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Opinion: The economic impact of the Russia-Ukraine crisis

07 March 2022 | Story Sanet Madonsela | Photo supplied

SanetMadonsela_web read more — Sanet Madonsela is a PhD Candidate in the Centre for Gender and Africa Studies. She is also the Chairperson of the South African Association of Political Science's Emerging Scholars Research Committee and the Projects and Events Coordinator for the International Association for Political Science Students

Opinion article by Sanet Madonsela, PhD Candidate in the Centre for Gender and Africa Studies, University of the Free State.

On the 24 February 2022 the world woke up to the news of Russia announcing its’ “special military operation” to “demilitarise” and “deNazify” Ukraine. This announcement was followed by a sophisticated, all-out attack by land and air. As Russia began its invasion, the rest of the world watched in anguish, contemplating the unavoidable international political and economic implications.

There are competing views as to why Russia invaded Ukraine. Some argue that the attacks were based on Ukraine’s desire to join NATO, while others link the invasion to the Minsk agreements. The Minsk agreements are two treaties signed in 2014 and 2015 aimed at ending the war in Donbass. To provide a bit of context one needs to go back to 2014.

Resolution to recognise Donetsk and Lugansk

Moscow was angered that its candidate lost Ukraine’s presidential mantle in elections in 2014. This resulted in Donetsk and Luhansk announcing their autonomy from Kiev. In September of that year the government of Kiev and the separatist leaders agreed to a 12-point ceasefire called Minsk I. Despite the signing of the agreement, the fighting continued resulting in Russia, Ukraine and the Special Monitoring Mission of the Organisation for Security and Co-operation in Europe (OSCE) signing Minsk II. The agreement called on Ukraine to control the state border, constitutional reform and decentralisation. Despite an election held in 2018 in the eastern regions, the US and the EU have refused to recognise the legitimacy of the vote, thus, violating the agreement. The OSCE has reported significant daily increases in ceasefire violations in the affected areas since February 2014. While the US is not a signatory, it has expressed the importance of implementing the agreement. Instead of accepting the existing agreement, Ukraine allegedly never implemented its provision thereby incensing Moscow as well as ethnic Russians in Ukraine.

On 16 February 2022, the Russian parliament adopted a resolution requesting Putin to recognise Donetsk and Lugansk. This agreement was signed on 21 February 2022 and followed by a request to deploy armed forces. Inevitably the conflict dynamics have escalated.

While some believe themselves to be immune to the conflict, economists warn that it will have far-reaching global consequences as armed conflict tends to disrupt supply chains and increase the price of food and gas. They predict a further increase in oil prices per barrel as Russia is the world’s largest natural gas exporter and the second largest exporter of crude oil. This is important as oil prices directly impact transportation, logistics, and air freights. On Thursday, 24 February, global oil prices past $105 per barrel warranting these predictions. In addition, Russia is the world’s largest supplier of palladium, a material used by automakers for catalytic converters and to clean car exhaust fumes, a delay which would affect auto production. It is worth noting that Ukraine is a major provider of wheat, corn, and barley. A lack of yellow maize, or even a slowdown in production, could result in an increase of meat prices.

Exports and sanctions

Combined, Russia and Ukraine export more than a third of the world’s wheat and 20% of its maize. They also account for 80% of global sunflower oil exports. They supply all major international buyers, as well as many emerging markets. In 2020, 90% of the African continent’s $4 billion agricultural imports from Russia were wheat and 6% sunflower oil. South Africa does not produce enough wheat and is heavily reliant on imports from these countries. It imported more than 30% of its wheat from these two countries over the past five years.

Western states have announced a coordinated series of sanctions aimed at Russian elites; however, critics warn that they may be ineffective as the country’s economy is large enough to absorb even the most severe sanctions. Its central bank has more than $630 billon in foreign reserves and gold. Its sovereign wealth accounts for an additional $190 billion. Russian debt accounts for a mere 20% of its gross domestic product (GDP).

