It is difficult to look away from the suffering that’s going on in Ukraine. The existing and potential loss of human life is frightening. The West, as well as the entire world, is frustrated with its' inability to offer anything other than military hardware and financial support. The key issue is the fact that Ukraine is not a member of NATO so any active NATO military intervention in the region would be viewed as an aggressive move by Russia, possibly sparking WWIII. It’s difficult to predict what lies ahead for the Ukrainian people. We’ve not seen this level of infrastructure destruction since WWll.
What’s Happening On The Ground
Vladimir Putin claims that his “special military operation” is going “to plan”. It isn’t. A huge tank column remains stalled north of Kyiv. In the south, the port of Odessa is preparing for a Russian advance. Meanwhile Russia’s economy has been pummeled. Shell, an oil major, became the latest Western company to say it was quitting the country.
Families are being driven from their land by incredible force. The severity of which none of us in the U.S. can understand. Many observers fear Putin will become frustrated by the lack of progress by the Russian army. The fear is he may increase bombing and utilize powerful military weapons he has, here to for, not utilized. The destructive power and sheer brutality of the Russian army has not yet been realized in this invasion. There is hope for a less destructive diplomatic solution which would still cost Ukraine its Sovereignty. Ukraine will likely find the terms unacceptable, but it may be the only way to save his people and preserve the rest of his country’s infrastructure.
Worldwide Economic Impact
The war in Ukraine is resulting in tragic loss of life and human suffering, as well as causing massive damage to Ukraine’s physical infrastructure. It has sent a wave of more than 1 million refugees to neighboring countries. Unprecedented sanctions have been announced on Russia. Clearly the humanitarian toll of this unprovoked invasion will be its most regrettable outcome. The worldwide economic fallout will be felt for many years. Energy and commodity prices, including wheat and other grains, have surged adding to inflationary pressures from supply chain disruptions and the rebound from the Covid‑19 pandemic. Price shocks will have an impact worldwide, especially on poor households for whom food and fuel are a higher proportion of expenses. Should the conflict escalate, the economic damage would be all the more devastating. The sanctions on Russia will also have a substantial impact on the global economy and financial markets, with significant spillovers to other countries.
In Ukraine, in addition to the human toll, the economic damage is already substantial. Sea ports and airports are closed and have been damaged, and many roads and bridges have been damaged or destroyed. While it is very difficult to assess financing needs precisely at this stage, it is already clear that Ukraine will face significant recovery and reconstruction costs.
The sanctions announced against the Central Bank of the Russian Federation will severely restrict its access to international reserves to support its currency and financial system. International sanctions on Russia’s banking system and the exclusion of a number of banks from SWIFT have significantly disrupted Russia’s ability to receive payments for exports, pay for imports and engage in cross-border financial transactions. While it is too early to foresee the full impact of these sanctions, we have already seen a sharp mark-down in asset prices as well as the ruble exchange rate. Most observers are dumfounded to understand how this potential benefit to Russia can be worth this level of death and destruction. Putin’s grand plan may be beyond monetary, and sadly, humanitarian concerns at this point.
Please let us know if there is anything we can do for your organization in these challenging times. Let there be peace.
Stay Safe Everyone.
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