{"id":264256,"date":"2022-04-04T13:58:30","date_gmt":"2022-04-04T08:28:30","guid":{"rendered":"https:\/\/www.indialegallive.com\/?p=264256"},"modified":"2022-04-17T08:22:11","modified_gmt":"2022-04-04T10:02:16","slug":"ukraine-war-raghuram-rajan-economic-impact","status":"publish","type":"post","link":"https:\/\/www.indialegallive.com\/column-news\/ukraine-war-raghuram-rajan-economic-impact\/","title":{"rendered":"The War Games"},"content":{"rendered":"\n

By Sujit Bhar <\/strong><\/p>\n\n\n\n

As this article is being written, over a month has passed since Russia invaded Ukraine, talks have started in Istanbul between Russian and Ukrainian representatives, Russia has said it wants to scale down offensives, insisting that its Phase 1 action is over, thousands have died, nearly 4 million have been displaced and sanctions have jackhammered the Russian economy into putty.<\/p>\n\n\n\n

That, however, is just news. When you look behind the wings of this theatre of the absurd, you realise that this entire situation could see the evolution of a whole new paradigm in war and post-war economics. There are two related aspects to consider. One is the sheer economic impact, and the second is the industrial takeaway from war-related expenditure of nations.<\/p>\n\n\n\n

\"Sujit
Sujit Bhar<\/figcaption><\/figure><\/div>\n\n\n\n

The possible economic shift was pointed out in a recent interview by Raghuram Rajan, the former governor of the Reserve Bank of India and a noted economist. He said that economic sanctions announced by the US and other European nations on Russia, are another Weapon of Mass Destruction (WMD). It has the potential to inflict as much destruction of lives and property as conventional WMDs. The effects of this slow-poisoning will not be evident immediately, but will cause widespread destruction of a nation\u2019s economy. That cannot bring peace.<\/p>\n\n\n\n

The industrial shift, on the other hand, will be mostly visible in the United States. There is the well-established case of the US weapons manufacturing industry\u2014representing possibly the strongest lobby in US Congress\u2014pushing a weak President Joe Biden to do its bidding for them and issuing re-weaponisation orders that will only benefit the defence industry at the cost of the American taxpayer.<\/p>\n\n\n\n

This, when seen in the backdrop of the cessation of action in Afghanistan and with no other emerging conflict hotspots in sight, makes business sense. Every Congressman\/Senator has, in his\/her constituency, at least one weapons making\/assembly unit that provides constant employment to a large number of voters. This is important political territory to protect.<\/p>\n\n\n\n

Also Read: <\/strong>Delhi Riots: Court discharges three accused for having no substantial proof<\/a><\/p>\n\n\n\n

The issues have simultaneous and compounding effect, but can be dealt here individually for clarity.<\/p>\n\n\n\n

The Economic WMD issue<\/p>\n\n\n\n

During the interview, Rajan put forth a rather scary picture. In describing the sanctions as \u201ceconomic weapons of mass destruction\u201d, he warned that the consequences of this need to be considered carefully. He said that this is sure to have effect, both on individual economies and people, as well as for the \u201cglobal economy and the global financial system.\u201d<\/p>\n\n\n\n

How can these sanctions translate into a global tragedy? Rajan\u2019s analysis sees years ahead. He said that these sanctions may not topple buildings, destroy bridges or immediately kill people, but they will destroy firms, financial institutions, livelihoods, and even lives. He said that even if it takes time, these sanctions\u2014the Economic Weapons of Mass Destruction \u2014will \u201cinflict pain indiscriminately, striking both the culpable and the innocent.\u201d<\/p>\n\n\n\n

That was not the end. In his interview with Karan Thapar for\u00a0The Wire, Rajan pointed out the other possible fallouts of the \u201coveruse\u201d of sanctions. Apart from the fact that the sanctions could shrink the Russian economy by as much as 10%, he said that the \u201clack of norms governing them\u201d could lead to a reversal of the very \u201cprocess of globalisation that has allowed the modern world to prosper.\u201d<\/p>\n\n\n\n

Also Read: <\/strong>Chief Justice of India-XI celebrate their maiden victory in the annual cricket match<\/a><\/p>\n\n\n\n

The following could be the other outcomes:<\/p>\n\n\n\n