The Global Economic Shock of the Ukraine War

Photograph Source: Ray Weitzenberg – CC BY 2.0

The war in Ukraine is already leading to fewer weddings in Syria because it has increased the price of the gold jewellery which is a traditionally part of Syrian wedding contracts. Prospective husbands who promised a fixed quantity of gold to their bride-to-be find that they can no longer afford to pay for it.

When Russia invaded Ukraine on 24 February, the price of gold rose sharply and dozens of weddings were postponed or cancelled in Syria according to Saeed Ali, a 46-year-old goldsmith and currency trader in Qamishli in north east Syria.

“A relative of mine had a provision in his marriage contract to buy 50 grams of gold for his fiancée,” he says.

“This would have cost him $2,500 before the Ukraine war, but after it broke out he could only buy 43 grams for that sum and this caused problems with his marriage.”

In small and large ways, the war in Ukraine is affecting the rest of the world, but nowhere is its effect more devastating than on countries such as Syria, Afghanistan, Yemen and South Sudan, to name but four, which have been torn apart by decades of warfare. For them the Ukraine crisis is the final destructive blow for weak governments and societies that are barely holding together.

Some 80 per cent of Syrians are rated as impoverished with many on the edge of starvation, while 12.4 million are described by the World Food Programme as being “food insecure.”

Many are jobless or grossly underpaid after a collapse in the Syrian currency caused by harsher American sanctions in 2020 that established what amounts to an economic siege.

A Syrian government employee today earn the equivalent of $25 a month and their Kurdish counterparts $75. But in the last couple of months the price of basic foodstuffs such as sunflower oil, sugar and tomatoes have doubled or tripled while the price of bread has risen by 50 per cent.

“Incomes are the same here but prices are crazy,” says Salem Amin, 43, who sells cooking oil in all Syrian cities.

“All this is happening because of Putin’s invasion of Ukraine: the fire may be there, but we are burning up here in Syria.”

The economies of these shattered countries in the Middle East and Africa were already close to capsizing because of endless military conflicts before the war in Ukraine began, but they are now close to sinking entirely.

Catastrophic though their situation is there is limited international interest in their plight because world attention is fixated on Ukraine and what is fast becoming a proxy war between Russia and the US.

Atrocities and mass killings in these forgotten war zones seldom get on the international news agenda, though they would be headline news if they occurred in the Donbas, Kharkiv or Odessa.

Many have been ignored for a long time, so it is scarcely surprising that their fate attracts little interest now. In South Sudan, the world’s newest nation, for instance, some 400,000 people were killed in a civil war between 2013 and 2018 that few outside the region ever knew was happening.

This has supposedly ended, but in fighting earlier this month 44,000 people had to flee for their lives from their burning villages after losing their houses, belongings and food stocks.

Bad though the situation has been for years, Ukraine has made it that bit worse primarily because it has raised food and fuel prices for those who can least afford to pay them.

Matthew Hollingworth, the South Sudan country director of the World Food Programme (WFP), says that of the 7.4 million people suffering from food shortages in South Sudan the WFP will only be able to feed 4.4 million because there is not enough money to pay for more rations.

Of the $1.7bn needed for humanitarian assistance only 10 per cent has been funded by donors.

“We are used to making do with 50 or 60 per cent of what we ask for,” he says, but he is shocked by a shortfall of this size when costs are soaring.

Reverberations from Ukraine are battering a country already hit by multiple disasters resulting from 30 years of savage fighting, the Covid-19 pandemic, and four years of flooding of the vast Sudd swamp on the White Nile which prevents villagers from fishing in the wet season and pastoralists grazing herds of cattle in the wet season.

“They no longer have a dry season,” says Hollingworth. “The pastoralists have to take their herds to new territory where they are not always welcome.”

It is a measure of the all-embracing effect of the war in Ukraine that it is now affecting the cattle herders in the swamplands of South Sudan as it is the marriage market in Syria.

In both cases people with very little are finding that they are even less able to meet their needs than before. Yet the crisis is not solely economic because it means increased great power competition which will destabilise some of the most fragile states in the world.

These countries were often the arenas where the proxy wars between the US and its allies and the Soviet Union were fought out between the late 1940s and 1989.

A second confrontation between Russia and the Nato powers could have a similarly destabilising effect.

Patrick Cockburn is the author of War in the Age of Trump (Verso).