The European Commission’s president, Ursula Von der Leyen, states that the bloc would target Russia’s energy sector by preventing European companies from providing Russia with the technology needed to upgrade its refineries. The US Department of Treasury has committed itself to prevent Russia’s state-owned Gazprom from raising money to fund its projects in the US. It is worth noting that Russia and Ukraine’s imports and exports to the US account for less than 1%, while Europe and Russia are interdependent. The EU needs Russian gas, while Russia needs the EU’s money. Some warn that the EU’s decision could be detrimental as it receives over a third of its natural gas from Russia. This is used for home heating and energy generation. These fears were intensified when the natural gas price in Europe increased by 62% on 24 February. It is believed that Russia has been preparing for economic isolation for years and that it could better absorb the sanctions than Europe’s ability to reduce its dependence on Russia’s oil, gas, and coal. Despite all these, Gazprom announced that its gas exports to Europe were continuing as normal.

While the world watches with bated breath as the conflict rages there are some promising signs. Russian and Ukrainian delegates are currently meeting on the border with Belarus to start a dialogue and Ukraine’s President Volodymyr Zelenskyy has called on Israel to serve as a mediator between himself and Russian President Vladimir Putin. Let us pray that reason prevails.

News Archive

Another boost for sport at the UFS

2005-10-13

A contract formalizing the appointment of Sports Plan (Pty) Ltd was signed by Prof Verschoor and Mr Morne du Plessis in the historic Main Building of the UFS Bloemfontein campus.

The University of the Free State (UFS) has officially appointed Sports Plan (Pty) Ltd, which has former Springbok rugby captain Morné du Plessis as managing director, to manage its Centre for Exercise and Sport Science Services (CESSS) on the Bloemfontein campus.

According to Prof Teuns Verschoor, Vice-Rector: Academic Operations, the appointment of Sports Plan (Pty) Ltd is another step in the implementation of the UFS’s wide-ranging sport strategy to improve sport facilities and elevate formerly marginalized sports such as soccer, hockey, netball, tennis etc.

Sports Plan (Pty) Ltd is the manager of the Sports Science Institute of South Africa and coordinates and manages the national basketball high-performance programme of SA Basketball, as well as the Boxing Academy on behalf of Boxing South Africa.

“It is also actively involved with the sports plans of several tertiary institutions like that of the University of Johannesburg and the University of Stellenbosch,” said Prof Verschoor.

“Sports Plan (Pty) Ltd was also appointed by the Ministry of Sport and Recreation to manage the allocation of sports codes to high-performance centres and to oversee the allocation of monies received from the National Lottery to these centres – this includes the CESSS at the UFS,” Prof Verschoor added.

In unfolding its national sports plan, the Ministry of Sport and Recreation has already identified the UFS-based CESSS as the high-performance testing centre for the national basketball teams whilst the national boxing teams are also earmarked to be trained at the UFS.

“We are glad to be associated with a company of this stature and look forward to work with them in the further development of sports at the UFS,” said Prof Verschoor.

According to Prof Verschoor, the CESSS will act as a centralised body that is responsible for the coordination and management of joint initiatives between professional service providers, research projects and KovsieSport.

“The centre will also coordinate and manage joint initiatives between various academic programmes in different academic subject fields such as sports medicine, bio kinetics, physiotherapy, dietetics, etc. ,” said Prof Verschoor.

These initiatives will help the UFS to become a centre and catalyst of sports development, to become internationally recognised in the field of exercise and sports science research and to become a centre for high quality sports performance enhancement.

Some of the objectives of the CESSS are:

To provide sports science services like to athletes, students, the general public and other stakeholders including certain national sport teams.
To provide the necessary teaching and training facilities and internship opportunities for UFS students in sports related fields of study will also be provided by the centre like human movement science.
To present skills-transfer programmes directed at the broader community like development of skills in various sporting codes.
To continue and extend the current chronic risk reversal programmes presented by the Department of Human Movement Science such as obesity management, cardiac rehabilitation and other lifestyle related conditions.

The centre was founded in 2003 and was until now managed by Dr Louis Holtzhausen, from Kovsie Health and a consultant, Dr Gary Vorster.

A contract formalizing the appointment of Sports Plan (Pty) Ltd was signed today by Prof Verschoor and Mr Morne du Plessis in the historic Main Building of the UFS Bloemfontein campus.

The manager of the centre appointed by Sports Plan (Pty) Ltd is Mr Charles Store, an alumnus of the UFS, previously employed at the Sports Science Institute in Cape Town and by the SANDF at 3 Military Hospital, Bloemfontein.

Media release
Issued by: Anton Fisher
Director: Strategic Communication
072-207-8334
12 October 2005

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