Rassegna Esteri

Economic costs of Ukraine war

Tehran Times – The Ukraine war is one of the most important challenges in the world of politics, especially between Russia and the West. The war was begun in February 2014 with a speech by Russian President Vladimir Putin and continues until now.

Putin told the Russian people that he was conducting a “special military operation” to “denazify” Ukraine and prevent NATO from expanding to Russia’s borders.

Many in the West see the war, which many consider it the most disruptive conflict in Europe since 1945, as a war of choice by Putin, but he says that NATO’s 2008 decision in favor of eventual Ukrainian membership brought an existential threat to Russia’s borders.
This article, aim to list the reasons for the start of the war, its process, and the costs of the war.

Reasons of war

Several important reasons for the beginning of the war have been listed. Russia declared one of the reasons for starting the war to help the Russians living in the two republics of Donetsk and Luhansk, two separatist regions of eastern Ukraine in Donbas.

Russia has repeatedly stated that the two regions have a Russian majority and should either become autonomous or join Russia. The Kremlin has declared racism against the Russians as the reason for the war.

Story of two provinces

After the Russian annexation of Crimea, Russians established self-rule governments in these two provinces. They were only able to take over parts of the two provinces of Donetsk and Luhansk, so a struggle started to conquer the two provinces. Ukrainian government forces also engaged in a military conflict against the separatists. As a result, more than 14,000 people were killed and a many were displaced.

In 2015, with the mediation of France and Germany, an agreement was signed between Russia and Ukraine, which became known as the Minsk Agreement. The main goal of the deal was to end the conflict between the Ukrainian army and Russian-backed separatists in Donbass. According to the agreement, in exchange for regaining control of its borders with Russia, Ukraine gave these two regions autonomy in many areas, which was supported by the United States and its allies.

But the agreement was annulled by the war, and once again Donbass became the core of the crisis between Russia and Ukraine and Putin said in his speech before the start of the war: The people’s republics of Donbass have asked Russia for help.

NATO expansion to the East

As mentioned above, one of the most important reasons for the start of Russia’s war against Ukraine was Kyiv’s decision to join NATO; in another word, to expand the military coalition to Russia’s borders and threaten the country.

In his speech, Putin said: I will begin with what I said in my address on February 21, 2022. I spoke about our biggest concerns and worries, and about the fundamental threats that irresponsible Western politicians created for Russia consistently, rudely, and unceremoniously from year to year. I am referring to the eastward expansion of NATO, which is moving its military infrastructure ever closer to the Russian border. It is a fact that over the past 30 years, we have been patiently trying to come to an agreement with the leading NATO countries regarding the principles of equal and indivisible security in Europe. In response to our proposals, we invariably faced either cynical deception and lies or attempts at pressure and blackmail, while the North Atlantic alliance continued to expand despite our protests and concerns. Its military machine is moving and, as I said, is approaching our very border.

Nuclear threat reason for start of the war!

Some sources say that another reason for the start of the war was Kyiv’s threat to resume its nuclear program, and to prove it, they point finger at the statements of Dmitry Medvedev, the former president and prime minister of Russia and the current deputy of the Security Council of this country.

Ukraine’s “threats” to resume its nuclear program were largely the reason for Moscow’s “special military operation,” Medvedev said on Nov, 7, 2022.

One of the reasons for conducting the “special military operation” was the “threats” by Ukrainian leaders that hinted resumption of the nuclear program, which Kyiv relinquished under the Budapest Memorandum of 1994, Medvedev wrote in a message on the country’s VK social network, according to TASS.

“What do we see in contrast next to our own borders? Poor puppets from an inferior state, now weeping bitterly about the decision taken under the Budapest Memorandum of 1994 to withdraw the nuclear arsenal located on their territory and inherited from the USSR,” Medvedev said, following statements describing South Africa’s accession process to the Nonproliferation Treaty.

Later, Medvedev said that Ukrainians always perceived Kyiv’s accession to the international treaty as a forced step decided “under harsh pressure from Washington,” adding that this was the case even though Ukraine “did not have the means to support the ‘might’ (nuclear weapons) that had fallen to it by chance.”

He further said Ukrainian leaders, from former President Leonid Kravchuk to current President Volodymyr Zelenskyy, have expressed that “they would be happy to use it (nuclear weapons) against us (Russia) and their own citizens (Ukrainians).”
Whatever the reason for this war, it cost a lot for the parties, especially the European Union, which was highly dependent on Russian energy. This cost can be examined in two dimensions.

Direct costs

The war in Ukraine, which is called the most destructive in Europe after World War II, has cost a lot to the parties involved.

Ukraine imports most of the weapons it needs. Although the country does not pay for the purchase of these weapons, its supporters – Europe, the US, and NATO – who are forced and committed to supplying Ukraine with weapons, bear the most costs.

Although the exact costs of these countries cannot be assessed, the cases announced by them show that Europe and the United States have incurred a lot of costs, some of which are as follows:

Short-Term Military Support ($17 billion): This includes the transfer of weapons, both U.S. weapons and those purchased from allies, training of Ukrainian military personnel, and intelligence sharing.

Long-Term Military Support ($10.4 billion): This consists of money that Ukraine can use to buy new weapons, mostly from the United States but also elsewhere.

U.S. Military Operations ($9.6 billion): In the spring, the United States sent about 18,000 troops to Europe to strengthen defenses and deter Russia. These deployments cost money above what was planned in the DOD budget.

DOD General Support ($1.2 billion): This covers a wide variety of activities, some only tangentially related to Ukraine, to prepare DOD for future conflicts.

Indirect costs

Indirect costs can also be referred to human costs, war refugees and the EU energy debate.

Europe, as a place on the front line of Ukrainian immigrants, suffered from two aspects. First, Ukrainian refugees directly entered Europe. Second, there was the issue of gas and energy crisis.

Nearly 8 million refugees fleeing Ukraine have been recorded across Europe, while an estimated 8 million have been displaced within the country by late May 2022. Approximately one-quarter of the country’s total population had left their homes in Ukraine by March 20, 2022.

Another impact of the Ukraine war was on the European benchmark natural gas prices.

The countries of the European Union, as importers of Russian gas, were deprived of energy due to their positions, and the energy challenge has turned into a super crisis for several months.

The benchmark price spiked to 227 euros after Russia invaded Ukraine on Feb. 24, 2022, and to around 350 euros in late August. As of Jan. 3, 2023, the benchmark price is about 74 euros.

Of course, the same cases are also true for Russia; the country has also suffered a lot of financial losses in addition to the loss of lives.

The sanctions of the European Union and the United States against this country, especially in the field of energy, are one of these losses.

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