In the modern world, wars have far-reaching consequences. Along with destroying the players directly involved, modern-day conflicts also significantly affect other nations as well.
With the ongoing war in Ukraine, we have clearly seen that a single conflict can completely disrupt the economy of a whole continent.
Ever since Russia invaded Ukraine, the European continent has been in a constant state of turmoil; energy prices have sky-rocketed, while numerous other economic issues have also disrupted the way everything functioned prior to the conflict.
Before the invasion, no one could have imagined that a conflict in North-Eastern Europe would have such consequences. The European economy had always been dependent on Russia because of its energy supply; however, everyone thought that once a conflict erupted, the EU would be able to adapt to the changes and find a way to replace Russia as its primary energy supplier.
But as we have seen in the last few months, it hasn’t been as simple as many experts had hoped. Still, the economic turmoil facing Europe cannot be solely blamed on the Russo-Ukrainian conflict; there are some other factors involved as well.
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Below, we look at how the Russia-Ukraine war has disrupted the functioning of the European economy.
- Energy Prices
The first and most obvious effect of the conflict is the rise in energy prices. Ever since last year when there was talk of a Russian invasion, energy prices started rising steadily. This trend has continued for almost a year, and the prices of hydrocarbons have never been higher in Europe.
Europe as a whole had always been dependent on Russian gas for decades, and the ongoing conflict has further highlighted the failures of the European governing body to find a suitable replacement for Russian gas.
Even after a series of declarations and sanctions on Russia, the EU hasn’t yet found an alternative for Russian gas. The European Parliament has passed a set of legislations, laying the groundwork for reducing energy dependence on Russia.
This is a major step towards energy independence, but it has had its repercussions on the economy. Energy prices have reached an all-time high, and even though new energy sources have been found, they haven’t been enough to fulfill the demands of the whole continent.
- Food Security
The food security of not just Europe but the whole world has been affected because of Russian aggression in Ukraine. The aggressor has decided to weaponize food, resulting in not only food shortages but also a humanitarian crisis that has not been seen in a very long time.
Because of the ongoing conflict, Europe has not been able to import essential food items like wheat, maize, and other grains. This has led to a shortage of basic goods, causing an unprecedented rise in the prices of basic commodities in the European market.
EU leaders have been working to find a solution for this ongoing crisis, but it continues to affect the economy of the continent.
- Trade
Trade is another sector that has been affected because of the ongoing situation in Ukraine. Exports from many European countries have been affected, which has taken a toll on their economy and affected their GDP to a great extent.
- Inflation
Inflation in Europe is at an all-time high, with everything increasing in price. From basic commodities to luxury items, the prices of everything have risen.
The reason for this is the increase in the prices of oil and gas. A domino effect has resulted from the ever-increasing hydrocarbon prices, affecting everything else.
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