Lawyers have a reputation of being “blood-sucking parasites (with) a briefcase” (Bee Movie, 2007) for fair reasons. One of those is that the role of a lawyer requires removing any emotive or controversial aspect to consider an issue in a seemingly cold and rational manner. It is important to consider every angle of any situation, which requires the removal of social views.
In this article, I will be discussing the potential developments that commercial law may see in relation to the sanctions placed on Russia. There is no doubt that the crisis occurring between Ukraine and Russia is a travesty, and it is highly sensitive to discuss. However, my focus is not on the political or humanitarian aspects. Instead, I will consider the impact of the invasion on Russia’s economy in the long-term and the impact on everyday life in both the long and short term.
Putin has struck at a time when some of the world’s former leading powers are weak and fragmented. America is facing an internal war over ideology and American values. The UK’s government is weak, its place in Europe is questionable, and there are still the effects of the pandemic on global economies. As Peter Watson says on his podcast (shout out to Watson’s Daily), he has played his cards at the right time. However, these global powers may have surprised him by acting so quickly.
There is a lot of hesitancy in the reactions of global powers, anxious about escalating threats. In an ideal world, all these powers could join against Putin, like the MCU in Endgame. Unfortunately, that is impractical in the real world and therefore, they have had to be more creative with their sanctions.
We have seen an increase in gas prices – suppliers have already been suffering and energy sources are struggling, but Russia’s actions have forced a surge in prices. Russia is Europe’s largest supplier of natural gasses, though the UK’s reliance is at 3%. The continent’s reliance on its gasses also makes it one of its most significant exports. Hence, it makes sense that we should reduce our reliance on this to harm their economy. The EU has plans to cut Russian gas imports by two-thirds, and the UK aims to reduce its imports by the end of the year. This is especially detrimental to Russia’s economy in the long term, but quite damaging to other global economies in the short term. President of the European Central Bank, Christine Lagarde, expressed her fears of high inflation paired with high unemployment. Here fears are not entirely misplaced, as we have already seen Russia’s impact on the everyday person, especially those from lower-income backgrounds – the material difference in these gas prices has already been detrimental. There has (again) been a panic buying spree, which will inevitably see an increase in prices, as we have seen throughout the pandemic.
Furthermore, supply chains have proven their fragility. Exports of grain and wheat, of which Russia is the world’s largest producer (holding a 17% share of the global market), have halted. Ukraine exports about 10%, making it the fifth largest exporter. This means that about 30% of wheat exports have been damaged. As a result, prices of wheat-based products have increased. Those from lower economic backgrounds, who are still suffering the consequences of the pandemic, are likely to see an exasperation in food insecurity. One Russia’s invasion results has been an increase in self-sufficiency – detrimental for the short term but beneficial for the long term. While in the long term we are likely to see a greater reliance on green sources of energy (about time!), there is the consequence of higher taxes and an increase in prices. The lack of certainty has contributed to the unsteady market and will continue to harm consumers until producers can increase their supply and please supply inefficiency.
There is still hope; however – the government proved it was willing and had the capacity to help businesses during the pandemic, so they are clearly capable of doing the same if they treat this crisis seriously and respond quickly. One benefit of the embarrassing scandals the government has seen itself gain the spotlight for means that they are likely more desperate to regain the public’s support. Therefore, if we can continue to pressure them to support our economy, perhaps by inviting Ukrainians in to work the currently understaffed jobs and subsequently allowing our economy to continue, we may be okay.
If we have learned anything from the past few years, it’s that we should stop calling things unprecedented and start acting on things we know need to be done, rather than procrastinating and playing the blame-game.
Now, nothing is impossible, so we need to prepare on an individual and on a wider scale for the expected, such as the consequences of global warming, and the unexpected. After all, if this has not pressured governments and businesses to be more prepared and independent, then what will?
By Amy Dugwell