Ukraine war: How the world is reshaping itself

Russia may overrun Ukraine completely; it may beat a hasty retreat; a compromise solution may be found for Russia's exit; Nato may get embroiled in the conflict in a bigger way, or the war may drag on to turn into another Afghanistan in the heart of Europe.

Whatever may the outcome be of the Ukraine war, rest assured the world will never be the same again.

From geopolitics to militarisation, from trade to economy to how energy security will be ensured – all will change and some of them very drastically. History is being made all too fast, especially in Europe.

The IMF has predicted that "the war may fundamentally alter the global economic and geopolitical order should energy trade shift, supply chains reconfigure, payment networks fragment, and countries rethink reserve currency holdings."

A new geopolitical fault-line becomes starkly clear

With the Ukraine invasion, the US and its allies have circled the wagons against Russia as their common enemy in Europe. The Soviet Union of the Cold War era does not exist anymore but Russia, which was a major portion of the USSR, is no less a threat to the West.

In a unique common stance, the US, the EU, the UK, Canada and Australia have applied sanctions on Russia, drawing a decisive line with the giant of a country. Unable to directly participate in the Ukraine war for fear of escalating the conflict into a wider bloodbath and also because Ukraine is not a Nato member, they now want to choke Russia economically.

China, on the other hand, has not applied sanctions, maintaining its neutrality on the issue. So does India. Brazil, Mexico and South Africa also refused to apply embargoes.

China has a considerable sway over Africa and South America. So the countries in these regions are likely to follow China.

And it seems Saudi Arabia now has found its own mind by refusing to hold talks with Biden on augmenting oil supply, giving away its sentiment on the US stance on Jamal Khashoggi murder.

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So whatever is the outcome of the war, this fault-line is likely to develop even deeper. The new blocks will tend to work with closer collaboration on geopolitical issues.

The US, because of its unique geographical position – it is an island and any war cannot directly touch its mainland – can always pull strings from a safe distance. Its apparent insulation from direct invasion gives it an enormous advantage and its supreme soft power gives it a modern weapon to leverage countries.

Meanwhile, the war has put the Western-style liberal democracies to the test. The idea of human rights will also face fundamental challenges. China has recently released its own human rights report accusing the US as the worst human rights violator.

New militarisation on the rise

Nobody had exactly predicted Russia would invade Ukraine so brazenly neither had anybody expected Russia to perform so poorly in its war against a much weaker Ukraine.

So that exposed new realities for both sides of the new fault line.

Europe feels its security is no longer assured, felt more acutely by the lesser members of Nato which have limited resources and population.

For example, Lithuania has a population of 2.8 million only, less than the population of metropolitan Dhaka city with a nominal GDP of $56 billion. Its vulnerability was exposed when it got into a row with China by allowing a de-facto embassy of Taiwan. It also threatened to stop the use of Russian gas and oil because of the Ukraine war.

So Nato is now duty-bound to help Lithuania out in case of any military threats.

Such ground realities and its own security concerns have forced Europe to rethink its defence strategies and to increase its military spending. Germany, which has always favoured the principle of pacification, has also dramatically upped its military spending. An initial injection of €100 billion will be followed by a guaranteed sum of at least 2% of GDP to be spent for bolstering defence in each budget.

Germany has also side-stepped its policy of not selling weapons in war zones and has announced military aid to Ukraine. It is sending troops to Lithuania and Slovakia, while air and sea deployments have been made to Romania, the Baltic and the Mediterranean. Nato troops have landed in Estonia too.

These Baltic states now make the forward post for Nato to confront Russia.

Sweden, Romania, Denmark, and Poland are also driving up military spending. The UK, France and Canada are also proceeding with increased defence spendings.

Other West European countries are also dispatching arms in large quantities to Ukraine. But the former Warsaw countries like Poland, Slovakia and Bulgaria are ready to send war planes to Ukraine.

Georgia, Moldova, Kosovo and Bosnia and Herzegovina are also jostling for a position within Nato.

So the military fault-line is clearly defined. In the Cold War era, Russia was less powerful than the US and its allies.

But  Russia and China are working on a new dawn of relationship. China has decided to increase its military spending by 7.1% in 2022. In PPP (purchasing power parity) terms that would mean significant spending compared to the West.

So Russia and China combined would pose a significant military power.

Turkey, sitting on the edge of Europe, has an interesting role with a balancing act with both Russia and Nato.

Future of energy use will change

The world was moving fast towards renewables both as an attempt to avert a total climate disaster and also as a tectonic shift in the source of energy just as oil had changed coal.

But now as Europe has woken up to the reality that it is vulnerably dependent on Russia for its energy. Without Russian gas, its residents will shiver in winter. Without oil its cars will go off the roads.

Europe now wants to reduce this vulnerability and wants to reboot its coal and gas-powered energy productions. Nuclear power plants, once discarded, are becoming a priority in the new reality.

This will mean the renewable energy future will get a backseat.

Weaponising commodity

This war and beyond have clearly defined the future of warfare. Commodities are the new weapons now.

Russia has its biggest weapon in the form of its enormous oil and gas reserves. Europe relies on 40% of its gas consumption on Russia which is also mineral-rich for which the West is hungry.

Germany has shelved the Nord Stream 2 pipeline from Russia following the Ukraine invasion. Russia can anytime turn the tap off of its gas supply to Europe.

The West has embargoed the sale of high-end technology in semiconductor to China long before the Ukraine war, and China is now looking to develop its own chips industry.

Newer ways of trade

With the American embargo on SWIFT transactions, there is an imperative for both Russia and China to bolster their own cross-border payment system.

China has developed its own transaction system named CIPS – Cross-border Interbank Payment System – but it is still limited to about 80 entities compared to SWIFT's over 10,000. Russia's SPFS is also in its nascent stage.

But this conflict will certainly give a boost to both the countries to develop their systems better.

The effort to move away from reliance on dollars for transactions will intensify.

Beyond the planet

The Ukraine war is redrawing geopolitics not only across the planet but also in space.

The future of the International Space Station (ISS), the orbiting outpost that is currently home to two Russian cosmonauts, four US astronauts and one European astronaut, has been thrown into uncertainty.

The ISS requires Russia to work together smoothly with 14 other nations. Part of the station is Russian-built and operated by it, and the other part is built and run by the US, European, Japanese and Canadian space agencies.

Each is dependent on the other for key services: the Nasa-led side of the station provides electrical power to the Russian side, while Russia provides the orbital boosting that is occasionally needed to stop the ISS from falling to lower altitudes and disintegrating in the Earth's atmosphere.