International Relations This Week: Episode 80

International relations is a very important segment of the UPSC syllabus. In this series, we present an analysis of the most important international issues and developments that occurred over the past week relevant for the IAS exam. In this article, you can learn more about the latest developments about the Russia-Ukraine war, the world economy and its impact on India.

TABLE OF CONTENTS

1. War in Ukraine
2. Developments in the World Economy and India

1. War in Ukraine

• Russia’s war in Ukraine has entered its fifth month with no signs of ending anytime soon. Some of the most notable developments in this war have been the following.
  • One of the most significant aspects has been the impact of the war in the realm of international relations. Russia’s war in Ukraine is one of the most significant events in recent times. It has and will continue to alter the existing balance of power in global geopolitics and influence international relations.
  • The war has given rise to a refugee crisis with some estimates placing the number of refugees created due to the war at around 8 million thus giving rise to a large humanitarian crisis. The handling of the refugee influx by neighbouring countries though welcome has also raised some questions on racist undertones in handling the refugee crisis.
  • Ukraine has suffered substantial economic losses due to the war. Existing infrastructure has been destroyed.
  • Russia has been able to gain substantial territory in Ukraine though at a limited pace. Russia has been able to hold out against the economic sanctions imposed on it to some extent by continuing its trade relations with countries like India and China.
  • New and more dangerous weapons have been used in the ongoing war. There has been the continued threat of usage of chemical and biological weapons in the war along with threats of usage of nuclear weapons by Russia. This could disrupt the security balance in the region and beyond.
  • There have been global economic repercussions as well. The global wheat supply chain has been disrupted leading to global food shortage and food inflation given that Ukraine has been a large supplier of wheat globally. Also, the economic sanctions on Russia have disrupted the crude supply chains. This has endangered global energy security and has also led to fuel-based inflation.

2. Developments in the World Economy and India

• The economic disruption caused by the COVID-19 pandemic had disrupted the global economic growth prospects. The geopolitical churn caused by the Russia-Ukraine crisis has only hampered any hopes of post-pandemic global economic recovery.
• The U.S. economy is facing fears of stagflation and this could have global repercussions given the prominence of the U.S. economy in the global economy. For India, this is all the more worrisome given the U.S. is a large market for India’s goods and services and the U.S. is also a major source of foreign investment in India.
  • The U.S. is India’s largest trade partner.
• China with its repeated lockdowns has been causing major disruptions in the global supply chains leading to supply shocks.
• The Indian rupee has fallen drastically in recent times. India is witnessing record outflows of foreign portfolio investments. This will adversely impact the value of the Indian rupee and also India’s economic growth and development.
• Another notable development has been the expansion of bilateral trade between India and China despite the border stand-off between the two neighbours. A worrisome aspect has been that the trade deficit India faces vis-a-vis China has only grown further and this does not augur well for India’s strategic standing vis-à-vis China in the longer run.
• The EU is India’s third-largest trade partner. However, there seems to be little potential in this trade relationship replacing the India-U.S. trade relationship in terms of value and volume given the differences over various issues like trade reciprocity and strict phytosanitary regulations.
• India’s trade relationship with Russia has been historically moderate or below its potential. However, recent times have witnessed a surge in oil imports from Russia by India.

Read more International Relations This Week articles in the link.

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