More chaos?

While a political power struggles rages inside Pakistan, the chaos in the world outside is in the process of expanding further. Although it is becoming apparent that Russia’s invasion into Ukraine has run into obstacles, it also raises prospects for peace talks (and with it, gradual cooling-off in energy and commodity prices). Maybe there will be a ceasefire leading to a compromise; maybe this three-week war will drag on. The global consequences of this regional showdown, however, are already coming into view.

First, countries (including Pakistan) are feeling the pressure to support either the West (US, UK, EU, etc.) or the so-called authoritarian bloc (Russia and China). The heat may increase further if there is direct confrontation between Russia and NATO or between China and US. After sanctioning Russia left, right and center, the West is now asking China and others to refrain from bailing Russia out militarily or economically. Pakistan, unfortunately, is yet to take a clear and credible stand in its foreign policy.

China has reportedly warned of economic retaliation against the US if its firms or individuals are sanctioned as a result of cooperation with Russia. A fresh US-China confrontation is looming on this count.In this context, Pakistan’s Finance minister’s optimism(expressed in his latest interview to the Financial Times) that Russia would build the multi-billion-dollar North-South gas pipeline seems misplaced.

Second, a global arms race is heating up, in the wake of a much-stronger country trying to lay to waste its smaller neighbor, all in the name of righting some historical wrongs. What to talk of smaller countries, even big powers feel insecure. Germany’s announcement earlier this month of giving a massive boost to its military spending says something! Unlike rich countries that have the finances to buy modern weapons and (in some cases) thecapability to produce arms locally, developing countries will remain especially worse-off in this arms race if they are forced to divert precious resources away from development.

Third, seeing how fossil fuels are currently causing economic havoc to global economic stability and considering renewables have yet to achieve scale, the oil-importing developing countries have to pay dearly for theircrude habit. Given the importance of crude oil in war times, nations may wonder if they should boost their cooperation with authoritarian countries (e.g. Russia, Saudi Arabia) that dictate global tradable oil surplus along with their OPEC partners. Western bloc rightly treats investments in renewable alternatives as critical to tackle climate change, but it cannot help when oil producers rule markets.

Fourth, the cocktail of high commodity prices, tight financial conditions and risks to economic recovery post-pandemic is delivered by fate with such poor timing, raising the prospect of the world entering a long and tough terrain of ‘stagflation’. Martin Wolf, the Financial Times’ renowned chief economics commentator, is hearing echoes of an economic crisis seen almost fifty years ago, as he wrote in his latest piece: “The combination of war, supply shocks and high inflation is destabilising, as the world learnt in the 1970s.”

And fifth, since Russian hostilities began, Wolf, and several other prominent commentators, have warned that global cooperation will suffer when it comes to future pandemics, climate change, peace-keeping in war-torn regions, multilateral systems for international trade, investment and finance, among other areas. Just as it is hard to tell how the Russian invasion will end in Ukraine, it is also difficult to fathom how or why the West can reconcile with Russia and its friends and rollback all those sanctions in the near or distant future. The spirit of global cooperation is sinking fast – the Iran nuclear deal being a case in point.

In short, the world is already a different place today than it was on February 24, whether or not folks recognize it at this stage. There are no good choices for any country right now. But all is not lost. The onus is on big powers to ensure that things do not get worse from here.

The term “off-ramp” is perhaps the most-used diplomatic term of the times, but it is of extreme importance to find a way out of this mess!