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Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Panel: Russian Invasion of Ukraine to Have Lasting Impact on Global Supply Chains

The Russian invasion of Ukraine will have lasting effects on diplomatic frameworks and global economic interdependence, panelists said at a virtual event. 

At the March 17 event, titled “The Impact of the Russian Invasion on the Ukrainian, Russian, and Global Economies,” leading economists discussed the domestic and global implications of the economic crisis fueled by the ongoing war in Ukraine. 

Anna Yuan / The Hoya | Russia’s invasion of Ukraine will cause lasting global and economic effects, the panelists said at the virtual March 17 event.

The event was co-sponsored by the Georgetown University Global Economic Challenges Network and the Solvay Brussels School of Economics and Management. 

The event was moderated by ​​Shéhérazade Semsar-de Boisséson, the inaugural executive director of the McCourt Institute. 

Russian president Vladimir Putin launched a full-scale invasion of Ukraine on Feb. 24, prompting the biggest military conflict in Europe since World War II. The unprovoked invasion has caused the largest refugee crisis on the continent since World War II, with nearly three million of Ukraine’s 44 million residents fleeing the country. 

The war has revealed how globalized the world is, according to Sergei Guriev, who served as chief economist at the European Bank for Reconstruction and Development from 2016 to 2019. 

“The biggest Russian carmaker stopped production because of its lack of access to foreign imports of chips. A lot of Russian companies don’t know what to do because they were reliant on Europe and the U.S. for imports. Even if you think you are safe because your suppliers are domestic, COVID already showed us that supply chains are more complex than we think,” Guriev said at the event. “Maybe you are relying on Russian companies but they themselves rely on foreign companies.”

Many countries have imposed sanctions on Russia in response to its invasion of Ukraine. For instance, the United States, the European Union, the United Kingdom and Canada banned certain Russian banks from SWIFT, a security network that facilitates payments among 11,000 financial institutions in 200 countries. 

Additionally, the United States has barred Russian financial institutions, including the Russian Central Bank, from making transactions in U.S. dollars.

Sanctions imposed on Russia have been a driving force so far, according to Tymofiy Mylovanov, Ukraine’s former minister of economic development, trade and agriculture. 

“The most important thing which happened was the sanctioning of the Central Bank of Russia. The reserves of the central bank were frozen. Since the beginning of the war, even big Chinese banks have been complying with U.S. sanctions,” Mylovanov said at the event. 

Sanctions have prompted the decline of the ruble, leaving many Russians unemployed. 

The extent of the sanctions imposed against Russia  is unprecedented, according to Guriev, the current president of the Kyiv School of Economics and a professor of the University of Pittsburgh.

“If you think about where the Russian ruble should be, even without all these tensions, it should be much stronger. Oil prices have grown a lot in the past year but the ruble has not strengthened. This shows you where the market was before the war, but what happened during the war was a completely different reality. Apparently Mr. Putin started this war without telling the economic policy team,” Guriev said. “They did not know that the West would be so united in its resolve and willingness to go far.” 

Oil and gas prices across the world soared after Russia invaded Ukraine, setting the highest prices since the 2008 financial crisis. The price of gas has begun to steadily decline. 

The international community — especially the EU — must double down on its efforts to end the war through embargoes on oil and gas, according to Guriev.

“We don’t know if this destruction of the domestic economy may be important, but what is important is whether he still has resources to pay for his war. Europe has to join the American embargo on oil and gas. That might close down the light at the end of the tunnel for Putin, destroy the Russian ruble, and the Russian budget. If this oil embargo is in place, President Putin will have a huge budget deficit and will not be able to pay his soldiers,” Guriev said.  

Global leaders must recognize Putin’s lack of sensibility and devotion to the continuation of this war, according to Mylovanov. 

“Our expectations on how President Putin behaves have been wrong because we are surprised time and time now,” Mylovanov said. “Every assumption we thought about the rationality of Putin has been violated. He has been doubling down on everything, and we should stop being in self-denial.”

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