The post-Russia-Ukraine war shook the globalization process

- The ruble weakened significantly after the Ukraine crisis

The world has changed since the Russia-Ukraine war. It is too early to understand the full consequences of the war that is about to unfold. But two things are quite clear. Russia's military action in Ukraine is expected to bring about changes in the system of international relations in the long run. Second, the trend of globalization began to reverse before the Ukraine crisis, but now it has suffered a major setback. There are fears that the war could have an adverse effect on the economies of countries around the world and increase inflation.

Russia has declared the debt of Russian companies to other countries as an unfavorable issue for payment in foreign currency following sanctions imposed by Western countries. Now these payments can only be made in rubles. Thus, Russia has hit the West indirectly. Russia's move is likely to hurt Western banks and companies. The ruble has weakened significantly since the Ukraine crisis. But it is not clear how many foreign companies can pay in rubles deposited in Russian banks and there are doubts about the payment of Russian bonds in dollars. Oil and gas prices have risen without Russia cutting off supplies. The West, and indeed the rest of the world, will suffer from high inflation and low growth. Rising protectionism and national security concerns slowed the flow of global trade and investment even before the Ukraine crisis. The coronavirus epidemic has raised suspicions about countries heavily dependent on supply chains around the world. The Ukraine crisis will deal one more blow to globalization.

The problem is not just trade and investment relations between the West and Russia. It is connected to the West and other countries such as China and India, which may choose to maintain contact with Russia. Volatility is likely to increase significantly if sanctions are also imposed on countries that transact with Russia.

Russia is facing stricter restrictions on the use of its central bank's foreign exchange reserves in the West. Many critics have said that countries including India would seriously consider having surplus foreign exchange with central banks in the West. One of the lessons is that greater engagement with the outside world increases the risk of external pressure on the economy and can reconcile the country with sovereignty.

India's move in the midst of this movement is that we do not want to end competition, we will produce for the world but help the local industry through tariffs and subsidies. To make this possible in the post-Ukraine world, self-reliance means not only building huge national companies, but also ensuring national security by minimizing the risk of external pressures.