Tomorrow marks one full year of resistance by the valiant Ukrainian people and soldiers in repelling Russia’s assault on their country. While both countries have lost tens of thousands of soldiers, the losses for Ukraine in terms of displaced people, civilian casualties, and destroyed properties have definitely been more crippling.
Yet, the will of the people of Ukraine to defend their homeland continues to be strong, bolstered by the military, financial, and humanitarian aid support given by sympathetic countries like the United States and the European Union.
International aid to Ukraine is now valued at more than $110 billion, consisting of war weapons, as well as food and relief packages. More is expected to be pledged, as the war has added on geopolitical ramifications. At no time in recent history has this polarization of alliances among the world’s superpowers been more pronounced than now.
Early estimates of how much will be needed to rehabilitate Ukraine if the war does turn against Russia is already close to $400 billion. As to be expected, talks about rehabilitation are still tentative as tactical and strategic military campaigns by both sides have not yielded decisive results yet.
Some other important shifts are worth taking note, though. Many of the war machines that Ukraine had sought earlier during the first few weeks of Russia’s invasion are gradually being granted by the US and EU countries, notably Germany, Britain, and France.
To tilt the war advantage for Ukraine in the coming months, all those pledged tanks, planes, drones, anti-missile radars, and ammunitions must arrive and be ready for use before the Russians wage another full scale offensive, which is feared to happen any time soon.
The gritty defense of Ukrainian forces against Russian attacks on its northern, eastern, and southern flanks has so far contributed to foiling Russia from capturing more areas in Ukraine. In some cases, Ukraine has successfully mounted offensives to reclaim land that Russians had taken over.
High prices
While Ukraine quietly celebrated its first year of struggle against Russia’s tyrannical invasion, other parts of the world continue to reel from the economic effects of shortages. The blockade of Ukraine’s Black Sea ports has disrupted the shipments of wheat and corn, which accounted for a significant amount in global exports.
This resulted in elevated prices of grains, and in some cases during the early days of the Russian invasion, a scarcity or lack. The Philippines has seen increases in the price of bread, which fortunately is still substitutable for many Filipino families with other food items.
But in countries in Africa whose people rely on bread as their main source of carbs, governments have had to heavily borrow just so to keep up with bread subsidies for poor families.
The war has also made a major impact on higher crude oil and natural gas prices. This time, the Philippines was not spared, being almost wholly reliant on imported fossil fuels. Our elevated inflation levels today are still the after-effects of crude prices rising more than 40 percent compared to pre-pandemic levels.
Definitely, higher fuel prices played a big role in runaway inflation in developed economies like the US and Europe. While the US Federal Reserve aggressively raised interest rates to counter their own inflation, this created a new hurdle in the world’s attempts to return to normal economic growth.
Moving forward
One year after the Russian invasion, as the global economy sheds off further restraints on economic growth caused by the COVID-19 pandemic, many countries, including the Philippines, are still keeping their eye on the threat that a successful Russian occupation of Ukraine could bring about.
Countries located in the western border of Ukraine are especially fearful of Russia’s ambitions to bring back the glory that was the Union of Soviet Socialist Republics (USSR), at a time when they have scaled down their military arsenals. This explains, for example, Germany’s decision to invest an unprecedented 100 billion euros for defense upgrading.
After the US President Joe Biden’s surprise visit to Kyiv, Ukraine’s capital, a few days ago, he went to Poland where his arrival was seen as a morale boost. Poland, which shares a long border with Ukraine, has also been worried about a successful Russian military campaign annexing its neighbor.
Ukraine has vowed to push back, and even get back the Crimean peninsula that the Russians forcibly occupied in 2014. Many military analysts do not see Vladimir Putin from backing down, and this only means that the war in Ukraine will extend beyond just another few months.
High debt levels
Fortunately, things seem to be moving towards a more acceptable semblance of normalcy, with other parts of the world slowly adjusting to the upheavals caused by the war and the fragmentation of global supply chains. The big problem nowadays will be how developing economies will pare down loans that were heavily borrowed during the pandemic, plus those borrowed recently to counter high inflation.
Interest rates by multilateral lending institutions like the International Monetary Fund have increased at a time when the level of loans disbursed to needy countries has reached record highs. For the Philippines, servicing its debts and bringing them down to more acceptable levels is still doable.
It may take a few more years for our country to bring down loan levels if we can keep our engines of economic growth humming. Thankfully, remittances from overseas workers continue to be strong, which is important for a consumer-led economy like ours.
Facebook and Twitter
We are actively using two social networking websites to reach out more often and even interact with and engage our readers, friends and colleagues in the various areas of interest that I tackle in my column. Please like us on www.facebook.com/ReyGamboa and follow us on www.twitter.com/ReyGamboa.
Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.