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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

First-year students encouraged to attend UFS welcoming function

2006-01-12

The University of the Free State (UFS) will host a welcoming function for all new first-year students and their parents on Saturday 14 January 2006 in the Callie Human Centre on the Main Campus in Bloemfontein.

The function starts at 11:00 and will be addressed by the Rector and Vice-Chancellor of the UFS, Prof Frederick Fourie. UFS staff will also be available to provide vital information to first-year students on academic matters.

According to Mr Vernon Collett, Registrar: Academic Student Services at the UFS, Saturday’s welcoming function can assist students and parents by providing vital information on the many high quality academic learning programmes on offer at the UFS in six faculties.

“If students and parents have this information it will make the registration process, which starts next week Tuesday 17 January 2006, much smoother,” Mr Collett said.

The UFS has split the registration process into various categories of students and Mr Collett appealed to all students to adhere to the dates and times which apply to them as a one-stop service will be available so as to avoid unnecessary delays in the registration process.

The registration of first-time entering first-year students who applied before 30 November 2005 to study at the Bloemfontein Campus will take place from Tuesday 17 January 2006 at the Callie Human Centre.

Senior undergraduate students (that is, students entering their second or later year of study) may register from 23 January 2006.

Postgraduate students, first-time entering first-year students and other students who applied for admission to the main campus after 30 November 2005 must register at the Callie Human from 2 February 2006.

Late applications will be accepted until Wednesday 25 January 2006 at the Information Centre on the Main Campus’ Thakaneng Bridge. These applications will be regarded as pending and will be processed as places become available on the programme the student has applied for,” said Mr Collett.

Vista Campus:
The Vista Campus in Bloemfontein – which was incorporated into the UFS in January 2004 – no longer accepts applications from first-year students. Such prospective students had to apply to the UFS Main Campus. Students who had been registered on the Vista campus last year must register at the Vista Campus on the same dates as applicable on the Main Campus.

Qwaqwa Campus:
At the Qwaqwa Campus of the UFS, all first-time entering first-year students must report on Thursday 19 January 2006, after which the registration of these students will take place according to a specific programme. The official welcoming functioning for new first-years at the Qwaqwa campus of the UFS will take place on Saturday 11 February 2006 at 08:00 in the Rolihlahla Mandela Hall on the Qwaqwa Campus.

Mr Collett appealed to first-year students who have applied to study at the Qwaqwa Campus and their parents to attend this function which fulfils the same role as the one held on the Bloemfontein Main Campus.

Detailed information on the dates and times of registration for the various faculties and academic learning programmes is available on the UFS website at www.uovs.ac.za. Prospective students may also call the Main Campus in Bloemfontein on (051) 401-3000 or the Qwaqwa Campus on (058) 718-5000 for more information.

Media release
Issued by: Lacea Loader
Media Representative
Tel: (051) 401-2584
Cell: 083 645 2454
E-mail: loaderl.stg@mail.uovs.ac.za
10 January 2006

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