Ukraine War: A Turning Point for Globalization?

on August 4, 2023
By Sarah Neumann


Globalization is a multifaceted phenomenon that refers to the increasing interconnectedness and integration of different regions and peoples across various dimensions, such as trade, investment, migration, culture, technology, and information. Globalization has been a dominant trend in the world economy since the end of the Second World War, but it has also faced many challenges and disruptions along the way.

The recent war in Ukraine is one of those disruptions that has profound implications for globalization and its future trajectory. The war has not only caused human suffering and economic damage in Ukraine and its neighboring countries, but also triggered wider geopolitical tensions and conflicts that have undermined global cooperation and trust. Moreover, the war has exposed the vulnerability and fragility of global supply chains that rely on foreign inputs, markets, and transport networks.

How will the war in Ukraine affect globalization in the medium to long run? Will it lead to a reversal or a reshaping of global integration? What are the consequences for development and cooperation? These are difficult questions to answer, as they depend on many factors and uncertainties. However, some possible scenarios can be sketched out based on current trends and evidence.

One scenario is that the war in Ukraine will accelerate de-globalization, or a decline in global integration. This scenario is based on the assumption that geopolitical risks will outweigh economic benefits as drivers of globalization. Under this scenario, countries will prioritize their national security interests over their trade interests, leading to a fragmentation of global markets along political lines. Trade barriers will increase as countries impose sanctions, tariffs, quotas, or other restrictions on their rivals or potential threats. Global supply chains will be disrupted or reconfigured to reduce dependence on foreign sources or markets. Countries will also seek to diversify their trade partners or develop their domestic capabilities to enhance their self-reliance.

This scenario would have negative consequences for development and cooperation. De-globalization would reduce global efficiency gains from specialization and comparative advantage. It would also reduce global welfare gains from lower prices, higher quality, and greater variety of goods and services. De-globalization would hurt developing countries more than developed countries, as they rely more on trade for their growth, employment, income, and poverty reduction. De-globalization would also undermine global institutions and norms that facilitate cooperation on common challenges such as climate change, public health, human rights, or peace.

Another scenario is that the war in Ukraine will reshape globalization rather than reverse it. This scenario is based on the assumption that economic benefits will still matter as drivers of globalization despite geopolitical risks. Under this scenario, countries will adapt to changing circumstances by adjusting their trade strategies and policies. Trade barriers will not increase significantly, but trade patterns will change as countries seek new opportunities or niches. Global supply chains will not be disrupted, but diversified or optimized to balance efficiency and security. Countries will also pursue regional or plurilateral integration agreements that are more flexible and inclusive than global ones.

This scenario would have mixed consequences for development and cooperation. Reshaping globalization would preserve some of the benefits of global integration, but also create some challenges and trade-offs. It would allow countries to exploit their comparative advantages and access new markets, but also expose them to more competition and volatility. It would enable countries to diversify their trade partners and sources, but also increase their complexity and coordination costs. It would foster regional or plurilateral cooperation on some issues, but also create fragmentation or exclusion on others.

The war in Ukraine has also revealed the vulnerability and complexity of global trade. The war in Ukraine has disrupted global supply chains and markets, especially for commodities such as food and energy. For example, Russia is one of the largest exporters of wheat and natural gas in the world, and its exports have been affected by Western sanctions and transport bottlenecks. This has created shortages and price spikes in some regions, such as Europe and Asia. Moreover, the war in Ukraine has increased global uncertainty and volatility, which have negative impacts on investment, consumption, and growth.

The war in Ukraine has also raised questions about the relationship between globalization and security. Liberalism is a theory of international relations that argues that globalization promotes peace and security by increasing interdependence, cooperation, and democracy among countries. However, this theory has been challenged by recent events that show that globalization can also create conflicts and threats. For example, Mark Galeotti argues in his book that globalization has enabled countries to use their economic, technological, or informational advantages as weapons against their rivals or adversaries. He calls this phenomenon “weaponized interdependence” and suggests that it leads to more frequent and protracted wars.

The war in Ukraine does not necessarily mean the end of globalization or the return of a Cold War scenario. Rather, it means that globalization is changing and evolving in response to new challenges and opportunities. Globalization is not a uniform or linear process, but a diverse and dynamic one that varies across different dimensions, regions, sectors, and actors. Some aspects of globalization may decline or stagnate, such as trade in goods or multilateral agreements. But other aspects of globalization may continue or increase, such as trade in services or digital flows. Moreover, some regions may pursue deeper integration or cooperation within their own blocs or groups, such as the European Union or the Regional Comprehensive Economic Partnership.

The war in Ukraine is a critical juncture for globalization, but its outcome and impact are not predetermined. They depend on how countries adapt to changing circumstances and what policies they adopt to manage their trade relations. The challenge for policymakers is to find ways to harness the benefits of globalization while minimizing its risks. This requires balancing efficiency and security, openness and sovereignty, cooperation and competition in a changing global environment.”

Sarah Neumann is a political scientist and freelance writer who specializes in international relations, security studies, and Middle East politics. She holds a PhD in Political Science from Humboldt University of Berlin, where she wrote her dissertation on the role of regional powers in the Syrian conflict. She is a regular contributor to various media outlets like Eurasia Review. She also teaches courses on international relations and Middle East politics at Humboldt University of Berlin and other academic institutions.