The international armed conflicts across Europe and the Middle East have had devastating impacts on all the countries at war and repercussions of the domino effect on countries both far and near.
Human suffering is incomprehensible, with extensive causalities and displacement. But the pen can bring the naked truth to the forefront and paint the narrative of reconstruction and the long-term implications of war for business and the world.
To date, 500,000 Ukrainians and Russian military personnel have been killed and wounded, with over 40,000 civilian casualties.
February 24, 2022, marked the start of Russia’s full-scale war of Ukraine, triggering a seismic shift in the global business landscape. From disrupted supply chains to volatile energy markets, these conflicts present challenges and opportunities for businesses across sectors, demanding strategic adaptation and innovative solutions.
Both the Russo-Ukraine and Israel-Palestine wars are having far-reaching consequences for the rest of the world. Alterations in trade flows, economic structures and established international trade systems have occurred because of the ongoing conflicts in Europe and the Middle East.
The reverberations of the conflict between Palestine and Israel are felt in the tourism, trade, investment and financial sectors of Egypt, Jordan and Lebanon. Disruptions due to the global supply chain are experienced when vessels in the Red Sea are attacked.
Many countries have also altered their trade policies towards self-sufficiency and regionalism and are slowly shifting towards de-globalisation to protect themselves from external shocks.
Alternative transportation modes have gained preference, such as rail freight between Asia and Europe, which benefit companies like Deutsche Bahn and Russian Railways but also impact business transit costs and timelines.
The ongoing war between Russia and Ukraine has also significantly impacted trade and investment. It has affected the automotive and hospitality industry in the European region.
According to the World Trade Organisation (WTO), global trade volumes in goods and services have declined by 3.4 per cent. Energy prices have increased by 100 per cent and commodities by 8 per cent. One-third of the international wheat exports and half of the sunflower oil exports were disrupted due to the war.
The exports of materials like palladium and nickel, essential for automotive manufacturing, have also been disrupted, affecting European manufacturers.
Sanctions imposed on these countries by other countries have caused damage to transport links, further straining supply chains and resulting in essential inputs being affected worldwide.
Russia has reoriented its trade in response to sanctions and economic pressures. It has shifted from advanced countries to emerging countries like India, China and Türkiye.
Russia is more dependent on trade with non-sanction countries and redirecting energy exports to new markets at a discounted price compared to global benchmarks.
European countries that were earlier dependent on Russian supplies have also altered trade routes, though they come with increased cost and supply challenges. Middle Eastern countries, such as Qatar, Oman, and Kuwait; and North African Countries, like Algeria, have increased their energy exports to the European Union.
The situation in Europe and the Middle East suggests tension and instability. The humanitarian situation is critical, with millions in need of assistance.
The escalating tensions between these countries complicate the geopolitical implications for international trade. Wars are having a ripple effect on global economic confidence and investment. The situation threatens to exacerbate global inflationary pressures.
The disruptions in food production and exports have contributed to the worldwide food crisis.
The writer is an assistant professor at the marketing and management department of the College of Banking and Financial Studies in Muscat.
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