The Impact of the Russian Invasion of Ukraine on the Economic Strength of Ukraine
1.1 Background of the study
According to Benkovskis (2022) twenty-five years after the collapse of the Iron Curtain, the current acute crisis in Russian-Western ties is not only a tremendous setback but is also escalating into a hazardous geopolitical clash. The conflict’s economic ramifications are as serious: not just for Russia (and, of course, first and foremost for Ukraine), but also for Europe’s still-fragile economic recovery (Brill,2022). The conflict’s ramifications stymie desperately needed investments and GDP development in Russia, which was already “locked in transition and stagnation” before the present crisis occurred, as well as economic reform and modernization (Benkovskis,2022). The purpose of this study is to examine the impact of the Russian invasion of Ukraine on the economic strength of Ukraine, the European Union, and even Russia. Needless to say, Ukraine is the major victim of the war, where, in addition to the already-inflicted human and material losses, a terrible economic slump has set in (Gaddy,2022). A protracted civil war in eastern Ukraine, resulting in a “frozen conflict” like that in Transdniestria, Abkhazia, South Ossetia, or Nagorno Karabakh (although on a much bigger scale), is now a distinct possibility (Gaddy,2022). The de facto breakup of Ukraine has resulted in a significant danger with global implications that go well beyond the scope of this study. Although Russia is often blamed in the West for the war after the invasion of Crimea and subsequent involvement in eastern Ukraine, the blame cannot be placed exclusively on Russia or even on Mr. Putin (in Russia a fair share of the blame is put on the West) (Copsey,2022). The dispute has a lengthy history (Brill,2014). The EU’s disastrous (mis)management of the Ukrainian issue (preceded by the Eastern Partnership (EaP) plan) has also contributed to the current geopolitical strife. The tug of war between Russia and the EU over Ukraine intensified in the second half of 2013, just before the EU and four EaP countries (Armenia, Georgia, Moldova, and Ukraine) were set to sign Association Agreements (which included a Deep and Comprehensive Free Trade Area AA/DCFTA) in November 2013. After the terms of the AA/DCFTA became public in the summer of 2013, both Russia and Ukraine were abruptly awakened to the potential negative economic effects of signing the agreement. Russia has begun to adopt and ‘test’ remedies (and has promised to enact more), such as import restrictions on Ukraine and Moldova, who are also EaP nations(Raik,2014). The Russian threats were partially effective: in September 2013, Armenia chose not to sign the AA/DCFTA with the EU, opting instead to join the Russian-led Customs Union and Eurasian Union alongside Belarus and Kazakhstan (Copsey,2014). Just days before the Vilnius EaP Summit in November 2013, Ukraine’s President V. Yanukovych announced the postponing of the AA/DCFTA signing – a move that ignited the first wave of demonstrations (Deutsche, 2014). The rapid sequence of events following the failed Vilnius Summit in November 2013 is well known: violent mass protests on Kyiv’s Maidan in February 2014, EU-sponsored mediation between protestors and the Yanukovych government (involving foreign affairs ministers from France, Germany, and Poland), and so on. In February 2014, representatives of Maidan demonstrators, President Yanukovych, and EU mediators struck an agreement that called for early elections and constitutional amendments in the fall. However, President Yanukovych’s ouster and flight to Russia the next day, as well as the controversial formation of a new transitory government in Kyiv (whose legitimacy was questioned in eastern Ukraine and Crimea, but backed by the West) led by Mr. Yatsenyuk as acting Prime Minister and new parliamentary speaker Mr. Turchynov, sparked internal conflict in Ukraine (Füle, 2013). In March 2014, the annexation of Crimea by Russia provoked the first wave of Western sanctions. In contrast to Crimea, where the ‘reunification’ was peaceful, anti-Maidan protests in eastern Ukraine (as well as Odesa in southern Ukraine) became violent as the new government in Kyiv attempted to reclaim control over the rebellious regions through force, involving both regular military troops and freelance fighters, mostly from western Ukraine Deutsche (2015). Mr. Poroshenko, an oligarch with holdings in the food and media sectors, was elected president with a clear majority vote on May 26, 2014; the result was’ respected’ by Russia, but not by separatists in Donbas, who do not recognize the government in Kyiv and instead declare independence. After the tragic downing of a Malaysian passenger jet on 17 July 2014, the situation in eastern Ukraine (and the corresponding Western sanctions) deteriorated even worse, with the cause of the catastrophe still unknown. Despite a tenuous truce agreed in Minsk in September 2014 between representatives of Kyiv authorities, Moscow, and Donbas rebels with the help of the OSCE and the EU, no long-term solution to the war is in sight. Only dialogue involving representatives of Ukraine, Russia, and the EU along the lines recommended previously. by Havlik (2013), and more recently by Emerson (2014) and others, may serve to de-escalate and perhaps settle the current crisis. On September 16, 2014, the Ukrainian parliament and the European parliament both accepted the AA/DCFTA, albeit the implementation of trade-related clauses (DCFTA) would be delayed until the end of 2015, reflecting the trilateral agreement between the EU, Ukraine, and Russia. The present situation between Russia and Ukraine will increasingly hurt the economy of Ukraine and even Europe as a whole as the impact of the war stretches beyond Ukraine’s borders, and the rises in global energy prices in particular, as does inflation” (Inayeh,2022). Food prices have also been pushed up by the war, and “are a very real consideration and problem for people in poor countries”. Both Russia and Ukraine are big food producers. Ukraine is the world’s biggest producer of sunflower oil, with Russia number two, according to (Benkovskis,2022), Between them, they account for 60% of global production. The two countries also account for 28.9% of global wheat exports according (Benkovskis,2022). Wheat prices on the Chicago future exchange have been trading at 14-year highs. Russian supplies of these commodities are being restricted because of the widespread sanctions which make it hard for the rest of the world to buy its products. Ukrainian supplies have been stopped because fighting has closed the country’s ports (Raik,2022). Hence the need to look into the impact of the Russian invasion of Ukraine on the economic strength of Ukraine.
