The Economic Repercussion of Russia-Ukraine War

BY SOLOMON DIBABA

The war between Russia and Ukraine has now continued unabated for almost three weeks. This is already having far more repercussions that the world was not expecting at all. The diplomatic tug of war between the belligerents and the nuclear threat that seems to appear on the horizon has put the international community of nations in a state of limbo. The exchange of press releases and the resultant exchange of sanctions are affecting the state of international economic relations, the results of which are already surfacing up.

The galloping prices of crude oil compounded by increase in prices of wheat and other food items in international trade along with the political jigsaw puzzle in international alliances seem to create a new world order the results of which is difficult to predict in the short run. Some think that the third world is at the gate, some even claim that we are already in the third world war. The point is, given the saber rattling and the propaganda war between NATO and Russia with their arsenals of hundreds of nuclear warheads that could destroy the entire world in a single day.

As Prime Minister Abiy has indicated in his recent comment on the war, Ethiopia firmly believes that the war situation needs to be reversed through a dialogue and negotiations between the two countries. Ethiopia’s position is also consistent with the call made by AU Commissioner to resolve the conflict in a peaceful manner through a dialogue.

Ethiopia has already predicted the extent to which the war could seriously affect the international socio-economic order. The war between Russia and Ukraine has ushered new challenges for Ethiopia and Africa. For instance, annually Ethiopia imports 3 billion worth of fuel to meet its energy and transport needs. With the inflated price of oil which some reports indicate is increasing by 5 USD per day, Ethiopia will need an average of 6 billion USD, doubling its expenses for the same amount of fuel to be imported.

Any reasonable person would understand that this will result in a higher level of inflation even on commodities that are produced in the country. There is a lot of emotional politicking on the price of edible oil and locally hatched food politics and agenda setting are unfolding by days. Criticizing the government for everything under the sky of the country does not seem to bring in bread for the needy. Recent events showed that there are groups in the country who wish to fish in troubled waters. Already, Ethiopia has a lot at hand and needed to focus on its internal affairs.

It is also interesting to observe that terrorist TPLF is lamenting because it seems to loose attention from the west due to the more serious focus that is being given to the Russo-Ukraine War.

Ethiopia critically needs food aid from donor countries, global financiers, and partner agencies to feed millions of citizens in drought affected areas and IDPs whose number is increasing due to terrorist TPLF’s savage war on the people of Ethiopia.

The government is pushing for the promotion of food production across the country through dryland irrigation and other means. Utmost efforts must be exerted to enhance wheat production to bridge the supply-demand market  imbalance resulted from the Russia-Ukraine War.  

The war between Russia and Ukraine is still unfolding. The international political climate is changing so swiftly. Some countries that chose to sit on the fence are now inclined to take sides as they strive to stick to their national interest. The issue of oil seems to create a rift between the US and some of its NATO allies as well as the Arab countries and some countries in the Middle and Far East.

Nobody is so sure about what is in store for the world in the following months. Once more, the overarching global and regional situation triggered by the war calls for repositioning of one’s national interest as economic globalization is becoming a pie in the sky.