South likely to be hit most by West’s price cap on Russian crude oil
Months into Russia’s invasion of Ukraine, it is becoming increasingly clear that the latter’s traumas would not end any time soon. Nor is the invader registering any notable gains from its fatal decision to annex Ukraine by armed means and might. However, it’s abundantly clear that the destabilizing economic consequences for the world from the invasion are likely to increase exponentially.
The recent decision by the G7, EU and Australia to place a price cap of US $ 60 on a barrel of Russian crude oil is further proof of the West’s intention of weakening Russia relentlessly on the economic plane, but as matters stand, it is the global South that is likely to suffer most from this decision.
Observers of the global oil industry were quoted as saying that the world would need to brace for further oil price hikes as a result of the Western decision and that OPEC would likely reduce its oil output in the days to come with the aim of propping-up prices. Needless to say, these developments translate into graver economic hardships for the more vulnerable economies of the South, although destabilizing ripple effects from stepped-up oil prices would be felt worldwide as well.
At the time of the Russian invasion of Ukraine in February, hunger and famine were already taking hold of parts of Africa. Some African countries with the worst food crises are; Kenya, Nigeria, Ethiopia and Somalia. Their condition was further aggravated as a result of food and energy prices escalating, close on the heels of the invasion.
It was only a matter of time before these economic aftershocks made themselves felt in even the West. Right now, the West is very much into a ‘Winter of Discontent’, with rising food and energy prices proving to be doubly distressing. Inflation in the UK, for instance, is said to be notably high.
In the Asian theatre, countries such as Sri Lanka and Afghanistan are virtually begging for survival. If not for the largesse of the international community, it could be truly said that Sri Lanka ‘would not live to see another day’. If its multi-dimensional crisis is not resolved expeditiously, Sri Lanka is likely to be categorized by the world community as one of those countries with the highest levels of hunger in South Asia and Southeast Asia. Some other countries in this category from the regions concerned are: Timor-Leste, Afghanistan, Pakistan, India and North Korea.
Accordingly, the mentioned economically-distressed countries and more are unlikely to survive another series of energy and food price shocks and also remain intact, so to speak. However, with the prospects remaining bleak for a negotiated settlement of the Ukraine crisis, the possibility of the international community alleviating the economic hardships of the South in the foreseeable future is remote. The conclusion is inescapable that the South would need to brace for aggravating material hardships and economic disempowerment.
Wise counsel would need to be brought to bear on the Russian political leadership to enable it to see the no-win situation into which it has brought itself in the Ukrainian theatre. President Putin is unlikely to take the path of negotiations in Ukraine if the latter course would incur for him a loss of face and prestige. The negotiated settlement while ensuring Ukraine’s independence and geographical integrity should guard against the possibility of a drastic loss of prestige and credibility for the Russian President in the eyes of his public at home.
However, the world community is quite a distance away from such a win-win outcome, considering the polarities in thinking and the persisting hostile relations between the main sides to the Ukraine crisis. The solution calls for deft diplomacy of the highest order.
It is left to powers, such as China and India, to take up the challenge of bringing about a negotiated political settlement in Ukraine. China has not condemned the Russian invasion of Ukraine but is not endorsing it either. Since the Chinese political leadership has entered into what may be called a détente process of sorts with the US, it emerges as a suitable candidate to bring the antagonists in Ukraine to the negotiating table.
President Xi could use the measure of cordiality he established with President Biden before the recent G-20 summit in Indonesia to narrow the differences between the conflicting sides in Ukraine, considering that the West’s staunch support for Ukraine is a vital factor in perpetuating the conflict.
Likewise, Indian Prime Minister Narendra Modi could use his offices as the head of the G-20 to help to bring the crisis in Ukraine to an end. As is the case with China, India enjoys cordial ties with Russia and being a major democracy, India is likely to see the wisdom of ending the Ukraine conflict by peaceful means, in consideration of the need to serve the best interests of the Ukrainian and Russian publics without further delay.
A moral duty is cast on the world’s foremost democracies, such as India, to attach primacy to the wellbeing of people everywhere and in the current world economic crunch, it is the people who are affected negatively most. It stands to reason if the Ukraine invasion is ended through negotiations, there would be considerable relief for people worldwide.
The fact that there is considerable popular unrest against the political leadership of China and Russia at present should further prompt the respective Presidents of these countries to lose no time in doing their best to end the Ukraine crisis by peaceful means. It ought to be clear that their tenures at the helm of their countries would no longer be peaceful, since their policies, domestic and foreign, have only served to trigger internal dissent and unrest. They may deploy state coercion to get such unrest under control but the possibility is that the people’s animosity towards their regimes will explode time and again.
If Xi and Putin would permit wise counsel to prevail they would redress the grievances of their publics by peaceful means rather than court chronic and continuing dissent against their regimes by seeking to quell their popular uprisings through the use of coercion. Next, they should use the expertise they have acquired locally to heal a ‘running wound’ that is bringing distress to people the world over, such as the Ukraine crisis.
