it.
True, the supply of natural gas and oil from Russia that kept Europe warm and its economic engine running has now stopped flowing. Of course, it is the Russian invasion of Ukraine more than seven months ago that is behind Europe's energy supply crunch. However, what Europe is going through is somewhat self-imposed. Russia's attacking Ukraine angered the West led by America and to punish it, they slapped one economic sanction after another on the country (Russia). Despite the war, Europe, however, did not mind getting the natural gas and oil from Russia. And Russia, badly in need of hard currency, also continued supplying gas to Europe despite the sanctions. But buying natural gas from Russia also means financing it to continue the war in Ukraine. It was indeed a moral dilemma for the West. So, they went for stricter sanctions on Russia and also started looking for alternative sources of energy. And to prevent Russia from gaining from rising energy price in the international market, they also put a price cap on Russian natural gas and oil.
Finally, things came to a head in early September with the Russian state gas company, Gazprom, switching off the Nord Stream 1 gas pipeline on the pretext of having detected an oil leak at one of its compressor stations.
Small wonder that the war shows no sign of abating. Meanwhile, the global energy, food and financial instabilities have reached a crisis point.
But why is it that a war of local kind has been able to affect the entire globe? It is because the theatre of the war is Europe.
Had the war been a non-European one, its impact on the world economy might not be so taxing for the rest of humanity.
But, as ill luck would have it, the world's most advanced economic and military powers are embroiled in this unwanted war. By dragging the world's biggies into it, the Ukrainian conflict has now turned into a global crisis.
Hence the obsession of the media with the Ukraine war.
Not surprisingly, Ukraine has now taken the centre stage in the global political and diplomatic discourses. That is the reason why Ukraine and its comedian-turned-president, Volodymyr Zelensky, is regularly hitting the headlines. Anyway, the world at large is hardly enjoying this interloper's sudden entry onto the world stage, thanks to the Russian leader's ill-conceived 'special military operation' in Ukraine.
But though no one wants this war to continue, there is also no serious effort from any side to stop it.
In its latest development, the Ukrainian president, his colleagues and advisers are not showing any interest to stop their Western-backed patriotic war against Russia. That is hardly surprising seeing that Russian forces, to all appearances, are on the backfoot in the battlefields.
Though in a recent escalation of the war, Russia launched a massive missile attack on Ukraine, it could hardly change the equation of the war on the ground. The emboldened Ukrainian forces are now confident of winning the war and reconquer the land they lost to Russia at the initial stage of the war. To all intent and purposes, the West, too, believe it. So, they are promising more military aid to the Ukrainian leadership. As a consequence, the winning side does not seem to be eager at the moment to sit with an enemy in retreat for any peace deal.
The Russian leader, on his part, knows he is in the pits, but his pride as one in control of one of the world's largest nuclear arsenals and leading a country that was once a superpower is too big to accept any defeat.
So, one wonders how the war is going to end.
While the war in Ukraine has been getting stickier every passing day, the financial outlook of the world economy is turning grimmer.
According to a recent World Bank report, forecasts for global growth for the current and the next year (2023) has been downgraded markedly. Though the consensus of experts is yet to outright declare it to be a recession, the evolving economic trends strongly point to that direction.
History of previous recessions, the experts believe, supports this view. For, in the past cases of economic recession, global growth, like now, contracted significantly. Also, in the case of previous global economic downturns, some economies experienced sharp economic slowdowns while others were deep in recession.
In the meantime, inflation has soared to a very high level in most world economies, an unprecedented development in the last many decades.
In the face of persistent inflation driven mainly by high energy price, many countries have opted for withdrawing the fiscal and monetary support to the consumers.
That such simultaneous tightening of fiscal and monetary policy has been taking place globally is something unheard-of in the past half a century. Such measures run the risk of further contracting of the economic growth in the countries concerned as well as reduction in the global economic growth.
While nations would be applying the required mix of fiscal and monetary measures to tame inflation, the world leaders should meanwhile be able to demonstrate their willingness to stop the war in Ukraine. To that end, any attempt at further escalation of the war from either side needs to be avoided. This is urgent because the ongoing global energy crisis and high inflation are directly linked to the Ukraine war.
Unless something is done to end the Ukrainian conflict, the world should be ready to witness something worse than the Great Depression of the 1930s.