The Global Cost of the Russian Invasion

The Kremlin’s aggression is spurring multiple crises affecting nearly every country in the world

16 December 2022

Oleksandra Drik

Future of Ukraine Fellow

Food security, access to fertilizer and unstable currency markets are just a few of the global implications of the Russian invasion of Ukraine. The impact is massive and the only solution requires a united effort to force Moscow to be accountable for the crimes it has committed.

When in March 2022 – directly after the fule-scale Russian invasion began – Oleh Hordiychuk was shot in both his legs by Russian soldiers in the backyard of his house in Hostomel, Ukraine, then blindfolded along with his wife and a 23-year-old son, taken to Belarus and then Russia where his son has been illegally detained ever since, maybe he was just a civilian in the wrong place at the wrong time?

According to UN-collected data, the Russian invasion has already affected the lives of around 1.6 billion people in 94 countries worldwide by triggering the greatest global cost-of-living crisis in a generation.

This cost-of-living crisis in just a couple of months has severely exposed 1.6 billion people all over the world to either food, finance or energy crises, with 1.2 million of them exposed to all three simultaneously. Here’s how.

Food and fertilizer crisis

Since Russia launched its unprovoked attack on Ukraine, many people have been facing famine-like conditions, with a marked increase in people facing severe hunger emergencies. Immediately after the Russian invasion, the FAO food price index hit a historical record with prices raising by 34 per cent.

95 million people have been predicted to be put into extreme poverty due to the Russian war in Ukraine, making 2022 the second-worst year ever for poverty alleviation, behind only 2020.

Since both Ukraine and Russia are among the world’s breadbaskets, providing around one-third of the world’s wheat and barley, the disruption of the wheat exports has hit the vulnerable populations in developing countries especially hard; more than 50 per cent of the income of the poorest households is spent on food. The World Food Programme calculated that an additional 47 million could become acutely food insecure in 2022 due to the Russian war in Ukraine. The livelihoods of more than 2 billion small producers, farm labourers, rural workers and their families are at risk, not least because they already cannot afford a healthy diet.

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The same relates to fertilizers that doubled twice in price and have become less accessible. As predicted by the UN Global crisis response group on food, energy and finance, if Russia continues its war and high prices of grain and fertilizers persist into the next planting season, food availability will be reduced at the worst possible time, and the present crisis in corn, wheat and vegetable oil could extend to other staples, affecting billions more people.

Make no mistake, this food crisis is of Russia’s own making. Russia has been deliberately weaponising such commodities as food and fertilizers. Russian propaganda is trying to persuade the countries of the world, especially in the Global South, that food insecurity emerged due to sanctions imposed on Russia. However, Russian food and fertilizer exports have not been subject to sanctions following its military invasion of Ukraine in February 2022.

Instead, Russia has deliberately disrupted supplies, blockading grain-carrying ships in Ukrainian ports. And while Ukraine searches for ways to ensure supplies get through, even sending wheat for free to those countries most affected by food insecurity, Russia has repeatedly threatened to renege on the Black Sea deal that should guarantee food exports. As starvation looms once more, it is Sub-Saharan Africa, South Asia, the Pacific, Latin America and the Caribbean that will pay for Russia’s crimes with their lives.

Financial crisis. Inflation and defaults

Food security is linked directly to economic growth. Up to a dozen developing countries are facing an increased risk of debt defaults almost immediately as Russia’s war boosted commodity prices. To give a sense of the effect of Russia’s actions, the April 2022 edition of the IMF’s World Economic Outlook contained more than 200 mentions of the word “war.” It indicates the extent to which political risks generated by the Russian invasion of Ukraine had a notable macroeconomic effect in 2022.

In just a couple of months after the full-scale invasion, the Russian war has reduced the level of global GDP by about 1.5 per cent and led to a rise in global inflation of about 1.3 per centage points.

After the first 100 days of the Russian full-scale invasion, the currencies of 142 developing countries depreciated. While the UN calculated the average of 2.8 per cent against the US dollar and their bond yields increased by an average of 77 basis points, the inflation hit some countries much harder than others. Hiking interest rates and growing investor uncertainty has eroded both the value of developing countries’ currencies, as well as their capacity to borrow in foreign markets. Globally, 60 per cent of the poorest countries found themselves in debt distress or at a high risk of debt distress due to the factors triggered by Russia’s war in Ukraine.

The Russian invasion has dramatically pushed up the cost of food and fuel imports, generating a “perfect storm” for emerging markets. Many of the larger middle-income countries were predicted to generally weather that storm although a hit to the European economies could be greatest, especially in goods-producing industries. The world’s biggest economies are facing the highest rates of inflation for 40 years as the fallout from the coronavirus pandemic disrupts global supply chains and Russia’s invasion of Ukraine drives up energy costs. Figures from the EU statistics agency Eurostat showed consumer price inflation increased from 8.1 per cent in May, reaching the highest level since relevant records began in 1997, two years before the euro was launched.

However, the economies of low- and middle-income countries are squeezed. According to the World Bank, taking into account only the price increases for corn and wheat, the average household has lost 1.5 per cent in real income since the start of the Russian war in Ukraine. Both the UNCTAD global GDP and IMF growth forecasts for 143 countries for 2022 have been revised downwards since the start of the Russian invasion.