1.2 Statement of the problem
The danger of Russian armed troops invading Ukraine has already had a severe impact on the Ukrainian economy (Raik,2022). If the country is attacked militarily, depreciation of the national currency and a rise in the cost of borrowing on external markets, which have been occurring as a result of the mounting uncertainty, might become much more substantial (Inayeh,2022). High levels of uncertainty are harming consumer and investor confidence, resulting in lower consumer spending and postponed investment projects, particularly FDI. Additional aid from the West is expected to cushion the damage and at least partly compensate for the loss of access to international financial markets(Raik,2022). The EU has already shown its support by launching a fresh EUR 1.2 billion emergency macro-financial assistance package (MFA) and an extra EUR 120 million in grant assistance (Brill,2022). The package is designed to assist Ukraine in meeting its increased financial demands as a result of the war. Canada provided a loan of USD 95 million and supplementary funding of USD 40 million (Raik,2022). The Ukrainian government is hopeful of getting a fresh tranche of up to USD 2.2 billion under the current IMF Stand-By Agreement and initiating a new arrangement to handle the emergency, with fewer limitations than previous IMF packages (Raik,2022). Cyber assaults (on the energy system, airports, and government administration) are anticipated to become far more widespread. The amount of damage caused by such hostilities will be determined by the Ukrainian side’s capacity to oppose them(Gaddy,2022). As a result, it is necessary to investigate the effect of Russia’s invasion of Ukraine on Ukraine’s economic strength.
1.3 Objectives of the study
The general objective of the study is the impact of the Russian invasion of Ukraine on the economic strength of Ukraine. The specific objective is as follows:
To examine the economic strength of Ukraine since its independence in 1991.
To evaluate the contribution of Russia to the economic strength of Ukraine.
To investigate the impact of the Russian attack on the Ukrainian economy.
1.4 Research Questions
The following questions have been prepared for the study
What is the economic strength of Ukraine since its independence in 1991?
What is the contribution of Russia to the economic strength of Ukraine?
What is the impact of the Russian attack on the Ukrainian economy?
1.5 Significance of the study
This study will examine the impact of the Russian invasion of Ukraine on the economic strength of Ukraine. Hence the study will be significant in the following ways:
Government: this study will be significant to the Nigerian government as it will see and learn from the Ukrainian invasion and reduce the country’s reliance on the western country.
Academia: this study will be significant to the academic community as it will contribute to the existing literature on the impact of the Russian invasion of Ukraine on the economic strength of Ukraine.
1.6 Scope of the study
This study will examine the economic strength of Ukraine since its independence in 1991. the study will also evaluate the contribution of Russia to the economic strength of Ukraine. Lastly, the study will investigate the impact of the Russian attack on the Ukrainian economy.
1.7 Limitation of the study
This study was constrained by several factors which are as follows:
Just like any other research, ranging from unavailability of needed accurate materials on the topic under study, inability to get data
Financial constraint was faced by the researcher in getting relevant materials and in printing and collation questionnaires
Time factor: time factor pose another constraint since having to shuttle between the writing of the research and also engaging in other academic work makes it uneasy for the researcher.
1.8 Research Methodology
Research methodology deals with the different ways or methods the researcher applied to carry out the research as well as the instrument used for gathering the data. There are several research methodologies appropriate for answering the research questions. The type of research methodology used in this research to gather data and relevant information is historical research and the study will adopt the descriptive method of data collection. This will involve the collection of materials from secondary sources, such as books, journal articles, magazines, internet sources, international and national conference proceedings, published and unpublished articles.
1.9 Organization of the study
The study consisted of five chapters. Chapter one comprised the background of the study and a general introduction to the work. It included a statement of the problem of the study, highlighted the objectives of the study, the scope within which the research was conducted is also highlighted. An outline of how the work is organized is also detailed in chapter one. Chapter two of the study reviewed the economic strength of Ukraine since its independence in 1991. Chapter three discussed the contribution of Russia to the economic strength of Ukraine. Chapter four discussed the impact of the Russian attack on the Ukrainian economy and chapter five is a summary of the major findings with recommendations and a conclusion to the study.
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Deutsche Bank Research (2015), ‘The economics of sanctions: The West can afford to be tough’,16 May.
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Raik, K., N. Helwig and J. Jokela (2022), ‘EU Sanctions against Russia. Europe Brings a Hard Edge to Its Economic Power’, FIIA Briefing Paper, No. 162, Helsinki, October