Newsletter #104 - What Russia-Ukraine Conflict means for Asian businesses

How Russia-Ukraine conflict is affecting Asian businesses

As you may be well aware, the Russia-Ukraine situation is being felt globally. Since last month, world leaders have condemned Russia’s invasion of Ukraine and slapped heavy sanctions on the Russian economy.

Meanwhile, Ukraine's border with Russia will have significant consequences for Asia, with China, Japan and India doing their best to avoid getting caught in the crossfire.

On the economic side of things, if a full-blown war breaks out in Europe, it will impact the energy and food markets as Russia is one of the world's most significant suppliers of fertiliser, related raw materials, also one of the world's top exporters of oil and natural gas. Any cuts to Russian exports could prove disastrous for Asian economies.

If history has taught us anything, it’s that in war there are no winners. Both nations are suffering heavy casualties.

Peace is not simply the absence of conflict, but the existence of justice for all people.” — Martin Luther King

Team NC

📻 The global consequences of the Russia-Ukraine conflict


The increasingly complex Russia-Ukraine crisis [Vox]

How this crisis started - The current crisis grew from the break up of the Soviet Union in the early ‘90s and Ukraine, a former Soviet republic, had the 3rd largest atomic arsenal in the world.

Through a denuclearisation agreement, Ukraine gave hundreds of its nuclear warheads to Russia in exchange for security assurances that protected it from a potential Russian attack. However, those assurances were put to the test in 2014, when Russia invaded Ukraine.

A culmination of 8 years of tension - The Russia-Ukraine crisis is a continuation of the one that began in 2014. But recent political developments within Ukraine, the US, Europe, and Russia help explain why Putin may feel now is the time to act.

Essentially, Russia wants Ukraine to implement some agreements—deals that would bring the pro-Russian regions back into Ukraine but would amount to a “Trojan horse” for Moscow to wield influence and control. No Ukrainian president could accept those terms, and so, under continued Russian pressure, Ukraine has turned to the West for help, talking openly about wanting to join NATO. As a result, the premise of a post-Soviet Europe is also helping to fuel today’s conflict, as Putin has been fixated on reclaiming some semblance of the Soviet Union empire.

What happens if Russia invades? - In 2014, Putin used unconventional tactics against Ukraine that have come to be known as “hybrid” warfare, such as irregular militias, cyber hacks, and disinformation. But a full-on invasion to seize all of Ukraine would be something Europe hasn’t seen in decades. Worst-case scenarios depict astounding humanitarian consequences, including a refugee crisis, where the US has estimated the civilian death toll could exceed 50,000, with somewhere between 1 million and 5 million refugees.

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How Russia’s Ukraine attack affects Asian businesses [Nikkei]

Oil and gas - Oil prices are soaring, with benchmark WTI crude futures hitting $100 per barrel for the first time in more than seven years due to worries over supplies from Russia. The impact of higher crude and gas prices could go beyond companies consuming oil, resulting in even higher inflation around the world, urging central banks to tighten monetary policy at a faster pace.

However, some energy-related businesses in Asia are poised to gain. The share price of Indonesian oil and gas company Medco Energi Internasional, for instance, jumped 13%, and Thailand's oil company PTT Exploration and Production climbed 3.5%.

IT: Big companies exposed to emerging tech hub - The current crisis comes as Ukraine has emerged as a growing tech hub in Europe. Many foreign companies have bases there, capitalising on Ukraine's educated yet relatively low-cost workforce. Those companies now face growing concerns over the local situation.

Japanese conglomerate Hitachi has about 7,200 employees of its U.S. subsidiary GlobalLogic in Ukraine. Following the escalating situation in the country, Hitachi has prepared evacuation plans for its 7,200 employees.

Asian food makers are concerned about grain - Ukraine is a major exporter of wheat, corn and other grains. While those products mainly head to European countries, potential supply chain disruptions could drive up broader grain prices, hitting Asian businesses and consumers.

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How you can help the people of Ukraine [NPR]

As the world watches on TVs and smartphones, it's a natural thought to want to help in some way. Here are some organisations that are asking for assistance. Donations can be made through the links to their websites or social media pages.

Médecins Sans Frontieres/Doctors Without Borders - MSF runs a range of activities in Ukraine working with local volunteers, organizations, health care professionals and authorities to help people travel to health care facilities and access prescribed medications.

CARE - CARE is raising money for its Ukraine Crisis Fund, which will provide immediate aid including food, water, hygiene kits, support services and direct cash assistance. The humanitarian organization aims to raise $20 million and help at least 4 million Ukrainians. It says it will prioritize women and girls, families and the elderly.

International Medical Corps - The global nonprofit has been delivering primary health care and mental health services in eastern Ukraine since 2014, and is raising funds to expand those services for people affected by the latest conflict.

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