Struggling to get currency to pay for their foreign debts, countries have turned to the main global mechanisms available to tackle debt crises, like the IMF. However, those weren’t designed for these conditions. Another place for emerging markets to turn for debt relief is the G20, but given that Russia is a member of the G20, it’s been nearly impossible since the invasion to get the countries’ finance ministers to even gather in the same room.

It means that by invading Ukraine Russia has triggered a financial crisis already felt in all regions of the world, exposing most severely the emerging markets of Africa and the Middle East, Eastern Europe and Asia, Latin America and the Caribbean, where people will now pay for Russia’s crimes with their compromised livelihoods.

Energy Crisis 

Russia has weaponised energy too. When Putin threatened to let Europe “freeze” over winter, halting gas supplies to the region citing technical issues on the Nord Stream 1 pipeline, he left the region vulnerable as it tried to replenish energy storage ahead of the colder months.

Because of Putin’s blunt blackmailing, many large natural gas importers have committed to dramatically reducing reliance on Russian natural gas. This, however, will take years and currently Europe has set a target of weaning itself off Russian gas by 2024. In the meantime, Putin continued to make around €100 million euros per day from exports of gas to Europe, making it one of the Kremlin’s principal sources of finance, so some called it a win-win situation for Moscow: whatever happens, the price of energy will rise, causing inflation to go up, triggering division in Europe that it will exploit to leverage the result it wants in Ukraine. Russia’s blackmail of Europe also had another consequence – replacing Russia’s natural gas with higher imports of Liquified Natural Gas from other countries, which may potentially price out some developing countries from the Liquified Natural Gas market on which they rely for energy imports.

This means that by invading Ukraine and weaponising energy, Russia has triggered a global energy crisis, which in turn further fuels both food and financial crises, making again the world pay for Russian crimes.

Vicious cycles

None of the crises exists separately; they create vicious cycles instead. When in Kenya recently, one of the countries severely affected by different dimensions of this Russia-generated crisis, I had a chance to explore these effects when speaking to both the deputy speaker of the National Assembly of Kenya and the civil society.

While Kenya is one of the countries the Ukrainian government has recently donated 25 thousand tons of grain, the consequences are complex. Higher energy prices, especially diesel and natural gas, increase the costs of fertilizers and transport, and both factors increase the costs of food production. This leads to reduced farm yields and even higher food prices next season.

These, in turn, add to inflation metrics, contributing to what were already increasing interest rate pressures and tightening financial conditions. Tighter financial conditions erode the buying power of the currencies of developing countries, further increasing the import costs of food and energy, reducing fiscal space and increasing the costs of servicing debt.

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One may argue though that attributing these different dimensions of the crises only to the Russian invasion of Ukraine might be an exaggeration since the world has been affected severely by the pandemic in the previous years. Indeed, the pandemic already caused a tremendous rollback in poverty reduction. It had also pushed up the total indebtedness of the countries to a 50-year high, or the equivalent of more than 2.5 times government revenues. Russia has tremendously exacerbated the problem by invading Ukraine, immediately darkening the outlook for many developing countries that are major commodity importers or highly dependent on tourism or remittances.

What it means is that people suffering from the cold in Europe this winter, people suffering from hunger in Africa, people suffering from inflation in America and Europe or from defaults in Asia – all these people can equally be considered the victims of Russia’s war in Ukraine.

None of these factors can be fixed in isolation, and none of them can be fixed without addressing the root cause of these global crises. By invading Ukraine, Russia is making people all over the world pay for Putin’s sick imperialistic ambition. This can only be fixed by stopping and holding accountable Putin’s Russia, which has been disregarding and neglecting the rules-based international order, enshrined in the UN Charter and supported by 193 countries.

This does require Russian troops to vacate the territory of the internationally recognised borders of Ukraine and Moscow to be held accountable for the crimes committed against and in Ukraine as well as make Russia pay reparations. Only then the restoration of peace and security is possible; otherwise, it would mean that Russia can continue to do whatever it wants enjoying complete impunity, undermining the lives, livelihoods and hopes for a better future of the people all over the world.


Published as part of our own Future of Ukraine Fellowship programme. Learn more about it here and consider contributing.

The featured image is a composite of the following images: “Ukraine” (CC BY 2.0) by Howard J Duncan ;, Передача трофейной украинской техники и вооружения подразделениям ЛНР 016, filter and crop and combined with other images by VI Team, CC BY 4.0 ;, Расчет ЗРПК «Панцирь» уничтожил ударный беспилотник UJ-22 Airborne ВСУ 001, filter and crop and combined with other images by VI Team, CC BY 4.0.

Oleksandra Drik

Future of Ukraine Fellow

Oleksandra Drik (Ukraine) is a Future of Ukraine Fellow at Visegrad Insight and a lawyer, who has been working on accountability reforms in Ukraine since 2014. Since the full-scale Russian invasion in 2022, she has been advocating for a comprehensive international system of accountability for war crimes committed in Ukraine. Oleksandra holds an MA in Global Politics and Law from the University of Sheffield (UK), and two Ukrainian degrees in international relations and law from Kyiv National Taras Shevchenko University, and has 8 years of background in advocating accountability reforms in Ukraine in governmental, non-governmental sectors and EU projects in Ukraine, including positions in the Ministry of Defence of Ukraine, Reforms Delivery office of the Cabinet of Ministers of Ukraine, EU Anti-corruption Initiative in Ukraine, NGO and media.

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