On February 24, President of Russia Vladimir Putin launched a full-scale invasion on his neighboring country Ukraine, attacking multiple targets across its northern, southern, and eastern borders. The buildup of tension between Russia and Ukraine has long been concerning, with Ukraine slowly tying closer relations towards the West. The decision to invade was prompted by Ukraine’s intention to join the North Atlantic Treaty Organization (NATO), which Putin saw as a threat to Russia’s borders and its sphere of influence. Airstrikes followed by explosions and heavy gunfire attacks have been reported across Ukraine, and the escalation of the years-long conflict between the two countries has sparked the greatest security crisis in Europe since the end of the Cold War.

The beginning of the crisis dates back to November 2021, when great numbers of Russian troops began moving closer to the borders around Ukraine. Although Russia had issued a list of security demands to the United States (U.S.) and its allies urging NATO to cease its eastward expansion, these were rejected by the Biden administration. President Putin then accused the U.S. and the Western alliance of disregarding Russia’s demands and expressed his discontent by deploying 100,000 troops to Ukraine’s borders, provoking fear of a military invasion. Putin then announced a partial withdrawal of Russian troops on February 15, signaling that the conflict may be resolved. However, Jens Stoltenberg, Secretary-General of NATO, said in response that there had actually been no reduction in Russian troops, but rather the opposite had occurred with reports of “reinforcements of combat and other capabilities close to the Ukraine border.” Despite Russia denying that it had plans to invade Ukraine, its words and actions were in conflict as it continued to amass 190,000 troops along the border, making it the “biggest mobilization of troops since the Second World War” according to the U.S. government.

A History of Conflict

Ukraine is bordered by Russia to the east and Europe to the west. As the second-largest country on the European continent and located in an influential position, it is particularly recognized for its agriculture. Because Russia and Ukraine were both members of the Union of Soviet Socialist Republics (USSR) from 1922 to 1991, they share a deep history. Nevertheless, the two countries have conflicting perceptions of each other. Putin has long been fixated on regaining the empire that was lost with the fall of the Soviet Union, believing Ukraine to be a central part of his vision. Due to Putin’s desire to resurrect the Soviet Union empire, Ukraine began to support greater integration with Europe, slowly breaking off its ties with Russia.

Following the collapse of the USSR in 1991, countries that were once part of the Soviet Union began forming alliances with NATO, a military alliance that was established in 1949 with the purpose to defend member nations from threats from communist countries. Currently, the organization’s political and military alliance extends to “guaranteeing freedom and security of its members through political and military means.” The cornerstone of NATO’s principle of collective defense found in Article 5 of the Washington Treaty states that “an armed attack against one Ally is considered an attack against all Allies.” This was a great threat to President Putin’s aspirations to rebuild the Soviet Union empire. Professor Youn Ik Joong (International Studies, Hallym University of Graduate Studies) claims that Ukraine’s decision to join NATO could have a negative impact on Russia implementing various domestic and international policies in order to re-establish itself as a powerful country. Thus, it is likely difficult for Russia to acknowledge Ukraine’s decision to form its alliances with the Western powers.

The dispute between the two countries reached a turning point in November 2014 when Viktor Yanukovych, the former pro-Russian president of Ukraine, refused to sign a European Union (EU) association agreement in favor of forming closer ties with Moscow. Several Ukrainians criticized Yanukovych’s decision and argued that it was the consequence of a profoundly corrupt and incompetent government. This resulted in mass protests, eventually leading to President Yanukovych being removed from power the following year. Russia saw this move as a sign that Ukraine would pursue closer ties with Western powers, thus, to restore its waning influence in Ukraine, Russia countered by annexing the Ukrainian peninsula of Crimea, leading to the loss of at least 14,000 lives.

Following the conflict, Ukraine has repeatedly stated its intentions to form an alliance with NATO, and it adopted a National Security Strategy aimed at extending its NATO partnership in 2021. Unlike Russia’s desire to unite with Ukraine, Ukraine’s ambitions and interests align it more with Western countries. In response, President Putin demanded that NATO and the U.S. halt its further eastward movement and strictly deny NATO membership to Ukraine. Nevertheless, these demands were rejected by the Biden administration, who emphasized that NATO is obligated to keep its door open for any countries wishing to join. This triggered Russia to threaten Ukraine militarily, positioning thousands of its troops along the Ukraine borders.

