The Cost of a Conflict

Note: This article was originally made as a data feature for a university class in Data Journalism at Dublin City University, and has been adapted for this blog. All data and information has been accessed in April 2022 and has not been updated since.

The war in Ukraine came as a shock to many people. Not least for those in any central and western European country, who haven’t had to deal with a military conflict on their doorstep in decades – many not even in their entire lives. But Russia’s decision to attack their neighbours isn't just a challenge for any citizens, but also for Europe’s governments.

For many European countries, Russia has long turned from the Soviet republic it once was into a reliable trading partner. Governments chose to seek better relations by keeping relaxed ties to the Kremlin, and to stop future Russian leaders from becoming aggressors by making the country rely on their exports. That approach is now leaving many European countries in a tricky situation, scrambling for alternatives to the cheap goods they used to get from Russia.

It will come without a surprise that the goods exchanged the most with Russia are oil and fuels. The country is particularly known for its mineral wealth, and state-run gas and oil producers such as Gazprom have even acted as prominent advertisers in the past to bolster up their international reputation. Almost two-thirds of exports from Russia to the EU are fossil fuels. Due to the heavy cost that comes with the rare minerals, at first glance, every other good seems irrelevant in comparison.

With Russia about to face heavy sanctions, countries can no longer rely on its oil and gas for their energy supply. Some of Europe’s most industrially successful nations are right at the top when it comes to fossil fuels imported from Russia, with particularly Germany, Italy, the Netherlands, and sometimes even nuclear-heavy France having dealt with the now undesired trading partner. As that turned out to be a bad idea, at least in hindsight, some European countries are now facing a dilemma: To stop financing what most certainly is a war crime, they would have to voluntarily refrain from buying Russian resources, while sacrificing some of their economic growth in the process. For Germany, making that decision will be particularly difficult.

The most populous and economically successful country in the EU is finding itself trapped with a precarious situation its politicians themselves have created. Under the leadership of former chancellors Gerhard Schröder and Angela Merkel – the former now a lobbyist employed by Russia – Germany tied itself closer to Vladimir Putin than any other western European country, particularly when it came to energy policy. Whether it is natural gas, oil or even coal, Germany is still leading the Russian fossil fuel import leaderboards in any category.

While Germany is not the only country relying on Russian minerals for energy and heating, it imports more fossils than any other European country, putting new chancellor Olaf Scholz, barely five months into his first term, under heavy pressure from their neighbours. Still, although the German government has admitted their policy over the past decades has largely been a mistake, they have not yet committed to stop importing natural gas from Russia. But doing that wouldn’t be quite as easy as one might think.

Thirty percent of Germany’s energy supply is generated from Russian resources. If the country was to give up on gas and oil, and considerable parts of the available energy, decisions would have to be made on who gets to power and heat their homes and companies first. Suppliers would most likely solve that problem by hiking prices, leading to higher costs for consumers, unless the government does not step in. Nevertheless, some economists are confident Germany and other European nations could be off Russian gas sooner rather than later if they wanted to, provided they work together as partners to solve each others shortages. Some others are doubtful, such as the head of IG Metall, the country’s largest union, which is traditionally close to Scholz’s Social Democratic Party.

But if Russia refuses to pull out of Ukraine, sanctions across the world stay in place and international supply chains keep being interrupted, the European nations' problems with sustaining their energy supply might not be the biggest issue on their plate for much longer. In fact, the world might be facing a global food crisis.

Added up together, Russia and Ukraine are leading the world in exports of wheat products, with almost 30 percent of global trade having been produced in the two embattled countries alone. For obvious, albeit different reasons – Ukraine’s economy is at a stillstand due to the constant threat of attack, while aggressor Russia is targeted by sanctions and even banned the export of grains – the vast majority of this will now disappear from the market, with other countries needing to fill the gaps.

Supply-wise, there are alternative partners on the horizon. India is looking to take advantage of the situation, by increasing production even further after having increased wheat exports sixfold in 2021 compared to the year before. However, the problem will lay elsewhere, as the huge demand with low supply will lead to higher prices, inevitably leading to further price hikes for consumers. In the west, governments could probably pay the extra bill if they want to, but particularly poorer countries might no longer be able to afford as much food for their citizens at all.

Even Ireland might find itself affected by this. As seen in the first graph, Ireland’s second most important good imported from Russia after minerals is fertiliser, a material very important to Irish farmers. Unfortunately, Russia has also suspended fertiliser exports, which will most likely lead to yet another price hike on top of an already higher cost of living.

Despite all the tough consequences of the escalation of the Russian-Ukrainian conflict, with everyone across Europe likely to feel the consequences of the war in one way or another, they are still better off than others. The people of Ukraine will have bigger issues on their mind than how to heat their homes or pay for more expensive food – after all, their lives are in danger, and many are fleeing their homes as a result for a life in peace. But it shows how Russia's invasion is taking prisoners not just in the east of Europe, but across the world – a truly horrible situation, which will hopefully end soon.