Tougher

The times just got tougher.

Russia just did the unthinkable: mount a full-scale invasion of Ukraine. By land, sea and air, Russian forces are swarming into a peaceful neighbor. It is the largest conventional military operation in the European theater since the end of World War II.

There is little doubt about the outcome of this war. The Ukrainians may be a valiant people. But they have little to stand up against the might of Russia’s military.

Prolonged resistance is not likely. Ukraine is a flat country ideal for agriculture. It is also ideal for mechanized warfare. There is no place for the Ukrainian armed forces to hide. There is no place for an organized insurgency to thrive.

As this is being written, Russian paratroopers have occupied most airports after a massive barrage of missiles. Ground forces surround the capital Kiev. With control of the air, the Russians can quickly wipe out Ukraine’s obsolete armored brigades.

Vladimir Putin’s objectives are clear. He wants regime change in Ukraine. He will achieve that by the blinding efficiency of his armed forces.

A whole nation is being gobbled up by ruthless military power as the world watches almost helplessly. The western powers have massed brigades in the NATO member-countries surrounding Ukraine. But since Ukraine is not a NATO member, those brigades cannot go into battle.

All the NATO member-countries have lined up economic sanctions against Russia. But it will take weeks before the effects of these sanctions could be felt on the ground. By the time they do, Putin would have presented the world with a fait accompli. Ukraine will cease to be a sovereign nation.

Most of the economic sanctions will hurt everyone nearly as much as they hurt Russia. The Russian stock exchange lost 33 percent of its value on the day the invasion commenced. The price of oil climbed to over $100 a barrel. It is a price level that almost guarantees recession in the industrial countries.

Russia’s invasion of Ukraine will certainly magnify the supply disruptions caused by the pandemic. A nation of 40 million, Ukrainian agriculture feeds 600

million. With a large portion of Ukrainians certain to be displaced or forced to become refugees, disruption of the country’s agriculture will certainly be felt in the grocery shelves.

Ukraine is not only an agricultural powerhouse. The country is also a tech hot spot. Ukrainian mines hold large deposits of uranium and titanium.

The main shock wave arising from the Russian invasion expresses in a stronger inflationary trend, driven by rising food and oil prices. Most of the world’s economies were already on an inflationary path before Ukraine happened due to the disruptions in the supply and value chains inflicted by the pandemic. Inflationary pressures will be heightened.

For most Filipinos, Ukraine might seem a world away. But in our tightly knit global economy, the economic repercussions of Russian aggression hit us in real time.

The spike in oil prices is felt immediately at the pumps. Fuel costs will be the main driver of our inflation rate into the foreseeable future.

With higher fuel costs, the price of everything rises. The fish and vegetables in our markets need to be transported from elsewhere. We have seen the prices of basic goods spike the past few days.

Because of the spike in oil prices, government is forced to roll out a direct subsidy program that will cost our taxpayers about P3 billion. The program will certainly not be enough to hold back the impact of higher transport costs on the ordinary consumer. But it is certainly better than withdrawing excise taxes on the product. This will certainly drive up our deficit and force us deeper into debt.

The pandemic sharpened social inequalities in all societies. The oil-driven inflationary surge will magnify inequalities even more. This will drive up social tensions in most societies, ours especially.

The recent surge in oil and then food prices will make life more miserable for our most vulnerable sectors. We have enough rabblerousing political groups that are not shy about exploiting the misery for political advantage. They will try to harness misery for political ends and demand short-term relief even at the cost of long-term aggravation.

We do not know how long the present oil price regime will last. It could become the permanent benchmark for how the precious commodity is priced. What is clear is that in the immediate term, it will drive inflation higher. That translates into pain for all consumers.

It is easy to manage economic recovery, understood as the pace of economic expansion. It is difficult to cure the inequality that is sometimes exacerbated by non-inclusive growth. The latter will require much more time and effort. It will need a leadership committed to building an inclusive society.

We are not sure at this point how much higher oil prices will rise. We are not sure how much inflation will pick up. We are not sure if the invasion and the flurry of economic sanctions imposed to punish Russia will cause recession.

What we know is that the coming period will be much more difficult for a world struggling to return to some form of normality after the onslaught of a pandemic. Some countries will get through this difficult time better than others.

The quality of leadership some countries enjoy will certainly matter. The sort of leadership we need to get though what could be a long period of difficulty ought to be central to our electoral conversation.