Commencing the Attacks

Following weeks of tension along the border between Russia and Ukraine, Putin declared the start of a special military operation on February 24. Strikes began as Russian forces launched a series of missile attacks against Ukraine’s capital Kyiv, which quickly spread across the central and eastern areas of the country. The trigger for Russia’s attack was when Putin officially recognized the Donbas region, which is in eastern Ukraine and partly controlled by Russian-backed separatists, as an independent state on February 21. The acknowledgment enabled Russian military forces to move into these areas for “peacekeeping” purposes, raising red flags regarding Russia’s imminent invasion of Ukraine. Though Russia repeatedly denied it was planning an assault, the U.S. responded with new sanctions to cut off strategic imports to Russia, leading President Putin to launch a full-scale invasion on Ukraine.

On the first day of Russia’s invasion, President of Ukraine Volodymyr Zelenskyy announced that more than 300 people had been injured in less than 24 hours. Because Russia is recognized as having one of the world’s largest military forces, the military imbalance between the two countries has been the foremost concern for supporters of Ukraine. Zelenskyy issued a full military mobilization order to counter Russia’s attack, allowing its military power and national infrastructure to shift to a wartime system and mobilize human resources and supplies. The Ukraine government declared a state of martial law in all territories, urging all citizens to stay at home. President Zelenskyy even turned down an offer to be evacuated from Ukraine, asserting in a TV address to the nation that he would be defending his own country, declaring that “We are not afraid of anyone or anything. We don’t owe anyone anything. And we won’t give anything to anyone.”

Hundreds of casualties and damage in multiple areas of Ukraine have been reported in the battle, while numerous Ukrainians fled their cities and took to subway stations for shelter from the bombings. The United Nations (UN) reported that about 100,000 people have deserted their homes, while several thousand more have fled the country since the start of the invasion. United Nations High Commissioner for Refugees (UNHCR) spokesperson Shabia Mantoo reported 281,000 refugees entering Poland, around 30,000 entering Slovakia, over 84,500 entering Hungary, 32,500 entering Romania, and 35,400 entering Moldova. According to UNHCR, more than 3.5 million citizens have fled from Ukraine to neighboring countries as of March 23, making it the worst refugee crisis in Europe since World War II.

Contrary to expectations that Russia would easily reach Kyiv within 48 hours, the Russian military has experienced unexpected resistance from Ukraine. In fact, two senior U.S. officials reported to CNN that the Russian invasion has run into a “stiff resistance,” with the Russian military encountering difficulty in supplying its forces. According to CNN, this is due to Ukrainian air defenses performing better than anticipated by U.S. intelligence assessments. As the war between the two countries continues to escalate, Ukraine has gained tremendous support from the U.S. and several other Western nations, allowing the country to fight back against Russia.

On February 27, days after the attacks, President Putin threatened to boost Russia's preparation for nuclear warfare in order to achieve victory in Ukraine. Linda Thomas-Greenfield, the U.S. Ambassador to the UN, accused Putin of making a “totally unacceptable” decision, making clear that the U.S. would maintain its support for Ukraine as well as continue to impose heavy sanctions on Russia. Professor Youn believes that Putin himself knows that Russia's use of nuclear weapons could escalate into a world war, proving how important the Ukraine issue is for the Russian government. Furthermore, Professor Youn explained that President Putin is likely to have tactical nuclear weapons ready for use at any time and doubts that Putin’s stance will change even though the West has imposed heavy sanctions on Russia.

