May 2024 - Eyes On

War in Europe - Ramifications and Impact

Our natural inclination towards looking and understanding the world exclusively from a first-person perspective makes it difficult for us to truly grasp the rich history predating the existence of each and every single one of us. Alan Kay's words,?technology is anything that was invented after you were born, everything else is just stuff,?summarise how this also applies to our perception of technology. Indeed contemporary technology is shaping our evolution and lives nowadays just as it did thousands of millennia ago. Our need for community, relative lack of bodily strength and general fragility combined with our ingenuity and?imagination have driven us to develop tools to expand our minds and physical capabilities.

No matter how far we progress, dissatisfaction is and will always be part and parcel of the human experience ultimately driving progress thanks to our need to find problems and develop solutions (BBC, 2024). War is an important phenomenon where this cycle becomes exacerbated. How will the ongoing 'problem', or better 'threat', of war affect and develop different industries and technologies to counter or solve said issues?

While the jury's still out on whether or not we are naturally inclined towards war we just can't seem to get enough of it. Unlike conflicts in the past where a larger army or better tactics meant you could win some major battle and call it a day the five Ws of how to end contemporary and ongoing conflicts are not so clear.?Last year was marked by the highest number of ongoing conflicts as seen in the past three decades. Wars are getting longer, more complex and fragmented;?conflict is becoming more normalised and there is a decline in diplomatic efforts; worsening socioeconomic and environmental factors, religious conflict and ineffective international governance paint a pretty bleak picture of the world we live in (Bloomberg, 2023;?The Guardian, 2020).

What can we gauge from all of this??Focusing specifically on the war in Europe its seemingly unforeseeable end means we must adapt and overcome its impact by seeking alternative solutions to the disruptions it has caused. Thankfully, humans are an incredibly adaptable and resilient species.

Economy

Whether it be due to sanctions or?stakeholder pressures many Western companies have scaled back or exited their Russian operations.?Will?an impoverished Russia bite back in the future? Will it seek to strengthen its economic alliances in Asia?instead??Although the immediate impact on the global financial system is limited, the war is heightening existing risks such as inflation and potential recessions, overall adding to global economic volatility, with geopolitical risks now seen as the primary threat to economic growth.?Furthermore,?this situation?has led to a massive displacement of people, with millions of refugees fleeing Ukraine and millions more displaced within the country. In the long-term many may choose to relocate elsewhere however, in the medium- and present-term many have fled to nearby European countries. While taking on the cost of aiding that many new people may be taxing for the asylum-providing?economy?the influx of working-age migrants could be beneficial to support europe's ageing population?(ECB, 2022;?McKinsey, 2022).

Food

Agriculture is one of humanity's most ancient technologies. Around 10,000 years ago factors such as climate change following the Ice Age and the development of food surpluses encouraged?small, mobile, hunter gatherer early human groups to begin growing and selecting their own crops. Today Ukraine and Russia are major exporters of key agricultural products such as grains, sunflower oil and fertilisers. The war has disrupted food production and raised prices, endangering global food security. Much like our ancestors we must turn this threat into an opportunity to develop our agricultural practices. The problems we face today may pale in comparison with tomorrow's threats of climate change and further supply disruptions such?other conflicts or even pandemics. From selecting more resilient crops to adopting more sustainable ways of growing food we must find alternative practices to both?prevent shortages now (and therefore inflation) as well as detriment to our environment down the line (McKinsey, 2022;?National Geographic, 2024;?McKinsey, 2024).

Resources and energy

The COVID-19 Global Pandemic gave us a real taste of the degree of interconnectedness and globalisation that exists between our economies by showing us how sensitive to disruptions and delicate our supply chains are. The ongoing conflict in Europe is yet another iteration of what we experienced in 2020 having?intensified the need for resilient supply chains, leading companies to adopt strategies like dual sourcing and friendshoring. Additionally, this time around?Europe is rapidly seeking to reduce its dependence on Russian energy by diversifying its sources and increasing energy efficiency by adopting and energy mix model including renewable, non-renewable and nuclear sources (McKinsey, 2024).

Technology

As aforementioned, many Western companies are fleeing Russia for a variety of reasons. Amongst these are many involved in the tech sector. The war is accelerating the separation of global technology standards as Western tech companies exit Russia, while others remain. Although obtaining?reliable sources about what state the country's economy is in it isn't hard to assume that the country is either investing in its homegrown talent and companies or seeking out collaborations with its Asian neighbours. In the West several NATO countries are boosting their defence budgets, with a focus on either immediate equipment purchases or long-term R&D investments. Wether this be in preparation for an expansion of the conflict or to discourage any potential attempt at this, military muscle flexing sadly seems to work well when it comes to maintaining peace. Nonetheless cyberattacks linked to the conflict are increasing. Critical infrastructure, state and privately owned organisations are being affected emphasising the need for robust cyber defences as well as military ones (McKinsey, 2022).

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