The war in Ukraine has influenced many things, from the price of energy to food to raw materials, and it fundamentally altered the way the world’s major economies will move forward in 2023 and beyond. E.U. inflation is the highest in 40 years with the U.K. crossing the 10 percent mark, and according to CNN business news, “the U.K. economy shrank in the third quarter, signaling the start of a recession that is likely to hit Europe next.”
The eagerness with which the E.U. dropped everything Russian plunged the European block into an energy crisis that will last for years. Additionally, just to make sure that the E.U. might start regretting its decision to abandon Russian gas, the newly built Nord 2 gas pipe was blown out of the water, making the decision irreversible. With the pipes blown, gas turbines in repairs, and the overall E.U. decrease or outright refusal to buy Russian gas or oil, it is a bonanza time for the U.S. gas and oil companies. According to the market data, the price the E.U. pays for U.S. liquid natural gas is 40 percent more than what it was paying for the Russian pipeline gas. According to Reuters, “U.S. LNG exports both a lifeline and a drain for Europe in 2023.”
The U.S. liquid natural gas exports to Europe increased by almost 140 percent in 2022 in comparison to 2021. With the E.U.’s self-imposed cut in Russian gas, the U.S. will continue to be the main supplier of LNG for years to come. Reuters also reported that in 2023 the U.S. will become the net exporter of oil. The E.U. has been rushing to buy U.S. oil as a substitute for oil from Russia. The astronomical increase in energy costs is pushing E.U. companies to relocate elsewhere. As NPR is reporting, “Europe fears its industries will jet to the U.S. as energy costs force plant closures.” The increase in demand for U.S. oil and gas will guarantee jobs for the industry and a chain reaction for its suppliers, all resulting in a significant increase in corporate profits.
Also, let’s not forget about the Pentagon and the U.S. military sector. Even Amazon delivery services might be jealous of the efficiency and speed with which the Pentagon is working to fulfill Ukraine’s arms order lists. Since February 2022, the U.S. has sent around $21 billion in military assistance to Ukraine, with $44 billion more authorized last month. It has been every U.S. administration’s complaint that the E.U. does not spend 2 percent of its gross domestic product on defense, as per NATO demand. Well, guess what, no more. Together with Ukraine, the E.U. will drive the production of U.S. military hardware to its maximum. According to the German news source Deutsche Welle, Germany will commit $100 billion to defense spending, up from $53 billion in 2021. The other E.U. countries will be drastically increasing their military expenditures to either beef up their current military stock or replenish arms sent to Ukraine and destroyed by the Russians along the way.
As this war will drag on for many more months, if not years, the U.S. military-industrial complex is guaranteed orders for the foreseeable future. The incoming House Foreign Affairs Chairman Michael McCaul said that the military aid to Ukraine will continue. During a CBS News interview, he said, “I think going with the amount of investment we’ve had is very small relative to destroying the Russian military, and what we have done without one American soldier being attacked, killed or in the country. To me, that is a pretty good investment.”
The military tactics shifted from the beginning of the Russian invasion of Ukraine, which looked more like World War II, with the tanks and urban house-to-house small-arms fights, and has morphed into a 21st century WWI trench stalemate war, with drones and ballistic missiles hitting residential complexes, infrastructure or military targets. This war is rewriting the military strategies as we know it and increasing the demand for attack drones, hypersonic missiles, software, and space spy satellites or low-flying inexpensive reconnaissance equipment. The U.S. is positioned the best to build and meet the expected demand. The constant destruction of the U.S. and E.U. military hardware on the front lines by the Russians will guarantee jobs and profits to American military-industry complex for years to come.
Then there is reconstruction time. The war will eventually come to an end. It is estimated that Ukraine might need up to $2 trillion to rebuild and in many cases fully replace its civilian infrastructure. From the electric power stations and grids to water and sewage to housing, U.S. companies will take a leading role in rebuilding the country, translating into jobs and profits at home.
The ultimate loss here is in human lives. The Ukrainians are paying for this war with their lives defending their homeland, families, and homes. For them, no corporate profits or creation of jobs elsewhere matters. They are either getting bombed while in their homes with their families, or dying on the front lines in the trenches. It is only fair to mention that the Russians come second with thousands of soldiers dying and dead, fighting and killing people who are in many ways their brothers, who share their culture and family ties on both sides of the border.
Let’s not forget about the Europeans, whose lifestyle plummeted with inflation, business bankruptcies and suicide on the rise. Last but not least, the people in the developing countries of Africa, the Middle East and Asia will be going through a time of hunger and hyperinflation, with a level of suffering that has not been seen since the mid-1990s.
The outcome of war in Ukraine will be one-sided, few corporate winners with the majority of losers.