ROME

Russian war on Ukraine hit Europe with a wide range of political, economic, and social effects, as the conflict has evolved into a dramatic humanitarian crisis, turning food and energy prices volatile and posing key questions about the EU’s architecture and its global alliances.

Political experts agree that both the short and long-term effects of the Ukrainian crisis need to be unitedly assessed at a European and international level to ensure these heavy consequences will not result in a new, worldwide shock, putting at risk the survival of European institutions and Euro-Atlantic ties.

However, according to many observers, what has been dubbed “the perfect storm” -- for its effects on world security, the international economy, and global energy supplies -- could turn into a unique opportunity for Europe to rethink its future and assess its historic vulnerabilities.

The Russia-Ukraine war represents what many economists have defined as the “third asymmetric shock” that Europe has experienced in the last two decades after the 2008 financial and economic crisis and the COVID-19 pandemic.

The shock waves from the conflict will continue to reverberate around the globe, analysts noted, while many international agencies lowered their global growth forecasts.

In late April, the IMF cut its global growth projections for this year and 2023, stressing that the economic impact of Russia’s war on Ukraine will “propagate far and wide, adding to price pressures and exacerbating significant policy challenges.”

The World Bank also lowered its global growth forecast for 2022, by nearly a full percentage point from 4.1% to 3.2%, citing the pressure that the Ukraine crisis has placed on the global economy.

“Europe was emerging from a dramatic phase, following the heavy economic recession caused by the COVID-19 pandemic, and was trying to reach a new normality,” Ferdinando Nelli Feroci, the head of the Italy-based think-tank Institute of International Affairs, told Anadolu Agency.

“The Ukraine crisis has hit Europe as the third black swan in a few years. Luckily, for now, Europe has demonstrated it can give a united and important response, inspired by the principle of solidarity,” he added.

Nelli Feroci stressed, however, that the Ukrainian crisis has also exposed Europe’s chronic weaknesses, especially in some fields -- such as the defense and security sector -- highlighting European countries’ dependence on Russia for key basic goods.

“We are working on it, but it will require a long time,” he noted.

To prevent asymmetric shocks from further weakening the EU, economists say European members need to step up their capacity to show solidarity with the most affected countries.

This is what Europe has already done to face the 2008-2009 economic crisis, and what it did to assess the economic impact of the COVID-19 pandemic, by pooling vaccine purchases and implementing the Next Generation EU plan.

Countries are currently working on contingency plans as a response to the shortage of oil and gas. The EU is studying plans to reduce dependence on Russian gas and oil by 2024, while other states and big private energy companies are leaving Russia.

International markets have already reacted to Russia's war on Ukraine with a gas and oil price surge. The immediate effect of these developments is that investment in renewables has now to be considered by EU members a key component of energy security and political stability.

“Europe has demonstrated a capacity to provide an integrated response, which was unthinkable before this Ukrainian war,” said Franco Pavoncello, a professor of political science and head of the Rome-based John Cabot University.

“The common response to the post-COVID economic crisis has been a first move in the right direction, with EU’s growth and resiliency plans, but now member states need to step even further,” Pavoncello added.

Concerns about stagflation

After the first economic shock, economic experts forecast that Russia’s war on Ukraine will further slow the economic growth across the continent and push inflation to record levels, raising the specter of stagflation. The IMF predicts that the inflation rate will reach 7.7% in the US this year and 5.3% in the eurozone.

The Ukrainian conflict is also heavily affecting Europe's clean energy transition and has the potential to accelerate the global shift to green energy in the long run. In the short term, it risks having wide consequences on energy prices and market structures.

Increasing food and fuel prices are chief among them, while aggravated poverty worldwide is likely to be another.

The Washington-based Center for Global Development estimates that at least 40 million people around the world will be pushed into extreme poverty – defined as living on less than $1.90 a day – because of the price spike sparked by Russia’s war on Ukraine.

Analysts also stress that global markets have become increasingly volatile as investors weigh in on the impact of the war in Ukraine, the potential disruptions to the flow of commodities, and the tightening of global sanctions on Russia.

“We are already witnessing a surge in inflation and a slowdown in global growth. If international sanctions against Russia are strengthened, we could face a real worldwide recession,” said Valentina Meliciani, an economics professor at Rome’s LUISS University.

“This crisis is a new, key challenge for the EU and its member states and also involves a rethinking of the relationships with the United States and other key global players,” she added, stressing that Europe needs to step up efforts to strengthen European governance with common policies able to respond to this new emergency.

Epic humanitarian crisis

Experts also noted that a war -- sometimes perceived as “local” -- has an enormous impact on the rest of the world in terms of global food supplies.

Russia’s war on Ukraine has already created economic disruption and increased poverty, food insecurity, and inflation far beyond Eastern Europe.

Ukraine grows enough food to feed 400 million people worldwide, which includes 50% of the world's sunflower oil supply, 10% of the worldwide grain supply, and 13% of the global corn supply.

On a humanitarian level, the conflict’s consequences could be epoch-making, making this the fastest-growing refugee crisis since World War II and the first of its kind in Europe since the Yugoslav wars in the 1990s.

According to the UN, more than 5.8 million people have so far fled Ukraine to other countries, with over 7.7 million internally displaced in the country due to the ongoing war.

An estimated 55 children are forced to flee the country every minute. More than half of Ukraine’s children had been displaced just after a month of Russia's war on Ukraine started on Feb. 24.