Violent conflict distorts global trade

Solly Rakgomo | Monday April 8, 2024 06:00

A stark increase in conflict-related deaths had already been observed prior to the Russia-Ukraine conflict, overturning a five-year decline since the peak of the Syrian civil war in 2014.

Notably, battle deaths spiked by 45% between 2020 and 2021, predominantly in the Asia-Pacific and sub-Saharan Africa regions. As we look to the horizon, potential challenges such as climate change, economic disparities, and political instability could arise in the future, potentially affecting regions globally. Rising geopolitical competition marks a shift in conflict dynamics in an increasingly multipolar world, particularly in strategic regions. Notably, powerful states, like Russia and China, and emerging regional actors like Turkey, Saudi Arabia, and Iran are now more proactive. They are offering political, military, and financial support beyond their immediate regions, thereby intensifying conflicts.

In addition, internationalised intrastate-armed conflict, defined by Orrera–Demantis as occurring between the government of a State and one or more internal opposition groups with intervention from other states on one or both sides, have grown significantly over the past two decades. Orrera-Demantis tells us that internationalised conflicts have increased nine-fold since 2004 to 2017.

In fact, internationalised intrastate conflicts are now just as common as intrastate conflicts, reflecting a trend where over 80% of intrastate conflicts from 1975-2017 saw external support. This increased engagement often aligns with their broader geopolitical ambitions, evident in situations like Russia’s increased involvement in Mali and Myanmar. Furthermore, conflict zones like Syria, Libya, Ukraine and Gaza have become flashpoints, with multiple external states endorsing opposing factions, thereby amplifying and extending the confrontations. As geopolitical competition intensifies, the distinction between intrastate and internationalised intrastate conflicts become increasingly nuanced. It is vital to recognise and address the complexities of these evolving conflict types in a bid to promote global peace and stability.

Transitioning to the broader stage, with the escalating US-China rivalry and the consequent shifts in regional influences, the landscape of global geopolitics is bracing for profound transformations in upcoming decades. China’s heightened activities in the South China Sea region signify its desire to project dominance and protect its territorial claims. This assertiveness is further underscored by intensified aerial operations near Taiwan, a strategic focal point in the Pacific region. Conversely, in the aftermath of the Cold War, the United States has maintained a vast network of strategic military bases spread across various regions. Ranging from the Middle East to South and Central America, these bases serve as a testament to the US’s longstanding strategy to maintain a global hegemonic military presence. From what has been posited one can safely argue that these conflicts have an impact on international or global trade. Alongside its dire humanitarian costs, armed conflict poses a range of risks to global economic growth and development. Measuring the economic impacts of violence matters because it can inform resilience strategies and drive resources toward conflict prevention. Accurately estimating the economic cost of violent conflict is hard due to the fact that the very existence of a conflict in a particular region makes measurement of economic activity difficult, and conflict can interact with the economy through multiple, complex pathways. In addition to the immediate, direct effects of violence on the economy, there are a number of indirect effects that may last long after the violence has receded. Fragile states often struggle to maintain resilience to conflict and other shocks; conflict, economic instability, poverty, and fragility tend to feed each other in a negative cycle. Notable example of such a fragile state in this case is South Sudan, which is facing challenges of maintaining resilience to conflict and other shocks.

Insecurity brought about by violent conflict can disrupt economic activity through a number of channels, and the effects can be large and long lasting. Fear resulting from violence and destruction can hinder economic activity directly through an increase in transport costs, capital flight, or postponing of investments. There can also be indirect effects like the breakdown of political institutions and public services such as health and education, as well as effects that spill over into other countries, such as refugee crises. Insecurity and weak law enforcement can threaten property rights and suppress economic activity in conflict affected states or regions. Particularly in contexts of weak institutions, countries, regions can become trapped in repeated cycles of violence that prevent economic development.

One good example is the Russian-Ukraine conflict, which has caused considerable human suffering and harmed global trade. The Russia-Ukraine conflict has also significantly disrupted global energy markets, resulting in higher prices for oil and natural gas. Since Russia is one of the world’s largest natural gas and oil exporters, the economic sanctions and foreign policy directives issued by Western countries on Russia further impacted global energy supplies. As for Africa, the continent has not been impervious to the negative impact of the conflict because of its structural dependence on countries in the global core. Economically, the conflict has led to rising energy costs, inflation, and food insecurity, all of which disproportionately affect Africa’s marginalised groups, especially the women. The war has compounded Africa’s food insecurity, as the continent’s heavy dependence on both Russian and Ukrainian for food imports. A report by the African Development Bank shows that the rising energy prices have also led to higher food prices, exacerbating food insecurity and having a disproportionate impact on women and girls, who frequently consume less when resources are scarce, are responsible for feeding their families, and may experience increased financial strain. The war has disrupted international trade between Russia, Ukraine, and other nations, influencing global supply chains and economic growth. As a result, many African economies, which rely heavily on trade with Europe and Russia, have witnessed a decline in exports and imports, resulting in slowed economic growth and employment losses. Women and girls are more susceptible to these economic disruptions because they are frequently employed in informal and low-paying occupations, which are more prone to economic downturns. World Bank reports concur, highlighting that the economic disruption has significantly affected African economies, resulting in employment losses and diminished economic opportunities for women and girls. In addition, the Russian-Ukrainian conflict has resulted in an influx of refugees, some of whom have sought asylum in African nations. This migration has increased the strain on finite resources, such as food, water, and medical care. As a result, Mbiyozo says women and girls, who are frequently responsible for providing these resources in their households, have experienced increased competition and a heavier burden of domestic duties.

In conclusion, one can safely argue that from rising fuel and food prices to inflation and supply chain disruptions, the Russia-Ukraine war has taken its toll on Africa’s economies and food systems, with varying implications for rural and urban populations across various commodity sectors.