Russia is one of the largest producers of oil in the world. Worldometer actually places it in the third position after USA and Saudi Arabia.
The war currently raging between Russia and Ukraine will no doubt have a number of economic repercussions, not just in the two countries or in the regions where they are located but in the rest of the world. We will not be involved in the war physically but we will almost certainly be affected.
The world of today is so globalised that events in one country, no matter how remote, normally will trickle down to the rest of the world. Many Malawians may not know that a country called Ukraine exists, much less where it is located, but that will not exempt Malawi from the effects of the current war.
By way of summary, Ukraine and Russia, plus other states, used to be in a Federation that was called the Union of Soviet Socialist Republics (USSR). During the so-called cold war, USSR was pitied against USA, the two countries being the world superpowers of that time. About thirty years ago, the USSR collapsed, courtesy of Mikhail Gorbachev and his Prestroika program. Prestroika was a policy first proposed by Leonid Brezhnev in 1979 to reform the economic and political systems in USSR. It did not go very far when it was first attempted. It took the determination of Goberchev to implement it more thoroughly in late 1980s for it to usher in the dissolution of the USSR.
The largely US championed North Atlantic Treaty Organisation (Nato) has always been a threat to Russia. When it was learnt by Russia that Ukraine had expressed the intention to join Nato, the Russians could not take it as it was next to sacrilegeous to have “the enemy” on their doorsteps. This led to the hostilities what have now developed into a full scale war between the two countries.
It is foolhardy to think that this is a war that will not affect us as it is fought thousands of kilometres away. Russia is already facing stiff sanctions from Europe and America. No Russian plane, for example, can overfly European airspace or fly to a European destination now. Russia will obviously retaliate in a variety of ways. One of such ways is to withhold its crude oil. Being the world’s third largest producer of the commodity, the market will feel the pinch. Suddenly supply will dwindle amid a rising demand spurred on by the recovery of world economies as countries emerge from the covid-19 crisis. As a result oil prices will rise sharply.
Malawians will not be spared from this price increase of oil. When oil prices rise, practically all commodities go up. And that will happen even here, through no fault of any local person. Obviously Malawians will blame the Government for this. Call-in radio programs will be crammed with Government bashing individuals who will not bother to analyse the situation but will hurriedly reach conclusions that do not bear much resemblance to the real situation on the ground. It is a lot easier to find a soft target to bear the blame for a misfortune or a calamity than to try and get to know how things are playing out in reality. Somebody will try to explain that a foreign war is the cause for the economic turmoil but such an explanation will be taken as a “feeble excuse” for non performance.
The authorities themselves have to brace up for this and put in place mechanisms to protect the population from the worst effects of the foreign war. Our people grapple with biting poverty on a daily basis. They need special attention from Government for them to have some semblance of near normal life.
The least that the Government can do is implement strict austerity measures from the very top. Nobody should be seen to live in opulence when a good part of the population engages in a daily struggle just to be able to get the basics of life.
Last Wednesday, I met a lady who asked for K200 saying she had searched for piece work in town and failed to secure any. The K200 was for her meal that evening. I have no clue what type of meal K200 can buy but that is what she asked for. As for her next meal I think she just resigned to her fate. There are many people like that in Malawi. With the looming further deterioration of the economy, the situation looks even bleaker.
That is what a distant war can do in a globalised world, which is the world we live in.