The Aftermath of the Russian Invasion

Ukraine is the primary country to experience the wrath of war on behalf of Russia's invasion. Aside from the physical damage on its businesses, houses and other infrastructure, Ukrainians were forced to leave their homes, leading to a mass exodus while some suffer from loss of lives and other casualties. Russia’s attacks did not only destroy lives and properties but also devastated the economy of Ukraine. With conflict worsening in Ukraine, financial support seems to be a necessary factor to Ukraine’s road to recovery. The financial losses due to war hit the country hard as Oxford Economics observed that its economy could contract by 50 to 60 percent.

In the meantime, recovery plans are underway as the economic repercussions of the conflict will not be limited between Russia and Ukraine. According to The Guardian, the economic activity in the country is expected to shrink by more than one-third this year. The process of recovering from economic, physical and human losses would be a long process considering the need for massive assistance from outside sources.

Due to this Russian invasion, Joseph Borrell, the EU foreign policy chief, reiterated that the bloc or the European Union would impose its heaviest sanctions on Russia. The President of U.S. Joe Biden added that he is prepared to introduce new sanctions, supported by U.S. allies, which will target Putin. Moreover, as reported by the Daily Mail, United Kingdom Prime Minister Boris Johnson has referred to Putin as a “bloodstained aggressor, who believes in imperial conquest” who has ridiculously demanded that Ukraine be de-nazified and demilitarized. He warned Moscow of facing grand economic sanctions created to inhibit the Russian economy. The U.S. and its allies are set to enforce sanctions that are powerful enough to control exports.

As a consequence of these sanctions, the ruble has plummeted against the U.S. dollar (USD) and other currencies. This is set to worsen because U.S. sanctions on exports of semiconductor chips and other technologies recently came into force on March 6. At the same time, Russian assets are being blocked in the Bank of Canada, the U.S. Federal Reserve System (FED), European Central Bank, and Bank of England, as are the Russian banks and financial institutions. Meanwhile, the Nord Stream 2 gas pipeline has halted operation, Central Bank of Russia transactions have been prohibited by the Department of Treasury, and even the personal assets of President Putin, his Foreign Minister, and other officials have been frozen.

International Impacts

The impact of this invasion has been immense, especially on Russia’s neighboring countries, because the global economy has not yet recovered from the supply shocks associated with the coronavirus disease (COVID-19). Days after the Russian forces executed airstrikes, seized army posts and broke through to Kyiv, the price of energy soared. Overnight, the oil price skyrocketed to over 100 USD a barrel because Russia is one of the largest gas and oil manufacturers in the world. The U.S. stated that about three percent of its oil supply comes from Russia, and this could be a burden to the economic growth of the U.S. with companies and citizens spending more on gas and oil, which would in turn lower their spending on other areas that affect the country’s Gross Domestic Product. Rising inflation is now anticipated as Russia continues its onslaught in Ukraine.

Economists are particularly concerned about the pressures companies will face due to supply shocks. This is because Russia supplies 40 percent of the global palladium, a raw material needed for petrol-powered vehicles and devices. In addition, Europe is highly dependent on Russia for gas and may not be able to find alternative sources should the pipelines be cut. With this, owners of oil tankers are wary of loading Russian crude because it may be subject to sanctions.

At the same time, rising inflation has affected the countries neighboring Russia and Ukraine, as they are bracing themselves for soaring wheat and energy prices. Major exporters of wheat and grain, such as Romania, Ukraine, Kazakhstan, and Russia, could face disruptions due to military sanctions. For example, three components of the Australian economy have been affected by the invasion: aluminum, petrol, and grain. Even though Queensland operates a huge alumina plant, the price of aluminum has increased because the plant is twenty percent owned by a Russian company. The same is true with increase in prices of Australian grains as attacks on Ukraine persist. Because the country does not produce petrol, the gradual increase in the price of crude oil over the past few weeks is expected to continue. The economic sanctions have also affected the stock market. Global markets face a major risk of investors rushing back to bonds and foreign exchange due to the conflict. As a result, the U.S. FED plans to tighten its monetary policy to slow down the increase in interest rates.

