Let’s start by hoping Vladimir Putin doesn’t press the nuclear button in the coming weeks. Secondly, let’s hope Kyiv will not be reduced to Stalingrad-like rubble. Even if we avoid those nightmare scenarios, the world’s political, economic and business landscapes are going to be altered beyond recognition now that Russian tanks have rolled into Ukraine.

Firstly, what went wrong with the Russian campaign? Moscow looks to have overestimated the strength of pro-Russia feelings among their Slavs brothers. Russia expected a quick thrust into Ukraine would be largely unopposed and the campaign would end with a rapid takeover of Kyiv and installation of a new puppet regime in place of the government of “drug-taking Nazis”, as Putin so delightfully put it, led by President Volodymyr Zelensky, who’s gained superstar status. (Zelensky is also definitely not a Nazi because he’s Jewish). 

The Russian government knew heavy Ukrainian casualties would be unpopular at home and even amongst its soldiers so it has held back on attacking cities, though now that seems to have changed. Overall, it’s been a clumsily planned campaign marked by bad logistics with reports of Russian tanks out of gas and stranded. Now, though, it looks like the war may be entering a far bloodier stage.

As the campaign is a week old, it’s clear though, if nothing else, that the Russians have lost the PR battle, outstaged every step of the way by the resilient Ukrainians.

 Zelensky, the lawyer-turned-comedian-turned president, armed with his mobile phone with which he rallies world support, has ably filled the role of national leader in Ukraine’s darkest hour. By contrast, Putin has assumed the mantle of global villain, behaving unexpectedly erratically and making dangerous nuclear threats.

Tightening the noose

What’s more, with no signs the fighting will conclude quickly, the Americans and Europeans are tightening the sanctions noose on Russia. They’re even taking the drastic step of booting the Russians out of the SWIFT banking system which will massively complicate fund transfers.

Even China has signalled it doesn’t approve of Russia’s march into Ukraine. The China-Russia alliance which had been growing stronger now looks more fragile. India, too, though it abstained in a UN Security Council vote deploring the invasion, has just announced it’s sending Ukraine humanitarian aid and medicines. These are two strong, unexpected rebukes for the Russians.

The across-the-board sanctions coupled with Russia’s sudden status of an outcast are also breaking up longstanding corporate alliances. BP has just announced it’s exiting a $12-billion tie-up with Russian oil giant Rosneft that may mean a $25-billion write-down. ExxonMobil is under pressure to take similar action. ExxonMobil has a 30 per cent stake in the Sakhalin oil-and-gas fields in which ONGC Videsh is also a partner.

What happens, as looks likely, if Russia is squeezed out of the global trading system? Oil and gas prices will certainly climb — some traders are looking at crude at $120 (someone’s going to have redo the math in India’s Budget which assumes crude at $70-75). The rouble has already crashed 40 per cent. To get round the sanctions, India is looking at the possibility of revving up the rupee-rouble trade. But clearly a country as large as Russia can’t be cut out of the global trading system without it making an impact on just about everyone.

For almost 30 years now, globalisation has been the lynchpin of the New World Order. The top US companies slashed costs by moving to China where they could hire armies of low-cost workers. Companies also discovered new markets in Third World countries. The world had become a smaller place and globalisation was the way forward.

Have the Russians struck the final nail in the coffin of globalisation? Clearly, it sends a message to corporations that investing in foreign locales could be dangerous. For a long time now, global corporations and even smaller companies had made their blueprints for the future on the premise the world was their oyster.

China’s onslaught

An earlier signal about investor risks from globalisation came from China when it launched an onslaught against its own tech giants. Overnight, China’s stock-market darlings found themselves in the government’s sights. Alibaba was fined $2.8 billion and the Ant Group was ordered to scrap a New York mega-IPO. Didi, the ride-hailing company had to suspend its app and educational companies were abruptly told they could no longer charge students. Inevitably, global investors took a heavy hit amidst all this.

US President Donald Trump was the first to question globalisation and the en masse move to China. In Trump’s mind, business was only worthwhile if the factories were producing their products under his nose in the US. More crucially, he spotted China’s economy was moving ahead faster and was poised to catch up and even possibly overtake the US. Trump began the campaign to get US business to invest less in China.

So could globalisation be pushed onto a different track? Will companies stay close to home particularly for key items like semiconductor chips which have been in short supply in the wake of the pandemic. Last year, Intel announced it would spend $20 billion on a chip fabrication facility in Arizona and $3.5 billion on a chip plant in New Mexico. A few days ago, it announced another $20-billion plant in Ohio. India is also hoping to set up chip fabrication facilities but it will be a long haul.

The direct impact of the events will, of course, be in Europe. This is a continent ripped apart by two wars just 21 years apart; a continent wearied by the dreadfulness of the Holocaust. From those memories sprang both the European Union and NATO. The EU aimed to create economic ties that would bind the entire continent and prevent conflict. But there was more than that. Says British thinker and journalist Will Hutton: “Its (the EU’s) foundations lay in the collective recognition Europeans have to stand together to protect their security and values.”

NATO was the sword arm to keep the Russians in their corner of the continent and ensure the US pledged to defend the entire continent. Even after the Iron Curtain collapsed, NATO treated Russia as its main enemy, squandering any chance to forge a new relationship.

Now, the Germans have pledged to spend the gigantic sum of $100 billion to rearm. The French will be forced to follow suit and so will the British, if they can afford it. Historians talk about how starting around 1905 the Germans, French and British began to build their military might and turned the continent into an armed camp that ended in the 1914-18 Great War. Will history be repeated once again? 

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