by Damon de Laszlo, ERC Chairman
The 24th of February’s announcement by Mr Putin that he was going to mount a ‘special military operation’ in Eastern Ukraine changed the world order. He also completely wrong-footed President Zi who he had assured he was not going to invade Ukraine, and that the US prediction that an invasion was imminent was an example of American propaganda. There is clearly considerable embarrassment being caused to China, and it is probably only China that will be able to force Putin’s retreat.
The horror of what Russia has unleashed on Ukraine in pain, suffering and destruction of the Ukrainian population seems to be a deliberate act of an unhinged dictator. I have often felt that dictators, whether they be Communist or Fascist, are but two sides of the same coin. The man is clearly unhinged, probably as a result of spending the last two years in self-imposed isolation. He is so frightened of Covid that he has refrained from close contact with anybody – neither his own staff nor foreign visitors, as seen with his meetings held at opposite ends of a ridiculously long table. His statements are incoherent and his idea that he would be welcome in a country that Russia had invaded and done its best to destroy within living memory, shows his delusion.
The West’s reaction was not anticipated. American predictions of the invasion were not taken seriously, and they were undermined by previous US and British predictions relating to the Middle East.
Germany’s reversal of its near pacifist stand under the Merkel government was dramatic. Merkel’s years of cosying up to Putin and promotion of policies that made Germany and Europe dependant on Russia have been, it would seem popularly, reversed in the space of one week, and NATO has risen to the top of the EU Agenda and will now, without doubt, be seriously supported by EU governments in revitalising its integrated defensive force.
Britain also will, hopefully, reverse its policies of “speaking loudly and carrying a small stick”, as it has emasculated its armed forces over the last thirty years or so.
While Ukraine is being mercilessly pummelled, the West, while rightly endeavouring to avoid all-out war, is imposing crippling sanctions on Russia that will bring the state to its knees. But as in war, this is a two-edged sword. Europe’s reliance on Russia and Ukraine for energy and raw materials is critical and the consequential impact on food supplies is likely to cause enormous hardship, if not starvation, around the emerging countries, the Middle East and Africa. Food prices in Europe are destined to rise dramatically as its agriculture is also impacted by the rising cost and shortage of fertilisers. The cutting off of gas supplies, both natural and, so-called, rare gases, along with rare earth elements, is quite possibly going to shut down sections of German industry, with ramifications in this supply-chain connected world for the UK and the rest of Europe.
Two weeks ago, the world looked like it was coming out of the Covid crisis and the disruption to the world’s economy was beginning to abate. Putin, at a single stroke, has put the global economy at great risk and could also precipitate a major financial crisis triggered by financial defaults, possibly starting in energy markets, and ricocheting into the West’s financial systems, most likely starting with the sub-prime debt that has become all too popular in the institutional market.
The world may furcate into different speed economies – the US continuing to grow over the next twelve months but slowing slightly, China to stabilise but growing at a slower rate, and Europe probably going into negative growth. Russia and many emerging markets will become effectively bankrupt. An extraordinary and frightening prospect that at this moment is too difficult to comprehend.
Damon de Laszlo
7th March 2022