Leader

NST Leader: The unbearable weight of war

WHAT happens in Ukraine isn't going to stay in Ukraine. There are two reasons for this.

One is economic and the other is geopolitical. Begin with the economic fallout. As this Leader was going to press, the Brent marker crude oil price was hovering around US$98.

But on Thursday, after Russia launched its attack on Ukraine, crude prices soared to US$105 per barrel. According to The Financial Times, the British business daily, this was the first time since 2014 the crude prices went this high. Expect many more firsts.

Unsurprisingly, European gas prices, too, soared by almost 70 per cent, the newspaper reported on Friday. Depending on how bad the war in Ukraine gets or how long it lasts, expect high crude prices to make global inflation unbearable and economic growth to slow considerably.

As usual, emerging economies will bear the brunt of it. The reason is not far to seek. Russia is an important producer of hydro-carbons and other raw materials.

In the analysis by The Financial Times, Europe relies on a quarter of Russia's oil and one third of its gas. It is for this reason America didn't impose any sanctions on Russia's oil and gas. If the market reads this as coming in the near future, analysts say crude prices could hit US$140.

It will be good news and bad news, especially for Malaysia. The good news is, as an oil producer, Malaysia stands to see a spike in its revenue. Again, depending on how long the war goes on, US$140 means more for the government coffers.

The bad news is inflation and other disruptions that a war brings with it. Russia isn't going to sit pretty and watch the West hammer it with sanctions. It will retaliate.

A borderless world will begin to erect borders. If Covid-19 gave a hard blow to the temple of globalisation, expect the isolation of Russia to go for the solar plexus.

Sure, globalisation will not be as dead as a doornail, but it will be somewhat dead. In its place will be islands of economic blocs. Covid-19 made that happen already.

Now for the geopolitical fallout. "Today almost everything is different from yesterday," political scientist Johannes Varwick of the University of Halle tells DW, a German news channel. By that he doesn't mean that Friday was different from Thursday.

He means there will be new enemies and in different geographies. Or put differently, there will be a new geopolitical order. We saw this when Putin took Israel to task for its settlement colonialism in Syria, an arena of Russian action.

My friend's enemy is my enemy. Then there is Turkey, what The Economist calls the frenemy of Russia, though it sees this rapprochement not to outlive the war.

But then again, the British newspaper has been wrong many times. Of greater interest is the bear hug of China. Or more like the dragon hug.

This is what happens when a country is pushed to the wall, especially a big one. It makes new friends. And when the new friends are as big and populous as China and Russia, the earth moves under many geopolitical feet.

Old world order gives way to a new one. The old one was hegemonic. The new one promises to be no better. Call it the new world disorder.

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