In a pandemic-impacted world, as several geopolitical factors tail-wind the major economies towards recession and contraction, Russia-Ukraine conflict can potentially be the turning point towards a lower consumption-based greener developmental pathway.
However, first the underlying assumption for the proposition. A conflict-ridden, and thus a fragmented world is likely to see less cooperation that is otherwise necessary for demand of economy, and economic growth. Supply chains that are global in nature are disrupted. Access to markets is impacted by protectionism and other barriers between countries. Contemporary geopolitical scenario is upping the sub-optimal economic activity trends owing to economic sanctions, sanction-retaliatory disruptions (energy crises in EU), growing rightist nationalism, migrations, and trade-routes’ appropriation (South China Sea and Arctic Circle). Expectedly, shrinking economic activity, demand, and incomes, have consumption-reducing implication. A lower consumption, and lower reliance on others for supplies, is likely to compel countries to use natural resources within their own geography more optimally. This will strengthen the environmental basis of economy, and thereby promote green development.
Now, let me explain its prospects.
Planet under crisis: Our living planet, the Earth, is in serious environmental crises due to unsustainable economic development pursued since mid-19th century. The collapse of Earth Systems (ecosystems, water cycle etc) is imminent due to increasing ecological footprint of development (impact of high resource consumption and pollution) and the reducing biocapacity of the planet (capacity to reproduce resources and treat pollution).
The unplanned outcomes of economic development include global warming and climate change manifest in the intense climatic events. Impacts of global warming are intensifying, and at the same time, constraining our capacity to deal with them.
Concurrently, three other changes are intensifying globally.
The firstchange is the shift towards the right-of-the-centre politics in several parts of the world. In at least 11 European Union (EU) member countries (Latvia could be 12th), centre-right parties hold a significant number of seats in the governments.
Most recently, the coalition of centre-right parties led by Brothers of Italy has won 30% seats and formed the government in Italy, which is the 3rd largest economy in the EU. In the USA, Republican Party is associating deeper with QAnon, a far right conspiracy theory-based cult. What is the implication of such politics for the economy at national and global levels?
The secondchange is the threat of economic recession due to high rate of inflation and supply chain disruptions. Several developed economies are reeling under 8% plus inflation rates. Fiscal measures adopted by the governments to maintain economic growth impacted by Covid-19 lockdowns, and the energy supply imbalances caused by the Russia-Ukraine conflict, are fuelling it.
The third change is the growing anguish in several parts of the world due to internal armed conflicts, migration crisis, random attacks on civilians, covid-19 losses, rising cost of living, and now the energy crisis due to Russia-Ukraine conflict. Such anguish is manifest in the growing support for ‘our interest first’ approach nationally.
Economic disruptions: Russia, Iran, Nigeria, Myanmar, and North Korea already stand isolated on sanctions with implications for their people and economy. Economic sanctions on Russia, which is a key player in energy and food grains exports, have impacted countries beyond Europe, and this situation is expected to continue. Shortage and cost of energy supply in the coming winter in Europe may further intensify citizen anguish and make EU member country positions harder as they fend for themselves.
Further, Sri Lanka, Pakistan and Libya are in deep economic crisis. China is flexing muscle in South China Sea, and nurtures expansionist aspirations. In this socio-econo-political scenario, countries are likely to prioritise self-interest over else. This is likely to make it increasingly difficult to cooperate with others, and the conservatives on all sides can make it more difficult. In a less cooperative and closed world, economies are likely to shrink, limiting consumption.
Chance for sustainable development:
Enough knowledge that is well-grounded and scientifically-robust is available to us to understand the reasons for, and to deal with, the environmental crises that are rendering development unsustainable. However, adequate action is lacking because the option to feed on the resources available beyond a nations’ geography is available through markets.
Humanity is where it is today due to apathy, greed, and self-centeredness, and not due to lack of scientific knowledge. In a fragmented world, with lesser mutualism, countries are likely to put such knowledge to use, and develop economies that are environmentally less impacting. Models for development based on rationalised consumption can promote economy as well as ecology.
In conclusion, the current conflict-ridden geopolitical scenario, growing citizen anguish, proliferating centre-right politics, increasingly fragmented world, and gradual decoupling of economies (e.g., US-China), can potentially give rise to a new global order favouring a more environmentally-sustainable developmental path. The world is treading in an unknown territory at present, and Russia-Ukraine conflict is perhaps bringing about the point of inflection that can help it discover path to sustainability.
Author is an IFS officer & DG, EMPRI. Views are personal