Geopolitical risks returned on the global stage with a vengeance in 2021 when Russia invaded Ukraine. Markets went into a tailspin but those who have a deep understanding of the historical ties between the two companies were less surprised. The hope is that the war will end soon but the landscape has shifted with China emerging more powerful than before.
These are the views of Tony Brenton, former British Ambassador, providing his experience in dealing with Russia from 2004 to 2008. “What we have seen is a $4 trillion hit to the economy,” he says. “The longer it goes on, the worse it gets. The result is the fragmentation of globalisation and the emergence of a southern dominance which is home to two thirds of the world’s population. These countries include India and Brazil, but China is emerging as the winner.”
As for Russia, it is likely to emerge diminished when the war ends but in fact, its economy as not been damaged by the sanction as the West expected, according to Brenton. They found other countries to see their oil and products to.
Predicting the end of the war is difficult especially as Ukraine President Volodymyr Zelensky has emerged as a much more resilient war time leader as anticipated. It will be difficult for Putin to let go.
“He firmly believes that Ukraine is in effect part of Russia,” he says. “He never really believed in the breakup of the Soviet Union and in his heart, Ukraine is a core part of what he sees is the Slavic identity, his home.”
Brenton notes, the two countries shared heritage dating back more than a thousand years to a time when Kyiv, now Ukraine’s capital, was at the centre of the first Slavic state, Kyivan Rus, the birthplace of both Ukraine and Russia.
Although Ukraine changed hands several times over the centuries, the country was one of the many to fight a brutal civil war before being fully absorbed into the Soviet Union in 1922 after the revolution. The result is that eastern Ukraine came under Russian rule much earlier than western Ukraine, which, spent centuries under the shifting control of European powers such as Poland and the Austro-Hungarian Empire.
The historical backdrop provides the backdrop to the current conflict and why Russia is holding on tight for now.
©Markets Media Europe 2023
