War is hell. Countless lives have been lost on both sides after ongoing fighting for the better part of the year. This conflict has sent waves of disruption in supply chain issues, over 4 million people are now displaced Ukrainian refugees, there is rampant hunger due to lack of Ukrainian wheat exports, ongoing deaths due to lack of sanitation and destruction of infrastructure, there is a lack of natural resources from countries who had become reliant on Russia and a huge debt incurred on behalf of the U.S. for supplying weapons to the Ukraine. Where are we now? Ukraine has done a exceptional job pushing Russian forces back closer to their original February 2022 boarders, but they have had to pay a heavy price; countless citizens are now dead and there has been billions in damage to their cities and roads.
The Economic Toll on The Russian Economy
The economic implications almost immediately took their toll when Western countries put economic sanctions on Russia. Long lines at the ATM, lack of goods in stores and Russia being ostracized by the rest of the world have affected the average Russian citizen, but have left the one person responsible for everything relatively unscathed, Vladimir Putin. While he and his oligarchs have had villas and boats confiscated abroad, it is still not enough to influence a dictator bent on expansionism, rolling back the Russian mentality to 1940s when the Soviet Union made their major land grab.
When the U.S. pushed for tough sanctions and the Russian economy shrunk by 10% in one week, the Ruble currency came crashing. This is partly due to Russia having been removed from the SHIFT money transfer system. The Ruble has since recovered relatively well under the circumstances and many of the foreign companies like McDonalds have been nationalized. Putin, having been allegedly planning this war for years, has built up a credit system of his own and has hid his assets in other people’s names. Putin is already well insulated and has been for quite some time.
On the battlefield, according to the UK Sun, over $1 billion has been lost in Russian ammunitions and equipment since the start of the war. Tanks have been abandoned, and there have been reports of Russian units deliberately sabotaging their own stockpiles because of low morale and resistance to be involved in this pointless war.
As the U.S. continues to put pressure on Putin’s circle of friends, business partners and Russia’s Oligarchs, the Russian “royalty” seem to feel the pinch, but not Putin. More recently, the Russian’s elite have hid their Yachts in Dubai, unfortunately, they now cannot leave. Gennady Timchenko of Volga Group, recently saw his fortune fall from $22 billion to $11 billion (SOURCE: CNBC). Oligarchs have reported that their concerns have fallen on deaf ears in the Kremlin.
The Economic Toll on The EU
President Biden walks a fine line in trying to avoid World War Three and yet still trying to play “big brother” to the Ukraine to help defend it’s sovereignty. The challenge here is that while the U.S. has instituted tough sanctions on Russia, the rest of Europe is dependent on Russia’s natural resources, specifically, Natural Gas. Europe gets over 50% of it’s natural gas from Russia, which affects the EU’s economy so significantly that the Prime Minister of Germany said they are expecting a recession due to the turmoil. Already, they are experiencing double digit inflation and already looking elsewhere to become less reliant on Russian exports. While America tries to diminish the Russian economy on one end, other countries like Turkey and China continue to supply Russia with a pipeline of money to perpetuate a pointless war.
The Economic Toll on Ukraine
While the Ukrainian army has done nothing short of spectacular in terms of defending their country, simply rebuilding will be a long process. According to “Reuters,” the Ukrainian government has reported $100 billion in damage from the war so far, with no end in sight of a cease fire. Assuming Russia will lose the war, will they pay the Ukraine some kind of restitution? I would guess not. It doesn’t seem like they can even give basic supplies to their army like food and ammunition. Hence, the 300,000 soldiers they are drafting to fight this conflict are being dubbed “cannon fodder.”
So far, over $13.6 billion was sent to the Ukraine for the purposes of purchasing new weapons for defense (*SOURCE: Theconversation.com). Slovakia is sending Soviet War-era weaponry. Other European nations have also started making their contributions. Poland has recently started erecting a fence in anticipation of a possible invasion. Clearly they have learned their lesson from World War Two. Other European countries have taken similar measures.
Oddly, Putin’s popularity was at one point, high amongst the Russian People, partly due to a clamp down on external media, heavy censorship and misinformation about the war. While he may be losing the Ukrainian conflict he started, he was winning the war in his own country to maintain control by throwing anti-war protestors in prison. Since the draft, his popularity is now dwindling, to the point where one would have to wonder, at what point does it make sense to defeat one person rather than millions? Putin is rumored to by alienating himself from his cabinet and trusting no one. That doesn’t seem very surprising based on the lack of success during his campaign. Soldiers were once promised they would be welcomed and greeting as heroes in the streets. Instead, they are met with AK-47 machine guns and Howitzers.
Putin has been “showing his strength” to ensure he will continue to rule the Russian people, regardless of the mass casualties on both sides. His dream to expand mother Russia and bring back the Soviet Union he once found so dear to him has led to the death tolls of tens of thousands of Ukrainian civilians, and over 63,000 Russian soldiers dead, not to mention the death of his 5 top generals in just the first few months of the way (*SOURCE: CNBC).
As the U.S. continues to put pressure on Putin’s circle of friends, business partners and Russia’s Oligarchs, the Russian “royalty” seem to feel the pinch, but not Putin. More recently, the Russian’s elite have hid their Yachts in Dubai, unfortunately, they now cannot leave. Oligarchs have reported that their concerns have fallen on deaf ears in the Kremlin.
Putin has been reportedly become more and more isolated since the beginning of Covid, his mistress being hid in Switzerland and Putin distancing himself both physically and financially over recent years. Has he lost touch with reality or is he just so hellbent on creating a legacy that nothing else matters? Is that what happens when you are the one of the richest men in the world? Is this why he has had seven assassination attempts since he has come to office? Should he expect even more?
The Economic Toll on the U.S.
The U.S. has committed to spending over $54 billion to help Ukraine win the war (*SOURCE: Westernjournal). Knowing the our national debt is over $30 Trillion dollars, are we now digging a financial grave for ourselves as a country? The military is expecting to have to replenish it’s own stockpiles costing at least $1.5 billion. As this spending continues, keep in mind this is an election year and all is takes is a Republican controlled Congress to stop the financing of the Ukraine defense war machine and things could go South very quickly for the struggling nation.
But don’t think it stops there. While Inflation was bad before Putin rolled in his tanks, now it has become downright painful when we got go the pump and the grocery store. Thanks to Covid-19 and the increase in demand for goods and services, everything seems to be going up. According to NPR, 1 in 6 people in America cannot even afford to pay their utility bill. Oil is hitting all time high records, and it doesn’t help when we hear reports of price gouging from the oil companies themselves. As China continues to heavily arm themselves and prepare for war over Taiwan, are we really ready to fight two fronts like we did in World War Two? It took four decades to get high taxes under control after subsidizing World War Two.
How long will the economic turmoil continue? I would expect it to take years assuming this war comes to a close relatively soon. After World War Two, it took 5 to 10 years before most of Germany was rebuilt, starting with the homes. And how long will this war last? Putin seems to be willing to play the waiting game. Who can outspend who? But even if Putin somehow were to succeed in taking the country and set up a puppet government, he still has to maintain control of the country. Will the Ukrainian people accept a puppet government after all they have been through? As Putin drives forward in his quest to reforge the “glory days” of the old Soviet Republic, what will be the long term costs? Will it potentially cost him his own power? And if so, what “war dog” could potentially replace him and be next to try and carve out a legacy for himself and claim the title, “The Stalin of his time?”