South Korea is also preparing for the supply shock. The country is figuring out which raw materials from Russia or Central Europe are most vulnerable. South Korea is constantly monitoring the situation between Russia and Ukraine in terms of its effect on energy prices and supply chains in the manufacturing sector. As predicted by the Korean government, the crisis in Ukraine poses a much more serious effect on South Korea’s exports than the nation’s imports. In response to the international sanctions on Russia, South Korea decided to restrict exports to Russia. Lee Jae-Myung, a presidential candidate from the ruling Democratic Party of Korea (DPK), argued that food security will be affected should prices of crops increase due to the conflict between Russia and Ukraine. Disruption to production is also expected because South Korea exports automobile parts from its plant in Russia. Following this, the South Korean government plans to expand its suppliers for materials necessary for chip manufacturing, such as krypton and neon. Other proposals include the 2.3 trillion Korean Won (KRW) investment in research and development (R&D) and plans for economic sanctions against Moscow.

Professor Kim Seongjin (Political Science and International Studies, Duksung Women’s University) stresses that Russia has already destabilized the international order in a conflict between social values and the development model since the mid-2010s. Russia's National Security Strategy, published in July 2015 and July 2021, and the Biden Administration's Interim National Security Strategic Guidance (INSSG), published in March 2021, contain similar objectives. Both countries place great importance on economic growth based on new technologies, with Russia seeking to reduce dependence on external technology and achieve independence in its advanced technologies and the U.S. striving to promote domestic renewal such as democracy and economic development and to revitalize cooperation with alliances and partners. Efforts are underway to promote and block the transfer of new technologies to hostile countries. As a result, negotiations are likely to proceed against the background of a new Cold War.

Seeking a Peaceful Settlement

With all these, the Russian invasion of Ukraine is set to have an even greater economic impact because financial markets and the global economy are interconnected. Nations around the world trade and exchange goods and services that are necessary for the growth of their economies. There is not a single country that has all the raw materials and natural resources it needs, so each country must depend on others. In this age of globalization, financial markets and economies are interdependent because of greater access and commitment to financial trading and markets, transnational business, and expansion of commerce. According to Professor Park Sang Nam (International Relations, Hanshin University), as long as the war continues, it will result in global inflation, with the price of both oil and commodities increasing. This will affect a large number of countries as global impacts for markets and companies become inevitable.

Prior to this invasion, efforts were made by French President Emmanuel Macron to avert the Russian invasion. However, the negotiations between President Zelenskyy and President Putin were to no avail. Since the war broke out, discussions have taken place between Russia and Ukraine on the border with Belarus. Ukraine announced that the goals of these talks were to seek an immediate ceasefire and the removal of Russian forces from the country. Professor Kim reiterates that specific measures can be taken to compensate those countries affected by the sanctions for their losses. For example, the U.S. could lower barriers to market access, loosen regulations, or encourage Saudi Arabia to increase its production of crude oil. The U.S. could also provide direct financial support and open the market for Ukraine. Even if Ukraine's “Finnishization” (the adoption of a neutral position with overly negative overtone) is pursued, it is likely that it will lead to economic growth if market access is authorized. In other words, this term refers to the maintenance of neutrality over a unit preventing others from inflicting harm.

Despite this, the Ukraine-Russia conflict remains a serious concern for the international community, and the outlook for the two countries remains in question. Professor Park is concerned about the increasing number of casualties due to the conflict. Although he believes that there may be a possibility of the two countries arriving at a peace agreement, he expresses concern that neither country will back down easily, despite being given the justification to do so. Professor Park added that this war again highlights that no national interest or ideology can take precedence over human life. Problems must be resolved peacefully in order to preserve human dignity. Solving problems with force and violence is a sin. He hopes that this tragedy will serve as an opportunity for the entire world to firmly establish these principles once again.

As further negotiations continue between representatives of Russia and Ukraine, evacuations from Ukraine increase while the rest of the world watches and hopes that the invasion ends soon. Professor Park agreed that the global anti-war protests, supply of weapons and humanitarian aid, the UN resolution to remove Russian troops, and economic sanctions by the U.S. and the West are of great help to Ukraine. However, most importantly, active diplomatic mediation efforts by the U.S. and NATO are needed to end this war as soon as possible.