How did the conflict in Ukraine expose the European Union's strategic quagmire?

By: A. Mahdavi

In the midst of the COVID-19 pandemic and its catastrophic implications, the global financial landscape has been witnessing a sluggish pace of growth. As we looked ahead to the economic year 2022, there were a variety of forecasts, each with its own unique perspective, with those that offered a more optimistic outlook projecting global growth rates exceeding 5%.

However, the year 2022 witnessed a global economic growth of a mere 3.1%, which is nearly 2% lower than the anticipated forecast, all the while Europe's share in the global economy became quite small, with a mere 0.3% increase in the economic growth. As the world was still reeling from economic turmoil, a significant event shook the international community with far-reaching consequences. The recent energy crisis that has gripped the world can be attributed to the war in Ukraine, according to the observations made by the Organisation for Economic Co-operation and Development (OECD).

The conflict in Ukraine has served as a catalyst for a dramatic shift in Europe's perception of Russia. In the aftermath of the Soviet Union's collapse, Europe engaged in extensive energy cooperation with the Russian Federation, adopting a win-win approach that aimed to bolster the latter's development and transition towards a liberal democracy and a laissez-faire economy through investing in the Russian energy market.

The process of Europeanizing Russia could provide Europe with a potent tool for influencing the Kremlin's policies. In this regard, several European countries, including Germany, Serbia, Bosnia, Austria, Greece, Bulgaria, and the Netherlands, became significantly reliant on Russian oil and gas, with Russian energy supplies meeting more than half of their energy demands. In addition, Russia's energy exports to Europe constituted a significant portion of the nation's overall exports, surpassing 65%. The conflict in Ukraine has revealed the Europeans' misplaced confidence and the fact that Russia cannot be a reliable long-term partner for the EU.

Amidst the raging conflict in Ukraine, the European governments have extended their support to the regime in Kyiv. One of the EU's retaliatory measures against Moscow was the reduction of fossil energy imports from Russia, which proved to be a costly affair. As Europe seeks to diversify its energy sources, one potential option is the import of natural liquefied gas (LNG) from the United States.

Currently, nearly 70% of Europe's LNG imports come from the US. Nevertheless, while this may provide a short-term solution, it is not a viable long-term strategy as it is far more expensive than transferring gas through pipelines, posing substantial economic and budgetary challenges for the EU's fragile economies.

As the EU seeks to diversify its energy portfolio, the exploration of alternative energy sources, including nuclear power plants and renewable energies, has gained momentum. Nevertheless, these options come with significant costs, which could pose a challenge in the short term.

As we observe the decrease in the EU's energy imports from its eastern neighbour, we cannot ignore the inflationary impact of this unexpected surge in the cost of energy on European citizens. The question at hand is whether European governments can maintain their current course of action or not. The European countries' support for Ukraine's war efforts is motivated by their desire to impose punitive measures and sanctions on Russia. Therefore, they opted for unorthodox financial and monetary strategies.

For example, Poland has committed a significant portion of its GDP to supporting Ukraine, while Latvia and Estonia have each pledged 1% of their own GDP. This level of financial support from neighbouring countries is indicative of the importance placed on keeping the flames of war burning in Ukraine. The European Union's unwavering backing of the Ukrainian regime has resulted in a staggering sum of over 30 billion dollars in financial and military assistance. Additionally, the United Kingdom and Germany have contributed nearly 10 billion dollars in financial aid to Ukraine, topping the bloc's contributions. 

The offering of financial aid carries with it the distinct implication that a portion of the economic revenue generated by Europeans must be directed towards the military budgets. The repercussions of this sociopolitical shift are significant for Europe's economic progress and flexibility, particularly in Germany. The achievement of economic objectives set by the Bundestag, the German parliament, has been sabotaged by the increased distribution of money to the Ukrainian military. As a result, the pace of economic growth in Germany, which is the EU's economic powerhouse, is likely to fall.

It is evident that Germany and its Chancellor Olaf Scholz are facing a multitude of challenges, one of which is the formidable task of rallying disparate factions to join forces in solidarity behind Zelenskyy and his fascist militias. Meanwhile, with the ongoing economic As the EU seeks to diversify its energy portfolio, the exploration of alternative energy sources, including nuclear power plants and renewable energies, has gained momentum. Nevertheless, these options come with significant costs, which could pose a challenge in the short term.

As we observe the decrease in the EU's energy imports from its eastern neighbour, we cannot ignore the consequential surge in energy prices across the EU. What's noteworthy is the inflationary impact of this unexpected surge in the cost of energy on European citizens. The question at hand is whether European governments can maintain their current course of action or not. The European countries' support for Ukraine's war efforts is motivated by their desire to impose punitive measures and sanctions on Russia. Therefore, they opted for unorthodox financial and monetary strategies.

For example, Poland has committed a significant portion of its GDP to supporting Ukraine, while Latvia and Estonia have each pledged 1% of their own GDP. This level of financial support from neighbouring countries is indicative of the importance placed on keeping the flames of war burning in Ukraine. The European Union's unwavering backing of the Ukrainian regime has resulted in a staggering sum of over 30 billion dollars in financial and military assistance. Additionally, the United Kingdom and Germany have contributed nearly 10 billion dollars in financial aid to Ukraine, topping the bloc's contributions. 

The offering of financial aid carries with it the distinct implication that a portion of the economic revenue generated by Europeans must be directed towards the military budgets. The repercussions of this financial shift are conspicuous for Europe's economic progress and flexibility, particularly in Germany, where the achievement of economic objectives set by the Bundestag, the German parliament, is crucial for the distribution of money to the military.

As a result, the pace of economic growth in Germany, which is the EU's economic powerhouse, is likely to fall. It is evident that Germany and its Chancellor Olaf Scholz are facing a multitude of challenges, one of which is the daunting task of persuading the various parties to come together in unity to support Ukraine. Meanwhile, with the ongoing economic turmoil, Europe has to deal with a pressing crisis of asylum seekers. The influx of over 21 million Ukrainian refugees into Europe has been a topic of great interest. The European Parliament has been considering an emergency budget of 10 billion dollars to accommodate this unexpected arrival.

However, the economic costs of these immigrants have been an enormous strain for European nations, particularly those with more vulnerable economies. In its economic turmoil, Europe has to deal with a pressing crisis of asylum seekers. The influx of over 21 million Ukrainian refugees into Europe has been a topic of great interest. The European Parliament has been considering an emergency budget of 10 billion dollars to accommodate this unexpected arrival. However, the economic costs of these immigrants have been an enormous strain for European nations, particularly those with more vulnerable economies.

With the recent unveiling of the protection plan for Ukrainian asylum seekers, granting them one-year temporary citizenship of the European Union and a host of accompanying benefits, the economic landscape of the Green Continent remains uncertain. What we are seeing is a sharp downturn in the financial and social security of European Union citizens, as they are collectively contributing an average of 300 euros monthly to support Ukrainian asylum seekers.

The sociopolitical insecurity and impoverishment of European citizens have been on the rise during the Ukrainian war, sending a clear message to their governments. If the issue at hand is not promptly addressed, it could result in a multifaceted set of societal problems and discontent among the general population, which could potentially exacerbate the already bleak situation. This could create a milieu in which far-right movements gain traction, further destabilising European nations and potentially even leading to the breakdown of the European Union.

Finally, it seems that European policymakers are seeking a long-lasting agreement to terminate the ongoing conflict. The future holds significant implications for Russia, Ukraine, and the EU, particularly in the economic and military arenas. The outcomes of these efforts will undoubtedly shape the future of these nations and have a profound impact on global geopolitics.