Reflections on a year of war

A year ago today, Ukraine woke to a Russian invasion.  Russia has failed to make much progress, although it has imposed staggering human and economic costs on Ukraine. In a brave, impressive, and ongoing effort, Ukraine has pushed Russia back.

Opinion is divided on what to expect next: the Russians are throwing masses of mobilised troops into battle, against depleted Ukrainian forces that are being equipped with advanced military equipment.  The next few months as spring arrives will be vital, and my sense is that Ukraine will have the edge.

But the unfortunate consensus is that the war has a way to go yet: ‘victory’ will be elusive.  From the discussions at the Munich Security Conference last weekend, to President Biden’s remarks in Kyiv and Warsaw this week, and Mr Putin’s state of the union speech, there is no backing down on either side – nor any obvious opening for meaningful negotiations. 

Whatever happens, Russia has substantively lost.  It is a diminished economy, a pariah state in the West, with limited strategic options and deep risk exposures.  NATO has strengthened and expanded (Finland, Sweden) and Ukraine will move closer to Europe: the start of a lengthy EU accession process is likely this year.

Beyond this, major structural changes have been unleashed across the global system.  The world after the invasion is a different place than before the invasion: a wartime economy is emerging, driven by big power competition, with accelerating fragmentation of global flows.  The invasion brough the curtain down on the post-Cold War regime, in much the same way as the fall of the Berlin Wall ended a strategic era.

This will be a turbulent process, disrupting much of what we have taken for granted over the past few decades.  It would be nice if this were not true, particularly from a small economy perspective, but this is a time for realism not wishful thinking: less kumbaya, more Lee Kuan Yew.

This note offers some reflections on changes to the global economic and political system that have been generated or accelerated by Russia’s invasion.

The note is available at: https://davidskilling.substack.com/p/reflections-on-a-year-of-war