Russia and Ukraine: Political, economic and social costs of war

There are two narratives available on Russia-Ukraine war. One narrative is, the West, the US in particular, has pushed Russia into war with Ukraine to secure its strategic goal. The other narrative is, Russia has used Ukraine’s NATO membership issue to secure its geopolitical objective. The war has opened up new fronts beyond Ukraine where Russia and the US and its allies are the belligerents. While Russia is pounding Ukraine on the military front, the West has rounded up Russia on the political and economic front.

On the military front, Russia’s advance toward Kyiv has been at much slower pace than estimated. At this stage, the course of the war looks to be at crossroads. The West, especially the US, will not allow Russia to settle down in Ukraine. Russia is essentially sucked into a long drawn war on all three fronts. A long drawn has never been to the advantage of any state, even a powerful one. Stories of former USSR and USA in Afghanistan are historical examples to mention. Russia is destined to brace a similar fate in Ukraine. The West, especially the US, will not want to miss the opportunity to damage Russian economy, impede the recovery in the long term and reduce its militarily capability without being involved militarily on the ground.

On 16 March 2022 President Biden announced 800 million dollar military aid to enhance Ukraine’s capacity to fight. The aid was part of 14 billion dollar military package that he approved on 15 March 2022 for Ukraine. The 800 million dollar military assistance package includes range of hardware taken from existing US military stocks in Europe, and dispatched to neighboring countries like Poland and Romania, where from they are shipped overland into western Ukraine. In 21 days of the war, US military assistance to Ukraine reached 1.35 billion dollars. The balance of 13 billion dollar of military aid will be shipped for Ukraine to keep up the resistance.

UK is also accelerating military supplies to Ukraine. EU confirmed military aid worth 1 billion euros. While military hardware is flowing in, President Zelensky acknowledged that everything in military aid has a cost, nothing is free, Ukraine will have to repay.

Cost of a war is multidimensional, deep rooted and uncontrollable. Some elements of the cost are difficult to measure in economic yard stick. Those remain intangible economic cost of war.

War is an economic burden for some and can be an economic opportunity for others. According to World Vision estimate, the economic cost of 10 years conflict (2011-2021) in Syria was 1.2 trillion dollars. If the war had ended in 2021, the cost would continue to accumulate to the tune of an additional 1.7 trillion dollars in today’s money through to 2035. The total cost of the Gulf War to the US was 62 billion dollars. Saudi Arabia, Kuwait, Japan, Germany, UAE reimbursed the cost. Wars boosted US arms sale in the region. There has been long term undisclosed political economic gains. Iraq War (2003-2011) cost 2.2 trillion dollars and cost of the 20 year war on terror in Afghanistan was 8 trillion dollars of which 2.60 trillion dollars was paid to five US weapons manufacturers, revitalizing US defence industry.

A war has political and social costs too. Ten years of war has reduced Syrian children’s overall life expectancy by 13 years. The social, political and economic cost of war in Iraq (1979-2011) has been enormous, not to recover and return to prewar economy and society in the foreseeable future. Ukraine being at the epicenter of the war, will have to pay dearly in trillion apart from political and social cost. According to Ukraine’s Finance Minister, as of 28 March 2022, the war has cost Ukraine 564.9 billion dollars in terms of property and infrastructure damage and economic growth loss.

The war is costing Russia too. Its direct economic cost in first four days of the war was estimated at 7 billion dollars. Costs will increase as the forces move further from home bases, face resistances and the war is prolonged. The Centre for Economic Recovery, CIVITTA and EasyBusiness have estimated Russia’s direct cost of war to exceed 20 billion dollars a day. It will be worth observing how the Russia’s economy at $1.48 trillion nominal GDP before the war will sustain the cost with heaps of economic sanctions. Russian economy is under tremendous pressure from multitude of economic sanctions costing billions of dollars.

The western objectives of economic sanctions are to reduce Russia’s war making potential in the long term and inflict economic hardships enough to rise up people against Putin. States, small or big are resilient to absorb such economic punishments. Cuba has passed sixty years of US sanctions and still under it. Iran has been under sanction for 44 years since 1979 and continuing. North Korea is another example of survival under sanctions and poking at US with nukes. Somaliland, not recognised by the world body since 1991 and has not been in any form of international transaction. Yet, people are surviving and did not revolt against their leadership. Economic hardships arising from sanctions seem to have united them more to rally against sanction regime. Nationalism was the powerful force to sustain governments in those countries. If such strong nationalism exists in Russian people, they would to rally around Putin.

The US is also dominating the political front to isolate Russia globally. In the UN General Assembly, 140 countries voted favoring a non-binding resolution calling Russia to stop the war and withdraw troops from Ukraine. Russia, Syria, North Korean, Eritrea and Belarus voted against the motion while 38 countries including China and India abstained.

In a bid to isolate Russia, President Biden reminded President Xi Jinping that China’s economic future depends on the West and warned not to side with Russia economically or militarily. China has not condemned Russia’s invasion of Ukraine. It is maintaining a cautious status and taking notes of developments. It’s a ‘tutorial’ for China in dealing with any eventual crisis over Taiwan.

India, another important ally of Russia is “shaky”, as President Biden called it, for not responding to America’s call to condemn or sanction Russia. America has warned India, “If China breaches borders, Russia won’t come to your defence.” India has sensitive stakes in Russia. Its military inventory dominates Russian hardware and software. Some other countries in the Southeast Asia and West Asia are also cautious in reacting to the demands of the US. Saudi Arabia did not respond to Biden’s call to increase oil production. Despite some differences with some the big and regional players on political front, the US is on the driving seat calling political and economic shots against Russia.

While war is the product of geopolitics, political and economic conflicts are the products of war. Finding ways out of the wars is difficult so long the geopolitical players’ ‘strategic interests and rights’ override international system. As the war lingers, both Russia and Ukraine continue to blunt their political, economic, social and military tools.

* Mohammad Abdur Razzak, a retired Commodore of Bangladesh Navy, is a security analyst. He can be reached at [email protected]